Promulgated Contracts
When a sales contract doesn't cover the terms needed by the parties, which of the following actions is a licensee allowed to take?
Add a standard addendum using standard language.
Amis is selling his condo. The closing is two weeks away, when a fire occurs and damages the unit. Which of the following is true?
Amis must return the unit to its previous condition as soon as possible, and before the closing.
A situation in which the parties involved in a contract dispute present their argument to an unbiased third party, who then makes a final decision, is called ______________________.
Arbitration
Mary agreed to buy her mother's house when her mother planned to move to a senior living community. They signed a purchase agreement, but when Mary had to move because of work, she signed her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario?
Assignment
Any parties who prevail in a legal proceeding regarding the TREC One To Four Family Residential Contract (Resale) are entitled to recover their ______ as well as the costs of the legal proceeding.
Attorney's fees
Which party to the contract will provide the sales price and financing to be used in the transaction?
Buyer
If the Texas noteholder fails to consent to the assumption of the loan, either party may terminate the contract by notice to the other party and the ______ will be refunded to the buyer.
Earnest money
Which of these becomes liquidated damages when a contract is terminated as a result of default?
Earnest money
What's the correct way to use an amendment to a contract?
To change the original contract's terms
The New Home Contract (Incomplete Construction) doesn't contain ______ in the property section, which is a key difference between this contract and the One to Four Family Residential Contract.
Improvements, accessories, or exclusions
Megan, a seller, tells the party buying her home that the property will soon be part of the public water system. She makes this claim based on erroneous information supplied to her by the city. The buyer relies upon this information and moves forward with the purchase of the home. This is an example of ______.
Innocent misrepresentation
Which of the following is a true statement about the Special Provisions section of the TREC One To Four Family Residential Contract (Resale)?
It may not be used to cover a situation for which a promulgated form exists.
Which of the following is true regarding the earnest money check in Texas?
It must be written to the escrow agent or title company and held by the buyers' broker until the contract is finalized.
Which of the following is true about the resale certificate that the condominium owners association should prepare?
It must have been prepared within the last three months.
Jesse received two offers for a listing. One is a lowball offer and one is for the listing price. Which one of the following statements is true?
Jesse must submit both offers to his seller client.
Justin Time is a business name for a Texas general partnership between Justin Leung and Anne Claren. How should a licensee identify their general partnership as a party to a sales contract?
Justin Time, a Texas partnership
Licensees are required to relate all information that's material to the transaction to their clients. How does this relate to presenting offers to the seller?
Licensees must present and explain all offers.
Under the statute of ______, if legal remedy is sought against a person, the pursuer must bring a court action within a specified period of time.
Limitations
A legally competent party means that an individual has the capacity, legally and ______, to enter into a contract.
Mentally
Mick and Shelby built their new home on 20 acres of land, which was formerly used for agricultural purposes. They love the house, but they've just been hit with a huge rollback tax assessment that they weren't expecting. Which of the following is true?
Mick and Shelby are responsible for paying the rollback taxes.
Texas licensee Krystal told her buyers, "Unfortunately, you checked 'as is' on the TREC One To Four Family Residential Contract (Resale). There's really no point in an inspection now." Is this true?
No, because repairs can still be negotiated.
Which of the following statements regarding sales contracts is true?
Once the sales contract is fully executed by all parties, it can no longer be changed.
When does partial performance of a contract occur?
One or both parties have completed only a portion of the terms agreed to in the contract.
Which of the following transactions requires the use of a promulgated form?
When negotiating a contract for the sale of interest in real property
What's an option period as it's used in a TREC residential resale contract?
When the buyer who has paid an option fee can terminate the contract for any reason
What paragraph of the TREC One to Four Family Residential Contract (Resale) contains the promise to sell and the promise to purchase, known as the consideration, of the contract?
Parties
Under the New Home Contract (Incomplete Construction), assessments for rollback taxes are the responsibility of ______.
The seller
Which of the following statements about the title commitment is true?
The title commitment is the title insurance company's promise to issue a title insurance policy.
Nancy is buying unimproved land. Which of the following is true?
There are many pitfalls with purchasing unimproved land.
Melanie is helping her clients, Steve and Monica, who are purchasing a brand new home. Steve and Monica love their home and its half-acre of property, but wish they'd had a chance to pick out the flooring. Who uses orange shag carpeting anymore? What form should Melanie use to write up Steve and Monica's offer?
New Home Contract (Completed Construction)
Under a residential service contract, if anything goes wrong with covered appliances or systems due to ______ during the year that's covered, the issuer will provide repair or replacement.
Normal wear and tear
When the parties couldn't mutually decide how to disperse the earnest money after a contract terminated, buyer Kevin sent the escrow agent a written request to return the earnest money to him. What should the escrow agent do next?
Send a copy of Kevin's request to the seller
Sheila, a buyer, didn't receive seller's disclosure notices until she went in to sign her closing paperwork. If Sheila terminates now, ______.
She will receive her earnest money back
How long is a member of TREC's term?
Six years
Reginald Barker and Stacey Lee are married and purchasing a property together. Which of the following is the best way to identify them as parties on a sales contract?
Stacey Lee and husband Reginald Barker
Appraisal fees, loan application fees, and inspection fees are typically covered by _______________ in the transaction.
The buyer
According to the TREC One to Four Family Residential Contract (Resale), what recourse does a buyer have if a seller is unable to complete agreed-upon repairs and treatments prior to closing?
The buyer can extend the closing date up to five days to allow the seller to complete the repairs.
In Texas, a potential consequence for the unauthorized practice of law is ______.
The revocation or suspension of one's real estate license
When a casualty loss occurs in a condominium unit after an offer to purchase has been made and accepted, which of the following is true?
The seller must return the unit to its previous condition as soon as possible, and before the closing.
What is a representation, according to the TREC sales contract in Texas?
The statements included throughout the sales contract
What is one of the exceptions to the rules requiring the use of TREC-promulgated forms?
A property owner may prepare an alternate form.
What is a rollback tax?
A tax assessed when agricultural property changes use
How many days after receiving the Texas buyer's list of objections to defects, exceptions, or encumbrances to title does the seller have to cure the objections under the TREC One to Four Family Residential Contract (Resale)?
15 days
Kimmy's buyer clients want the seller to leave behind the workbench that is in the basement—something that was not originally identified as an inclusion in the original Texas sales contract. Which of the following will Kimmy use to indicate the change?
A TREC-promulgated addendum form
You're helping your buyer client complete a Buyer's Temporary Residential Lease form for a Texas real estate transaction. Closing is set for January 5. Which of the following lease terms falls outside the maximum term allowed under the provisions of the Buyer's Temporary Residential Lease?
A lease beginning October 2
Any addenda to the contract must be included with the TREC One To Four Family Residential Contract (Resale) documents and ______.
Checked off in the Agreement of Parties section of that contract
The property section of the One to Four Family Residential Contract references the land's lot and block description. On the Residential Condominium Contract (Resale), what's referenced instead of lot and block?
Condominium unit, building, and condominium project name
For which of the following homes should the New Home Contract (Completed Construction) be used?
Harvey is purchasing a home that was recently built.
Your buyer needs to lease the Texas property he's purchasing for six months before he can close. You notice that the Buyer's Temporary Residential Lease allows a term of up to 90 days. What should you do?
Suggest that your client have an attorney prepare the temporary lease.
Koby is a Texas seller who has a recent property survey that he would like to provide to the buyer's lender and title company. Koby swears and notarizes a statement about any changes to the property since the existing survey. What document does Koby use to provide his statement?
T-47 Residential Real Property Affidavit
On which entity's website can you reference to find promulgated contract forms?
TREC
What are voluntary use forms in Texas?
TREC doesn't require you to use them, but they have been reviewed by attorneys.
Considering TREC's authority under the laws of TRELA, which of the following statements is true?
TREC has the authority to suspend or revoke any license holder's license.
If any expenses for either party exceed the amount already agreed-upon in the contract, that party can ______ unless the other party agrees to pay the excess amount unless prohibited by the type of loan the buyer is obtaining.
Terminate
The TREC Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum gives the buyers time to have an evaluation and the right to ________ if there's an adverse finding.
Terminate the contract
The ______ of the TREC sales contract allows the buyer to unilaterally end an option contract within a certain period of time after contract acceptance.
Termination option
TREC stands for what entity in Texas?
Texas Real Estate Commission
Which entity administers license law in Texas?
Texas Real Estate Commission
What's one key difference between the One to Four Family Residential (Resale) Contract and the New Home Contract (Incomplete Construction)?
The New Home Contract (Incomplete Construction) doesn't contain improvements, accessories, or exclusions.
An escrow agent is not liable for the bank's loss of earnest money, unless ______.
The bank is the acting escrow agent
Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?
Void
As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?
Voidable
Zelda is a Texas licensee working with a buyer, She's explaining the Addendum for the Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement. Which of the following explanations accurately describes what restoration of seller's VA entitlement means?
"A VA entitlement is a financial guaranty from the government to repay a portion of a VA loan in the event of default. Because the VA entitlement is a specific amount, the parties may apply to have the VA entitlement restored once the loan is assumed."
Nancy is explaining the termination option to her buyer client. How would she explain that "time is of the essence" for the termination option?
"This means that the deadline for depositing the option fee and the time frame for the option period will be strictly enforced. You don't want to miss these deadlines."
Samantha makes an offer to buy Dirk's home, and he accepts it. Under the terms of the agreement, Samantha is supposed to put down an earnest deposit of $15,000. However, she only puts down $10,000. Dirk accepts the lesser deposit, and the sale is ultimately finalized. Of what is this an example?
Accepting partial performance
Sharon bought a condo and the first thing that happened was a repair issue. Her residential service contract covered it, though, except for a small deductible. What was likely repaired?
Air conditioner
Ramon and Sylvia are buying their first house in Texas. Closing is set for April 10. Their lender gets their loan approved in record time, and it turns out they can actually close on April 5. What needs to happen for the closing date to change to April 5?
Both parties must agree to the earlier date and must have met all other terms of the contract.
If any expense exceeds the amount the buyer agreed to pay in the contract, the _________ must go through with the transaction if the seller agrees to pay the difference in cost.
Buyer
Marco enters into a contract to acquire real property in return for some form of consideration. On the contract, he's regarded as the ______.
Buyer
In Texas, if the buyer doesn't object in writing within the time allotted in the Objections paragraph of the TREC One to Four Family Residential Contract (Resale), which of the following is waived?
Buyer's right to object
Carl and Sadie, who are neighbors, got into a disagreement about early-morning noise on the weekends. The two came to an agreement: Carl promised to not mow the lawn before 10 a.m., and Sadie promised to put bark collars on her dogs in the early morning hours. Their promises represent the ______ in their agreement.
Consideration
Which type of document is provided to the consumer to notify them that a recovery fund is available, should they be unable to collect a judgment against a licensee?
Consumer disclosure
What type of contract do you have once the seller has accepted the buyer's offer in writing and the buyer has been notified of the acceptance?
Enforceable
In the TREC One To Four Family Residential Contract (Resale), the paragraph titled ______ alerts buyers that wetlands, toxic substances, or the presence of a threatened or endangered species may affect the buyer's intended use of the property.
Environmental Matters
When a real estate transaction involving a governmental agency takes place, the forms used in the transaction will need to be provided by that agency. This is what is known as an ______ to TREC's rule.
Exception
Per the TREC One to Four Family Residential Contract (Resale), which of the following statements about lender-required repairs is true?
Neither party is obligated to pay for lender-required repairs.
Kendra enters a contract to sell her home to Madge. After the inspection, Madge insists that Kendra replace the roof, which is damaged. Kendra refuses, and the parties agree to cancel the deal. Of what is this an example?
Mutually rescinding the contract
Soon-Yi Chin is making an offer to purchase a three-bedroom, three-bath house on the outskirts of Austin. She is offering $270,500 for the property. Where on the TREC One to Four Family Residential Contract (Resale) should she indicate the price she's offering?
In the Sales Price section
What typically happens to any earnest money when a sales transaction successfully closes?
It's applied to the down payment and closing costs owed by the buyer.
The Addendum for Property Subject to Mandatory Membership in a Property Owners Association is meant to do which of the following?
Make buyers aware of the CC&Rs that govern the neighborhood of the house they're purchasing
The seller's disclosure notice is a required form by Texas law; however, it is not ______ by TREC.
Promulgated
Which of the following is a responsibility of the Texas Real Estate Commission, as provided in the Texas Real Estate License Act?
Rulemaking authority for real estate licensees that has the full force and effect of the law
Offer to purchase, sales agreement, contract of purchase and sale, and purchase agreement are other names for which of the following?
Sales contract
Russel Maverick likes to get things done quickly, so when he decided to buy Kent Regent's property, he asked Kent if he'd be willing to take a promissory note for the difference between the down payment and the purchase price that he would pay off in installments. Kent agreed. What type of financing is this?
Seller financing
Frank is a buyer who wants an option to purchase but doesn't want to pay the seller an option fee. He puts "0" for the option fee amount in the Termination Option paragraph in the TREC residential resale contract. What does this mean?
The termination option won't be a part of the sales contract.
Nancy wants to buy unimproved land in Texas. When she contacted her lender, she was surprised to find that she would need a 40% down payment. Why is that?
There is more risk financing unimproved land.
Which of the following is a true statement regarding plans, specifications, change orders, and allowances for a new home?
They are part of the construction documents.
Valid real estate contracts require competent parties, a legal description, consideration, a lawful objective, mutual agreement, and _______.
They must be in writing and signed by the parties
Your Texas seller clients, the Clarks, want to change the closing date on their executed sales contract. How can they do this?
They must use the TREC-promulgated Amendment form.
What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?
Time is of the essence
What's the purpose of a sales contract?
To document the agreement between a buyer and seller in a real estate sales transaction
Texas residents Carole and Frank Bellacera are purchasing a two-story house with five bedrooms for $350,000. To whom should they write out their earnest money check of $10,000?
To the All American Escrow Company
What type of form has been prepared by the Broker-Lawyer Committee, approved by TREC, and made available on a voluntary basis?
Trial use
Acting outside the scope of one's license by offering legal advice or drafting legal forms is considered ______.
Unauthorized practice of law
Which type of contract won't stand up in court?
Unenforceable
Which of the following does the Residential Condominium Contract (Resale) reference?
Unit number
If you're involved in a transaction and there isn't a promulgated form available for use, what should you do?
Use a form that's been approved by a Texas attorney.
Vanessa just received two offers for a Texas listing. One is $15,000 below the asking price, and one is for the asking price. Vanessa's client, Nevaeh, has asked her in writing to not present offers that are more than $10,000 below the asking price. What should Vanessa do?
Vanessa should submit only the offer that meets Nevaeh's request.
The Butlers have countered an offer from Conner, but then they receive an even better offer from Audrey. What should the Butlers do before accepting Audrey's offer?
Withdraw their counter-offer to Conner.
Which of the following actions is a violation of TREC rules regarding addenda?
Writing something in the Special Provisions of a TREC contract if there is a TREC addendum form that can be used
