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Texas Promulgated Contract Forms ( real estate) > Chapter 3 Review (more Details) > Flashcards

Chapter 3 Review (more Details) Flashcards

1
Q

(TREC) numbering system

A

TREC establishes contracts for agents to use and gives each new document a unique number. The number after the hyphen indicates how many times the form has been revised.

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2
Q

last two pages one to 4 family residential contract

A

the full signatures of both parties for execution, identify brokers and they also indicate that the escrow money and a signed contract have been received by the title company acting as the escrow agent.

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3
Q

Top of most of the pages

A

The property address so that if two contracts get mixed together, pages can be put back together correct

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4
Q

Residential

A

This means the property is not a commercial property. Commercial contracts are typically drawn up by attorneys. There are no promulgated contracts that exist for commercial properties.

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5
Q

“single person” in the contract

A

Since the seller in our scenario is not married, after the name, place a comma and the words “single person.”
(write in the names of the buyers and their marital status as well.)

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6
Q

Property has 3 parts in the contract

A
  1. Land : Lot, block, subdivision ( further description Addendum attached to the contract )
  2. Improvement and accessories :
    Do not mark out too many

3.Exclusions : Seller plans to keep and not sell ( Do NOT use this paragraph for items the buyer wants to stay with the property.

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7
Q

counteroffer in the contract ( effect )

A

Any counteroffer that is made involving a change in the sales price will change 1. cash portion, 2. financing, 3. Sales price.

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8
Q

TITLE POLICY AND SURVEY

A

who is paying for the title policy. It also has a blank to indicate the name of the title company being used to provide the title policy. This paragraph also lists nine standard exceptions to the title policy.

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9
Q

Section 9 of RESPA (12 USC §2608)

A

home sellers are prohibited from requiring home buyers to purchase the settlement services from a particular company either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.

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10
Q

COMMITMENT

A

is necessary to disclose to a buyer what the title policy will show once this transaction closes, and the new owner’s title policy will be issued. The COMMITMENT Paragraph has no blanks, but you should know each paragraph completely.

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11
Q

SURVEY ( paragraph 1)

A

states that the owner will provide a copy of the seller’s existing survey and a T-47 Residential Real Property Affidavit, claiming that the survey is correct.

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12
Q

T-47 affidavit

A

is used for the seller to disclose that no changes have been made on the property that could affect the survey. When the survey is presented to the buyer as part of the contract, the T-47 affidavit must be signed and notarized. If the survey or affidavit is not given to the buyer within the number of days noted, then the buyer shall obtain a new survey at the sellers’ expense. This all must be done prior to closing.

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13
Q

Survey Paragraph 2

A

This paragraph states that the buyer will obtain and pay for and furnish a new survey.

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14
Q

Survey Paragraph 3

A

This paragraph states that the seller will obtain and pay for and furnish a new survey to the buyer. This block is to be used if the seller does not have a survey, which is referred to in paragraph 1 in that section.

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15
Q

What is OBJECTIONS in the contract ?

A

gives the buyer the right to object to certain items, but not others. This paragraph also allows the buyer to determine if they have a special use for the property. For example, the buyer may want a home-based business, or to put in a swimming pool after they buy the property. If either of these uses is denied, then the buyer could terminate the contract.

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16
Q

Prohibited Uses

A

the prohibited use blank could define the actions of the new owner.

For example, a buyer may want to purchase a residential property to live in, and also operate a barbershop in the living room.

In which case, the prohibited use blank should be filled in with the words, barbershop.

There is a small blank in this paragraph that many agents miss, but it must have a number filled in.

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17
Q

Property Misuse

A

inquire with the proper authorities. If that use is not allowed, bear in mind that the buyer is not required to buy the property.

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18
Q

Intended Use Details which paragraph ?

A

paragraph 6.D / Anytime the use of the property is not a typical use, you should note the use in this paragraph, otherwise, write “not applicable,” or N/A.

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19
Q

If the property is in a mandatory POA

A

the buyer, once they become the owner, must pay the dues.

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20
Q

If the buyer, now the owner, does not pay the mandatory membership in the POA

A

then the POA has the right to set a lien against the property, and eventually foreclose on the property

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21
Q

where the restrictive covenants are recorded?

A

is recorded in the Real Property Records of the county.

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22
Q

Restrictive covenants governing ?

A

governing the use and occupancy of the property, and a dedicatory instrument governing the establishment, maintenance, and operation of the residential community, is recorded in the Real Property Records of the county.

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23
Q

if you are involved in the sale of real property with a mandatory.

A

Addendum for Property Subject to Mandatory Membership

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24
Q

What is the purpose of paragraph 6.D, in the One to Four Family Residential Contract (Resale)?

A

Objections

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25
Q

STATUTORY TAX DISTRICTS

A

There are also known as Municipal Utility Districts (MUD). These are water and sewer providers that are not owned by the city. Privately-owned districts can charge fees that can be unmonitored. The buyer must be provided disclosures if the property is in a MUD.

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26
Q

MUD

A

Municipal utility Districts

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27
Q

Tide Water

A

These are areas on the coast where tides can actually change the property lines. The Addendum for Coastal Area Property must be used.

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28
Q

ANNEXATION

A

This is when there is taking in of Extraterritorial Jurisdictions to grow a city. Once annexed, the new area has the benefits of being in a city, but also the taxes.

29
Q

PROPERTY LOCATED IN A CERTIFICATED SERVICE AREA OF A UTILITY SERVICE PROVIDER

A

Newer subdivisions are being added faster than utility service can be provided. In such areas, the buyer needs to be aware that utility services may not be available for a while.

30
Q

PUBLIC IMPROVEMENT DISTRICTS

A

These are areas where improvements are being made. The buyer needs to know that they may be assessed additional taxes to pay for these improvements.

31
Q

Private Transfer Fee

(A private transfer fee created after June 17th, 2011, is not binding or enforceable. Now, there will not be any new transfer fees established.)

A

Anytime the property is transferred to a new owner by sale, gift, or inheritance, or by any other means of changing the ownership of the property, the fee is to be paid to the original creator of the covenant or contractual agreement.

(A private transfer fee is 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.)

32
Q

“Notice of Private Transfer Fee Obligation”

A

Developers who created transfer fees before June 17th, 2011/ Re-file every three years. Disclosure of a transfer fee is required in the One to Four Family Residential Contract (Resale), which is done in Paragraph 6.E.8.

33
Q

Fees by POA

A

as long as the fee is not passed through the POA to a third individual, such as a subdivision developer, The law allows a POA to charge a fee for transferring ownership records of a property .

34
Q

some private transfer fees that were created on or before January 31st, 2012.

A

has to be filed in the county in which the property is located. The notice must be at least 14-point typeface, and it must state the amount of the transfer fee. It must also state the date or circumstances in which the fee will come to an end.

35
Q

Fee Notice Requirements

A

the person who will receive the fee must sign the notice. If the person who is to receive the fees does not accept payment by the 30th day after the payment is made, then the payment must be returned to the person who paid the fee and the fee is void from that point on.

36
Q

Notice Re-filing

A

No earlier than 30 days before the third anniversary of the original filing date, and in that same time period every third year thereafter. if not updated, the transfer fee will become void.

37
Q

agreement between a seller and a buyer that attempts to end a transfer fee is void. ( penalties ?)

A

State attorney general => court injunction to restrict the collection of the fee=> civil penalties. The financial penalties may not exceed two times the amount of the transfer fee.

The court could include a Civil penalty not to Exceed $250,000. These collected funds will be deposited in the General Revenue Fund of the State.

38
Q

hydrostatic testing

A

the seller must have the utilities turned on, and if there is an expense involved, then the seller must pay it. The seller must keep the utilities on while the contract is active. The seller must authorize hydrostatic testing in writing.

39
Q

SDN

A

Seller’s Disclosure Notice Pursuant to §5.008, Texas Property Code

40
Q

When the SDN is not required ? ( example 3)

A
  1. Of real property where the value of any dwelling does not exceed five (5%) percent of the value of the property.

2.To or from any governmental entity
3. Seller of residential property consisting of more than one dwelling unit.
4. From one co-owner to one or more other co-owners

41
Q

RESIDENTIAL SERVICE CONTRACTS

A

Advises about contracts sold by residential service companies. These companies are certified by TREC. This paragraph addresses who should pay for the cost of the coverage.

Services covered in a residential service contract are most often paid for by the seller.
The contract is to provide repairs that would be done on all major equipment in the home for ONE YEAR after the closing.

Residential service contracts include major equipment like air conditioning, heating ovens, and electrical issues? Residential service contracts are also called a “HOME WARRANTY PACKAGES.”

42
Q

BROKER’S FEES

A

The actual fees (commission) that the seller will pay the listing broker when the property sells is covered in the listing agreement.

43
Q

Private transfer fees are considered what?

A

Not binding or enforceable

44
Q

ON OR BEFORE a date Closing section

A

it can close before but not after without an extension.

45
Q

good funds

A

currently available funds, such as certified check, cashier’s check, official bank check, In Texas, a personal check is limited to $1,500.

46
Q

Courier Fee (just know)

A

A fee, typically around $20, to cover the cost of sending your loan documents to different parties. Wire Transfer Fee: Mortgage lenders generally wire the funds to the escrow company handling the loan closing.

47
Q

If you see an addendum does not list

A

put them in the block called: “ other”

48
Q

option period cost and extensions

A

at least $1.00

49
Q

which paragraph deals with the termination of the contract
and responsibility of the title company ?

A

DEMAND

50
Q

If Sellers fail to repair, how many days buyer extend time for the seller to perform

A

5 days!

51
Q

SDN ( seller Disclosure notice )

A

effective date => If disclosure will not be given to the buyer=> 7 days TEXAS => Termination by the buyer

52
Q

How many days the title company have to produce title commitment after receiving the contract ?

A

20 days ( title policy & survey)

53
Q

which paragraph stated that the chandeliers will be staying with the home ?

A

Exclusions

54
Q

When the Section “ option Fee Receipt” be filled out ?

A

when the option fee is delivered to the seller or the listing agent.

55
Q

Title Commitment extension days ?

A

15 days

56
Q

Delivering the SDN timing?

A

it is negotiable

57
Q

Third Party Financing Addendum.

A

The Third-Party Financing Addendum is to be used if the buyer is applying for multiple types of financing. These include Conventional, Texas Veterans, FHA Insured, VA Guaranteed, USDA Guaranteed and Reverse Mortgage, or other forms of financing.

58
Q

FHA 203 (B)

A

loan is most common because it allows the borrower to have a lower down payment

59
Q

FHA 203 (k)

A

buyer borrows the money to buy the home plus money to remodel it at the same time

60
Q

FHA 245(a)

A

This is a program for borrowers who expect their incomes to increase.
1. Graduated Payment Mortgage
2.Growing Equity Mortgage => increase in monthly principal

61
Q

Funding Fee (VA)

A

The Funding Fee is what the VA charges to protect the lender from default by the buyer.

The fee is similar to the Private Mortgage Insurance (PMI) charged with conventional financing, and the Mortgage Insurance Premium (MIP) in FHA loans.

However, unlike these programs, the VA states it is a guarantee.

62
Q

Which paragraph is TIME is of the essence ?

A

Approval of Financing

63
Q

AUTHORIZATION TO RELEASE INFORMATION

A

authorizes the lender, title company and escrow agent to disclose the appropriate information to the sellers and their agent, along with the buyer’s and their agent.

64
Q

What is the reason the buyer wants to assume the loan ?

A

The interest rate on the current loan is less than the market rate. the difference need to be 2 percent. 2%

  1. The current note has been paid for a considerable amount. Additional payment goes into principal instead of interest rate.
65
Q

Tax & Insurance Escrow Paragraph

A

it is called “AD VALOREM TAX “ = according to value
according to the value the taxing authority places on the property. it is not necessarily equal to the market value of the property, less than market value. => at closing part of settlement procedures .

66
Q

late fee payment ( promissory note)

A

The Note will contain a provision for payment of a late fee of 5% of any
installment not paid within 10 days of the due date. Matured unpaid amounts will bear interest
at the rate of 1½% per month or at the highest lawful rate, whichever is less.

67
Q

The documents that will be used to create the owner-financing loan

A

note and deed of trust

68
Q

The time frame to apply for release of liability assumed loan

A

It is negotiable between the buyer and seller. Some do it quickly. Others do it after the termination option period is over. There cannot be a long delay though, as the title company needs this information from the lender as soon as possible.

Texas Promulgated Contract Forms ( real estate) (23 decks)

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