Texas Promulgated Contract Forms

Void translates as

"absence of", meaning the contract never existed.

Suppose a buyer was willing to offer a seller $300,000 on a property with a first lien of $215,000 and a second lien of $70,000, with $15,000 as a down payment. What would the licensee put in the sum of the financing paragraph of the One to Four Family Residential Contract (Resale)?

$285,000 215,000 + 70,000 = 285,000

Which of the following types of sellers would most likely use a contract prepared by an attorney?

A new home builder

To be an acceptable listing contract, TREC requires that the listing form contains what items?

A provision informing the parties to the contract that commissions are negotiable

How is the effective date of the contract determined?

After both parties have signed/initialed the contract and all parties have been notified of such

What are the four basic elements of a contract?

Agreement Competency Consideration Legal objective

Alicia is set to close on her new home in three days, but today she received a phone call from her agent stating that the lender needs to push closing back seven days. What, if any, action needs to be done?

Alicia's agent should submit an "Amendment to Contract" with the new closing date to the seller's agent

After a contract has been agreed upon by both parties and a problem arises that needs the contract to be changed, the agent of the client that wants the contract to be adjusted will submit the to the other agent?

Amendment

What is misrepresentation?

An error

What is it called when someone listens to both sides of the situation and makes a decision?

Arbitration

When does a purchase agreement become binding if both parties have signed and both parties have been notified?

At that time

In completing a sales contract, the sale price should equal what?

Both the down payment and the loan amount are added together

What is it called when two or more real estate companies refuse, as a group, to show and sell another real estate companies' listings?

Boycotting

Which group has the task to draft and revise contracts and forms for use by agents?

Broker-Lawyer Committee

Which item cannot be changed or modified by completing the Amendment form?

Brokerage fee (commission)

What form is used when the buyer wants to cancel the contract?

Buyer's termination of contract

Under the Texas Real Estate License Act (TRELA), a real estate agent will not be in violation of practicing law without a license if they do what?

Fills in the blanks on a standardized contract

When there is a dispute in a written contract the judge will use what is called the

Four Corners Doctrine. This means that the interpretation of any disputed clause will be influenced by the document as a whole.

Acceptance must be absolute and must be entered into freely and voluntarily. The contract cannot contain:

Misrepresentation - an error Fraud - intentional misrepresentation Duress - use of force Menace - threat of violence Undue Influence - use of power

What are some actions that would be considered practicing law without a license?

Modifying a 2012 TREC promulgated contract to fit the buyer's current situation Giving advice about the legal consequences of the purchase Offering a client an opinion regarding the validity of the title

How many amendments are allowed on a valid contract?

Multiple

What is it called when all terms in a contract are agreed to by all the parties of the contract?

Mutual Agreement

What is another term for "rewritten"?

Reformation

If a seller changes one item on an offer, what does that offer become?

Rejection of the entire offer

There are 13 members on the Broker-Lawyer Committee. It is made up of:

Six lawyers appointed by the president of the state bar of Texas Six real estate brokers appointed by the Texas Real Estate Commission One public member who is appointed by the governor

Consideration is also known as what?

Something in exchange for something else

Which paragraph in the One to Four Family Residential Contract (Resale), typically creates the potential for legal problems for an agent?

Special provisions

If a party feels they have been wronged, what law sets the length of time they are allowed to bring a civil lawsuit?

Statute of Limitations

What can TREC do if a real estate agent fails to use a required contract form?

Suspend the agent's license

What repairs might be noted on the Texas Real Estate Commission Amendment to Contract?

Swimming pool has missing tiles that are to be replaced. The sink in the main bathroom is cracked and is to be replaced. Fix leaky pipe in the laundry room.

Who promulgates contracts for real estate agents to use?

TREC

All of the following actions would be considered practicing law without a license except which one?

Tell the client known facts about the property that might affect the title

Executory contracts defer material action by either party into the future. Any contract for deed, lease option, or purchase option longer than 180 days is defined by

Texas Property Code as an executory contract.

What group administers the Texas Real Estate License Act?

Texas Real Estate Commission

What is the best solution to solve a situation when the seller and buyer agree to alter a binding One to Four Family Residential Contract (Resale)?

The "Amendment" must be completed and signed by both parties

Who is responsible for making sure all applicable addenda have been included with the contract?

The client's agent

Which of the following is an exception to an agent using a TREC promulgated form?

The form is prepared and required by the property owner

How can an agent determine the terms of the buyer's loan when completing the Third Party Financing Addendum?

The lender will provide this information after negotiations with the buyer

TREC's main purpose is to protect the public from

Unscrupulous licensees.

What is duress?

Use of force

Fraud in a contract makes it what?

Voidable

At what point does an offer become a contract?

When all parties have signed/initialed the contracts and both parties have been notified

One to Four Family in One to Four Family Residential Contract (Resale) means that this contract cannot be used for any transaction over

four families, or for apartment complexes with hundreds of families.

A statute of limitations is a law that

provides the length of time a person is allowed to bring a civil lawsuit, like a personal lawsuit or how long the state has to prosecute someone for committing a crime.

If a seller pays for both the owner's policy and the buyer's title insurance policy, the seller does have the right to select the

title company

Price fixing is when

two or more real estate brokers conspire together to charge the same commissions.

There are two types of consideration:

valuable consideration - Valuable consideration is something of value. good consideration - Good consideration is "love and affection."

Which of the following statements best defines "promulgated"?

A form that has been made public and its use mandated

What are some things you can do to avoid common contract mistakes?

1) Keep the contract neat 2) Fill in all blanks correctly 3) Use full names for the buyer/seller 4) Double-check all the numbers, figures and dates. 5) Be sure their clients receive a copy of everything signed. 6) Not accept poorly written contracts from other agents.

How many total members are on the Broker-Lawyer Committee?

13

What is the legal age in Texas to enter into a valid, binding contract?

18

What is the minimum age a person must have attained to be of legal age in Texas?

18

What determines whether someone is a competent party?

18 years old Mentally competent Cannot be temporary incompetent

In what year was the TRELA written?

1939 at this time agents only represented the seller never the buyer.

How long is the Statute of Limitations for a written contract in Texas?

4 Years

In Texas, both written and oral contracts have a statute of limitations of

4 Years

To make a valid contract, there must be four elements, including Agreement, Competent Parties and Legal objective. Which one is missing?

Consideration

What are some examples of discharging a contract?

Contract could not be accomplished legally, Fraud, Some action of the law

What is the definition of an executory contract?

Contract for deed, lease option, or purchase option longer than 180 days

What is contract rescission?

Contract is completely canceled

What does the Four Corners Doctrine direct a judge to look at?

Document as a whole

What type of contract is it when two parties agree to and then sign it?

Executed

If both parties have signed and initialed contracts agreeing to each of the details within offers and counteroffers, and all parties have been notified, that it is what?

Executory contract or Executed agreement.

What damages could a seller possibly claim if the buyer is in breach of contract?

Loss of marketing time Any fees actually paid Mental duress

What is the maximum amount of commission allowed by law?

No limit

What legal status does a void contract have?

None. A contract that never existed.

What is it called when two or more real estate companies work together to conspire to charge the same commission?

Price Fixing

Who authorizes a licensee to strike information from a contract?

Principal to the transaction

What is the primary purpose of TREC?

Protect the public

What is the main law that governs the real estate industry?

Real Estate License Act

What is probably the best action a seller can take if they want to take a ceiling fan with them prior to closing?

Remove any item prior to any showings

What is another term for "cancellation"?

Rescission

Which of the following forms are NOT promulgated by TREC?

Residential Listing agreement

The TREC One to Four Family Residential Contract (Resale) should be used in which of the following transactions?

SIngle-Family A duplex Triplex Fourplex

The Down Payment plus the Loan Amount should always equal the?

Sales price.

If your client is not married, what do you write after their name on the contract?

Single Person

Who fills out the Seller's Disclosure Notice?

The owner/Seller

An initial counteroffer would be best described as what?

The seller's offer to the buyer

A contract is valid when all of these five conditions are met:

The written agreement is legal, the parties to the contract have a legal right to enter the contract Every item is completely agreed to The buyer and seller are sane and of legal age There is nothing in the document that is illegal or against public policy, the contract is for legal purposes All of the applicable addenda to a contract are included in the document

TREC establishes contracts for agents to use and gives each new document a

Unique number

Licensees are or are not allowed to fill in the blanks of a promulgated contract form without fear of injuring the customer or client?

They are allowed

What is a court's primary objective when interpreting a contract?

To ascertain and give effect to the intent of the parties

When can an agent use their own forms in a transaction?

When they are buying properties for themselves

Once a contract is signed, how many days are there for automatic rescission?

Zero 0

Boycotting is the

active elimination of a third person or group from participating in free commerce. In a real estate situation, it would be when two or more real estate companies refuse, as a group, to show and sell another real estate companies' listings. Unfair advantage prohibited by TRELA

Maria, a licensed real estate professional, is working with Juan and Augustina, who are buyers. Juan wants Maria's opinion on whether or not she thinks the title is valid. What should Maria do?

advise Juan to call the title company or his favorite attorney for this type of advice

Mutual agreement is an agreement to

all the terms by all the parties of a contract. If one term cannot be agreed to, then the entire offer never becomes a contract. It is necessary for courts to effectively interpret contracts.

Another way a discharge of contract could take place would be if?

an item in the contract could not be accomplished legally.

Licensees are allowed to strike information from a promulgated contract form only when?

at the request of the principal to the transaction.

When two parties agree to purchase and sell a real property, there are no days for

automatic rescission.

One item that cannot be changed by using an amendment is the?

brokerage fee, also called a commission. This should already have been determined in the listing agreement between the seller and the listing broker.

The commission may suspend or revoke a license issued under this chapter or take other disciplinary action authorized by this chapter if the license holder fails to use a

contract form required by the commission under Section 1101.155

The purpose of the Broker-Lawyer Committee is to

draft and revise contracts and forms for use by agents.

When two parties agree to a contract and sign it, then that contract is said to be

executed. That is, the negotiations of the contract have been completed.

TREC has not created some forms commonly used by licensees. These include:

listing agreements & buyer representation agreements that create relationships between clients and brokers.

Texas Real Estate License Act (TRELA) is the?

main law that governs the real estate industry in Texas.

Coercion, threats, false statements, undue influence, misrepresentation, improper persuasion and fraud could be reasons to

make a contract voidable by the party who feels they were the victim of unfairness.

Consideration is defined as

something in exchange for something else. It is a essential element for a valid contract

Promulgated means

that the form was formally made public or created and mandated by TREC, and is to be used by licensees for the specific purpose intended, unless there is an exception of when you do not have to use the form.

The Texas Real Estate License Act was formerly known as

the Real Estate Dealer's License Act.