Prom Forms

A buyer has a signed document that would allow them to purchase a property within one year at an agreed-upon price. Which contract feature allows this type of agreement?

A contract with an option to buy contract

A ___ is actually the seller making a new offer to the buyer

A counteroffer is actually the seller making a new offer to the buyer

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

A new home builder

In the Addendum for Coastal area Property, the buyer is made aware that due to erosion, the amount of land they buy may change over time. It suggests that ______

A professional surveyor should be retained for verification

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

What is the difference between a title policy and a title commitment?

A title commitment is issued PRIOR TO closing to describe the items on the title policy which will be issued AFTER closing.

What are Statutory Tax Districts?

AKA Municipal Utility Districts (MUD) These are water and sewer providers that are not owned by the city.

Ad Valorem means

According to value

When dealing with a legal description like the King Ranch, you would probably have to attach an ___ to completely describe the property.

Addendum

This form is used when a seller wants to be released from further liability on a VA assumed loan, and they want their VA entitlement restored

Addendum For Release of Liability on Assumed Loan And/Or Restoration Of Seller's VA Entitlement

What is misrepresentation?

An error

How long does the owner's title policy stay in force?

As long as the buyers own the property

If a home is being leased back to the seller under the Seller's Temporary Residential Lease, when does the lease commence?

At closing and funding

What would an agent need to do when writing a legal description for a large ranch?

Attach an addendum to completely describe the property

This TREC committee drafts and revises contracts and promulgated forms for use by agents:

Broker-Lawyer Committee

Who signs the Notice to Prospective Buyer form?

Buyer

What happens if the seller does not leave personal property that was agreed to in writing?

Buyer has legal recourse for the seller's breach of contract

Earnest money funds are usually applied to what at closing?

Buyer's closing costs Down payment

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

Buyer's termination of contract

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

Executed

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.

How does a buyer determine if property is located in a flood plain?

FEMA flood map

The___ loan is most common because it allows the borrower to have a lower down payment

FHA 203(B)

What contract shows an area called the Ratification of Fee?

Farm and Ranch

The exceptions when a seller is NOT required to fill out the Seller's Disclosure Notice are when:

Foreclosure property is handled by an executor of an estate transfer is the result of a divorce a builder sells a new home for the first time transfer does not exceed 5% of the value of the property

What contingencies will be covered by the title insurance policy?

Forgery Confusion due to similar names Error in the records

most common amendment to the One to Four Family Residential Contract (Resale), is the

Form 39-8, Amendment to Contract

The collected funds collected from penalty violations from transfer fees will be deposited in the ___ ___ ___ ___ ___ ___.

General revenue fund of the state

What should the agent do with the Notice to Prospective Buyer form?

Give a copy to the buyer and retain the original in file

During a title search, there may be additional claims of ownership by whom?

Government entities Property Owners' Associations (POA) Contractors

What should the buyer know about condo rules prior to agreeing to a contract?

How restrictive they are

Possible example of rollback taxes:

If a builder bought an agricultural ranch and changed its use to residential

How does the Seller's Temporary Lease handle the tenant making improvements?

If the tenant is allowed to improve the property by the landlord, those improvements become the landlords.

Interstate Land Sales Disclosure Act

Income status

What act is designed to protect buyers from misrepresentations, fraud and abuse in the sale and/or lease of land?

Interstate Land Sales Disclosure Act

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

Who signs the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies addendum?

Neither the buyer or seller

What type of contract does not require a seller to provide a seller's disclosure notice?

New Home Contract (Completed Construction)

What is not discussed on the Information About Brokerage Services form (IABS)?

Non-agency

Which form addresses a contract for deed?

None available

What is the minimum amount of earnest money needed to make a contract valid?

None, earnest money is not a requirement of the sale

Which paragraph indicates that the chandeliers will be staying in the home?

Property - Improvements

Which paragraph is the same between the Farm and Ranch Contract, and the One to Four Family Residential Contract (Resale)?

Property Condition

What document contains important information about the lots and the subdivision and is required to be given to the buyer prior to signing of the purchase contract?

Property Report

Broker's fees should always be on a separate written agreement called the

Residential Real Estate Listing Agreement Exclusive Right to Sell.

In a Farm and Ranch Contract, what paragraph do you select information about a home warranty?

Residential Service Contract

When using the Seller's Temporary Lease, who is the tenant?

Seller

If the seller is exempt from filling out a Seller's Disclosure Notice what do they still have to do?

Seller is still required to make full disclosure about the property condition

The New Home Contract (Incomplete Construction) is most commonly used to purchase what type of property?

Spec house

___ ___ is used to put in items that have no other paragraph addressing them

Special provisions

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

Special provisions Agents like to try to modify this section to help their clients but it is a better idea to have the client consult with their attorney

What type of lease is considered a hunting lease?

Surface lease

When may a survey not be required?

Surveying is expensive so large acreage will cost a lot No lender involved Buyer is willing to pay cash

A ___ is used for the seller to disclose that no changes have been made on the property that could affect the survey.

T-47

Who promulgates contracts for real estate agents to use?

TREC

A buyer leases a property for a period of time and then exercises an option to buy. What is TREC's position regarding the agent's role in the option contract?

TREC prohibits real estate agents from getting involved

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

TRELA

According to the Buyer's Temporary Lease, who is responsible for all repairs during the lease period?

Tenant

What entity regulates the title industry?

Texas Department of Insurance

What group administers the Texas Real Estate License Act?

Texas Real Estate Commission

What form is used that says who must pay for any assessments mandated by the Condominium association?

The Residential Condominium Contract (Resale)

An agent's client is interested in a builder's new home. How can the agent protect their commission in completing the transaction?

The agent must register their client before showing the model home.

The following is information requested on the Subdivision Information, including Resale Certificate for Property Subject to Mandatory Membership in a Property Owners' Association:

The amount of special assessments The capital expenditures approved over the next year Unsatisfied judgments

On the New Home Contract (Completed Construction), what two amounts equal the sales price?

The cash portion plus the sum of all of the financing

What happens to the contract if one party receives the earnest money as liquidated damages?

The contract is terminated

At the time, the back-up contract becomes the primary contract, what is the effective date of a back-up contract according to the Addendum for "Back-Up" Contract

The date the buyer is notified that the first contract terminated

In a transaction that does not involve owner financing or cash, who typically requires a title policy?

The lender

For a short sale to go through, who must give approval?

The lender holding the current mortgage

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

Which of the following is required to be able to sue for a commission?

The listing agreement must be in writing

On the New Home Contract (Completed Construction) which paragraph is the same as on a One to Four Family Residential Contract (Resale)?

The paragraph dealing with the buyer and seller's legal names

An initial counteroffer would be best described as what?

The seller's offer to the buyer

How are buyers notified to obtain an abstract or a title policy?

There is a form to notify buyers to obtain an abstract or a title policy

Why does a Property Owners Association (POA) enforce deed restrictions?

To maintain the value of the homes

A court's primary objective when interpreting a contract is to:

ascertain and give effect to the intent of the parties as it is expressed in the contract

Voidable contract is

when a party to the contract can change their mind and exit the contract, or in the case of an incompetent party, a court may make the decision for the individual. can become voidable by mistake or error

Void contract is

"absence of", meaning the contract never existed invalid and completely without legal force or binding effect. It is also void if one of the parties is not competent, an essential element is missing in the document, or a request was made that cannot legally be accomplished

Mutual assent is also known as

"meeting of the minds"

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

0

Earnest money amount varies, but ___% of the sales price is usually adequate.

1-2

Any time an addendum is attached to a contract, the box referencing that addendum should be checked in paragraph ___ of the 1-4 Family Residential Contract (Resale).

22

Seller may terminate the contract by a notice to buyer within ___ days after expiration of the time for delivery, and the earnest money will be paid to Seller

7

Who issues the Condo Resale Certificate?

Condo Association

Which document requires the appropriate condominium association, upon written request, to issue a resale certificate disclosing information about the financial, physical, and legal condition of the condominium?

Condominium Resale Certificate

TREC's One to Four Family Residential Contract (Resale) does not include what kind of properties?

Condominiums

Which documents does TREC not make available?

Contract for deed Listing representation agreement Buyer/Tenant representation agreement

What is the definition of an executory contract?

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

The Third-Party Financing Addendum is to be used if the buyer is applying for multiple types of financing like ___, ___, ___, ___

Conventional, Texas Veterans, FHA Insured, VA Guaranteed, USDA Guaranteed and Reverse Mortgage

When using the Seller's Temporary Residential Lease, what rental rate should you place in paragraph 4?

Daily rate

Executory contracts do what?

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 the Texas Property Code as an executory contract

Which paragraph deals with the termination of the contract and responsibility of title company?

Demand

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

Document as a whole

Sales Price =

Down Payment plus the Loan Amount

As part of a loan, a lender may have a clause that keeps another person from assuming the loan. What is this clause called?

Due on sale

What clause in an insurance policy details an exemption from or a change in coverage?

Endorsement

Using the One to Four Family Residential Contract - (Resale), who is required to pay for the title insurance policy?

It is negotiable

In what type of transaction is the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies required to be used?

It is not required

When does the buyer pay the seller any agreed-upon option money when using the Addendum For "Back-Up" Contract?

It is not required since it is a back-up contract

If a buyer terminates a Buyer's Temporary Residential Lease prior to the closing date, what happens to the security deposit?

It is refunded to the buyer, less any itemized deductions for repairs

What is critical about a metes and bounds survey?

It must start and end at the point of beginning

What do Residential Service companies do?

It sells warranties to the buyers covering repairs of several listed items in the home like appliances, A/C, etc.

How many days does the seller have to deliver the disclosure notice to the buyer after the effective date?

It's negotiable

There may be some private transfer fees that will continue. One of those types involves fees that were created on or before___

January 31st, 2012

The pamphlet about Lead exposure is called Protect Your Family from what?

Lead in Your Home

Who is the mortgagee's title policy issued to?

Lender

Where is the TREC Contract Form number located on the form?

Lower right corner of each page

Why do brokers receive a fee from the Residential Service Companies?

Not because they sell the service, but because the licensees collect additional information for the company. This can include the brand and serial number of appliances and HVAC equipment

Private transfer fees are considered what?

Not binding or enforceable

What is the form called that should be used by the buyer to terminate the previously agreed One to Four Family contract for any reason?

Notice of Buyer's Termination of Contract

The ___ __ ___ ___ form is used to notify buyers to obtain an abstract or title policy

Notice to Prospective Buyer

The seller does not sign the ___ __ ___ ___ form. The buyer signs and you will give them a copy, then keep the original in the file in case it is needed for future reference

Notice to Prospective Buyer

What is the purpose of paragraph 6.D, in the One to Four Family Residential Contract (Resale)?

Objections

When is the rent due according to the Seller's Temporary Lease?

On the day of closing

What is Assignment?

One of the parties to a contract may choose to assign the contract to a third individual

Who signs the Notice of Buyer's Termination of Contract?

Only the buyer

What paragraph of Lead-Based Paint Addendum does the buyer make the choice of whether they will accept the condition or have an inspection within 10 days?

Paragraph C

Which paragraph in the Condominium Resale Certificate explains if there is a special assessment due on the unit?

Paragraph C

Which paragraph in the Condominium Resale Certificate elaborates on any capital expenditures approved by the association over the next year?

Paragraph E

Which paragraph in the Condominium Resale Certificate identifies the amount of unsatisfied judgements against the association?

Paragraph H

What is the best way to have a seller's name removed and a buyer's name added to the Property Owners Association's (POA's) records?

Pay a fee as specified in the Addendum for Property Subject to Mandatory Membership in a Property Owners Association

What is the purpose of a form called the Subdivision Information, Including Resale Certificate For Property Subject to Mandatory Membership In A Property Owners' Association?

To request information from the association to give to the buyer

Real estate commissions are negotiable. True or False?

True

When should a real estate agent give a customer the Information About Brokerage Services form (IABS)?

Upon the first substantial discussion about real estate

If the seller does not respond to buyer about the creditworthiness, the contract is considered ___

Valid

Most common reason for a New Home Contract (Incomplete Construction) form:

When a buyer wishes to purchase a home that is being built for speculation

In which of the following situations would a temporary lease be inappropriate?

When the buyer moves in six months prior to the closing date

When can a seller have another party assume their loan?

When the lender allows it

Is a Seller's Disclosure Notice required to be provided when the transfer is from an investor in real estate?

Yes

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

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

On the TREC's One to Four Family Residential Contract (Resale), if the seller in our scenario is not married, what do you put after their name?

place a comma and the words "single person."

TREC's main purpose is to ____

protect the public from unscrupulous licensees

If the seller wants to change one item of an offer, that would be a ___ of the entire offer

rejection

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

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

Mutual agreement

What can make a contract voidable?

Coercion, threats, false statements, undue influence, misrepresentation, improper persuasion and FRAUD could be reasons to make a contract voidable

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

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

What might be a reason for the necessity to change the closing date of a contract? The repairs will take longer than anticipated. The seller needs more time to find another home. The buyer cannot get out of his or her lease. All of the above.

All of the above.

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. All of the above.

All of the above.

Parole evidence does what?

Prevents a party to a written contract from presenting oral evidence that contradicts, or adds to, the written terms of the contract that appears to be whole.

Who authorizes a licensee to strike information from a contract?

Principal

What is Novation?

Replacement of a contract with a new one

How is the Broker-Lawyer committee structured?

There are 13 members on the Broker-Lawyer Committee. It is made up of: - 6 lawyers appointed by the president of the state bar of Texas - 6 real estate brokers appointed by the Texas Real Estate Commission - 1 public member who is appointed by the governor

Which paragraph mentions the extraterritorial jurisdiction?

Title Policy and Survey - Annexation

Valuable consideration VS. good consideration

Valuable consideration is something of value. It is usually cash, but it could be anything of monetary value. Good consideration is "love and affection."

What is the exception for an agent to use a promulgated form?

When he/she is acting as a principal, not an agent. They are only required to use promulgated forms when they are acting as a third party in a transaction If they were simply investing in a property, they would not need to use a promulgated form either

Is it an exception under the TRELA if a principal directs you to use a different form?

Yes

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

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

In addition to meeting all the five conditions for being valid, a contract must have terms that are ___ and ___

definite and certain

Fraud committed by either party in the contract could ___ the contract

discharge

If a seller pays for both the ___ and the ___, the seller does have the right to select the title company. If this is not the case, then it is negotiable

owner's policy the buyer's title insurance policy

Why is a title commitment is necessary?

to disclose to a buyer what the title policy will show once this transaction closes, and the new owner's title policy will be issued

Main difference between void and voidable

Void contract is not legally valid or enforceable at any point. A voidable contract can be legal and enforceable depending on how the contract is used.

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

Discharge meaning:

to release, liberate, annul, or unburden Yet another way a discharge of contract could take place would be if an item in the contract could not be accomplished legally.

A unenforceable contract is

when it goes against the Statutes of Fraud. This means that one party may be in default, but because of the nature of the agreement, the damaged party would not have the ability to sue the other party in court.

When was TRELA written and how did representation broker/client representation work back then?

1939. At that time, salespeople only represented the owner and never represented the buyer.

SELLER'S DISCLOSURE OF LEAD-BASED PAINT AND LEAD-BASED PAINT HAZARDS requires a pamphlet be provided to the buyers concerning lead-based paint if the property was built prior to ___. More than ___% of houses used lead-based paint prior to ___.

1978, 80

When is the only time agents are allowed to strike information from a promulgated contract form?

Only at the request of the principal to the transaction.

The commission can't prohibit using exchange or lease in a real property a contract form that is 1) prepared by the property owner, or 2) _____

Prepared by an attorney and required by the property owner

What does promulgated mean?

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.

If the buyer, now the owner, does not pay the mandatory membership in the ___, then the ___ has the right to set a lien against the property, and eventually foreclose on the property.

Property Owner's Association

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

Real Estate Agent

Who provides an abstract of title, or a title insurance policy?

Seller

How many days does the buyer's agent have to deliver the termination option check to the seller or agent?

3 days

How long are written and oral statutes of limitations?

4 years

Paragraph ___ of the One to Four Family Residential Contract (Resale) is used most often when there is a VA or FHA loan being used in a transaction

5

If the seller fails to make repairs that were agreed to, how many days does the buyer extend the closing date?

5 days

How many days does the buyer have to terminate the contract after receiving the seller's disclosure, if it wasn't provided on the effective date?

7 days

Paragraph ___ of the Amendment to Contract in the 1-4 Family Residential Contract (Resale), exists to make changes to the Third Party Financing Addendum, allowing the buyer a longer period of time before closing.

8

Paragraph ___ of the One to Four Family Residential Contract (Resale) is used to add or adjust the Special Provisions paragraph

9

A temporary lease is used anytime a buyer moves in early, or a seller stays in possession after closing. The temporary lease should only be used with tenancies of ___. If a seller stays in the property longer than they should, it creates a tenancy at sufferance relationship.

90 days or less

___ cannot be given to buyers until closing nor before funding, per the POSSESSION paragraph.

Keys

Agents are not allowed to give what to their clients?

Legal advice or opinions as to the validity of a title

What common forms does TREC not create?

Listing agreements and buyer rep agreements

What type of contract dispute results in going to court and usually involves attorneys and research? Litigation Mediation Arbitration Sublimation

Litigation

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?

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

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

Which paragraph indicates the possibility of the buyer assuming the seller's existing loan?

Sales Price - Loan assumption Addendum

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

Single-Family A duplex Triplex Fourplex

What is Rescission?

Where the contract is completely canceled and the parties restored to their position before the contract was entered into. Rescission is only available if the non-mistaken party knows or should have known about the unilateral mistake

If an addendum is not on the list, then it should be:

Written into the line that says "Other" and that box should be checked.

The ___ must tell the buyer to have a title policy. Or, if the buyer insists on a history of title abstract, the ___ must tell the buyer that the abstract will be examined by an attorney.

agent, agent

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. If there is an estate with 12 heirs, for example, then all 12 heirs must agree.

Recording Acts do what?

require that any claim, interest, or ownership in real estate be placed in the public records in the county where the property is located

If the seller indicates that they plan to take an item in the house with them, you should:

require that they remove it before a buyer previews the house

Statute of Frauds does what?

requires that all documents pertaining to the transfer of real estate from one person to another must be in writing to be enforceable. This includes mortgages.