ASG 3 Contract Forms and Addenda
Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 3.5% only if the broker is not paid by the seller or the sellerâ s agent. The broker finds a property that is not listed in the MLS. How much will the buyer have to pay the broker under the agreement?
3.5%
Which of these is FALSE regarding the Information About Brokerage Services form?
A license holder can manipulate the form as the license holder sees fit.
Which of the following is NOT a defense to the DTPA?
A written limitation of liability
A buyer wishes to sell her existing home with an existing mortgage before buying a new home. The new lender will not approve the loan on the new property until the existing loan is paid in full. The buyer enters into a contract with seller and attaches the Addendum for Sale of Other Property by Buyer. The seller accepts a back-up offer and notifies buyer 1 that she must waive the contingency. Buyer 1 timely waives the contingency, confident that her first house will close. Buyer 1 doesn't close on her existing home and cannot get a loan by the closing date on the new house. What is the result?
Buyer is in default.
Under the Addendum for Reservation of Oil, Gas, and Other Minerals, what information must seller provide to the buyer if seller conveys all of seller's interest in the mineral estate?
Contact information of any existing mineral lessee
When may a defendant be held jointly and separately responsible for all damages recoverable by the claimant?
If the defendant's percentage of responsibility is greater than 50%
An apartment complex that is occupied solely by persons age 62 or older gets an applicant from a 65-year-old tenant who has legal custody of her granddaughter. Management denies the application. Which of the following is TRUE regarding this action?
It does not violate the Fair Housing Act.
Seller and buyer enter into an agreement for buyer to purchase seller's property and seller reserves all of the mineral estate that he owns using the Addendum for Reservation of Oil, Gas, and Other Minerals. Seller elects not to retain any implied right of ingress or egress and reasonable use of the property. How does this election affect the surface rights of other owners of the mineral estate?
It has no effect
Buyer and seller entered into a contract for buyer to purchase seller's home. Buyer now wishes to terminate the contract based on information disclosed in the seller's disclosure notice. Which form should buyer use?
Notice of Buyer's Termination of Contract
Who is required to execute the notice of termination of contract?
Only the buyer
What happens if coastal erosion moves the public easement to a public beach in the Texas Gulf Coast?
Private coastal real property may become a public beach.
Which of the following disclosures related to the sale of a house is permitted but NOT required?
Sex offenders in the neighborhood
The National Association of REALTORS® recently added which of the following as a protected class under the NAR Code of Ethics?
Sexual orientation
A seller wants to tell potential buyers that the neighborhood is perfect for young couples without children. What should the broker advise the seller.
This may be a fair housing violation.
What is the statute of limitations on a DTPA cause of action?
Two years
The buyer wants to purchase the antique buffet in the dining room to be included in the contract. How should the agent handle it?
Use the Non-Realty Items Addendum
The buyers want to include some unusual paintings in the purchase of their new home. How should it be noted in the contract?
Use the Non-Realty Items Addendum
When is the TREC Addendum for Sale of Other Property by Buyer used?
When a new lender will not approve the loan on the new property until a mortgage on an existing property is paid in full
When is the TREC Addendum for Sale of Other Property by Buyer used?
When the buyer is unable to buy the new property unless her existing property is sold.
What can be a red flag for an illegal type of buyer rebate?
When the contract calls for money to be paid to a certain vendor for improvements to be made after closing
An owner might be exempt from the provisions of the Fair Housing Act if the owner is attempting to rent out
one of the units in the duplex in which she lives.
Under the Addendum for Reservation of Oil, Gas, and Other Minerals, how long the seller have to provide contact information of any existing mineral lessee to the buyer if seller conveys all of seller's interest in the mineral estate?
Within seven days after the effective date
Would a three-bedroom home leased to a single parent and five children be acceptable under the HUD standard?
Yes, because it allows two people per bedroom.
Under paragraph B of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, for what reason may buyer terminate the contract prior to closing by giving written notice to seller?
Any material adverse change in the subdivision information occurs prior to closing.
Buyer and seller have agreed to terminate a contract and agree on how to distribute the earnest money. The buyer's agent is a REALTORS®. Which form should be used?
TAR 1904
Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 3% of the purchase price only if the broker is not paid by the seller or the seller's agent. The broker finds a property that is listed in the MLS with an offer of compensation of 3.5%. How much will the buyer have to pay the broker under the agreement?
Nothing
Broker and seller enter into a listing agreement where the seller agrees to pay the listing broker 7% of the purchase price if the house is sold. The property is not listed in the MLS but eventually sells. How much will the seller have to pay the selling broker under the agreement?
Nothing
Under the Addendum for Sale of Other Property by Buyer, what happens if the seller accepts a back-up offer?
Buyer 1 may waive the contingency before the agreed upon date.
What is the maximum civil penalty for a violation of the DTPA?
$20,000 per violation
What is the maximum civil penalty for a violation of the DTPA that targets the elderly?
$250,000
A broker, while representing a buyer, forges the buyerâ s signature on a sales contract. The buyer ends up suffering economic damages of $100,000 and sues the broker. The broker may be held liable for which of the following amounts?
$300,000 if it was intentional
What does the lienholder agree to under the TREC Short Sale Addendum?
Accept seller's net proceeds in full satisfaction of seller's liability under the mortgage loan
A buyer wishes to sell her existing home before buying a new home. Which TREC form should be used?
Addendum for Sale of Other Property by Buyer
A builder wishes to rebate 1% of the purchase price to potential buyers. Which of the following is the BEST practice for a broker representing the buyer?
Advise the buyer to disclose all rebates to the lender
Which of these are included in the Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies?
All of these: Improperly installed or defective safety devices, Lack of electrical bonding and grounding, Lack of bonding on gas piping, including corrugated stainless-steel tubing (CSST).
Red flags that a party may be making an offer that will be involved in real estate fraud include
All of these: an offer calling for future improvements, An inflated sales price, A request to remove the property from MLS.
A back-up contract was executed on August 9. The parties agreed to a 12-day option period. On August 15, the seller notified the buyer that the first contract had terminated. When does the buyerâ s option period end?
At 5:00 pm on August 27
When must the Information About Brokerage Services be provided to a consumer?
At the first substantive discussion
Buyer and seller enter into an agreement for buyer to purchase seller's property which is located in a property owners association (POA). Buyer wants additional information about the POA and asks the seller to provide and pay for the subdivision information. What is the buyer's option if seller timely provides it as required by paragraph A(1) of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association?
Buyer may terminate within three days and receive the earnest money.
Which of the following is NOT included in the TREC Notice of Buyer's Termination of Contract?
Buyer wants a refund of earnest money.
According to the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway, what causes coastal property to become part of a public beach?
Coastal erosion
Which of the following is NOT an exemption under The Fair Housing Act?
Condominium sales to the elderly
Which of the following is TRUE regarding DTPA lawsuits?
Consumers may waive their rights to bring a suit under the DTPA.
Which of the following disclosures related to the sale of a house is required?
Death by electrocution because of faulty wiring
When a license holder suspects fraud, which of the following should the license holder NOT do to protect herself and the parties to the transaction?
Disclose everything to all parties
If you believe a transaction is involved in illegal activity, you should
Do all of these: notify your broker. withdraw from the transaction. tell the seller to seek legal advice if they plan to continue with the transaction.
A buyer decides to exercise her right to terminate under the option period. What is the proper process?
Execute a Notice of Buyer's Termination of Contract and deliver it to the seller according to the instructions in paragraph 21 of the contract.
What is the term for purchasing a property and then quickly reselling it at a value that is artificially inflated by false appraisals?
Flipping
Who completes the promulgated resale certificate?
Homeowners association
Buyer 1 enters into a contract with seller with an option to terminate 14 days after the effective date. The effective date is January 5. The seller accepts a back-up offer with the Addendum for Back-Up Contract attached from buyer 2 with an effective date of January 6, and with the date in paragraph B of the addendum filled in as January 15. Buyer 1 terminates the first contract on the last day of the option period and the seller gives notice to buyer 2 on the same day. What is the status of the second contract with buyer 2?
It terminated on January 15.
Buyer 1 wishes to sell her existing home before buying a new home. Buyer 1 enters into a contract with seller and attaches the Addendum for Sale of Other Property by Buyer. The seller accepts a back-up offer with the Addendum for Back-Up Contract attached from buyer 2 and notifies buyer 1 that she must waive the contingency. Buyer 1 timely waives the contingency. What happens to the back-up contract?
It terminates if the first contract does not terminate by the date agreed upon in the addendum.
An apartment complex manager is concerned about the complex's liability because the stairs are very steep and it has no elevators. Therefore, it has a policy of refusing to lease an apartment to a clearly pregnant person. Which of the following is TRUE regarding the policy?
It violates the Fair Housing Act.
Where is the specific rule addressing housing occupancy standards?
There is no rule
Buyer 1 enters into a contract with seller with an option to terminate 21 days after the effective date of January 5. The seller accepts a back-up offer with the Addendum for Back-Up Contract attached from buyer 2 with an effective date of January 6, and with a 10-day option period. Buyer 2 finds another place she likes better on January 17. What are her options under the back-up offer?
She may terminate and get a refund of the earnest money.
Which of the following is NOT a required disclosure related to the sale of a house?
Suicide on the property
Where is the written compensation agreement between a purchaser and a broker?
The buyer's representation agreement
When may an apartment complex manager discriminate based on familial status?
The community qualifies as housing for older persons
What happens if seller fails to notify buyer that seller has obtained the lienholder's consent and agreement within the agreed upon time period using the TREC Short Sale Addendum?
The contract terminates and the earnest money is refunded to buyer.
What is the amended effective date under the TREC Short Sale Addendum?
The date seller provides buyer notice of the lienholder's consent and agreement.
Under the Addendum for Sale of Other Property by Buyer, what happens if the seller accepts a back-up offer from buyer 2 and buyer 1 does not waive the contingency before the agreed upon date?
The first contract will terminate.
Which of the TREC contracts includes an agreement to pay the broker's commission?
The last page of the Farm and Ranch Contract
A seller wishes to list his house with a broker and wishes to conceal the fact that his spouse died of AIDS. What should the broker advise the seller?
The law permits the seller to withhold the information.
Which agreement for payment of broker's fees is between the seller and the broker?
The listing agreement
According to the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway, who is responsible for the cost of removing a structure from a public beach pursuant to a removal order?
The owner of the structure
Which of the following disclosures related to the sale of a house is prohibited?
The racial breakdown of the neighboring high school
Who must approve a short sale?
The seller's lender
Typically, where is the agreement for compensation between brokers if the property is listed in the MLS?
The subagency compensation blank in the MLS
Broker and buyer enter into a buyer representation agreement where the buyer agrees to pay the broker 4% if the broker is not paid by the seller or the listing agent. The MLS listing indicates a 3% compensation offer to selling broker. How much will the buyer have to pay?
1%
A buyer wishes to purchase a fully furnished ranch house. What form or paragraph in the contract should be used to convey the personal property?
Non-Realty Items Addendum
Which of the following is TRUE regarding occupancy restrictions?
Housing providers have been permitted to develop and implement reasonable occupancy restrictions on their own.
Under paragraph B of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, for what reason may buyer terminate the contract prior to closing by giving written notice to seller?
If any of the subdivision information provided was not true.
Which of the following is NOT a situation in which a defendant may be held jointly and separately responsible for all damages recoverable by the claimant?
If the defendant negligently caused harm to another
A blind tenant with a helper dog wishes to rent an apartment in a complex with a no pets policy and the landlord refuses based on its policy. Which of the following is TRUE under the Fair Housing Act?
It is a violation of the Act.
Under the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, who is required to obtain the subdivision information?
It is negotiated
Under the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, who is required to pay for the updated resale certificate if required by the title?
It is negotiated
Buyer enters into a short sale agreement with seller with an option to terminate 14 days after the effective date using the TREC Short Sale Addendum. The effective date is February 5. The seller has until February 19 to notify buyer that seller has obtained lienholder's consent and agreement. The seller notifies the buyer that the lienholder has consented to the sale on February 20, even though he received the notice on February 19. What is the status of the contract?
It terminated on February 19.
Buyer 1 enters into a contract with seller with an option to terminate 10 days after the effective date. The effective date is January 5. The seller accepts a back-up offer with the Addendum for Back-Up Contract attached from buyer 2 with an effective date of January 6, and with the date in paragraph B of the addendum filled in as January 16. Buyer 1 and seller amend the first contract on the last day of the option period. What is the status of the second contract with buyer 2?
It will terminate on January 16.
Buyer enters into a short sale agreement with seller with an option to terminate seven days after the effective date using the TREC Short Sale Addendum. The effective date is January 2. The seller notifies the buyer that the lienholder has consented to the sale on January 10. What is the amended effective date of the short sale agreement?
January 10
Buyer enters into a short sale agreement with seller with an option to terminate seven days after the effective date using the TREC Short Sale Addendum. The effective date is January 2. The seller notifies the buyer that the lienholder has consented to the sale on January 10. What is the last day of the option period?
January 17
What should a license holder advise a seller to do if the seller wants to keep a TV projector that is installed in the theater room?
List the item as an exclusion in paragraph 2D
The seller wants to keep the above ground pool. How should it be addressed if using the TREC One to Four Family Residential Contract?
List the pool in paragraph 2, Exclusions
A seller wishes to keep an antique fireplace screen that was installed when the house was built. How should this be addressed in the TREC One to Four Family Residential Contract?
List the screen under Exclusions.
Would an apartment complex that limits one bedroom apartments to only one person be acceptable?
No, because the one person would be an adult, eliminating children.
The Addendum for Coastal Area Property and the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway contain the notices required by the
Texas Natural Resources Code.
A seller of real property wishes to sell to a buyer for an additional price the home theater television. Which form or paragraph in the contract should be used?
The Non-Realty Items Addendum
Which TREC form should be used if the buyer wishes to include the furnishings in a home as part of the purchase price?
The Non-Realty Items Addendum
According to the Addendum for Property Located Seaward of the Gulf Intracoastal Waterway, where can a person find erosion rates for all Texas Gulf property subject to the Open Beaches Act?
The Texas General Land Office
Under the HUD policy statement regarding occupancy standards, what is the age limit for persons occupying any one bedroom?
The age of the people is not a consideration
A buyer wants to make sure that the neighborhood is safe for their young daughters. He asks about whether there are any sex offenders on the street. The seller knows that the man that lives across the street is a registered sex offender but wishes to conceal this from potential buyers because he really needs to sell the property. What should the seller's agent do?
The agent is not required to disclose the information.
A buyer asks the seller's agent about the racial makeup of the neighborhood. Which of the following is the best way to deal with the question?
The agent should not disclose any information based on race.
A disabled person wishes to rent an apartment and renovate it with grab bars and ramps. Which of the following is TRUE under the Fair Housing Act?
The tenant may renovate as long as he restores the apartment before he leaves.
How long does seller have to notify buyer that seller has obtained the lienholder's consent and agreement using the TREC Short Sale Addendum?
The time period is negotiated
The agreement between the brokers regarding the amount to be paid by the listing broker to the selling broker is a contractual agreement contained in the
agreement between brokers (frequently in MLS).
The agreement between brokers referred to on the last page of the TREC sales contract is considered
an affirmation of the agreement between brokers.
Real estate fraud is harmful to
everyone.
Familial status in the Fair Housing Act protects
families with children under the age of 18 and pregnant women.
The primary intention of HUD regarding occupancy standards is to make sure the occupancy standards do not eliminate the protection of
families with children.
If anyone is helping the buyer with the down payment or closing cost, it
must be disclosed to the lender on the contract and on the closing documents.
A back-up contract allows
the seller to negotiate with a second buyer on terms that will be used if the first buyer's transaction falls through.
Contractual agreements between brokers may be defined in
written agreements signed by both brokers and the sales contract.