Chapter 3

Question 1

AGREEMENT OF PARTIES

Answer 1

It is the section that includes most of the frequently used addendums.

Question 2

TERMINATION OPTION

Answer 2

Allows the buyer to terminate this contract for any reason during an agreed amount of time for an agreed-upon amount of money. The option fee can be credited at closing if agreed to. This is designed to allow the buyer time to get inspections and develop a prioritized repair list.

Question 3

CONSULT AN ATTORNEY BEFORE SIGNING

Answer 3

emphasizes the fact that real estate licensees cannot give legal advice and cautions the parties to read the contract carefully and consult an attorney before signing if there is anything in the contract they do not understand.

Question 4

Third-Party Financing Addendum for Credit Approval addendum

Answer 4

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

Question 5

Third-Party Financing Addendum for Credit Approval addendum is not required when ?

Answer 5

1. The seller is carrying the note for the buyer.
   2.The buyer is paying cash for the property and not financing any portion.
   3.The seller and the buyer are trading one property for another and no financing is required by either side.

Question 6

when Loan Assumption Addendum is used?

Answer 6

When a borrower will allow the assumption of the loan.

Question 7

When the Seller Financing Addendum is needed

Answer 7

when the seller carries a note for a buyer for all or a portion of the sales price.

1. It has spaces to collect credit information on the buyer to determine whether it would be a good idea to provide this loan to the buyer.
2. It also deals with transfer of the property and who is responsible for taxes and insurance.

Question 8

buyer has to meet certain requirements to be approved to assume a VA loan anyway ?

Answer 8

1. Are they a veteran?
2. Do they have sufficient unused entitlement?
   3.Is otherwise qualified?
   (Also, the licensees involved in the transaction need to know that to use the form properly for a veteran who is a seller, both paragraphs A and B must be completed.)

Question 9

Addendum for Release of Liability on Assumed Loan and/or Restoration of Seller’s VA Entitlement

Answer 9

make sure the seller who allows someone else to assume their loan is released from further obligation on the loan in the event that the person who assumed the loan goes into default.

Question 10

Deed of trust

Answer 10

Document which secures the note.

Question 11

Private transfer fee

Answer 11

An obligation of the property owner to pay a fee that was created by a covenant recorded in the county records, usually by the original developer.