Promulgated contract forms CSRE

Steering

Channeling prospective buyers or tenants to particular neighborhoods based upon their race, religion, national origin.

Fair housing terminology and prohibited acts

Civil rights act of 1866- prohibited discrimination in housing based on race or color. Civil rights act of 1968- prohibits discrimination based on race, religion, and national origin. Prohibited acts: refusing to sell or rent to deal or negotiate with any person. Discriminating in the terms or conditions for buying or renting. Discriminating by advertising that housing is available only to persons of a certain race, color, religion, sex, or national origin, those who are not handicapped, or adults. Denying availability of a property, when it is available. Steering or blockbusting.

Requirements of a Valid Contract

Competent parties, offer an acceptance, legal purpose, in writing, consideration

Paragraph 23: use and timing

Consult an attorney: TREC rules prohibit real estate license holders from giving legal advice. When the last party signs and acceptance has been communicated to the other party's agent.

Farm and ranch contract - crops, accessories, improvements - definitions

Crops - paragraph 2(d) - Even though Seller has the right to harvest right up to the delivery of pos- session, some Sellers may want to have the right to harvest after closing. Buyer and Seller must agree on how Seller will leave the land, including who will shred the stalks, plow the ground, and other issues. Accessories- paragraph 2 (c) - Describes accessories, which, while not necessarily permanently installed or built-in, are commonly conveyed to Buyer in the sale. Accessories include the typical residential items. Farm and ranch accessories to be conveyed are indicated by checking the appropriate boxes Improvements - paragraph 2 (b) - This includes the improvements, which are all man-made additions to the land, including the house, garage, and other permanently installed and built-in items. Included in the improvements are the usual residential improvements and specific farm and ranch improvements

Use of the third-party financing addendum

Is through third-party lenders such as banks, mortgage companies, and other lending institutions. Government loans are insured or guaranteed by the US government made by lenders. A conventional loan is best described as any loan that is not a government loan.

Features of the Lead Based Paint disclosure form

Lead warning statement, sellers disclosure, buyers rights, buyers acknowledgment, brokers acknowledgment, certification of accuracy.

Loan origination vs assumption

Loan assumption - A loan assumption occurs when a buyer assumes and agrees to pay the seller's existing mortgage.

Mediation vs arbitration or lawsuit

Mediation - It is the policy of the State of Texas to encourage resolution of disputes through alternative dispute resolution procedures such as mediation. Subject to applicable law, any dispute between Seller and Buyer related to this contract which is not resolved through informal discussion will be submitted to a mutually acceptable mediation service or provider. The parties to the mediation shall bear the mediation costs equally Arbitration -

IABS - required uses

Must be provided when the first substantive discussion of a real estate transaction takes place. provide this info before doing a listing presentation for a seller and before discussing properties, needs, and wants. purpose; so that buyers/sellers may be better informed about agency relationships.

Loan assumption

Occurs when a buyer assumes and agrees to pay the sellers existing mortgage.

TREC contract forms

One-to-four family contract(resale) New home contract(incomplete construction) New home contract(completed construction) Unimproved property contract Residential condominium contract(resale) Farm and Ranch contract

Addressing environmental concerns - TREC forms

PARAGRAPH 7.G. ENVIRONMENTAL MATTERS: This is a notice to Buyer that, if Buyer is concerned about environmental matters affecting the property, a TREC-promulgated environmental Addendum is available. The addendum allows Buyer, at Buyer's expense, to perform environmental assessments on the property

Accessories in the real estate contract - definition, features, disposition

Paragraph 2 (c) - describes accessories, which, while not necessarily permanently installed or built-in, are commonly conveyed to the buyer in the sale

The purpose and use of Paragraph 6

Paragraph 6: title policy and survey, The owners title policy can be paid for by either buy or seller.

The proration process

Proration is the process of dividing ongoing expenses between the buyer and the seller at closing. Items typically prorated: taxes for the current year, interest, maintenance fees, assessments, dues and rent will be prorated through the closing date.

PARAGRAPH 8.A. BROKER OR SALES AGENT DISCLOSURE

States The license holder with a familial relationship with a party to the transaction must disclose this information to other parties before entering into a contract.

Common amendments to the original contract

• Changes to the closing date • Changes to the sales price, down payment and/or amount financed • Repairs that the seller agrees to perform • Removal or waiver of contingencies

Stigmatized Properties

-psychological stigma; house is haunted, murder, death, infectious disease. -physical stigma; results from environmental or natural conditions near or on property. previous flood, foundation, landfill, power plant -license holder IS NOT required to disclose AIDS-HIV, or death on property , stigma relating to material defect in property MUST be disclosed. A property in the vicinity of a sex offender can be included in stigmatized property

Requirements of a valid option

.The applicable blanks in Paragraphs 5.A. and 5.B. must be filled in. .Buyer must pay the option fee within three days after the effective date of the contract. .Buyer must deliver the option fee to the escrow agent.

Offers and the communication of offers

A license holder has a duty to communicate or submit offers to his or her client. The communication or submission of an offer should be done promptly because the license holder's duty is to keep the principal or client informed at all times of material information. There is no specific amount of time within which the license holder must present or submit an offer Texas recognizes the legal doctrine of imputed notice. Under this concept, an offer is presumed to have been delivered to the principal when it is delivered to the agent.

The unlawful practice of law, examples

A license holder should never give an opinion as to the sufficiency of title. License holders should never discourage a party to a transaction from seeking the advice of an attorney. When a seller is the occupied property after closing, the sellers temporary lease should be used(only two options exist in paragraph 10.A) Failure to enter an effective date possibly leaves the performance of parties in question, all contracts must have an effective date. Failure to collect and deliver the option fee within three days after the effective date of the contract means that the buyer does not have a valid option.

Paragraph 20 federal tax requirements

A seller who has no social security card or green card is considered a foreign person. The escrow agent will withhold from the sales proceeds an amount sufficient to comply with applicable tax law and deliver the same to the IRS.

When does an offer become a contract

An offer becomes a binding contract when all parties sign it, and the acceptance is communicated to the offering party.

Blockbusting

Any attempt to induce panic selling in the neighborhood for financial gain.

Paragraph 5: authorization to release information

Authorizes lenders to disclose and/or furnish various pieces of information related to financing approval status and/or closing disclosures

TREC rules regarding the buyer's use of inspectors

Buyer may have the property inspected by inspector selected by the buyer and licensed by TREC

TREC promulgated forms and leases

Buyers temporary residential lease- for use when the buyer occupies the property for no more than 90 days prior to closing Sellers temporary residential lease- for use when the seller occupies the property for no more than 90 days after closing

TREC Form RSC-3

Disclosure of relationship with residential service company, to disclose to a party to a RE transaction in which the license holder represents one or both of the parties . form should be retained in the transaction records maintained by the broker as evidence the disclosure was provided

Earnest money - definition, purpose, amount

Earnest money is a deposit paid up front by the buyer to show that he or she is serious in his or her intent. There is no standard for the dollar amount of earnest money, but it is often in the range of 1% of the purchase price

Parties to the contract 18A

Escrow, The escrow agent is not a party to the contract and has no liability for the performance of either party. Escrow services are performed when some thing of value such as a deed, money, or an instrument, is put into custody of a third person to be retained until the occurrence of a contingency or performance contract.

What are good funds?

Good funds is described as a cashier's check or wire transfer. Title companies may accept a small personal check from a Buyer. Check with the title company for their policy.

Lead Paint Disclosure

If you are about to buy a residential dwelling that is built before 1978, property made present to the buyer exposure to lead found in paint

Closing cost or settlement expenses

Sellers expenses: existing liens, including payment penalties and recording fees; release of sellers loan liability; tech statements or certificates; preparation of deed; 1/2 of escrow fee; and other expenses paid for by the seller under this contract. Buyers expenses: appraisal fees; loan application fees; origination charges; credit reports; preparation of loan documents; interest on the notes from the date of disbursement to one month prior to dates of first monthly payments; recording fees; copy of easements and restrictions; loan title policy with the Dorsman's required by the lender; loan related inspected fees; photos; amortization Schedules; 1/2 of escrow fee; all prepaid items, including required premiums for food and hazard insurance, reserve deposit for insurance, add Viral him taxes and special governmental assessment; final compliance inspection; courier fee; repair inspection; underwriting fee; wire transfer fee; Expenses incident to any loan; private mortgage insurance premium lender; and other expenses payable by the buyer under this contract.

Short sale vs foreclosure vs Deed in lieu of foreclosure

Short sale - A short sale is when the lender forgives a portion of or lowers the loan amount in order for the property to be sold at market value Foreclosure - the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments. Deed in lieu of foreclosure - The borrower simply transfers the property back to the lender and the lender cancels the debt. This is sometimes referred to as a "friendly foreclosure" or a "voluntary repossession." It can avoid lawsuits and bankruptcy.

Imputed notice - definition/example

Texas recognizes the legal doctrine of imputed notice. Under this concept, an offer is presumed to have been delivered to the principal when it is delivered to the agent. A license holder who fails to communicate an offer in a timely manner may be disci- plined by TREC.

A party used to conceal the identity of a buyer

The Straw Buyer is a person who is used to buy property in order to conceal the actual owner.

T-47 Affidavit

The T-47 must be signed in the presence of a notary. If the use of an existing survey is anticipated, listing agents should have the T-47 completed when the listing is taken. The contract states that both the T-47 and the survey must be delivered within the negotiated number of days.

Broker-lawyer committee duties & purpose

The Texas Real Estate Broker-Lawyer Committee was created to draft and revise contract forms capable of standardization for use by real estate license holders. These contract forms expedite real estate transactions and reduce controversies while containing safeguards adequate to protect the interest of the principals to the transaction. The Broker-Lawyer committee has 13 members. Six members are licensed brokers appointed by TREC, and six members are licensed attorneys appointed by the president of the State Bar. One public member is appointed by the governor.

Requirements for buyer approval according to the TREC third-party financing addendum

The buyer agrees to apply for financing promptly and to make a good faith effort to obtain credit approval..

The effective date of the contract

The effective date is the date that acceptance was communicated to the offering party

Paragraph 3.B. - contents

The sum of all financing from all sources. Insert only the amount being financed.

Number of days for the title company to deliver the title commitment

The title company has 20 days from the date that they receive the contract to furnish a commitment to the buyer for title insurance. This paragraph also provides for an automatic extension of the delivery period for up to 15 days or 3 days prior to closing if the commitment cannot be delivered within the 20 days allowed.

Required used of TREC forms and exceptions to required use

The use of a form by license holders, which was prepared and approved by a licensed Texas attorney for the particular transaction involved or a form prepared by the property owner or prepared by an attorney and required by the property owner, is also authorized. License holders should not alter the pre-printed text of a promulgated form.

Purpose of the notice to prospective buyer form

This notice complies with the provision of the Texas Real Estate License Act that requires that license holders advise buyers to have an abstract examined or obtain title insurance. All of the TREC-pro- mulgated contracts have this notice in Paragraph 6 in the Title Notices section. This form could be used when a TREC contract is not being used or could be used anytime that the broker wants the buyer to acknowledge receipt of this advice.

Types of contracts- valid, void, voidable, unenforceable, executory,

Valid contract- is one that meets all of the requirements of law Void contract- is invalid from the beginning and does not affect the parties. A contract to perform an illegal act is void contract. Voidable contract- is one that cannot be enforced against one or more of the parties. Unenforceable contract- is one that cannot be enforced due to some flaw in the contract, passage of time, or other issues that makes enforceable impossible. Executory contract- is defined as a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed.

Types of contracts and their features - valid, void, voidable, unenforceable

Valid- One that meets all of the requirements of law Void- invalid from the beginning and has no affect on the parties Voidable- One that cannot be enforced against one or more of the parties Unenforceable- cannot be enforced due to some flaw in the contract, passage of time, or other issues that make enforcement impossible

Default - Definition of Default

When a party to a contract fails to perform under the contract, they are in default. Failure to perform is also commonly referred to as a breach of contract.

Assignment and when it's possible/not possible

When possible - The assignment of a contract transfers all of the rights related to the contract to another party known as an assignee. The assignee assumes primary liability for performance under the contracts, and the assignor, unless released, remains secondarily liable. Not possible - Contracts for personal services are not assignable. Therefore, a buyer's representation agreement or listing agreement would not be assignable. Mortgages generally have a clause that prohibits assignment (assumption) without prior approval. Purchase contracts are not assignable if they are contingent upon the buyer obtaining credit or some other contingency that makes assignment impossible. Unless otherwise prohibited, leases are assignable, and the new lessee is bound to the original terms of the lease.

Paragraph 5B - features, number of days

While there is no mention of inspections in this paragraph, the option period allows for inspections that Buyer may want. Please note, any notices under this paragraph are required to be provided by 5 p.m. on the specified date.

The brokers responsibility in handling multiple offers on a single property

a broker receives more than one offer, all offers must be presented to the seller unless instructed otherwise by the seller. No offer has a priority of presentation over another. The broker should sub- mit all offers promptly.

Possible responses or actions upon the receipt of an offer

do nothing; reject; accept; counteroffer