Promulgated Contracts Practice Test
According to Paragraph 9 of the One to Four Family Residential Contract, how must a buyer pay for the property?
"in good funds acceptable to the escrow agent"
Rollback taxes are addressed in all of the following except:
-both new home contracts -farm and ranch contract -unimproved property contract NOT residential service contract
What are some factors about the residential service contract?
-its optional -the buyer is responsible for understanding the coverage they're choosing -the provider is chosen by the buyer NOT -the buyer is responsible for understanding the coverage they are choosing
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
By what time is the seller required to furnish a new survey?
The seller must furnish the buyer a new survey no later than 3 days prior to closing
How many lawyers are on the Broker-Lawyer Committee?
six
Which of these must the broker maintain a copy of for three years following a sale?
Lead Based Paint Addendum
The words "time is of the essence" are in:
Paragraph 23 of the One to Four Family Contract
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
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
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 date and executed date
What is an example of a TREC promulgated contract?
farm and ranch contract
What does paragraph 7A of the One to Four Family Residential contract grant every buyer the right to do?
have the property inspected
What does the third party financing addendum provide a deadline to buyers for?
informing a seller they didn't get their financing approved
What is the purpose of the Consumer Notice Concerning Hazards or Deficiencies in TREC promulgated contracts?
it educates buyers on the purpose of property inspections
When a contract has been fully executed, what has happened to it?
it has been terminated
Who can create contracts?
lawyers, sellers, and the Broker-Lawyer Committee NOT a broker
What is something that TREC cannot do?
license developers and builders
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
What are some things that are appropriate to put in Paragraph 11 (the Special Provisions section) of a TREC promulgated contract?
relevant business information -the names of additional owners that could not fit in Paragraph 1 -the details of an adjustable-rate mortgage -a description of the property NOT -that the contract is contingent on the inspection
Paragraph 7D(2) of the contract indicates:
repairs that must be completed by the seller before closing
Which of these is something TREC is empowered to do by TRELA?
require license holders to use contract forms for certain transactions
Which of these is NOT a protected class of people, according to Fair Lending Laws?
sexuality
If clients want to make an offer to the seller offering a "lease with option to buy," the buyer's agent should:
tell the client they will need an attorney to draw up the documents
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?
that date becomes the effective date of the back up contract
What information does the Disclosure of Relationship with Residential Service Company form convey?
that it is a violation of RESPA for a license holder to receive a referral fee for passing on a name to a service provider
Where can commission split agreements be determined?
the MLS a signed agreement between brokers the listing agreement NOT the sales contract
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 Notice to Prospective Buyer
The Seller's Disclosure Notice is a requirement of
the Texas Property Code
Agent Alicia is helping her client buy a newly built home. She does not use the New Home Contract (Completed Construction). What is the most likely reason why?
the builder required that she use their contract
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
Why does the Notice of Buyer's Termination of Contract only have to be signed by the buyer?
the buyer's termination rights are outlined in the contract
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
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 one
If legal action is required regarding a TREC sales contract, what will the non-prevailing party be responsible for?
the prevailing party's reasonable attorney fees and court costs
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
A seller is renting back a property from a buyer using the Seller's Temporary Residential Lease. The seller damages the property while they are staying there. Who is responsible for the cost of the repairs?
the seller/tenant
When both parties mutually agree to terminate a contract, who provides the appropriate form?
the title company
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
There are three different types of financing choices in Paragraph Three of TREC's One to Four Family Residential Contract. They are:
third party, assumption, seller financing
What is the purpose of the Short Sale Addendum?
to protect a seller who is selling their home for less than they owe their lender
What is the purpose of the "Listing Broker's fee" section at the bottom of Page 9 of the One to Four Family Residential contract?
to reflect a previously agreed-upon commission
When is the T-47 Residential Real Property Affidavit required?
when the sellers are providing an existing survey
In TREC promulgated contracts, what does Paragraph 21: Notices provide information about?
where to send official notices about the contract
Reggie made Betty an offer on her house. She countered, but Reggie has not yet accepted. Then along comes Archie with a better offer. Before accepting Archie's offer, what must Betty do?
withdraw her counter to Reggie
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 after the effective date
In Paragraph 9 of the One to Four Family (Resale) contract, what must happen "on or before" the specified date?
closing
Which of these forms is least likely to be involved in the sale of unimproved property?
condominium resale certificate
Agent Kara signed a buyer's representation agreement with her client that set her commission at 3%. The listing broker of the home her client chose offered 3.5% to the buyer's broker. What percentage of the sale price of the home will Kara's commission be?
3.5%
What is the statute of limitations to claim fraud or misrepresentation against a license holder?
4 years from discovery
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 sellers VA addendum
Anthony changed the use of his land from farm land to residential before he sold it. According to TREC rules, who is responsible for any rollback taxes he might owe?
Anthony
Which type of TREC promulgated contract form(s) gives disclosure about the type of insulation in the property?
Both New Home Contracts
In the Farm and Ranch Contract, where does a legal description and list of improvements staying with the property go?
Paragraph 2
A murder/suicide took place in a property. The crime was widely publicized. What is the disclosure requirement for this crime?
It must be disclosed forever.
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
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
Buyer Javier sends a formal offer to Seller Joy: $250,000 and the appliances stay. Joy counters: $250,000, no appliances. She then reconsiders and accepts the first offer. Is Javier obligated to buy the home? Why or why not?
No, because the first offer was dead when Joy countered.
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 Non-Realty Items addendum must be owned fully by the seller
Which TREC promulgated contract are all the other contracts based on?
One to Four Family Residential Contract
What contract would be used in this scenario: A client is buying a property where the land is not owned individually and the common areas are shared equally among the community's owners.
Residential Condominium Contract (resale)
Which TREC promulgated form allows for the sales price to be adjusted because of the survey?
The Farm and Ranch Contract
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
If an agent makes a change to Paragraph 6A8 in a TREC promulgated contract, which of the following is most likely to be the result?
The title policy will be amended to read "shortage in area" rather than the standard exception
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
What is an express contract?
a contract that has a very specific offer and acceptance
What is a unilateral contract?
a promise exchanged for performance
What does the Residential Condominium Contract require in the legal description of the property?
a unit number
What are more examples of TREC promulgated contracts?
addendum for release of liability on assumed loan, notice of buyers termination of contract, notice of sellers termination of contract NOT condo addendum
Which of the following would constitute unauthorized practice of law and/or be a violation of TRELA?
adding or striking things from pre-printed contract forms
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
According to Paragraph 6B: Commitments in the promulgated One to Four Family Residential Contract, what must be provided to the buyer along with the title policy documents?
any restrictive covenants
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
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
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
How can an agent help protect the earnest money of a buyer who is financing their purchase?
by submitting a third party financing addendum
Who creates housing occupancy standards?
city zoning laws, state laws, and housing providers NOT the FHA )Federal Housing Administration
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