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TX Exam Prep - Ch 5

Ch 5- Contracts

QuestionAnswer
License holders must use standard Contract forms when applicable. Exceptions are: Those prepared by Attorneys from this state or any other state, or those specified by governmental agencies, property owners, or their lawyers.
TREC has promulgated sales contract forms For most residential properties including Farm and Ranch. TREC has no forms for commercial transactions. TREC has no forms for the sale of Co-ops or mobile homes.
If a broker receives any backup offers, they must be presented to the seller. A backup offer cannot become effective unless The previous contract is terminated. A backup buyer must meet the requirements for any negotiated earnest money and option fees.
If a broker has more than one offer on a listed property, he must present all offers There is no required order of presentation.
TREC 1-4 Family Residential Contract (Resale) - Paragraph 2 - Accessories Paragraph 2 – Accessories, which may or may not be attached to the property (i.e. pool equipment/ pool covers, stoves, window AC units) are considered part of the real property
TREC 1-4 Family Residential Contract (Resale) - Paragraph 3 Paragraph 3 – The cash portion (3.A) + the financing (3.B) = the sales price
TREC 1-4 Family Residential Contract (Resale) - Paragraph 4 Paragraph 4 - Seller may not, without Buyer's written consent, create a new lease, amend any existing lease, or convey any interest in the Property.
TREC 1-4 Family Residential Contract (Resale) - Paragraph 5 – Earnest Money and Termination Option Within 3 days after the Effective Date, Buyer must deliver earnest money and option fee to the escrow agent. If the last day falls on a Saturday, Sunday or holiday, the time is extended to the next business day.
TREC 1-4 Family Residential Contract (Resale) - Paragraph 5 – Earnest Money and Termination Option - cont - Buyer will have the right to terminate the contract within the negotiated option period by providing notice by 5:00 p.m. on the date specified. - Time is of the essence for this paragraph
T - REC 1-4 Family Residential Contract (Resale) Paragraph 6B. The title company has 20 days to provide the title commitment after they receive the sales contract.
T - REC 1-4 Family Residential Contract (Resale) Paragraph 6C.(1) Within __ days after the Effective Date of this contract, Seller shall furnish to Buyer & Title Company Seller’s existing survey and an Insurance T-47 Affidavit. - If not delivered 3 days prior to closing, buyer shall obtain new survey at Seller's exp
T - REC 1-4 Family Residential Contract (Resale) Paragraph 6D Allows a buyer to choose a number of days to review both the title commitment and the survey. If the buyer is unhappy with the results of either, he has the negotiated number of days to address his/her concerns with the seller
T - REC 1-4 Family Residential Contract (Resale) Paragraph 6.E.(3) Texas Water Code requires the Seller to deliver and the Buyer to sign the M.U.D. disclosure prior to final execution of the contract. (A buyer who has not received the M.U.D. disclosure has the right to terminate the contract)
T - REC 1-4 Family Residential Contract (Resale) Paragraph 6.E. (6) If the property is located in a Certificated Service area of a Utility Service Provider (a M.U.D.) the buyer must be given notice of this, disclosing to the buyer that there may be an extra charge for having water and sewer services connected.
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.A. Seller at Seller’s expense…..shall keep the utilities on during the time this contract is in effect
A Seller’s Disclosure of Property Condition must be given to a buyer BEFORE HE SIGNS AN OFFER to make that offer binding on the buyer
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.B.(2) If the Buyer receives the Sellers disclosure, the Buyer will have 7 days after receiving it to terminate for any reason.
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.B.(3) Seller’s disclosure is not required in a foreclosure sale, tax sale, sale by guardian, executor, or administrator, or sale by a builder of a new home that has not been lived in.
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.B.(3) - cont A seller’s disclosure is not required if the house is worth less than 5% of the price of the property
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.D.(1) Buyer accepts the Property As Is (with all known defects.)
T - REC 1-4 Family Residential Contract (Resale) Paragraph 7.E. If lender required repairs exceed 5% of the Sale Price, Buyer may terminate the contract and receive a refund of earnest money paid.
T - REC 1-4 Family Residential Contract (Resale) Paragraph 8. BROKERS and SALES AGENTS - (Agency coupled with an interest) Texas law requires a real estate license holder who is a party to a transaction or acting on behalf of a spouse, parent, or child, or business entity in which the broker or salesperson owns more than 10% ... to notify the other party in writing
T - REC 1-4 Family Residential Contract (Resale) Paragraph 15. Default Sue for specific performance, seek such other relief as may be provided by law, or both, or the injured party can terminate the contract
T - REC 1-4 Family Residential Contract (Resale) Paragraph 16. The contracts require the parties to agree to mediation for dispute resolution
T - REC 1-4 Family Residential Contract (Resale) Paragraph 22. review the Addenda. The Seller’s Temporary Lease Addendum & Buyer’s Temporary Lease Addendum are for use when the lease period is for 90 days or less - A seller of coastal property abutting tidally influenced water must provide the “Addendum for Coastal Area Property.”
T - REC 1-4 Family Residential Contract (Resale) Paragraph 22. review the Addenda. (cont) The HOA/POA addendum allows a buyer to terminate the contract within 3 days after Buyer receives the Subdivision Information or prior to closing, whichever occurs first, &the earnest money will be refunded to Buyer.
The last party to sign the contract is the party accepting the final change. The broker is responsible for Filling in the effective date after the last party signs
The Statute of Frauds requires that all contracts that relate to the transfer of any interest in real estate must be in writing to be enforceable. This also applies to compensation/employment agreements, such as listings and buyer representation agreements
A mold remediator, he must give you a Certificate of Mold Remediation no later than 10 days after work is complete. The certificate verifies that the mold has been removed and certifies with a reasonable certainty that the underlying cause of the mold has been corrected.
Receiving a Certificate of Mold Remediation is an advantage for a homeowner because It prevents an insurer from making an underwriting decision on the property based on previous mold damage or claims.
On selling a home, the law requires the seller provide the buyer with copies of all Certificates of Mold Remediation they have received for the property within the past 5 years.
Created by: deidresj
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