T. Contracts Flashcards
What is one of the exceptions to the rules requiring the use of a TREC-promulgated sales contract?
A. A broker may prepare an alternate form.
B. An associate broker may prepare an alternate form.
C. A property owner may prepare an alternate form.
D. A licensee may prepare an alternate form.
C. A property owner may prepare an alternate form.
Let’s talk about the rules that require the use of TREC-promulgated forms. Who is required to follow these rules? Texas license holders. Therefore, we know that answer options A, B, and D, which say a licensee/associate broker/broker may prepare an alternate form, are incorrect. However, a property owner isn’t bound by the rule to use a TREC-promulgated form. Property owners may prepare their own contract forms, or may request that an attorney prepare a contract form for them. This means that answer option C is correct.
Which of the following addenda is required as part of the TREC residential resale contract when the buyer’s purchase of the property is contingent upon the buyers having to sell their own property first?
A. Seller Financing Addendum
B. Addendum for Sale of Other Property by Buyer
C. Buyer’s Temporary Residential Lease
D. Addendum for “Back-Up” Contract
B. Addendum for Sale of Other Property by Buyer
Lucky for us, many of the TREC addenda have pretty obvious names, so pay close attention to their titles when you consider your choices. Answer option A, Seller Financing Addendum, is used when the seller is providing the buyer’s financing. That doesn’t apply in this situation, so answer option A is incorrect. A Buyer’s Temporary Residential Lease is used when the buyer moves into the property prior to closing and leases the property for up to 90 days before closing. This means answer option C is incorrect. The Addendum for “Back-Up” Contract allows the seller to negotiate with a second buyer when the property is already under contract. That doesn’t apply to this situation, so answer option D is incorrect. Instead, this situation requires that the buyer complete the Addendum for Sale of Other Property by Buyer. If this contingency is not waived or met by the date specified in the addendum, then the contract is terminated automatically and the earnest money is refunded to the buyer.
Per the Texas statute of frauds, a contract for the sale of real estate is only enforceable if it is in writing and ______.
A. In at least an eight-point font
B. Signed by the person to be charged with the promise/agreement
C. Signed by the seller’s agent
D. Signed by the parties’ attorneys
B. Signed by the person to be charged with the promise/agreement
Under the Texas statute of frauds, are there any rules about the font size in a real estate contract? No. The statute of frauds doesn’t address font size, because a particular font has nothing to do with a contract’s enforceability. This means answer option A is incorrect. The other remaining answer options all specify which party is required to sign the contract. Only parties who are the principals to a contract must sign that contract. A contract for the sale of real estate doesn’t have to be signed by either the seller’s agent or the parties’ attorneys because these individuals aren’t parties to the contract, so answer options C and D are incorrect. Another way of saying that a party is a principal to the contract is by saying that a party is to be charged with the promise/agreement of that contract. In other words, the parties to a real estate sales contract are generally required to exchange money for property. (Of course, there are other specific details and duties laid out in the contract, but the primary point of a real estate purchase contract is that the buyer is purchasing a property from the seller, and paying the seller in exchange for that property.)
Which of the following statements about the purpose of the seller’s property disclosure in Texas is true?
A. The notice serves as a warranty and replaces the need for any property inspections.
B. The notice captures what the seller knows to be true about the condition of the property as of the date the form is signed by the seller.
C. The notice constitutes a guarantee from the seller that the property is in good condition.
D. Although not a warranty, the notice removes the need for a professional inspection.
B. The notice captures what the seller knows to be true about the condition of the property as of the date the form is signed by the seller.
The seller’s disclosure notice required in Texas is the TAR Seller’s Disclosure Notice. Knowing what the purpose of this notice is—and isn’t—is vital for all Texas real estate license holders. Let’s first talk about what this notice is NOT: It is not any kind of warranty or guarantee from the seller, the seller’s agent, or any other agent. The notice does not replace the need for professional property inspections. This means that answer options A, C, and D are all incorrect. The correct answer, then, is answer option B: The seller’s disclosure notice captures what the seller knows to be true about the property’s condition as of the date the seller signs the form.
There are a few exceptions to the Texas rule that requires a seller to complete a seller’s disclosure. Which of the following is an example of such an exception?
A. When a lawyer argues that the seller is unable to complete the form
B. When the property is new construction
C. When the seller is a member of the commission
D. When the seller is selling the home within one year of purchase
B. When the property is new construction
The TAR Seller’s Disclosure Notice is required for most home sales in Texas. However, certain types of transactions don’t require sellers to provide the disclosure. Let’s look at the answer options to narrow down the choices. There’s no exception made for sellers whose lawyers try to get them out of completing the form, which means that answer option A is incorrect. There also aren’t exceptions made for TREC members or for sellers selling their homes within one year of purchase, which mean answer options C and D are incorrect. New construction is an exception to the seller disclosure requirement because the home has not been previously occupied. Seller’s Disclosure Notices are also not required for foreclosures.
