Promulgated Contracts Pretest 2
Your buyer client has received their inspection report. In it, there are several identified items that they want the seller to fix. Seller has agreed to fix these items before close. What will you need to include in the contract to ensure this agreement is enforced?
An amendment is something that is attached to the contract after it is accepted that changes the contract's requirements.
As outlined in the TREC promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?
As outlined in the TREC promulgated sales contracts, a seller's obligations regarding the property condition at the time of sale are a matter of negotiation with the buyer.
How can a license holder ensure that any relevant addenda or notices are officially included in a contract?
Checking the appropriate boxes in Paragraph 22 officially includes them as part of the contract.
Buyer Jeremy gave Seller Anthony $800 in earnest money and an additional $200 in option money. During the option period, Jeremy decided to terminate the contract. Anthony gave him back $800. Is this correct? Why or why not?
Option money is not refundable. Jeremy should only have gotten his $800 in earnest money back.
In Paragraph 9 of the One to Four Family (Resale) contract, what must happen "on or before" the specified date?
Paragraph 9 is where the "on or before" closing date is noted.
What does Paragraph A of the Addendum for Back-Up Contract specify a back-up contract holder do when they execute the contract?
Paragraph A says the back-up buyer will pay any earnest and option money agreed to in the back-up contract.
What part of the Third Party Financing Addendum for Credit Approval specifically pertains to people getting VA loans?
Paragraph D of the Third Party Financing Addendum for Credit Approval concerns VA loans.
Agent Ralph has a buyer client that wants the seller to leave them the refrigerator, built-in microwave, and vent hood. Ralph notes this expectation in the Special Provisions section. What is wrong with this scenario?
Requests to leave appliances should go in the Non-Realty Items Addendum. To use it in Special Provisions would be a violation.
What is the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway for?
The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway warns buyers that, if their property comes to be located on the beach area because of storms or erosion of the soil, the state can require them to remove the structure at their own expense.
The Seller's Temporary Residential Lease will only be used:
The Seller's Temporary Residential Lease will only be used when the seller will remain on the property for no more than 90 days after closing .
What is the purpose of the Short Sale Addendum?
The Short Sale Addendum protects the seller by referring to "net proceeds" and giving them a way to break the contract if the lender doesn't approve the sale.
Which of these is NOT something that is appropriate to put in Paragraph 11 (the Special Provisions section) of a TREC promulgated contract?
The Special Provisions section can be used for relevant business information (such as the names of the parties or the property description) that did not fit in the fields provided. That the contract is contingent on the inspection
If the seller is providing an existing survey during a real estate transaction, what must the license holder give to the buyer?
The T-47 Residential Real Property Affidavit is required only when the seller is providing an existing survey during the real estate transaction.
Which of these materials would be considered part of a property's mineral estate?
The mineral estate does NOT include water, sand, caliche, gravel, limestone, or iron.
Laura is in contract for a home. Her contract contains a Sale of Other Property by Buyer Addendum. The seller has just accepted a back-up contract for the property that doesn't have this contingency. What happens to Laura and her contract?
The seller can accept the back-up offer and notify Laura that she may waive the contingency by an agreed upon date or Laura's contract terminates.
Additions to the standard coverage in a title policy can be purchased via:
Additions to the standard coverage in a title policy can be purchased via endorsements.
What is one exception to HUD's occupancy guidelines of two people per bedroom?
An exception to HUD's occupancy guidelines is infants in a room with parents.
What is the purpose of the Consumer Notice Concerning Hazards or Deficiencies in TREC promulgated contracts?
Consumer Notice Concerning Hazards or Deficiencies educates buyers on the purpose of property inspections.
Which of these agent scenarios involving contracts is NOT inappropriate or in violation of TRELA?
Explain the meaning of factual statements or business details in the contract form
When a property is purchased and then quickly resells at a higher value it is called:
Flipping is quickly reselling a home for a higher value.
What is the purpose of TREC form OP-C Notice to Prospective Buyer?
Form OP-C Notice to Prospective Buyer provides a notice to buyers using their own contract to obtain an Abstract of Title.
When is it acceptable for a seller not to give a buyer a seller's disclosure notice?
If a buyer indicates they either already have or don't need the seller's disclosure (by checking box one or three in paragraph 7B of the contract), it is okay not to give them one.
What does the date in the Third Party Financing Addendum provide a deadline to buyers for?
If the buyer fails to notify the seller within the termination time period that they did not receive buyer approval, the buyer forfeits their right to earnest money.
There are three different types of financing choices in Paragraph Three of TREC's One to Four Family Residential Contract. They are:
In the TREC promulgated One to Four Family Residential Contract, the three types of financing choices in Paragraph Three are third party, assumption, seller financing.
Agent Sarah knows her client wants to make the sales contract contingent on appraisal, so she adds a notation to that effect in the Special Provisions section of the contract. Why is that wrong?
It's a violation to include anything in the Special Provisions section that alters the parties' legal rights, because that could be considered the unauthorized practice of law.
A married couple is buying a property. Which is the BEST way to write their names in the contract?
It's best to used full names and specify any relation between the parties.
In TREC promulgated contracts, what does Paragraph 21: Notices provide information about?
Paragraph 21: Notices informs parties where to send official notices.
Who is tasked with drafting and editing Texas's promulgated contracts?
The Broker-Lawyer Committee creates promulgated contracts for Texas license holders.
What are brokers required to do regarding Consumer Protection Notice TREC No. CN 1-2?
The Consumer Protection Notice TREC No. CN 1-2 needs to be posted in each real estate office to inform consumers about filing a complaint, the real estate recovery funds held by TREC, and the way the consumer can contact TREC.
Which is the purpose of the Information About Brokerage Services form?
The Information About Brokerage Services notice informs clients of the types of license holders, a broker's minimum duties, and how a license holder can represent a party in a real estate transaction.
Which of these is a possible result of when zoning is changed and a property no longer qualifies for a previous exemption?
Rollback taxes can be assessed when zoning is changing and the property no longer qualifies for a previous exemption.
In which of these scenarios would it be correct to use the Residential Condominium Contract (Resale)?
The Residential Condominium Contract (Resale) is for homes where the land is not owned individually and the common areas are shared equally among the community's owners.
Which of these forms is least likely to be involved in the sale of unimproved property?
The Unimproved Property Contract would not be involved in the sale of a condo.
What should an agent do if asked to violate anti-discrimination laws by a client?
The agent should educate the seller about anti-discrimination laws and inform the seller they cannot make that promise.
Which of these must the broker maintain a copy of for three years following a sale?
The broker must maintain a copy of the signed Lead Based Paint Addendum for three years following the sale.
How long after receiving an Addendum for Property Subject to Mandatory Membership in an Owner's Association does a buyer have to terminate the contract?
The buyer has 3 days to terminate.
According to the promulgated contracts, rollback taxes assessed because the buyer changed the usage after closing will be settled how?
The buyer will be obligated to pay the rollback taxes.
According to the NAR Code of Ethics, unless the agent has written instructions stating otherwise, they must present all offers until:
The closing
Which of the following is TRUE regarding a contract to transfer real estate which contains no earnest money?
The contract is valid.
What determines which New Home Contract a license holder should use?
There are two versions of the New Home Contract: one for completed construction, and one for incomplete construction.
Which of these is NOT true about a Seller's Temporary Residential Lease?
There is an agreed-upon charge for overstaying a Seller's Temporary Residential Lease.
If a buyer is using VA financing, what will be part of the contract?
Third Party Financing Addendum for Credit Approval
Which is TRUE regarding buyer rebates?
Undisclosed buyer rebates are not legal.
Which of these is an example of a time when it is acceptable not to use a TREC promulgated form?
Unless authorized to practice law in the state of Texas, a broker cannot prepare and approve a form for an agent to use. The US government requires a different form to be used.
In a Texas real estate contract, what does an Addendum for Property Subject to Mandatory Membership allow a buyer to do?
A buyer may elect to terminate a contract through the Paragraph B1 of the Third Party Financing Addendum if they aren't provided with the appropriate subdivision information sheet.
A contract which courts cannot compel the parties to perform is:
A contract is not void until a court has ruled it void. If a contract has not been tested but violates the laws governing contracts, it is said to be unenforceable.
What is an express contract?
A contract that has a very specific offer and acceptance is a express contract.
Emily and Josh signed a real estate contract with each other. The contract is now fully executed. What does that mean that Josh and Emily have done?
A fully executed contract is one where both parties materially fulfilled the terms of the contract.
What happens when a homebuyer takes out a residential service contract on their newly-purchased home?
A residential service contract usually offers a home warranty to the buyer or seller of an existing home at the time of the sale or purchase of the property. The typical term of coverage for a home warranty is one year.
Why do townhouses require the One to Four Family Residential Contract instead of the Residential Condominium Contract?
A townhouse is treated like a house (because the owner owns the dwelling and the land beneath it) rather than a condo.
Which of these is an example of a unilateral contract?
A unilateral contract is an agreement made between two or more parties in which only one of those parties makes a promise or otherwise accepts an obligation.
Which of these is a technique license holders can employ to avoid mortgage fraud?
Documentation, disclosure, and double checking documents for accuracy are all good risk management techniques. Keeping earnest money in a personal account is NOT a risk management technique.
According to TREC rules, which of these must be delivered to the seller within three days of a contract's effective date?
Earnest money must be delivered to the seller (or their escrow agent) within three days of a contract's effective date.
Agent Larry has a client applying for a mortgage to purchase a home. His client is planning to claim some income they didn't actually make in an effort to qualify for a larger mortgage. They've disclosed this to Larry. What should he do in this situation to avoid committing mortgage fraud?
Larry needs to let his sponsoring broker know and withdraw from this transaction.
Which of these is NOT a protected class of people, according to Fair Lending Laws?
Laws prohibit lenders from discriminating against all of the same protected classes as the Fair Housing Act, with the addition of age, marital status, and receipt of public income.
What is special about the earnest money section (paragraph five) and the option money section (paragraph 23) in the TREC promulgated sales contract?
Only the earnest money and option money sections contain "time is of the essence" language in promulgated TREC contracts.
What is one thing that differentiates TREC from the Broker-Lawyer Committee?
TREC members are appointed by the governor only.
Which of these is NOT necessary for a contract to be binding and effective?
For an offer to become a contract, it must be in writing, it has to be signed by all parties with changes initialed, acceptance must be completed, and acceptance of the contract must be communicated to the other party. There is not a faxing or delivery requirement.
A Residential Real Property Affidavit Promulgated by the Texas Department of Insurance (T-47 Affidavit) must be furnished to the buyer _______________________.
When the seller provides the existing survey
When both parties mutually agree to terminate a contract, who provides the appropriate form?
While there is not a promulgated form for mutual termination, the title company can provide the parties with a form for each of them to sign for the release of contract that will address what will happen with the earnest money.