Promulgated Contract Forms #351

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All the following are true about the Texas Real Estate Commission EXCEPT: A. There are nine members. B. All members are brokers with a minimum of 5 years' experience. C. Members of the Commission are appointed by the Governor. D. Members serve six years staggered terms.

All members are brokers with a minimum of 5 years' experience.

A valid contract: A. Is a written or expressed agreement between two parties to provide a product or service B. Must be entered into as a free and voluntary act of each party C. Must have all the essential elements and are binding and enforceable on both parties D. All of the above

All of the above

Essential elements of a contract include: A. Competent parties B. Offer and acceptance C. Consideration D. All of the above

All of the above

In Texas, two individuals can exchange real property using only: A. The agreed price B. The legal description C. The names of parties D. All of the above

All of the above

_______ This form is used to make changes from the original contract.

Amendment

______ is where the parties have fully performed their promises under a signed contract.

Executed

A contract in which each party promises to perform an act in exchange for the other party's promise to perform is a unilateral contract. A. True B. False

False

A license holder may undertake to draw or prepare documents fixing and defining the legal rights of the principals to a real estate transaction. A. True B. False

False

As long as any exclusion is on the Seller's Disclosure, it is not necessary to put in the contract itself. A. True B. False

False

Earnest money is the consideration in a contract. A. True B. False

False

If an agent is a principal in a transaction or has at least a 50% interest in the property, he must disclose this in paragraph # 4 of the contract. A. True B. False

False

If the buyer is seeking FHA or VA financing and the appraisal comes in below the asking price, the buyer must come up with the difference in the down payment. A. True B. False

False

In Texas, real estate licensees have the authority to make up their own amendments or addenda to contracts. A. True B. False

False

It is illegal to NOT divulge the existence of a second offer. A. True B. False

False

On the Loan Assumption Addendum, if the tax and insurance escrow is deficient, the buyer must pay the deficiency. A. True B. False

False

The sales price in the contracts includes the down payment, the loan, and the private mortgage insurance if the loan is greater than 80%. A. True B. False

False

The clause in a contract stating that "time is of the essence" would indicate: A. The contract must be finalized immediately. B. The contract must include the time of day the contract was executed. C. Strict performance of certain acts within the time stated in the contract. D. Monetary penalties will be incurred if the provisions are not met by certain times.

Strict performance of certain acts within the time stated in the contract.

In addition to providing an existing survey, the seller must also provide the _________________ if the parties want to use the existing survey for the new loan for the buyer.

T-47 affidavit

Contracts created by another entity other than TREC that can be used by licensees.

TAR

This is the policy making body that protects the public.

TREC

The One-to-Four Family Contract includes all the following EXCEPT: A. Street address and legal description B. Down payment, loan amount, and sales price C. Full and legal names of both parties D. Type of loan the buyer is obtaining

Type of loan the buyer is obtaining

If there is no time limit specified in an offer, then the time limit will expire: A. 30 days B. As stated by the broker. C. As determined by the seller D. Within a reasonable time

Within a reasonable time

With an FHA or VA loan, the buyer is not obligated to purchase the property if the house does not ____________.

appraise

It is absolutely essential to have a __________________________ to make the contract binding and legally enforceable.

correct legal description

Paragraph 3 A represents the ______________________ in the transaction.

down payment

The main job of the Joint Broker-Lawyer Committee is to ___________________________.

draft and revise contracts

The One-to-Four Family Residential Contract spells out the ______________________________________ of each party to successfully complete a transaction.

duties, responsibilities and financial obligations

This is the Canon of Professional Ethics that speaks to knowledge of the industry.

Competency

_______ is one of the elements that makes a contract valid.

Competent parties

________ A contract must be in writing to be this.

Enforceable

Understand that when you are in a multiple offer situation, you are in an adversarial situation with the other agent. A. True B. False

False

Which offer the seller accepts, if any, will be decided by the listing agent. A. True B. False

False

You can give legal advice to a buyer or seller if you understand all the facts. A. True B. False

False

Drafts and revises contracts.

Joint Broker-Lawyer Committee

List two of the most common agreements that are not promulgated by the Texas Real Estate Commission but are available through the Texas Association of Realtors ® for use by licensees who are members of TAR. ______________________________ ______________________________

Listing Agreement and Buyer Representation Agreement

What is true about the TREC promulgated contracts? A. The contracts are available to any persons. B. TREC revises contracts every year. C. Only brokers must use the promulgated contracts. D. A licensee must be in the real estate business for three months before using the pro-mulgated forms

The contracts are available to any persons.

TREC does NOT promulgate listing forms and Buyer Representation Agreements. A. True B. False

True

The Seller Financing Addendum is much more common than the Loan Assumption Addendum. A. True B. False

True

The TREC promulgated Seller Financing Addendum states that if a seller determines at seller's sole discretion that the buyer's credit is unacceptable, the seller may terminate the contract and return the earnest money to the buyer. A. True B. False

True

The VA release of liability is for the benefit of the seller. A. True B. False

True

The effective date on the contract is determined by the final date of acceptance. A. True B. False

True

The main purpose of the Broker-Lawyer Committee is to draft and revise contracts for use by the licensees in Texas. A. True B. False

True

The public can use the promulgated contract forms approved by TREC. A. True B. False

True

Under conventional financing, the buyer will normally get a 30-year amortized loan although 15-year and bi-monthly payment loans are available. A. True B. False

True

When representing a buyer, seller, landlord, or tenant, the agent pledges to protect and promote the interest of their client. A. True B. False

True

________ A contract can become this if the party was under undue influence or not of sound mind.

Voidable

A seller, age 30, enters into a contract with a buyer, age 17. The contract is: A. Valid for both parties B. Void for both parties C. Voidable by the buyer D. None of the above

Voidable by the buyer

If the earnest money is not deposited within two days, it is considered a(n) ___________________.

defect

There are two places to find the seller's name to fill in the contract. The name can be found in the ____________________ or in the ______________________.

MLS printout/ tax returns

All the following are common errors in the contracts EXCEPT: A. Improper use of the Special Provisions section B. Terms for performance too short C. Not disclosing what stays with the property D. Failure to date the contract

Not disclosing what stays with the property

This paragraph must have factual details only concerning the contract.

Paragraph 11 (Special Provisions)

If the buyer takes possession prior to closing, what needs to happen? A. The seller needs to sign an affidavit relinquishing responsibility for the house. B. The seller should contract the insurance company for additional coverage. C. The buyer should sign a waiver to release the seller of liability. D. The buyer needs to sign a temporary lease.

The buyer needs to sign a temporary lease.

A bilateral contract is: A. A promise in exchange for a promise B. A promise made only by the agent C. A promise made only be the seller D. No promises

A promise in exchange for a promise

Either party may withdraw an offer before it is accepted. A. True B. False

True

A real estate broker or salesperson, while acting as an agent for another, is a(n) _____________.

fiduciary

In a contract to purchase real property, what is the name of the clause that states that the buyer will NOT be held responsible to complete the purchase if the buyer cannot obtain sufficient financing? A. Acceleration clause B. Escalation clause C. Contingency clause D. "As is" clause

Contingency clause

_______ is a rejection of the original offer.

Counteroffer

A counteroffer is a rejection of the original offer. A. True B. False

True

Withdrawing an offer is called _____________________.

rescission

The Texas Real Estate Commission is a nine-member commission appointed by _____________.

the governor

In the One-to-Four Residential Contract, "property" includes the land, improvements, and accessories. A. True B. False

True

It is considered illegal for a contract to include any discriminatory provisions. A. True B. False

True

The Joint Broker-Lawyer Committee consists of _______________ members.

13

What year was the Texas Real Estate Commission created to administer TRELA? A. 1959 B. 1972 C. 1991 D. 1949

1949

The standard FHA loan used with most residential transactions is the FHA _________ program.

203b

Paragraph 4 is a disclosure clause. A. True B. False

True

The effective date is determined by the final date of acceptance. All the following are elements of final acceptance EXCEPT: A. The final contract must be in writing. B. Acceptance must be unequivocal. C. An email must be attached to the contract. D. The buyer and seller must sign the contract and initial all handwritten changes

An email must be attached to the contract.

_______ transfers all the rights and obligations of a contract from one person to another.

Assignment

______ is a promise for a promise.

Bilateral

A voidable contract is: A. Not valid in the state of Texas B. Binding on one party but not the other C. Binding and enforceable on both parties if neither party is a minor D. All of the above

Binding on one party but not the other

The biggest majority of lawsuits come from the issue of: A. Fixtures vs. personal items that convey with the property B. Misunderstandings between brokers C. Non-disclosure D. Repair items

Non-disclosure

______Most lawsuits come from this.

Non-disclosure

In paragraph 2 of the standard residential contract form, which of the following items would NOT be included in the sale unless otherwise provided for: A. Mini-blinds B. Stove C. Ceiling fans D. Oriental living room rug

Oriental living room rug

If the buyer cannot obtain financing for the purchase. A. The earnest money is automatically refunded. B. The lender will notify the seller. C. The underwriter will notify the seller. D. The buyer must terminate the contract within a certain number of days or lose the right to terminate.

The buyer must terminate the contract within a certain number of days or lose the right to terminate.

In the Third-Party Financing Addendum, all the following are true EXCEPT: A. The contract is not subject to financing approval. B. The addendum is for an FHA or VA contract. C. The option of seller financing is part of the Third-Party Financing Addendum. D. The Buyer has the right to terminate and have earnest money refunded if they cannot obtain a loan.

The option of seller financing is part of the Third-Party Financing Addendum.

In Texas, if the buyer is in default, the seller can receive the earnest money as liquidated damages. A. True B. False

True

_______ is where certain things must be performed at certain specific times stipulated in the contract.

Time is of the essence.

The obligation to the client's interests is primary but that does not relieve Realtors® of the obligation to _____________________. A. Explain your relationship with your client to all other parties in the transaction B. Treat all parties honestly C. Disclose your client's position D. Make the other party feel that they are being respected too

Treat all parties honestly

A contract is considered completely performed when all the terms of the contract have been carried out. A. True B. False

True

A rental lease is an example of an executory contract. A. True B. False

True

A unilateral contract only binds one party to perform. A. True B. False

True

Above all else, dealing honestly in a transaction is the most important duty. A. True B. False

True

An addendum is text that is added to the original text as it got omitted from the draft by mistake or by purpose. A. True B. False

True

As a Texas REALTOR® , you also have access to more than a hundred forms for various types of real estate transactions that are not covered by T REC-promulgated forms. A. True B. False

True

Built-in appliances, wall-to-wall carpeting, and heating and air conditioning units are all considered "improvements." A. True B. False

True

Contract termination doesn't necessarily have to involve the wrongdoing of one party. A. True B. False

True

FHA loans are government insured. VA loans are guaranteed by the government. A. True B. False

True

If a seller counters a buyer's offer, it is considered a rejection. A. True B. False

True

If the seller wants to have his VA entitlement reinstated in full, he must find a veteran who has sufficient eligibility to purchase the seller's home and is willing to substitute his eligibility for the seller. A. True B. False

True

In Texas, civil statute of limitation laws is anywhere from one to five years depending on the severity of the claim. A. True B. False

True

The typical survey which most purchasers obtain when they go to closing is called _____________________.

a real property survey

The three Canons of Professional Ethics are ____________, ___________, and ______________.

fidelity, integrity and competency

For proper naming of the parties in the contract, you should ask the buyer (if you are representing them) their ___________________________.

full and legal name

Wetlands are the link between ____________ and ________________.

land/water

Seller disclosure of ______________________ is required by Federal law for a residential dwelling constructed prior to 1978.

lead-based paint

When personal property is included in the sale, you will want to use the ____________________ addendum.

non-realty items

If the agent is a _________________________, he/she must disclose that fact.

party to the contract

Texas real estate license holders are _______________ to use forms promulgated by TREC when negotiating contacts for the sale of real property.

required

Having an inadequate legal description in the contract most often happens with ___________________ property.

rural

If there is an addendum that addresses the issue of concern, then it should be used and not stated in the _____________________________ paragraph of the contract.

special provisions


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