Real Estate Contracts

Addendum

A clause or term added to a contract after the fact

Void

A contract in which is illegal and thus non valid

Voidable Contract

A contract that may be legally avoided at the option of one or both of the parties.

Deed of Trust

A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party)

Quitclaim Deed

A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

Non-Conforming Loan

A loan unable to be sold to Fannie Mae or Freddie Mac - for example a sub-prime loan

prepayment penalty

A monetary penalty imposed on a borrower for paying off a loan before its intended time

Purchase Money Mortgage

A mortgage given by the seller to the buyer to cover all or part of the sale price. Buyer has title but seller has interest. May be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.

This addendum, when signed, makes the buyer's offer to the seller contingent on the sale of the buyer's current property.

Addendum for Sale of Other Property by Buyer

Adjusted Rate loan

Adjusted on periodic basis based on economic index, rate cap

Executed

All terms met

Executor's deed

An executor's deed conveys real property from a decedent's estate to a buyer.

Under the rules relating to contract forms of TRELA, what must a listing agent do?

Inform the parties of a real estate transaction that commissions are negotiable.

Fee simple

Inheritable freehold estate

In accordance with the TREC One to Four Family Residential Contract (Resale), which of the following expenses is paid by the buyer?

Inspection fees, The buyer's settlement costs include loan-related fees, insurance fees, inspection fees, and half of the escrow fee.

What are the Freddie Mac and Fannie Mae loan requirement considerations?

Loan amount Down payment requirements Loan-to-value ratio Housing debt-to-income and/or total debt-to-income ratios

Which is the correct way to describe a property on the Texas sales contract?

Lot 26 Block 05, Section 16 of Crystal Falls Addition, City of Leander, County of Travis, Texas, known as 1900 High Lonesome Street, Leander, TX 78641

When preparing her purchase offer to the seller, Margo elected to take the termination option because she just wasn't certain she could pull the necessary funds together in time and she wanted an out. The seller accepted her offer, and Margo forgot all about needing to get the option fee into the seller's hand within three days of signing the contract. Given the situation, which of the following statements is true?

Margo no longer has the unrestricted right to terminate the contract. Because Margo failed to pay the option fee within three days of the contract's effective date, she no longer has the unrestricted right to terminate the contract.

What is the buyer of a condominium required to pay that a co-op buyer isn't?

Mortgage recording tax, Condominium buyers usually must pay a mortgage recording tax.

Which of the following statements about counter-offers is true?

Once a counter-offer has been made, the prior offer is cancelled.

Tenant in common

Possession of whole by each party. Inheritable ownership. Partition.

The seller's disclosure notice is a required form by Texas law; however, it is not ______ by TREC.

Promulgated

Appraisal contingency

Protect buyers and get their money back incase appraisal falls through

Fee absolute

Provides the most complete form of ownership and bundle of rights in real property

Lyle and his wife, Carol, were unable to obtain the loan they needed to buy the home they wanted, and have had to terminate their contract with the seller. Which of the following statements about Lyle and Carol is true?

They may receive a refund of earnest money, but they're responsible for expenses associated with the completed inspection and appraisal.

Consideration acknowledgment clause

This clause does exactly what it says: it acknowledges the grantor's receipt of consideration. For deeds that convey property as a gift in Texas, it's customary to recite a nominal consideration, such as one dollar

Signature of Grantor

To be valid, a deed must be signed by all grantors named in the deed. Some states also require witnesses to the grantor's signature.

A form may be required by law, but not promulgated by TREC. In that case, there's often a _____-approved form available for licensee use.

TREC

Land Contract

With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.

Granting Clause

Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant"; "grant"; "grant, bargain, and sell"; or the like.

Tenancy by the entirety

Tenancy by the entirety is concurrent ownership between two married people as an integrated legal unit. This includes the right of survivorship as well as a requirement that conveyance can only happen when both parties consent to it.

Mortgagee

lender

Amortized Loan

paying off a loan via periodic payments, most initial payment goes towards interest

Foreclosure

The seizure of property from borrowers who are unable to repay their loans

Constructive Eviction

tenant moves out of leased premises because the landlord caused the premises to become unfit for its intended use

Hiram plans to do a 1031 tax-deferred exchange. He just sold his property. How many days does he have to close on a new property?

180 days, Investors who want to use the 1031 tax-deferred exchange must identify the new property within 45 days of closing and must close within 180 days of the date of sale of the first property.

Amendment

To change already agreed upon terms in a sales contract

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?

Depending on his state's laws, Mario may have marketable title.

What is the term used to describe the payments made to the contractor during the construction phase?

Draw

Joint Tenant

Equal ownership. Undivided possession. Right of survivorship.

What entity or entities set the criteria for conforming loan limits?

Fannie Mae and Freddie Mac

Leo wants to give a written termination notice to his month-to-month tenant. How much notice must he give the tenant?

One month

Estate In Severality

One owner

In a real estate transaction for which financing has been obtained, what's recorded at the completion of a sales transaction?

Only the mortgage or deed of trust is recorded with the county. The promissory note is retained by the lender.

Under a sole proprietorship form of business, ______.

The owner assumes personal liability for all debts

Where are broker fee obligations found?

The parties agency agreements

Offerors

The people giving property offers

Percentage lease

A percentage lease is one in which a tenant pays a base rent plus a percentage of gross sales. This is most common with retail tenants.

Fee Simple Defeasible

A qualified fee estate that is subject to the occurrence or nonoccurrence of some specified event.

Conforming Loan

A standardized conventional loan that meets Fannie Mae's or Freddie Mac's purchase requirements.

What is a transfer tax?

A tax that's applied to the transfer of property from one person to another

Timeshare use

A timeshare use, also known as a right-to-use timeshare, grants the right to possession for some specified number of years.

In Texas, a party to a contract has ______ from a contract breach to sue the other party.

Four years

Reliction

Gradual recession of water which uncovers land that usually belongs to the riparian owner.

Theo is a buyer who's contemplating a land contract. Why might he choose this route over traditional financing?

He doesn't qualify for traditional financing.

Optioner

Seller - may sell if disclosed

Executory

Some but not all terms met

Optionee

The holder of the option. Buyer

Ballon Payment

a large lump-sum payment that must be paid at a set time

Promissory Note

a written promise to pay a specified amount of money on a loan

Mortgagor

borrower

Reverse Mortgage

A loan based on the equity in a home, that provides elderly homeowners with tax-free income and is paid back with interest when the home is sold or the homeowner dies.

Fixed Rate Loan

A loan with a rate that does not change over the life of the loan.

At the time of closing, the agents' brokerage firms will close on which contract?

Compensation agreement, The agents' brokerage firms close on the compensation agreement according to the terms of their contract agreement. The brokerages take their share of the commission and pay the agents as contracted.

The _____ is used to transfer the title.

Deed, To protect ownership interest, the deed should be recorded.

Lease purchase

In a lease with option to purchase agreement, a portion of the lease payment may go toward the purchase price. The purchase contract between the owner and the lessee is the primary consideration; their lease is secondary.

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.

What is the correct way to list the buyer's name on the Texas sales contract?

Sheila Mae Drew, a single person

What is the term length for a member of the Texas Real Estate Commission?

Six years

nuncupative will

Spoken and then put into writing by a witness

Habendum Clause

That part of a deed beginning with the words "to have and to hold," following the granting clause and defining the extent of ownership the grantor is conveying.

TREC is made up of nine members, all of whom are appointed by the governor, with the advice, consent, and approval of ______.

The Senate

"Subject to" clauses

These are clauses that contain any reservations or exceptions placed by the grantor.

What type of timeshare involves a buyer agreeing to pay a one-time purchase price and an annual maintenance fee, and in return selecting an accommodation time and having the right to use the unit for a specified number of years?

Vacation

hysical characteristics of land

immobility, indestructibility,Uniqueness

holographic will

handwritten will

Offerees

party to whom an offer is made

warranty clause

the part of a deed in which the seller warrants the title conveyed to the buyer