Promulgated Contract Forms Flashcards
Good Funds
- Down Payment
- Cashier’s check or wire transfer
When does offer become a contract?
When signed and acceptance communicated to offering party
Default
When a party fails to perform under contract
Requirements of valid contract
- COLIC
- Competent Parties
- Offer and Acceptance
- Legal Purpose
- In Writing
- Consideration
Exclusions
Items to be retained by the Seller as specified in the contract
Prorated Items
- Taxes
- HOA fees
- Rents
Paragraph 5
- Earnest Money
- Amount (~1%)
- Name and Address of Title Company
- Time is of the essence
Paragraph 3B
Sum of all financing from all sources
Executed Date
Offer accepted signed and communicated to other party
Paragraph 23
- Option fee and time period
- Fee must be paid within 3 days of effective date to seller or seller’s agent
- Can be credited at closing
Imputed Notice
Offer presumed to be delivered to client when delivered to agent
Number of days for the title company to deliver the title commitment
- 20 days
- Could be extended 15 days or up to 3 days before closing
T-47 Affidavit
- When using existing survey
- Notarized
Requirements of a valid option
- All Paragraph 23 filled in
- Must be delivered within 3 days of effective date
- Must be paid to seller or seller’s agent
Valid
Meets all requirements of law
Void
Invalid from beginning
Voidable
Cannot be enforces against parties
Unenforceable
Cannot be enforces due to flaw in contract
Executory
Binding but duties have not been performed
Executed
When all duties have been performed
Broker/Seller Commission Agreements
- On listing agreement
- Between brokers on MLS or arrangement
Right of First Refusal
A tenant has the right to match or better any offer the landlord may receive on the property before the property is sold to someone else.
Option to Buy
Allows tenant to buy at preset price and terms for given period
Lease Purchase
- tenant makes lease payments.
- Tenant agrees to purchase at agreed time and price.
- Binding on both parties
Straw Buyer
Person buys property to hide owner
Churning
- Excessive selling to generate fees
- Refinancing
Chunking
Show investors how to get rich in real estate
Equity Theft
Forge deed transfer and obtain new liens
Foreclosure Rescue Scam
Homeowner signs over title with belief they can rent and repurchase
Property Flipping
Property sold for artificially inflated values
Presentation of Offers
- All offers must be presented
- Imputed notice- offered presumed to be delivered when given to agent
Acceptance
-No changes to offer, as is Intent -Manner of acceptance -Timeliness of acceptance -If acceptance is unconditional
Counteroffer
- Party changes offer in some way
- Reject initial offer and make new offer
Offer Requirements
- Communicated to specific offeree
- Intended to be serious offer
- Definite and certain enough to be accepted
Rejection with Invitation to Resubmit
Reject offer and makes suggestions to what would be acceptable
Multiple offers
- Present all offers
- Inform agents multiple offers have been received
Paragraph 12
- Settlement Expenses
- Seller’s contributions
- If expenses exceed what was agreed contract will terminate unless other party pays
paragraph 4
- License Holder Disclosure
- Any client is license holder
- Agency Coupled with Interest
- Family Relationships
Common Amendments to Original Contract
- Changes to closing date
- Changes to sales price, down payment or finance amount
- Seller’s repairs
- Removal or waiver of contingencies
Which provision prevails? Addendum or Original Contract?
Addendum
Paragraph 24
- Attorney contact information
- Effective date
Paragraph 7E
- Lender required repairs
- If repairs are more than 5% of sales price contract can be terminated
- Must be completed up to 5 days before closing
Notice to Prospective Buyer Form
Inform to have abstract examines or get title insurance
Paragraph 6
- Title Policy
- Commitment within 20 days
- Survey
- Objections
- Title Notices and POA
Deed in Lieu
- Borrower deeds property in exchange for release from mortgage
- Not accepted if they can afford payments
Foreclosure
Legal procedure of selling property to satisfy note
Short Sale
Property sold for less than when is owed
Paragraph 20
- Federal Tax Requirements
- Escrow agent will withhold amount for taxes for someone with no SSN or green card
Temporary Lease Forms
- Used when a party will occupy before or after closing
- Rent to be paid per day
Mediation
- Cost shared equally
- If cannot be settled with informal discussion
Arbitration
Third party to sale will decide outcome
Lawsuit
Court settles dispute
Broker-Lawyer Committee
- Draft and revise contract forms to be standardized
- 13 members
- 6 brokers
- 6 attorneys
- 1 public member
Unlawful Practice of Law
- Alter text in promulgated contract form
- Add provisions in Paragraph 11 that change legal effect
Paragraph 2C
- Accessories
- Not permanently installed but commonly conveyed
Loan Forms
- Seller Financing
- Third Party Financing
- Loan Assumption
Stigmatized Properties
- Physical or psychological stigma
- Must disclose unless AIDS/HIV related or death
Requirements for Use of Inspector
- Must be licensed
- Selected by Buyer
- Hydrostatic testing must be approved by Seller
Origination
process of creating a loan
Loan Assumption
Buyer assumes and pays seller’s existing mortgage
Assignment
- Transfers all rights and liabilities to new party
- Most contracts are assignable
- Exceptions
- Personal services
- Dependent on credit
- Must have approval
Lead Paint Disclosure
- Completed by seller if home built before 1978
- Buyer can have property inspected within 10 days of effective date
- Deliver pamphlet
Environmental Concerns Addendum
- Environmental Assessment
- Endangered Species
- Wetlands
- # of days to complete assessments
Loan Assumption Benefits
- Lower Rate
- Lower Cost
Loan Assumption Concerns
- Seller’s Liability
- Processing Time
Information About Brokerage Services
- Given to prospective clients at first substantive conversation
- Broker duties as agent, intermediary
Steering
Taking buyers to or away from an area
Blockbusting
Inducing panic selling
Third Party Financing Buyer Approval Requirements
- Given set amount of days
- Time is of the essence
- If cannot be obtained
- Terminate
- Allow time to run out
- Request extension
TREC Form RSC-2
- Disclosure of Relationship with Residential Service Company
- Home warranty companies
- If they pay broker any compensation
Third-Party Financing Addendum
- Type of financing
- Conventional
- Texas Veterans Loan
- VA
- FHA
- USDA
- Reverse Mortgage
Farm and Ranch Crops
Right to harvest until closing
Farm and Ranch Improvements
- Permanently installed items
- Windmills
- Tanks
- Pens
- Barns
Farm and Ranch Accessories
- Feeders
- Corrals
- Portable buildings
TREC Contract Forms
- Required unless prepared by attorney and requested by client
- 1-4 Resale
- New Incomplete Construction
- New Complete Construction
- Unimproved Property
- Condo Resale
- Farm and Ranch
