Texas Promulgated Forms
Under the TREC New Home Contract (Incomplete Construction) how are change orders that result in a lower sales price addressed in the contract?
The amounts paid in cash and financed are reduced proportionately.
Which of the following promise exchanges is considered adequate consideration to create a legally binding contract?
The buyer's promise to buy and the seller's promise to deliver title.
The addenda included in the agreement are in paragraph __
22
The amount of the cash down payment is in paragraph __
3
What happens if seller fails to complete paragraph C of the Addendum for Reservation of Oil, Gas, and Other Minerals?
All surface rights are conveyed.
How is paragraph 14 different in the Residential Condominium Contract?
Because the seller owns a single unit only, casualty loss addresses that situation.
___ is only different in the Condominium Contract. It addresses association fees and deposits
Paragraph 12
The owner's title policy is a contract between which two parties?
The buyer and the title company
Which type of loans have unallowable fees that a buyer is prohibited from paying under the TREC One to Four Family Residential Contract?
FHA loans
Seller and buyer enter into an agreement for buyer to purchase seller's property and seller conveys a portion of his mineral estate to seller. The effective date of the contract is February 2. The closing date is February 28. Under the Addendum for Reservation of Oil, Gas, and Other Minerals by what date must the seller provide buyer with the contact information of any existing mineral lessee known to seller?
February 9
How are smoke alarms dealt with in the TREC temporary lease forms?
Tenant expressly waives landlord's duties to inspect and repair smoke alarms.
Provided the seller will not incur any expense, how many days after their receipt does the seller have to cure the timely objections of the buyer or any third-party lender?
15
The legal description of the property is in paragraph __
2
Buyer and seller (builder) wish to enter into an agreement for buyer to purchase a new home from builder. The builder ran out of money and never completed the project, but buyer is willing to buy the unfinished home and have builder finish the project with the funding from closing. Which TREC contract should the buyer's agent advise the buyer to use?
None of the TREC contracts are suitable for this transaction.
Which TREC form should be used if buyer wishes to terminate the contract because buyer cannot obtain approval?
Notice of Buyer's Termination of Contract
Under paragraph 13 of the TREC Residential Condominium Contract, which of the following is TRUE?
Cash reserves from regular condominium assessments for deferred maintenance established by the association will NOT be credited to seller.
Buyer and seller enter into a contract for buyer to purchase seller's property using the One to Four Family Residential Contract. Seller wants to reference and attach the seller's disclosure notice to the contract. What should the seller's agent advise the seller?
Do not attach the notice to the contract
Which of the following is included in paragraph 2 of the TREC One to Four Family Residential Contract?
Excluded fixtures and accessories
What can happen if a buyer fails to pay for an option fee within three days of execution of a contract under paragraph 23 of the TREC One to Four Family Residential Contract?
The paragraph will not be a part of the contract.
How are cash reserves from regular condominium assessments for deferred maintenance and capital improvements established by the association addressed in the TREC Residential Condominium Contract?
They are not credited to seller.
What law or rule requires disclosure of insulation R-Value?
Federal regulations
Which TREC contract should be used to sell or purchase a new condominium?
None of the TREC contracts should be used.
___ is different in each contract, describing the type of property that is covered.
Paragraph 2
Which TREC contract should be used to purchase a newly constructed home that has tenants residing in the house?
The One to Four Family Residential Contract
The Addendum for Property Located Seaward of the Gulf Intracoastal Waterway provides a disclosure regarding
public beach easements.
Which of the following is not included in paragraph 7 of the TREC One to Four Family Residential Contract?
Who will pay for the title policy
Which of the following is a specifically listed right, privileges and appurtenances in the TREC Unimproved Property Contract?
Water rights, claims, permits, strips and gores, easements, cooperative or association memberships
The Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller's VA Entitlement allows ___
the parties to negotiate the time to complete their duties under the agreement
Which of the following is NOT included in the TREC Notice of Buyer's Termination of Contract?
Buyer wants a refund of earnest money
Which of the following is NOT a reason for providing earnest money?
It serves as consideration for the contract.
What happens if no dollar amount is inserted in paragraph 23 of the TREC One to Four Family Residential Contract but the time period is filled in as 10 days?
The paragraph is not part of the contract.
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.
A buyer wishes to get a USDA guaranteed loan. Which form should the agent use to address that type of financing?
Third Party Financing Addendum
A new home builder is selling a spec house that she briefly lived in before listing it in the local MLS. A buyer is interested in making an offer on the house. Which TREC contract should the buyer's agent advise the buyer to use to submit the offer?
The One to Four Family Residential Contract (Resale)
How many promulgated contracts does TREC issue?
6
Title policy information is in paragraph __
6
___ is checked to indicate that the buyer has received the seller's disclosure.
7B1
The closing date is in paragraph __
9
Buyer and seller enter into a contract for buyer to purchase seller's house using the One to Four Family Residential Contract. Buyer wishes to purchase a 10-day option to terminate the contract. How long does the buyer have to pay the option fee?
Three days
The earnest money paragraph addresses all of the following EXCEPT
Title policy company
The buyer wishes to make an offer to buy a house for $185,000, with 70% financed through a first loan, 10% financed through a second loan, and a 20% cash down payment. How much is the down payment?
$37,000. Twenty percent of $185,000 is $37,000. The first loan will be for $129,500 and the second loan will be for $18,500.
License holder disclosure is addressed in paragraph __
4
The names of the sellers and buyers, including marital status, are in paragraph __
1
Who fills out the Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in a Property Owners Association?
A representative of the property owners association
The Statutory Tax District Notice in paragraph 6 of the One to Four Family Residential Contract applies to which of the following?
A utility district that provides water services
The buyer will receive a copy of the restrictive covenants at the _____________ expense, according to the contract.
buyer's
If the buyer wants to be sure the fireplace screen stays with the property, the buyer's agent should
do nothing; it is already in the contract
If the buyer wants to be sure the fireplace screen stays with the property, the buyer's agent should
do nothing; it is already in the contract.
Buyer and seller enter into an agreement for buyer to purchase seller's lot using the TREC Unimproved Property Contract. Buyer has paid earnest money to the escrow agent. Buyer is unable to find financing and gives proper notice to seller. Buyer terminates the contract and requests a release of the earnest money. Which of the following is TRUE with respect to escrow agent's payment of the earnest money to buyer?
escrow agent may deduct buyer's unpaid expenses before refunding the earnest money to buyer.
Buyer and seller enter into a contract for buyer to purchase seller's condominium unit using the TREC Residential Condominium Contract with an effective date of January 5. Seller delivers the condominium documents three days after the effective date. Assuming no option period, what is the latest date on which buyer may cancel the contract and still get her earnest money refunded?
January 13
A buyer and seller enter into an agreement for buyer to purchase seller's 200-acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $4,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 220 acres. The seller wants to adjust the sales price accordingly. What is buyer's option under the contract?
Buyer may not terminate because the variance is 10%.
Which of the following is TRUE under paragraph 7D of the One to Four Family Residential Contract?
Buyer's agreement to accept the property as is under paragraph 7D(1) or (2) precludes buyer from inspecting the property under paragraph 7A.
Buyer 1 enters into a contract with seller with an option to terminate 21 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 25. 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 earnest money on the second contract?
It was refunded to buyer 2.
What should a licensee do if the seller wishes to retain an item not specifically listed as an improvement or accessory in paragraph 2 of the TREC One to Four Family Residential Contract?
List the item as an exclusion in paragraph 2D.
Which of these promulgated forms does NOT include "time is of the essence"?
Loan Assumption Addendum
Under paragraph B of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, when is seller required to provide information to buyer regarding material changes to the subdivision information?
Promptly
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
When the seller remains in the property after closing, the Seller's Temporary Residential Lease is used, and the new owners are the___.
landlords
A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is
voidable
Earnest money is addressed in paragraph __
5
Buyer must object not later than the closing date or within how many days after receiving the commitment, exception documents, and the survey?
An agreed-upon number
If the property is located outside the limits of a municipality, which notice in paragraph 6 of the One to Four Family Residential Contract provides notice about the extraterritorial jurisdiction of the municipality?
Annexation
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 buyer's option period end?
At 5:00 pm on August 27
What does the statement on page nine of the TREC Farm and Ranch Contract indicate regarding payment of brokers' fees?
Brokers' fees or the sharing of fees between brokers are not fixed, controlled, recommended, suggested or maintained by the Texas Real Estate Commission.
How is paragraph 13 of the Residential Condominium Contract different from the One to Four Family Residential Contract?
It addresses cash reserves from regular condominium assessments.
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
How long does the seller have to provide the condominium documents in the TREC Residential Condominium Contract?
It is negotiated by the parties
The buyer wants to use her favorite title company to handle the purchase of an investment property. The seller's agent always uses a different title company. Who selects the title company?
It is negotiated by the parties
Why is the Seller's Disclosure of Property Condition form not addressed in the TREC Unimproved Property Contract?
It is not required under section 5.008 of the property code.
Under the TREC Residential Condominium Contract, how old can the resale certificate be?
It must have been prepared no more than three months before the date it is delivered to buyer.
What are unallowables under the TREC One to Four Family Residential Contract?
Lender fees that the borrower is prohibited from paying so the seller pays them
What should a licensee 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
____ is different only in the Condominium Contract. The seller owns the unit only, so that must be defined.
Paragraph 14
___ is only different in the Farm and Ranch Contract because the sales price can be adjusted by the survey.
Paragraph 3
___ is different in Condominium Contract and the Farm and Ranch Contract. The Farm and Ranch Contract allows for information regarding Exception Documents and Surface Leases. Paragraph 6G7 discusses Texas Agricultural Development Districts.
Paragraph 6
Which paragraph of the One to Four Family Residential Contract indicates if the buyer has received the seller's disclosure notice?
Paragraph 7
___ is different in both New Home Contracts, the Unimproved Property Contract, and the Farm and Ranch Contract. Different seller's disclosures are required by the type of property and are contained in these paragraphs.
Paragraph 7
How is paragraph 3 different in the Farm and Ranch Contract from the other five contracts?
Sales price can be adjusted after the effective date.
In the TREC Unimproved Property Contract, who is responsible for paying for the survey if seller fails to provide it as promised?
Seller
A buyer and seller enter into an agreement for buyer to purchase seller's 150 acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $6,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 135 acres. The buyer wants to adjust the sales price accordingly. What is seller's option under the contract?
Seller may not terminate because the variance is 10%.
Which of the following is NOT assumed in a short sale using the TREC Short Sale Addendum?
Seller's net proceeds at closing will be sufficient to pay the balance of seller's mortgage loan.
How long does the buyer have to terminate the contract after he receives the condominium documents in the TREC Residential Condominium Contract?
Six days after delivery of the documents
TREC promulgates the Loan Assumption Addendum. In a transaction where a buyer is assuming a seller's loan
TREC's Loan Assumption Addendum is required.
Which law requires that a contract have a proper legal description?
The Statute of Frauds
If a seller gave a letter to the listing agent with instructions not to deliver any offers for less than $250,000 and the listing agent receives an offer for $249,500, should he deliver it?
The TREC allows the listing agent to reject this offer because the seller has given written approval
A buyer and seller enter into an agreement for buyer to purchase seller's 3,500-acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $5,000 per acre and that the sales price will be adjusted based on the survey. The seller gets a survey done which indicates that the ranch is 3,900 acres. The seller wants to adjust the sales price accordingly and buyer disagrees. What happens if buyer fails to timely terminate the contract?
The additional cost is allocated as agreed in paragraph 3D.
A buyer and seller enter into an agreement for buyer to purchase seller's 2,000-acre ranch using the TREC Farm and Ranch Contract. The parties agree that the sales price is calculated at $2,000 per acre and that the sales price will be adjusted based on the survey. The buyer gets a survey done which indicates that the ranch is 2,400 acres. The seller wants to adjust the sales price accordingly and buyer disagrees. What is buyer's option under the contract?
The answer is buyer may terminate with written notice to the seller. Since the variance is more than 10% of the original sales price
A buyer and seller agree that buyer will buy the seller's home for $475,000 with no option to terminate using the TREC One to Four Family Residential Contract. The lender requires the roof to be replaced, the perimeter to be treated for termites, and the stucco on the back of the house to be repaired. The roof will cost $10,000, the termite treatment will cost $1,800, and the stucco repair is estimated to cost $8,000. Seller agrees to pay for everything. What are the buyer's options?
The buyer may not terminate the contract.
A buyer promises to pay an option fee of $500 within three days of execution under paragraph 23 of the TREC One to Four Family Residential Contract to purchase a 12-day option to terminate. What happens if the buyer pays half of the fee up front and half four days after execution?
The buyer will not have the unrestricted right to terminate the contract.
A buyer promises to pay an option fee of $500 within three days of execution under paragraph 23 of the TREC One to Four Family Residential Contract to purchase a 15-day option to terminate. What happens if the buyer pays the fee four days after execution?
The buyer will not have the unrestricted right to terminate the contract.
Which of the following is NOT an appropriate use for paragraph 11, Special Provisions, of the One to Four Family Residential Contract?
The contract is in a second or back-up position.
Who issues the receipt for the earnest money under the One to Four Family Residential Contract?
The escrow agent
What is the purpose of paragraph 24 of the One to Four Family Residential Contract?
The parties may add contact information of their attorneys.
Which of the following is/are considered adequate consideration to create a legally binding contract?
The promise of the buyer to buy and the promise of the seller to deliver title
Which of the following may be included in paragraph 11, Special Provisions, of the One to Four Family Residential Contract?
The seller is unavailable by phone Tuesdays and Thursdays from 1:00 to 4:00 pm.
Which of the following is not a notice under paragraph 6 of the One to Four Family Residential Contract?
The seller's disclosure notice
Which of the following is TRUE for the statute of limitations for contracts for the sale of real estate and oral contracts for leases of less than one year?
The statute of limitations is four years for the sale and two years for the lease.
Under the TREC One to Four Family Residential Contract, how long does the seller have to provide the seller's disclosure notice to the buyer?
The time period is negotiated between the parties
How is paragraph 7 different in both New Home Contracts, the Unimproved Property Contract, and the Farm and Ranch Contract from the residential contract?
There are different seller's disclosures required depending on the type of property.
The sellers purchased the home 20 years ago and had the property surveyed. They made no changes to the property. Using the One to Four Family Residential Contract, what should the listing agent tell the sellers to do about a survey?
Use the Residential Real Property Affidavit and the existing survey