Promulgated Contracts (Course 6)
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?
it should be written in a Non-Realty Items Addendum, not in the Special Provisions section
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?
laura can waive the addendum by a date she and the seller agree on, otherwise her contract terminates
According to the Short Sale Addendum the effective date of the contract is amended to the date the Seller notifies the Buyer that the ____________________________. seller has received the appraisal seller is vacating the property seller has deposited the earnest money lender has approved the short sale
lender has approved the short sale
Which of these is NOT something TREC has the power to do?
licensing developers and builders
By what time is the seller required to furnish any existing survey?
no later than 3 days prior to closing
What are rules about the maximum number of people allowed to live together in a single dwelling called?
occupancy standards
A landlord may have to make adjustments for a tenant with a disability to be able to live in a dwelling. Those adjustments do not include:
permitting a tenant to use illegal drugs
What is the difference between contracts that TREC has promulgated and those that TREC has approved?
promulgated contracts are required, approved contracts are option if needed
What is the purpose of TREC form OP-C Notice to Prospective Buyer?
provides a notice to buyers using their own contract to obtain an Abstract of Title
According to the Addendum for Back-Up Contract, if a first contract is terminated and the seller notifies the back-up buyer of the termination, what happens? both contracts are terminated and the back-up contact must be re-submitted the agent representing the back-up buyer must formally acknowledge notification within three days that date becomes the effective date of the back-up contract the option period for the back-up buyer is automatically extended an extra week
that date becomes the effective date of the back-up contract
In TREC promulgated contracts, what does paragraph 6E(8) say about private transfer fees?
that if they exist, the seller must notify the buyer
What information does the Disclosure of Relationship with Residential Service Company form convey?
that it is a violation of RESPA for license holder to receive a referral fee for passing on a name to service provider
Agents are required to give all buyers a written copy of the title notice. Aside from Paragraph 6E(1) of the One to Four Family Residential contract, where else can this notice be found? the Seller's Disclosure Notice the Notice to Prospective Buyer the T-47 Residential Real Property Affidavit the Non-Reality Items Addendum
the Notice to Prospective Buyer
Which of these is an example of a time when it is acceptable not to use a TREC promulgated form?
the US government requires a different form to be used
Who pays for an investigation of an environmental, endangered species, or wetlands issue, according to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum? the seller state environmental agencies the buyer the cost is split between buyer and seller
the buyer
According to the Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum, what happens if the buyer can provide the seller with a report proving that the use of the property is negatively affected by one of the noted factors (before the agreed-upon deadline)?
the buyer can terminate the contract and get their earnest money back
Paragraph C2 on the Lead Based Paint Disclosure states that:
the buyer has 10 days to have the property inspected for lead-based paint
Paragraph D of the Short Sale Addendum contains a date by which the seller must get approval from their lender for the sale. What happens if the lender does not give approval by the date?
the contract will terminate and the earnest money will be refunded to the buyer
Which of these is an example of something that could go in Paragraph 12 of the One to Four Family Residential Contract?
the seller plans to pay some of the buyer's closing costs
When both parties mutually agree to terminate a contract, who provides the appropriate form? TREC the broker representing the seller TAR the title company
the title company
If an agent makes a change to Paragraph 6A8 in a TREC promulgated contract, which of these is most likely to be the result?
the title policy will be amended to read "shortage in area" rather than the standard exception
What happens when a homebuyer takes out a residential service contract on their newly-purchased home?
they get a warranty for the property, usually for a year
Which is the purpose of the Information About Brokerage Services form?
to inform clients how a license holder can represent a party in a real estate transaction
A contract which courts cannot compel the parties to perform is:
unenforceable
Buyer Ashley is shopping for empty lots on which to build a home. She found a lot for sale that looks promising, but she's concerned its located on a wetland. What should her agent do?
use the Unimproved Property contract and attach the Environmental Assessment, Threatened or endangered species and wetlands addendum
When should a license holder use form T-47, Residential Real Property Affidavit? when there is a reasonable chance the property could have lead paint on it when a seller wants to use an existing survey when a buyer declines to buy owner's title insurance when the buyer is accepting the property "as is"
when a seller wants to use an existing survey
When is it acceptable for a seller not to give a buyer a seller's disclosure notice?
when the buyer has indicated in the contract it isn't necessary
A seller is selling a property that is under a lease. When does the seller have to deliver a copy of the lease and any move-in condition form to the buyer?
within seven days after the effective date
Agent Aaron was drawing up a contract, and opted to use his brokerage's (lawyer-created) Seller's Disclosure Notice instead of TREC's. Is this allowed? Why or why not?
Yes, because the Seller's Disclosure Notice is not promulgated by TREC
When all parties have agreed to all terms of an offer, have signed the offer, and have initialed any changes that took place during negotiations, what happens to the offer?
it becomes a contract
What is the purpose of the Consumer Notice Concerning Hazards or Deficiencies in TREC promulgated contracts?
it educates buyers on the purpose of the property inspections
Which of the following laws protect people based on race only?
Civil Rights Act of 1866
When a contract has been fully executed, what has happened to it?
it had been terminated
Paragraph 7D(2) of the contract indicates:
repairs that must be completed by the seller before closing
A buyer and seller have been in negotiations. They have everything in writing, have agreed to all terms, the contract is signed and changes initialed. Today, the written acceptance of the final agreement has been communicated to the other party. What is today called?
the effective date
If a property is occupied solely by people over the age of 62 and qualifies as senior housing it is exempt from:
the familial status portion of the Fair Housing Act
When seller financing is being used, the seller becomes:
the lender
Which of these is appropriate to put in the Special Provisions section of the One to Four Family Residential Contract?
the names of the sellers that wouldn't fit in Paragraph 1
The amount of the earnest money the buyer is contractually obligated to pay the seller is set by:
the parties
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
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
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?
withdraw from the transaction
Which of these must the broker maintain a copy of for three years following a sale?
Lead Based Paint Addendum
Which of these materials would be considered part of a property's mineral estate?
Oil
Which TREC promulgated contract are all the other contracts based on?
One to Four Family Residential Contract
Which element of the TREC promulgated contracts is the same across all contract forms?
Paragraph 1 identifies the parties to the contract
As outlined in the TREC promulgated sales contracts, what obligations does the seller have regarding the property condition at the time of sale?
Seller's obligations are a matter of negotiation with the buyer
What is one thing that differentiates TREC from the Broker-Lawyer Committee?
TREC members are only appointed by the governor, Broker-Lawyer Committee members can be appointed by different people
If a buyer is using VA financing, what will be part of the contract?
Third Party Financing Addendum for Credit Approval
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?
Yes, because option money is never refundable
TRELA empowers TREC to require license holders to use certain contract forms. Which of these would NOT meet TREC's requirements?
a contract created by a license holder's sponsoring broker
Which of these constitutes a voidable contract?
a contract made with a minor
In which of these scenarios could an HOA foreclose on a property that belongs to the HOA?
a property owner fails to pay their HOA assessments
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?
amendment
Which of these is an example of an illegal buyer rebate?
an agent gives their buyer clients half of their commission without disclosing it on the settlement statement
George Jr. inherited the family compound after George Sr. died. The will was contested, and some family is still disgruntled. George is now selling the property. How can a buyer best protect themself from any claims on the title?
ask the family to sign a quitclaim deed
Which of these agent scenarios involving contracts is NOT inappropriate or in violation of TRELA?
avery explains the meaning of factual statements or business details in the contract form
To be valid and enforceable, a contract must be in writing, represent a complete agreement, have acceptance communicated, and:
be signed by all parties
Why does the Option to Terminate require an extra consideration in the form of option money?
because it is another contract within the overall contract
When do brokers determine how the commission from a sale will be split?
before closing
Because many things in the contract depend on these two items, it is important that the agent finalizing the acceptance of the contract fill in which of the following dates for their broker:
effective and executed date
In a TREC promulgated contract, what is the Third Party Financing Addendum concerned with?
financing contingencies
What does paragraph 7A of the One to Four Family Residential Contract grant every buyer the right to do?
have the property inspected
In TREC promulgated contracts, what does paragraph 6E(8) say about private transfer fees?
if they exist, the seller must notify the buyer (6E8)
What form must be provided to any unrepresented buyer or seller a license holder talks with?
information about brokerage services form
In a Texas real estate contract, what does an Addendum for Property Subject to Mandatory Membership allow a buyer to do?
terminate a contract if not given information about the property's HOA
Which of these is NOT something that is appropriate to put in Paragraph 11 (the Special Provisions section) of a TREC promulgated contract?
that the contract is contingent on the inspection
Which of these is NOT true about a Seller's Temporary Residential Lease?
the buyer/landlord has no recourse if the seller/tenant overstays
Which of these is NOT necessary for a contract to be binding and effective? the contract must be hand delivered to the title company acceptance of the contract must be communicated with the other party changes to the contract must be initialed the contract must be signed by all parties
the contract must be hand delivered to the title company
Which of these is NOT true about the residential service contract?
the seller can prevent the buyer from purchasing it
A seller is selling a property that is under a lease. When does the seller have to deliver a copy of the lease and any move-in condition form to the buyer?
within 7 days after the effective date
A potential buyer's current home is under contract. He has found a home he would like to make an offer on, but does not want to take a chance on being obligated to buy if his current home does not close. What form can help this buyer?
Addendum for Sale of Other Property by Buyer
What part of the One to Four Family Residential Contract advises the buyer to get an abstract of title reviewed by a lawyer?
Paragraph 6E1
If a seller wants to reserve part of their mineral rights after selling, where on the Reservation of Oil, Gas and Other Minerals Addendum would they note what percentage they're keeping?
Paragraph B2
What part of the Third Party Financing Addendum for Credit Approval specifically pertains to people getting VA loans?
Paragraph D
Which of these is NOT a TREC promulgated form?
Condo Addendum
Which is TRUE regarding buyer rebates?
undisclosed buyer rebates are not legal
Within how many days after the title company receiving a copy of the contract will the buyer receive the title policy documents?
20 days
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?
3 days
What is the statute of limitations to claim fraud or misrepresentation against a license holder?
4 years from discovery
How can a license holder ensure that any relevant addenda or notices are officially included in a contract?
By checking the appropriate boxes in paragraph 22
A married couple is buying a property. Which is the BEST way to write their names in the contract?
Georgianna Serif and spouse Bryan Serif
Mary has a rental property with a two year lease on it. She collected a $500 security deposit at the beginning of the lease. Now she is selling the property. What will happen to the security deposit?
Mary will transfer the security deposit to the buyer at closing
A seller is planning to convey a refrigerator through the Non-Realty Items Addendum. They financed the applianced purchase, and still have a few payments left. Is this allowed? Why or why not?
No, items conveyed through the non-realty items addendum must be owned fully by the seller
Where in the One to Four Family Residential Contract does it spell out what remedy the buyer has if the property is damaged after going into contract but before closing?
Paragraph 14
A buyer who discovers a defect which they believe was misrepresented has a certain time after discovery to make a claim for damages. This is known as the:
Statute of limitations
Jill's client bought a new home but never lived there. Eight months later she decided to sell it. When they found a buyer, Jill used the One to Four Family Residential Contract. Why didn't she use the New Home Contract (Completed Construction)?
The New Home Contract (Completed Construction) is only appropriate for the first time a new home is sold
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
Buyer Raz goes into contract on a house in Texas. At the last minute, he is unable to obtain financing. What would he need to have in his contract to terminate it without penalty?
a third party financing addendum
What is TRUE of a unilateral contract? A unilateral contract is not upheld in court. A unilateral contract has multiple parties accepting an obligation. A unilateral contract is a promise made in exchange for a promise. A unilateral contract is a promise exchanged for performance.
a unilateral contract is a promise exchanged for performance
Per Paragraph 7D, what is it called when a buyer accepts the property, "with any and all defects and without warranty"?
accepting it in "as is" condition
Seller Vera agrees to allow another veteran to assume their mortgage loan. To make sure Vera can get their VA entitlement restored, what must be attached to the contract?
addendum for release of liability on an assumed loan and/or restoration of Seller's VA addendum
A buyer was unable to obtain financing. How would they notify the seller that they are terminating the contract?
by sending a promulgated Notice of Buyer's Termination
How can an agent help protect the earnest money of a buyer who is financing their purchase?
by submitting a Third Party Financing Addendum
How can a buyer ensure they pay the least possible amount of pre-paid interest to the mortgage company?
close near the end of the month
In Paragraph 9 of the One to Four Family (Resale) contract, what must happen "on or before" the specified date?
closing
Which of these is a technique license holders can employ to avoid mortgage fraud?
disclose everything to the lender
What is the only time it is acceptable for a license holder not to present all offers to a seller client?
if the listing agreement specifies that it is not necessary
If nothing is added in Paragraph 7D, the agreement says that the buyer is accepting the property:
in its present condition
