Chapter 4 ( review) Flashcards
Earnest money as liquidated damages benefits
can save time and money in a court of law. It may even allow the contract to be settled without the necessity of going to court.
Option Period TIME
The option period begins on the first full day after the effective date of the contract.
The option to terminate is located in the Termination Option paragraph, of the One to Four Family Residential Contract (Resale).
During the option period, the buyer should have the home inspected by a home inspector.
if they find such problems unacceptable, and they choose to end the contract, they must do so by 5:00 PM local time on the last day of the option period.
The title company’s title search may uncover title problems, what are those problems ?
unpaid taxes or mortgages, judgments against previous owners, easements, and other court actions, or recorded documents which can affect title to real estate.
During a title search, there may be additional claims of ownership by whom?
Government entities
Property Owners’ Associations (POA)
Contractors
What contingencies will be covered by the title insurance policy?
such
as a forgery,
confusion due to similar names, or
error in the records.
These contingencies will be covered by the title insurance policy.
Protection by the title policy
- Defending the title, in court if necessary, at the issuer’s expense.
- Bearing the cost of settling the claim if it proves valid, in order to perfect the title, and keep the buyers in possession of their property.
owner’s policy of title insurance Tip
1) protect any defects to the title that were not disclosed in the title commitment.
2)The policy is paid at closing as a one-time fee, based on the sale price.
3)As a general rule, the cost of the policy is paid for by the seller, but this is negotiable.
Mortgagee’s Policy of Title Insurance
1.it is normally paid by the buyer at closing as a one-time fee, based on the loan amount.
2.The coverage decreases as the loan balance decreases.
3.If there is not a lender, then there will not be a mortgagee’s title insurance policy issued.
the cost of the issuance of the Commitment.
There is no charge
The Title Commitment is different from the Commitment for Title Insurance. And different from the title policy.
Provides the terms and conditions on which the title company will be issuing a title policy. It is a commitment for title insurance.
The Title Commitment states that if nothing changes between when the Title Commitment is issued and closing, the actual title policy will be issued with only the disclosed defects.
Schedule B commitment
Directed toward the buyer, items that are exceptions to the coverage. such as deed restrictions , standby fees tax and assessments.
Schedule C commitment
all items in this part should be removed prior to closing.
Requirements
Schedule D
Title company settlement charges
Endorsements
- clauses in insurance policies
- Each endorsement will add costs to the title insurance policy coverage
3.Cost of each endorsement is set by the Texas Department of Insurance.
(The Title Policy and Survey paragraph of the One to Four Family Residential Contract (Resale), has a Shortages in Area and Boundary exception.)
POB
is a point designated in the description as an initial point for beginning the land description. The POB could also be called point of commencement, starting point and place of beginning.
plat
- Plats are filed with the county recorder’s office.
- property is described by registered lot number and designated block on a plat. The property description includes a reference to the registered plat.
3.platting process ensures that all lots comply with local city development standards.
Misdemeanor
It is a misdemeanor to describe a tract of land by lot and block if the subdivision plat has not been recorded in the county where the property is located.
Notice to Prospective Buyer ( TIP)
In a transaction involving owner financing, or where the buyer is paying cash for the property, there is no lender. Therefore, there is no requirement for a title policy. but In most transactions, the lender is going to require a title search, an abstract of title, and/or a title insurance policy.
Notice to Prospective Buyer form
“This form has been approved by the Texas Real Estate Commission (TREC).” This means use of the form is strongly suggested.
What are Latent defects ? and make examples
These are defects about the property that may not be readily observable, but would materially affect the value of the home or a buyer’s decision to purchase it.
- leaks in the ceiling or roof
- plumbing issues
- cracks or foundation instabilities
- electrical wiring
- toxic conditions
Disclosure of the boundary line is by
?
surveyor/ protect seller and lender
What is a professional analysis of a property and its location relative to other property?
Survey
Buyer may have the Property inspected by inspectors
selected by Buyer. how many days?
10 days /If lead-based paint or lead-based paint hazards are present, Buyer may terminate this contract by giving Seller written notice within 14 days after the effective date of this contract, and the earnest
money will be refunded to Buyer.
Environmental Assessment
“at buyer’s expense” in the form.
When can a broker receive a fee from a Residential Service Company (RSC)?
When the RSC collects additional information for the company
What does a Residential Service Company do?
Sells warranties to the buyers covering repairs of several listed items in the home like appliances, A/C, etc.
