Texas Promulgated Contract Forms

When should the Third Party Financing Addendum be used?

If the buyer is applying for a loan with conventional, FHA, VA or other forms of financing

When would the Unimproved Property Contract be used?

When there are no improvements on the property.

Why might a buyer want to assume a note and not originate a new loan? The interest is lower than current market rates. The note is paid down. There is no legitimate reason. Both A & B

Both A & B

With the Seller's Temporary Lease, who is the landlord?

Buyer

An option could be used in which of the following ways? To give a buyer time to fly an out-of-town spouse in to make a final decision. To give time for a seller to conduct repairs To give an investor a look at several houses at once without having to buy any. All of the above are correct.

All of the above are correct.

Which of the following is a real estate agent not allowed to do?

An agent acting properly should always include all names including nick names and fictitious names as well as full names for the parties of a contract.

How is the interest rate in the Third Party Financing addendum determined?

By negotiation between the buyer and lender

What is it called when a buyer puts together the paperwork necessary to buy a house from a seller and that paperwork is presented to the seller?

An offer

What is it called when a person listens to both sides of the situation and makes a decision. His or her decision is binding and court action cannot be pursued.

Arbitration

When a change needs to be made to the TREC ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE) TREC 20-14, what is the best way to handle it?

Changes should be made using the "Amendment to Contract" addendum.

What documents are necessary to the buyer because the buyer needs to know how the association will operate and the rules of the condo?

Condominium Declaration, Bylaws and any Rules of the Association.

What are liquidated damages?

Damages that are agreed to in advance.

All of the following are necessary to create a valid contract except which one?

Earnest money

Which of the following is not an example of good consideration for the sale of a house?

Earnest money

A buyer is most likely to request an assessment on the TREC Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum for which of the following issues?

Environment, Threatened or Endangered Species, and Wetlands

When all promises in a contract have been met, that contract is called what?

Executed

What is a contract called which defers material action by either party into the future?

Executory

Which FHA loan is typically the lowest down payment loan for a buyer?

FHA 203 (b)

How long is the Statute of Limitations for an oral contract in Texas?

Four years

Which of the following is a real estate agent allowed to do?

Give advice as to the pricing of an owner's property

How does the Seller's Temporary Lease handle the tenant making improvements?

If the tenant is allowed to improve the property by the landlord, those improvements become the landlord's.

Who does the mortgagee's title policy protect?

Lender

Which of the following would be an example of "good consideration"?

Love of a friend

What is defined as a landmark that is used for a point of reference?

Monument

What is defined as agreement to all the terms by all the parties of the contract?

Mutual assent

Where on the Texas Real Estate Commission One to Four Family Residential Contract (Resale) does the address get entered?

Paragraph 2

What rule in contract cases prevents a party to a written contract from presenting oral evidence that contradicts or adds to the written terms of the contract that appears to be whole?

Parol Evidence Rule

What is point designated in the description as an initial point for beginning a land description?

Place of Beginning

What is it called when two or more real estate brokers work together to conspire to charge the same commission?

Price Fixing

Which of the following groups does the Texas Real Estate Commission govern?

Real estate licensees

The seller must allow the buyer the right to have the property inspected during which times?

Reasonable times

What is another term for "cancellation"?

Rescission

According to the TREC promulgated ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE), who is responsible for having the utilities turned on?

Seller

According to the Buyer's Temporary Lease, who is responsible for all repairs during the lease period?

Tenant

What was the Texas Real Estate License Act called in 1939?

The Real Estate Dealer's License Act

What law prohibits price fixing?

The Sherman Anti-Trust Act

What entity promulgates real estate contracts for use by licensees?

The Texas Real Estate Commission

Under TREC 16-5, who is responsible for any injuries that occur during the lease agreement?

The buyer

With the Addendum for Sale of Other Property by Buyer, if a back-up offer is received by the seller and he or she chooses to accept it, the seller will notify the buyer and then what would happen to the contract?

The buyer could waive the contingency.

Using the TREC Farm & Ranch contract, if the property is located on a FEMA flood map, what are the buyer's rights?

The buyer may object and terminate the contract as long as the buyer does so in the time allowed.

What is an 80 - 10 - 10 loan program?

The buyer will borrow 80%, put 10% down and get a second lien for 10%.

With the Loan Assumption addendum, what happens if the seller does not respond to the buyer's creditworthiness after seven days?

The contract is valid.

When is the effective date of the back-up offer?

The date that the buyer was notified that the first contract was terminated

What is the best definition for "option" when referring to TREC One To Four Family Residential Contract (Resale)?

The days the buyer would have to terminate without recourse

Which items are included in the condo's documents?

The declaration, bylaws, rules

Which of the following is the correct definition of the "Four Corners Doctrine"?

The interpretation of any disputed clause in a contract will be influenced by the document as a whole.

What does the term "good and marketable" mean?

The property could be sold without interference.

If the seller is exempt from filling out a Seller's Disclosure Notice, then which of the following is true?

The seller is still required to make full disclosure about the property condition.

Which addendum spells out the details of the loan and will be included on almost all contracts?

Third Party Financing Addendum

On Form 9-13 Unimproved Property Contract, in what paragraph would you find information regarding property liens?

Title Policy and Survey

What is the fee that is charged every time a property changes hands?

Transfer fee

When one party may be in default but because of the nature of the agreement, the damaged party would not have the ability to sue the other party in court, this is what type of contract?

Unenforceable

What is duress?

Use of force

How should a licensee fill out a TREC One to Four Family Residential Contract (Resale) if the seller is willing to finance the transaction for the buyer?

Use paragraph 3.B and check the appropriate box for Seller Financing Addendum.

When a written agreement is legal and every item is completely agreed to, it is said to be which of the following?

Valid

When working with a builder, what is "registration" of a client?

When the client registers with the builder to protect the agents commission.

The Texas Real Estate Commission regulates a licensee in which of the following situations?

When the licensee is selling a house for a client

What is the maximum amount of days that is allowed using the Seller's Temporary Lease?

90

Using the Texas Real Estate Commission promulgated Buyer's Temporary Residential Lease, a buyer can lease a property up to ______ prior to closing.

90 days

What is a legal agreement between parties to do (performance) or not to do (forbearance) a certain act for consideration?

A contract

The TREC One to Four Family Residential Contract (Resale) should be used in which of the following transactions?

A duplex

Which of the following is true? A real estate licensee may practice law (limited) A real estate licensee may give advice to their clients A real estate licensee may draw up contracts for use A real estate licensee can hire an attorney to represent his or her client's interests

A real estate licensee may give advice to their clients

Which of the following is true? An REO company can require a buyer to use a specific title company. Any seller can require a buyer to use a specific title company. A national bank can require a buyer to use a specific title company. A seller that has agreed to pay for the title policy can require a buyer to use a specific title company.

A seller that has agreed to pay for the title policy can require a buyer to use a specific title company.

Which of the following situations is NOT an exception to the use of promulgated forms?

A standard purchase agreement bought from a business supply store

Using a TREC promulgated purchase agreement, who is required to pay for the title insurance?

It's negotiable

Which one of the following is a TREC rule on filling in Paragraph 3 of the Texas Real Estate Commission One to Four Family Residential Contract (Resale)?

3.A. + 3.B. = 3.C.

Suppose a buyer was willing to offer a seller $285,000 on a property with a first lien of $200,000 and a second lien of $60,000, with $25,000 as a down payment. What would the licensee put in paragraph 3.B of the TREC One to Four Family Residential Contract (Resale)?

$260,000

A lead-based paint notification is required on all properties built prior to what year?

1978

How long is the Statute of Limitations for a written contract in Texas?

4 years

What does "ad valorem" mean?

According to value

According to the TREC Farm & Ranch contract, how long does the buyer have to object if any portion of the property is on the FEMA flood map?

It's negotiable.

If a claim is made against the title as covered by the title policy. The issuing title company and or the Underwriter that issued the title policy on behalf of the title company protects the buyers by:

Bearing the cost of settling the claim if it proves valid, in order to perfect the title and keep the buyers in possession of their property.

With a condominium, what is the strictest definition of what is owned?

Inside airspace of only the one unit.

What is a vara?

It is a unit of measurement, equaling approximately 33 1/3 inches.

How many days is the buyer allowed to get financial information to the seller in the Seller Financing Addendum?

It is dependent upon paragraph A of the Seller Financing Addendum

When should the Seller Financing Addendum be used?

It is used when the seller carries a note for a buyer for all or any portion of the sales price.

According to the TREC promulgated ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE), who is required to pay for lender-required repairs?

Neither party

What is a "spec" house?

One that the builder builds to show off his or her work.

If both the buyer and seller agree to have the real estate professional write a contract for their specific situation and will put this request in writing, can the agent then write the contract for the customers?

Not under any circumstances

At what time is the rent due according to the Seller's Temporary Lease?

On the date of closing of the purchase agreement

What requires a survey to be ordered on a condominium sale?

Since the exterior of the condominium is not relevant to the sale, the survey of the property is not relevant.

What law requires all contracts for real property to be in writing to be enforceable?

Statute of Frauds

What law requires any amendment or addenda used must be in writing and signed by both parties to be enforceable?

Statute of Frauds

What is the meaning of the term "time is of the essence?"

Strict compliance to the dates on the contract.

Who are professionals that can determine the integrity of a building?

Structural Engineers

What is a professional analysis of a property and its location relative to other property?

Survey

What is a disclosure statement by the seller that states no changes have been made on the property that could affect the survey?

T-47 Affidavit

When an essential element is missing in an agreement and the courts would not hold it as a contract, then the agreement would be:

Void

When one party could change their mind and exit a contract, it is said to be:

Voidable

Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement is used for what type of situation?

When a seller wants to be released from further liability on the VA assumed loan and wants their VA entitlement restored.

Should addendums be attached to the main contract?

Yes, all addendums should be attached to the contract under Paragraph 22.

A title search could uncover all the following EXCEPT

a low appraisal

When does a purchase agreement become binding if both parties have signed and both parties have been notified?

at that time

What do the words "to bring to a conclusion" mean?

bring something to a finish or to an end

On the TREC No 15-5 Seller's Temporary Residential Lease, the ____________ is the landlord and the ____________ is the tenant.

buyer, seller

A title search will not discover

the sellers motivation to sell.

What is the difference between a title policy and a title commitment?

A title commitment is issued prior to closing to describe the items on the title policy which will be issued after closing.

Who is a "third party" to a contract?

Anyone listed on the contract that is not the buyer or seller

What is the least appropriate way to communicate the agreement of a buyer and seller?

By postal mail

What is an error in the meaning of words, laws, or facts which causes one or both parties to enter into the contract without fully understanding the outcomes or responsibilities implied by the contract?

Mistake