Texas Real Estate - Promulgated Forms
Earnest Money Deposit
"deposit" paid upfront by the buyer
Communication
Also referred to as notification.
Addendum/Addenda
An ________ to a contract is an attachment that adds or further describes the rights and of the parties.
Addendum for Property Subject to Mandatory Membership in a Property Owners Assoc.
This is the subdivision information and resale certificate.
Earnest Money Deposit
Should not be confused with consideration. It is not one of the requirements of a valid contract.
Effective Date
The date that acceptance was communicated to the offering party.
Consideration
The purchase price or sales price of the property is the ___________ in a valid contract.
Complaints
If an individual feels discriminated against, a complaint may be filed with the Texas Workforce Commission Civil Rights Division, HUD, the courts, or with the U.S. Attorney General. The complaint must be filed within two years of the alleged act. Burden of proof of discrimination lies with the person filing the complaint. Remedies include actual and punitive damages. Violation of the law is a civil offense.
Exclusions
If an item is to be excluded, give it a name and a location. For example, "dining room chandelier" would be an adequate name and location. Excluded items are to be "removed prior to delivery of possession."
Assignable
Unless otherwise provided in the contract, most contracts are ________. Leases are ________and the new leasee is bound to the original terms of the lease unless otherwise prohibited.
Grounds for Termination
Unsatisfactory results from the testing or research.
Buyer's Primary Duty
Show up at closing and pay the agreed consideration (sales price).
Abstract
The Texas Real Estate License Act requires that license holders advise the buyer to have the abstract examined by an attorney or to obtain a title insurance policy.
Assumption
The agreement by the buyer to pay the seller's existing mortgage as part of a contract for sale.
Breach of Contract
The breach of one of the parties may terminate a contract. The party who breaches a contract is the party in default. The other party, known as the injured party, has a number of possible remedies. The injured party may sue for damages in court. Some contracts provide for the injured party to collect liquidated damages, thereby releasing all parties from further obligation under the contract.
Fully Executed
The contract is _____ _______ when both parties have performed. When the sale is closed the contract has been _____ _______.
Executory Contract
The contract is known as an _______ ________ from the effective date through the closing. 45-60 days from effective date to closing.
Contract and Earnest Money Receipt
The escrow agent will fill out this part of the form when title is "opened" by the delivery of the contract to the title company. Either agent may deliver the contract to the title company. It is the title company representative that effectively "opens title" to the property.
Addendum for Property Located Seaward of the Gulf Intracoastal Waterway
The purchaser is advised that the property described in this contract is in the vicinity of a public beach, and that it is possible that the vegetation line could move in such a way as to leave the property and its improvements on a public beach. The owner of such property could be liable for the cost of demolition and removal of the improvements.
Fixed-rate mortgage
The rate does not change over the term of the loan.
Assignment
Transfers all of the rights related to the contract to another party known as an assignee. The assignee assumes primary liability for performance under the contracts, and the assignor, unless released, remains secondarily liable.
Buyer's Concerns of assuming a loan
1. The seller, who is the original borrower on the loan assumed may continue to be liable, along with the buyer. See the following discussion of seller liability on assumed loans. 2. Time to process. Processing loan assumptions is not a core business activity of lenders. The assumption department may be overworked and understaffed, resulting in processing times that can run 75-90 days.
D
According to the Addendum for Back-Up Contract, an amendment to the first contract: a. Waives all contingencies b. Gives the seller the right to keep the earnest money c. Constitutes a termination of contract d. Does not constitute a termination of the first contract
Complaint Venues
Administrative Hearing, Federal District Court, Private Litigation. Complaint must be filed within 2 years of alleged violation.
Gender Preference
Advertisements must contain no explicit reference for the gender of the renter. Shared living spaces are an exception, and "female roommate wanted" would be acceptable. Acceptable terminology that describes the premises as opposed to the occupant would include "bachelor apartment" and "mother in-law suite."
General rule of law
All parties to a contract have read it and understand it even if illiterate or not knowledgeable in the subject.
Blockbusting
Also know as panic peddling. is any attempt to induce panic selling in a neighborhood for financial gain. The most common tactic is to imply the entrance into the neighborhood of a new ethnic or racial group, and suggest to homeowners that they sell now "While values are still high."
Default
Failure to meet a contractual obligation
Escrow Agent
IS NOT a party to the contract and does not have liability for performance or nonperformance of any party. IS liable for interest on the earnest money. IS liable for the loss of any earnest money caused by the failure of any financial institution.
Hazardous Substances
Radon, Asbestos, UFFI, Landfills or waste disposal sites, Underground storage fuel tanks, Farming herbicides and pesticides, Electromagnetic fields EMFs
buyer, listing agent (seller's agent)
10. In most cases, the initial offer is prepared by the agent working with the __________________. The offer is delivered to the __________________, who presents the offer to the seller.
Broker-Lawyer Committee
13 members- 6 licensed brokers appointed by TREC, 6 licensed attorneys appointed by president of State Bar & one public member appointed by the governor.
Earnest Money Deposit
As a rule the ________ _________ _________ will be collected rom the buyer when entering into a contract.
Hydrostatic Testing
Exception to inspections, must be authorized separately by the seller, in writing.
Churning
Excessive selling/lending activity for the purpose of generating fees and commissions. Lenders encourage refinancing to earn additional fees rather than to help the customer.
Assignor
Unless released, remains secondarily liable for performance under the contract assigned.
Buyer's Benefits of assuming a loan
1. Assuming a loan at a rate that is not currently available 2. Less expensive than obtaining a new loan, $500, buyer pay as none of the typical charges associated with a new loan. 3. Rate may be higher than currently available, but the savings in fees associated may be much greater.
13, 6
4. The Broker-Lawyer committee has ______________members. ______ members are licensed brokers appointed by TREC, and six members are licensed attorneys appointed by the president of the State Bar.
communication
5. The __________________ of an offer should be done promptly because the license holder's duty is to keep the principal or client informed at all times of material information
Conventional Loans
A c________________ is best described as any loan that is not a government loan.
Endorsement
A change made to a standard insurance policy
Bilateral Contract
A contract between a buyer and seller is a ________ contract because both parties have made promises; therefore both parties have duties to perform. Both parties are obligated to perform.
Casualty Loss
A fire or other casualty loss does not release the buyer or seller from the contract. Seller has until closing to bring the property back to its prior condition.
Counteroffer
A rejection of the original offer coupled with a new offer. Made when a party changes an offer in some way and communicates the change to the other party.
Assignee
Assumes primary liability for performance under the contracts assigned.
Earnest Money
At closing, the _____ _____ must be applied first to any case down payment, then to Buyer's expenses and any excess refunded to buyer.
Elements of a Valid Contract
COLIC - Competent parties, Offer and acceptance (mutual consent), Legal purpose, In writing (when required by law) , Consideration.
Amendment
Can be used for many purposes. If signed by both parties, it becomes a change to the existing contract and must to be submitted to the title company.
Error & Omissions Insurance
Can protect a broker if the seller misrepresents property condition, the broker is unaware of the misrepresentation, and could not have detected it by visual inspection.
Common Amendments
Changes to closing date, Changes to the sales price, down payment and/or amount financed, Repairs that the seller agrees to perform, Removal or waiver of contingencies.
Closing
Closing date is agreed to by the seller and the buyer. It is an "on or before" date. May extend up to 7 days after resolving objections to the commitment or survey. If either party fails to close by closing date, the non-defaulting party may exercise the remedies in Pgh 15.
Condominium Documents
Condominium Resale Certificate
Farm and Ranch Contract
Contains provisions for surface leases related to property.
Executory Contract
From the effective date to closing the contract is an __________ _____________. A contract that is binding on the parties, with one or more of the parties have contractual duties that have not yet been performed.
Escrow
Funds held by a third party until performance of a contract
Conciliation
HUD will try to reach an agreement with the respondent (the person the complaint was filed against). A conciliation agreement must protect both the complainant and the public interest. If an agreement is signed, HUD will take no further action on the complaint. However, if HUD has reasonable cause to believe that a conciliation agreement is breached, HUD will recommend that the Attorney General file suit.
Addendum for Property in a Propane Gas System Area
House Bill 2532 Propane Distribution system.
Certificate of Reasonable Value
In order for a buyer to purchase a property using a VA Guaranteed financing, the buyer must receive a(n) _______________, which establishes the value of the property.
Fraud
In the case of _______ there never was a "Meeting of the Minds" and the contract is void.
Failure of Mutual Consent
In the case of fraud or, the buyer and seller could have made a mutual mistake. The mistake must be mutual between the buyer and sell.
Binding
Once all the terms of an offer have been agreed to and signed by the parties, and the acceptance communicated to the offeror, the contract becomes _______ on the parties.
Foreclosure Rescue Scam
Involves a homeowner who is deceived into signing over title to the property with the belief that he or she will be able to remain in the house as a renter and eventually buy it back over time. In this case, the terms are impossible to live up to; the homeowner loses his or her home, and any equity he or she may have built. In the other case, the homeowner thinks he or she is signing documents to bring the mortgage current, but instead actually surrenders his or her ownership. The homeowner usually does not know about the scam until the day he or she is evicted.
Acceptance
Means that the accepting party does so with no change to the contract whatsoever.
Agricultural Use Exemption
Method for evaluating tax burden of properties used for agriculture
Do not have full contractual capacity
Minors, individuals who have had guardians appointed, and those under the influence of drugs or alcohol.
Government Loans
Mortgages insured or guaranteed by the U.S. Government often FHA or VA.
Chunking
Occurs when a fraudster promises to show investors how to get rich by investing in the real estate market.
Equity Theft
Occurs when fraudsters forge a deed transfer or a satisfaction of lien, and then obtain new liens on the property. The homeowner does not know about it until he or she receives an eviction notice. A foreclosure rescue scam is also a version of equity theft.
If financing not obtained within allotted days
Options: 1. Terminate contract by providing written notice of inability to obtain credit approval. 2. Allow allotted time to run out (possible lose earnest money). Request an extension of time from seller.
Disclose the relationship in Pgh 4
Raul is Moises's father and real estate agent. What must Raul do when filling out the sales contract?
Buyer's Temporary Residential Lease
Per day. Buyer's Temporary Residential Lease form should be completed if Buyer occupies the property 90 days or less prior to closing.
Civil Rights Act of 1866
Prohibits discrimination in housing based on race or color. Still in effect today.
Civil Rights Act of 1968
Prohibits discrimination in housing based on race, religion and national gender. Gender was added in 1974. Followed by physical handicap and familial status in 1988. Age is not protected category under this law.
Consideration
Something given in exchange for a promise. No requirement that it must be in the form of money. It could be nothing more than an exchange of promises.
Addendum prevails
Sometimes a provision in an addendum contradicts a provision in the main body of the contract. In such a case, the provision in the ______ ______.
Default Remedies
Specific Performance, Monetary Damages, Liquidated Damages or Refund of Earnest Money.
Buyer Defaults - Seller's Options
Specific performance (court action), Monetary Damages or Liquidated Damages.
Doctrine of laches
Statue of Limitations
Channeling
Steering, also known as channeling, is taking buyers or renters to, or away from, a particular area based on the race, religion, etc. of the buyer or renter, and is the most common cause for complaint under the law. Steering can be blatant or quite subtle.
Examples of Performance
The seller must allow the buyer access to the property for inspections. The buyer must make reasonable efforts to obtain financing, and appear on the closing date ready to pay and close.
Environmental Assessment
This is a notice to Buyer that, if Buyer is concerned about environmental matters affecting the property, a TREC Promulgated Environmental Addendum is available. The addendum allows Buyer, at Buyer's expense, to perform environmental assessments on the property. An example of an environmental assessment would be a site assessment to determine the likelihood of toxic substances on the site. Buyer may terminate the contract if any of the reports show that toxic substances, endangered species or their habitat on site, or wetlands which will adversely affect the Buyer's intended use of property.
Broker's Fees
These fees are most commonly found in the listing agreement between the broker and seller, and in the buyer representation agreement between the broker and buyer. Fee sharing agreements between brokers may be by written agreement, or may be through participation in a Multiple Listing Service (MLS).
Addendum for Sale of Other Property by Buyer
This addendum is used when Buyer and Seller agree to make a contract subject to the sale and funding of another property currently owned by Buyer.
Addendum for Coastal Area Property
This addendum is used when a property abuts any tidally influenced waters of Texas. This would include lands fronting on the Gulf of Mexico, including all bays and waterways whose level rise and fall with the tide. The seller must disclose any known fill on the property. Construction of structures such as bulkheads and piers over state-owned submerged lands must be done with a proper permit from the state.
Addendum for Back-up Contract
This addendum is used when a property is already under contract to a buyer, and another buyer wants to enter into a contract that would become effective if the first contract fails to close. The intent of a back-up contract is that it is to be contingent on the failure of an existing contract to close. In no way is this contract to be interpreted as an attempt on the part of a seller to replace a valid and enforceable contract with a new one that may have terms more favorable to the seller.
Condominium Resale Certificate
This certificate is prepared by the management of the condominium project. It should be carefully reviewed by the buyer to determine that there are no significant issues relating to the project as a whole or to the particular unit being purchased.
Buyer's Termination Form
This is a "multi-purpose" termination form that provides five specific reasons to terminate. If the termination is pursuant to another provision of the contract, the appropriate information can be entered in Paragraph 6.
additional provisions
When inserting __________________ into a contract, the license holder should add only factual statements and business details that are required for the transaction.
Factual Statements
When inserting additional provisions into a contract, the license holder should add only ______ _______ and business details that are required for the transaction.
Binding Contract
When offer is signed by all parties and the acceptance is communicated to the offering party. Communication is also referred to as notification.
Acceptance
When the last party signs and acceptance has been communicated to the other party's agent, the date of final acceptance is filled in. The broker is responsible for ensuring the date is filled in.
C
Which of the following is NOT part of the mineral estate? a. Oil b. Gas c. Limestone d. Salt
A
Which of the following statements regarding the Addendum for Back-Up Contract is FALSE? a. An amendment to the first contract automatically constitutes a termination of the first contract b. The previous contract is known as the "First Contract" c. The intent of a back-up contract is that it is to be contingent on the failure of an existing contract to close. d. All of these statements are false
Accessories
Which, while not necessarily permanently installed or built-in, are commonly conveyed to the buyer in the sale.
Broker-Lawyer Committee
Write residential contract forms that, with few exceptions, are mandatory for license holders.
Contingencies
____________ may be waived at any time. Examples "sale of other property" contingencies, options periods and any other condition that a party wishes to waive.
Executory Contract
a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed.
FHA and VA loans
are assumable with not change in interest rate, subject to credit approval of the buyer.
Addendum for Reservation of Oil, Gas and Minerals
mineral interests can be conveyed from one owner to another with a mineral deed, by will or through inheritance. When property is sold, Seller often reserves some if not all of the mineral estate.
Americans w/ Disabilities Act
prohibits discrimination against those with disabilities by denying them the full and equal enjoyment of goods, facilities, accommodations, services and privileges. Single-family homes, private clubs, historic buildings, and religious organizations are exempt from the ADA.
