Chapter 6 The Remaining Promulgated Forms Terms
Condominium
A condominium, or condo for short, is the type of housing that allows ownership of "air space", and a specified part of a piece of real estate, like an apartment.
Earnest Money and Termination Option; Title Policy and Survey
A survey may not be required because there may be no lender involved, and the buyer is willing to pay cash. Surveys are very expensive for acreage.
Compare the New Home Contract (Completed Construction) to the One to Four Family Residential Contract (Resale )- Parties
Both contracts require the buyer and the seller's legal names.
Spec house
Homes built to certain specifications to allow a builder show it and sell later.
Incomplete Construction
However, the most common reason this form is used is when a buyer wishes to purchase a home that is being built for speculation.
Objective 6: Identify the differences between the Unimproved Property Contact and the New Home Contract and the One to Four Family Residential Contract (Resale).
Important differences between the New Home Contract and the One to Four Family Residential Contract (Resale) include: ● The PROPERTY portion of the NHC is much shorter because it's unlikely a builder wants to sell any personal property in a furnished newly constructed home. ● The PROPERTY CONDITION portion of the NHC does not include a seller's disclosure notice because the house is brand new. However, disclosures are required for flooding, environmental hazards, litigation, and dumpsites. ● The NHC includes provisions on rollback taxes warranties, and insulation. ● The NHC doesn't have a CLOSING paragraph dealing with the property being leased prior to the sale since that is not a possibility.
Differences of the New Home Contract (Completed Construction) to the One to Four Family Residential Contract (Resale ) - Prorations and Rollback Taxes
It is possible that the builder bought a ranch that had an agricultural exemption for real estate taxes and now that he or she is changing the use to residential, it is likely that the new utilization of the property will trigger roll back taxes.
Title Policy and Survey Objection
It may be that a portion of the property is in a flood plain making it difficult for the buyer to accomplish their goal with the property. If the property is located on a FEMA flood map, the buyer may object and terminate the contract as long as the buyer does so in the time allowed.
Differences of the New Home Contract (Completed Construction) to the One to Four Family Residential Contract (Resale ) - Seller's Disclosure
New Home Contract (Completed Construction) is about the Seller's Disclosure. This is not required on the One to Four Family Residential Contract (Resale), but you may recognize it from the Farm and Ranch Contract and the Unimproved Property Contract.
Property and condominium documents
Paragraph (B), addresses the Condominium Declaration, Bylaws and any Rules of the Association. These documents are necessary for the buyer to know how the association will operate, and the rules of the condo. These should be read over carefully by the buyer, since the information could affect their willingness to live at this property.
Unimproved Property Contract - Oil, Gas, Minerals Paragraph A
Paragraph A gives the definition of mineral estate. Because real estate can be severed laterally, it is possible for one person to own the surface of the land and someone else to own the minerals under the land.
Condominium Resale Certificate Paragraph C
Paragraph C explains if there is a special assessment due on the unit.
Condominium Resale Certificate Paragraph E
Paragraph E elaborates on any capital expenditures approved by the association over the next year.
Condominium Resale Certificate Paragraph H
Paragraph H identifies the amount of unsatisfied judgments against the association.
Broker Information and Agreement for Payment of Broker's Fees
TREC states that for a broker to be able to sue for a commission due, it must be in writing and signed by the person responsible for paying a fee.
Client Registration
There is a registration process using a form, that declares the Buyer as your client. This protects you from a builder taking your client and selling them a new home construction, and then not paying you, you should "register" your client before showing them a builders' model home.
Farm and Ranch Contract Property Condition
There will not be a residential service contact. The property is not subject to any government programs.
Title Policy and Survey Surface Leases
These surface leases could be in the form of hunting leases, grazing leases, ground leases for equipment storage, or any number of other types of leases.
Compare the New Home Contract (Completed Construction) to the One to Four Family Residential Contract (Resale )- Sales Price
This is the same on both contracts. It is the cash portion plus the sum of all financing equals the sales price.
Property Condition - Residential Service Contract
This section is the same on both contracts. It is sometime referred to as a Home Warranty.
Condominium (Condo)
Type of housing that allows ownership of "air space", and a specified part of a piece of real estate, individually owned, with use of, and access to, common facilities like hallways elevators and exterior areas, is executed under legal rights associated with individual ownership. Common areas are controlled by the association of owners who jointly represent ownership of the whole property as tenants-in-common.
Objective 7: Determine the proper procedure for filling in the New Home Contract (Incomplete Construction) form.
The New Home Contract (Incomplete Construction) is used for purchasing a new house where the construction is not yet complete. This document is less frequently used because most new-construction homes will not be sold until construction is completed. In instances where the buyer cannot wait for the completion of construction, this is the contract to be used. There are important distinctions between the New Home Contract (Incomplete Construction) and the One to Four Family Residential Contract (Resale), including: ● The SURVEY paragraph in the NHC assumes that there will not be an existing survey for a home that is complete. ● The PROPERTY CONDITION paragraphs which addresses utilities, construction documents, cost adjustments, and commencement and completion dates will be different.
Objective 3: Evaluate each paragraph of the Farm and Ranch Contract.
The One to Four Family Residential Contract (Resale) and the Farm and Ranch Contract are the documents licensees will use for farms and ranch contracts in Texas. Distinctions of these documents include: ● PROPERTY IMPROVEMENTS includes additional information specific to farms including barns, tanks, fences, crops, mineral and timber rights, etc. ● TITLE POLICY AND SURVEY includes an additional section in F&C that gives the option to omit a survey since surveying at such extensive acreages can be very expensive. ● Several other paragraphs have some variance between the two contracts, including SALES PRICE, PROPERTY CONDITION, and ROLLBACK TAXES. ● The RATIFICATION OF FEE and BROKER INFORMATION AND AGREEMENT FOR PAYMENT OF BROKER'S FEES paragraphs are used in the Farm and Ranch Contract to address the brokers' fees because there aren't always listing agreements for farm and ranch properties. ● Additional distinctions include concerns about flood plains, hunting leases, and any issues with the Texas Agricultural Developmental District.
Ratification Fee of Farm and Ranch Contract
The Ratification of Fee section is at the top of the page on the F&R contract,
Objective 1: Evaluate each paragraph of the Condominium Contract.
The Residential Condominium Contract (Resale) assists condominium purchasers in making informed decisions about the rights, responsibilities and risks of condominium ownership and is required by the Texas Real Estate Commission. The Residential Condominium Contract (Resale) is very similar to the One to Four Family Residential Contract (Resale). ● The Residential Condominium Contract (Resale) doesn't have a SURVEY or CASUALTY LOSS paragraphs. ● The LEASES, TITLE NOTICES, SETTLEMENT AND OTHER EXPENSES, CASUALTY LOSS, CLOSING, and PRORATIONS sections all have slight differences between the forms. ● The addenda under AGREEMENT OF THE PARTIES differ somewhat.
The Residential Condominium Contract (Resale) Proration
The Residential Condominium Contract (Resale)has additional language regarding condominium assessments and who is responsible for paying them.
Unimproved Property Contract (UPC)
The Unimproved Property Contract (UPC) form is used when no improvements have been placed on the property.
Objective 5: Explain the purpose and use of the Unimproved Property Contract and the New Home Contract and how to complete provisions.
The Unimproved Property Contract should be used when no improvements have been placed on the property. There are a number of distinctions between this document and the One to Four Residential Contract (Resale), including: ● The UPC PROPERTY section is different because it does not need the paragraphs dealing with improvements, accessories, and exclusions because there is no home and no improvements. ● The UPC includes rollback taxes in the PRORATIONS paragraph. The New Home Contract should be used for new home contracts, though it is not used often because most builders have their own forms. Licensees should "register" their client before showing him or her a builders' model home in case a New Home Contract will be used.
Residential Condominium Contract
The buyer needs to know how restrictive the condo rules are prior to agreeing to a contract.
Condominium Resale Certificate
The certificate requires the appropriate condominium association, upon written request, to issue a resale certificate disclosing information about the financial, physical, and legal condition of the condominium.
Inaccurate Condominium Resale Certificate
You should not complete the Condominium Resale Certificate. You should send it to the condominium owners' association's governing board. The board should fill it out and send it back.