Chapter 4 Flashcards
The Necessity for the earnest money ?
It is not the consideration of the contract but the term of the contract.1% or 2% of the sales price is usually adequate.
contract goes to closing then the earnest money would go to the buyer’s closing costs.
Earnest money Reasons?
- liquidated damages
- good faith money
3 ways the option is used ?
- One to Four Family Residential Contract (Resale) to purchase. The buyer and seller could agree that the buyer would have a time period after the contract is accepted by both parties that would allow the buyer to terminate the contract without recourse. The buyer would have to pay the seller a fee for this right and the funds would have to be delivered to the seller or the listing agent within three calendar days.
2.option to buy a property rather than to terminate a contract.
3.when a seller options a property to the buyer to sell at a later date. The seller has the option to require the buyer to buy but is not required to sell.
Title Insurance
insurance that protects the real estate title that a buyer is about to purchase. Because the title process is usually a seller sided event, the seller needs to prove to the buyer that they can sell the house as agreed.
title search
uncovers any unpaid taxes or mortgages, judgments against previous owners, easements, and other court actions or recorded documents which can affect title to real estate. A title company will find and report such defects in the title to the real estate buyers wish to buy so that these matters can be corrected and cleared up.
It is the FIRST benefit a consumer will receive when title insurance is ordered!
“free and clear”
NEVER SAY THIS WORD !”.
A title that is “free and clear” means that the property can be sold and there are no encumbrances on the property. The problem with this is that almost every property sold has a utility easement. The easement creates an encumbrance.
Who is the closing agent in TEXAS ?
The title officer is a neutral third party who ensures that all conditions of a real estate transaction are met. These people handle all of the paperwork involved in the closing of the transaction. These people handle the figuring and transferring of funds.
What Title attorneys do in the transaction ?
put together all the legal papers to transfer title from one person to another. Most of the papers to be used at closing need an attorney involved. These attorneys do not represent either party. They just make the transaction work.
Title commitment Vs Title Policy ?
nearly same but the title policy is issued to the owner of the property. The buyer is not the owner before closing but the buyer would still want to know the status of the title before closing. The title commitment gives the buyer this satisfaction and basically states that if nothing changes between when the title commitment was issued and closing the actual title policy will be issued with only the disclosed defects.
