Chapter 3

Question 1

Top and bottom of the pages ( one-to-4 Family residential)

Answer 1

The initials of all parties as well as the address of the property. /

Question 2

PARTIES paragraph

Answer 2

identifies the parties involved, including spouses, if applicable.

PROPERTY paragraph identifies the property being sold, as well as any additional items. It also describes the property in terms of lot, block and subdivision. This is also the paragraph where disputed items like ceiling fans, and refrigerators, should be listed.

Question 3

SALES PRICE

Answer 3

Details of the financial offer, including down payment, loan amount and sales price. Dollar amounts should be used rather than percentages.

Question 4

LICENSE HOLDER DISCLOSURE

Answer 4

is used if the licensee is a party to the transaction or acting on behalf or a spouse, parent, child, or business entity if the licensee has more than 10% ownership.

Question 5

TITLE POLICY AND SURVEY

Answer 5

It is a more complex section concerning title policy and survey.

1. Indicates which title company will be used to provide the title policy, as well as the nine standard exceptions that will not be covered
2. discusses title commitment

Question 6

BROKER’S FEES

Answer 6

addresses the fact that commission agreements and broker fees are all addressed in separate written agreements.

Question 7

POSSESSION

Answer 7

focuses on the transfer of the occupancy, including when parties have to be in or out of a property.

Question 8

SPECIAL PROVISIONS

Answer 8

put in items that have no other paragraph addressing them. Put only factual statements and business details in this paragraph. This paragraph is possibly the most frequent paragraph that results in the disciplinary action against a licensee. The “smart” licensee does not put anything in this paragraph.

Question 9

SETTLEMENT AND OTHER EXPENSES

Answer 9

spells out the buyer’s and the seller’s expenses.

Question 10

CASUALTY LOSS

Answer 10

Examines casualty loss and describes the ramifications of the property being damaged or destroyed prior to closing.

Question 11

DEFAULT

Answer 11

focuses on when one or both parties do not perform according to the terms of the contract. This paragraph addresses the non-defaulting party’s remedies. If the earnest money is disbursed, then both parties are released from any further liability.

Question 12

REPRESENTATIONS

Answer 12

States that all covenants, representations, and warranties survive closing. If the seller has made any representations that are untrue on the day of closing, the seller is in default. The seller may continue to show the property and entertain other offers as back up, unless doing so is strictly prohibited in the contract.

Question 13

FEDERAL TAX REQUIREMENTS

Answer 13

states that on the close of a real estate transaction, if taxes are owed, the IRS will still be paid. This requirement is in place if the seller is a “foreign person” as defined by IRS code.

Question 14

NOTICES

Answer 14

states that all notices from one party to another must be in writing and are effective when they are mailed, hand-delivered, emailed, or faxed. If this paragraph is not completed, the buyer or licensee for the buyer would not have a place to send a notification of major importance to the seller, such as the Notification of Termination of Contract. A licensee should not use paragraph 21 to fill in personal information.