Contract Addenda and Contract Termination Flashcards
Which box should be marked on the Notice of Buyer’s Termination of Contract if the buyer is terminating pursuant to the option to terminate?
Box 1
In completing paragraph B. of the Addendum for Reservation of Oil, Gas and Other Minerals, which of the following boxes should be checked?
Does retain
How will the blank be filled in under paragraph C. of the Addendum for Sale of Other Property be filled in?
The amount to be paid for the waiver (additional deposit)
What goes in the blank line at the beginning of the Addendum for Sale of Other Property by Buyer?
Property address
With a Sale of Other Property by Buyer addendum, if a back-up offer is received by the seller and he or she chooses to accept it, the seller will notify the buyer and then what would happen to the contract?
The buyer could waive the contingency
What do the words “to bring to a conclusion” mean?
Terminate
What is the meaning of the term “time is of the essence?”
Strict compliance to the dates of a contract.
When is the effective date of the back-up offer?
The date that the buyer was notified that the first contract was terminated
If the buyer terminates because he/she did not receive the Seller’s Disclosure Notice, what happens to the earnest money?
It is refunded to the buyer
Which of the following is the best reason to use the Addendum for Reservation of Oil, Gas & Other Minerals?
To keep the real estate real estate agents from practicing law.
According to the Addendum for Back-Up Contract, what are the parties obligations if the first transaction closes?
None
Shown below is an excerpt from one of the addenda presented in this unit. What is the name of it?
The contract is contingent upon Buyer’s receipt of the proceeds from the sale of Buyer’s property at __________________________
(Address) on or before ______, 20__ (the Contingency). If the Contingency is not satisfied or waived by Buyer by the above date, the contract will terminate automatically and the earnest money will be refunded to Buyer.
It is the Addendum for Sale of Other Buyer Property by Buyer
What is the central purpose of this promulgated addendum? Addendum for Sale of Other Buyer Property by Buyer
To make it clear to all parties that the buyer must sell a property prior to being obligated to purchase another property.
When should this addendum be used? Addendum for Sale of Other Buyer Property by Buyer
It is required to be used if the buyer must sell a property prior to being obligated to purchase another property.
Shown Below is an excerpt from one of the addenda presented in this unit. What is the name of it?
If the First Contract does not terminate on or before ________, 20_, the Back-Up Contract terminates and the earnest money will be refunded to Buyer. Seller must notify Buyer immediately of the termination of the First Contract. For purposes of performance, the effective date of the Back-Up Contract changes to the date Buyer receives notice of termination of the First Contract (Amended Effective Date).
Addendum for Back-Up Contract
What is the central purpose of this promulgated addendum? Addendum for Back-Up Contract
To make clear the terms of a secondary offer on a property.
When should this addendum be used? Addendum for Back-Up Contract
It must be used if a seller has accepted an offer (under contract) and then another buyer wants to place a secondary contract (back-up)
Shown Below is an excerpt from one of the addenda presented in this unit. What is the name of it?
[ ] (6) Other (identify the paragraph number of contract or the addendum):
_____________________________________________________________________
_____________________________________________________________________
NOTE: Release of the earnest money is governed by the terms of the contract.
Notice of Buyer’s Termination of Contract
What is the central purpose of this promulgated addendum? Notice of Buyer’s Termination of Contract
To notify the seller that the buyer is terminating a contract. There are multiple ways the buyer has the right to terminate and several are listed in this addendum.
When should this addendum be used? Notice of Buyer’s Termination of Contract
It is used after a buyer and seller have formed a contract and now the buyer wants to terminate that contract.
The TREC No. 10-6 Addendum is used when
a buyer wishes to purchase a home but needs to sell his or her current home to do so. This addendum is added to the Residential Contract.
The TREC No. 10-6 Addendum Paragraph A
concerned with date by which the buyer’s property needs to be sold. The date for this document cannot be any later than the closing date in paragraph 9 of the Residential Contract.
The TREC No. 10-6 Addendum If the buyer fails to close after waiving the contingency because the buyer was unable to receive the funds from the sale of the other property
the buyer is in default on the contract. The Seller may then:
(a) enforce specific performance, seek such other relief as may be provided by law, or both, or
(b) terminate this contract and receive the earnest money as liquidated damages, thereby releasing both parties from this contract.
The TREC No. 11-7 Addendum
is used if a buyer wants to make an offer on a property that already has a contract on it. If the first contract terminates and then this offer will become a contract. It is a called a Back-Up offer.
The TREC No. 11-7 Addendum, If the first contract closes
the back-up contract terminates and earnest money is refunded. The seller must notify the buyer of the back-up contract immediately that the first contract has terminated.
The TREC No. 44-2 Addendum is used for
reservation of oil, gas, and other minerals
In many communities across Texas, the property owners have been severed from the right to obtain the minerals, oil, and gas that are under the yards where families live.
Because real estate can be severed laterally, it is possible for one person to own the surface of the land and someone else to own the minerals under the land.
This addendum is required for use for ANY reservation of minerals by the Texas Real Estate Commission when using real estate licensees. Paragraph 11 should not be used when dealing with mineral rights.
TREC No. 44-2 Addendum
The TREC No. 38-5
should be used by the buyer to terminate the previously agreed to Residential Contract for any reason. No similar document exists for the seller. There are six paragraphs that deal with the termination of a contact.
Not signed by the seller
TREC No. 38-5 Paragraph 1
where the buyer can end the contract during the termination option period. The option period is given to the buyer to allow the buyer time to make a decision as to the repairs needed, as well as other decisions the buyer may want to make on the property prior to actually buying it.
TREC No. 38-5 Paragraph 2
is used to notify the seller that the buyer could not obtain a loan to purchase the property.
TREC No. 38-5 Paragraph 3
identifies the lender requirements for the improvements on the property involving problems with appraisal, insurability, and lender required repairs.
TREC No. 38-5 Paragraph 4
exists to allow the buyer to exercise his or her right in the Addendum for Property Subject to Mandatory Membership In a Property Owners Association to terminate the Residential Contract if the purchaser does not receive or objects to the documents received concerning the homeowners’ association.
TREC No. 38-5 Paragraph 5
allows the buyer to terminate the contract because he or she either did not receive the Seller’s Disclosure Notice (SDN) or there was something in that document that caused the buyer to change his or her mind about wanting the property.
TREC No. 38-5 Paragraph 6
gives space to write in the reason the buyer wants to withdraw from the contract if that reason is not covered in the previous paragraphs.
