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Texas Real Estate Exam > Texas Promulgated Contract Forms > Flashcards

Texas Promulgated Contract Forms Flashcards

1
Q

Void Contract

A

Has no legal effect and can’t be enforced as terms do not create legal rights or call fro illegal acts

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2
Q

Voidable Contract

A

One or more of the parties has authority to rescind the contract (incompetent, fraud, duress)

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3
Q

Mutual Agreement

A

Offer and acceptance

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4
Q

Mirror Image Rule

A

Offer must be accepted without modifications

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5
Q

Parol Evidence

A

When parties agree in writing, all prior oral and written agreements integrated into one and prevents a party to add to the written terms of the contract

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6
Q

Electronic Signature

A

An electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record

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7
Q

Laches

A

Use it or lose it rule. Too bad, you are out of time. That door is now locked. Unreasonable delay, neglect

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8
Q

Executory Contracts

A

In the works

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9
Q

Option Money

A

Must be given to the seller or seller’s agent and NEVER to the title company

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10
Q

Contract Lawsuit Statute of Limitations

A

15 years

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11
Q

Time is of the essence addenda

A

Sale or Other Property by Buyer
Back-up Contract
Third Party Financing
Short Sale

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12
Q

Four Corners Rule

A

If a contract appears to be complete, no outside evidence can be used to challenge it

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13
Q

Nominal Damages

A

Token damages when breach occurred – not money loss

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14
Q

Liquidated damages

A

Specific damages

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15
Q

Specific Performance

A

Performance of a contractual duty, as ordered in cases where damages would not be adequate remedy

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16
Q

Restitution

A

Putting non breaching party back in position before breach

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17
Q

Assignment

A

Famous people purchasing property may have the original contract in the name of an unknown buyer and then at closing, the contract is assigned to the real purchaser

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18
Q

Assignment

A

Transfer of rights

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19
Q

Delegation

A

Transfer of duties

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20
Q

Statutes of Limitations in Texas

A
  • Assault and battery: 2 years
  • Contract: 4 years
  • False imprisonment: 2 years
  • Fraud: 4 years
  • Legal malpractice: 2 years
  • Libel: 1 year
  • Medical malpractice: 2 years
  • Personal injury: 2 years
  • Product liability: 2 years or 15 years
  • Property damage: 2 years
  • Slander: 1 year
  • Trespass: 2 years
  • Wrongful death: 2 years
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21
Q

MUD

A

Municipal Utility District provides water, sewage, drainage etc.

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22
Q

Reasons for Termination

A

Fully executed contract is best way

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23
Q

Life of a Real Estate Transaction

A 
Buyer orders home inspection
Repairs
Loan Application and Appraisal
Survey
Insurance
Home Warranty
Final Walk-through
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24
Q

Who approves and promulgates Texas RE forms

A

TREC

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25
Q

How many promulgated forms does TREC have

A

The Real Estate Commission has approved and promulgated 6 contract forms for licensee’s use. They include a One to Four Family Residential Contract, Two New Home Contracts, a Farm and Ranch Contract, a Condo Contract and an Unimproved Property Contract

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26
Q

Texas Veterans Loan

A

Can borrow u p to $150,000 to purchase land at competitive interest rates. 5% down for tracts one acre of more

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27
Q

MIP (Mortgage Insurance Premium)

A

FHA

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28
Q

Lender Paid PMI

A

Built into interest rate. Often monthly payment is less

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29
Q

Mortgage Premiums for FHA

A

Two mortgage insurance premiums are required on all FHA loans. The upfront premium is a % of the loan amount – currently 1.75%
The 2nd is the annual premium (paid monthly) based on LTV

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30
Q

FHA 203K

A

Based on current appraised value for repairs up to $35,000 nonstructural repairs (painting, replacing cabinets or fixtures)

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31
Q

Max FHA loan size

A

$625,500

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32
Q

Reverse Mortgage Age

A

62 and no escrow account and the mortgage isn’t due until last borrower dies, sells or fails to live in the home for longer than 12 months

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33
Q

Texas Veterans Land Board

A 
Competitive interest rates
Up to $417,000
Those with 30% or greater service connected disability get additional 1/2% discount and Funding Fee is waived
0 down
No PMI
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34
Q

The date in the right side top of the contract is the date that

A

TREC approved and promulgated the form

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35
Q

How many versions of the Third Party Financing Addendum

A

8

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36
Q

The sales contract describes the property as

A

Land, Improvements and Accessories

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37
Q

If parties decide to add items that stay that are not in the contract, they should use

A

Non-Realty Items Addendum

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38
Q

On FHA loans being made currently, the MIP the borrower pays monthly will terminate when

A

Never until loan is paid off

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39
Q

The money to originate an FHA, VA, TVLB loan comes from the

A

The lender

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40
Q

A veteran may be able to get his VA entitlement restored by

A

Sending an application to the VA

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41
Q

According to the Loan Assumption Addendum, if the buyer does not deliver the credit information within the required time, the seller has how many days to terminate after expiration for the time of delivery?

A

7

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42
Q

According to the Seller’s Financing Addendum, if the buyer delivers his credit information to the seller in a timely fashion, and the seller determines it is unacceptable, how many days after the date for the expiration of the time for delivery does the seller have to terminate?

A

7

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43
Q

Property approval, according to paragraph 4, includes which of the following things?

A

The appraisal
Lender-required repairs
Insurability

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44
Q

The amount listed as the principal amount of the loan(s) in the addendum(s) should match the amount in Paragraph 3B of the contract

A

True

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45
Q

The buyer’s notice of failure to receive buyer approval from the lender, written on a napkin and given to the seller before the deadline, is sufficient to terminate the contract and receive a return of the earnest money

A

True

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46
Q

Who do you deliver earnest money to

A

Listing Agent

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47
Q

Paragraph 23

A

Paragraph 23 says the money must be delivered to the seller within three days after the effective date. Notice the last line of the paragraph says, “time is of the essence”. Time is of the essence means that five minutes after that 5PM deadline on that third day is too late. For example, if the effective date is the second day of the month, the option money must be delivered to the seller (or his or her agent) by 5PM on the 5th.

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48
Q

Who is responsible for Title Insurance Policy cost

A

The parties negotiate who will pay for the Owner’s Title Policy and which Title Company will be used. The Title Policy is a contract between the title company and the buyer. It is important the decision of which title company to use be left to the decision of the parties.

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49
Q

Who pays for Restrictive Covenants

A

According to paragraph 6B of the TREC contract the Title Company will send a commitment for title insurance, within 20 days after they receive the contract, to the buyer at the address listed in Paragraph 21 of the contract. The buyer will also receive a copy of the restrictive covenants, at the buyer’s expense, that are in place for the real estate. The restrictions dictate how the buyer can and cannot use the property. Restrictive covenants are an exclusion to the title policy.

50
Q

Restrictive Covenants

A

The buyer will receive a copy of the restrictive covenants and other deed restrictions that are in place for the real estate. The restrictions dictate how the buyer can and cannot use the property. Restrictive covenants usually apply to a group of homes or lots, or property that’s part of a specific development or subdivision. They are normally put in place by the original developer and are different for every area of homes

51
Q

Reservations

A

oil, gas, or other minerals, water, timber, or other interests is
made in accordance with an attached addendum

52
Q

Who picks Title Company

A

if a seller wants to avoid a possible violation of RESPA, the seller should not insist on a particular title company for the transaction unless the seller is paying for both the owner policy and the lender policy of title insurance.

53
Q

Who picks Title Company

A

if a seller wants to avoid a possible violation of RESPA, the seller should not insist on a particular title company for the transaction unless the seller is paying for both the owner policy and the lender policy of title insurance.

54
Q

RESPA issues with choosing a Title Company

A

It’s the agents who care. If you are a seller’s agent and there is even the slightest possibility that trying to force the buyer to use a certain title company could cause your seller to be in violation of RESPA, it would be a very serious situation. Let the parties decide the title company.

55
Q

When does buyer pay seller option fee (usually $100-200)

A

Within 3 day after date of contract and will not be credited to sales price at closing and not refundable

56
Q

Stand By Fees

A

Charged by water district to unimproved property

57
Q

Who pays for Title Insurance

A

Although it is customary for the seller to pay for the title policy, this is not required, and paragraph 6 provides the opportunity to check the buyer as the paying party. The title company has 20 days to produce the commitment with an automatic 15 day extension if needed.

Buyer pays for copies of restrictive covenants

58
Q

Increase Value Endorsement

A

The title policy does NOT guarantee that no one will ever attack your title. They do guarantee that if anyone does attack your title, they will defend you and if they lose, you are insured up to a certain amount. The amount is usually what you paid for the property when you bought it. That was probably enough when you bought it. This is to increase value of property to what it is now.

59
Q

Title Insurance Policies

A

T-1 for Seller and t-2 for buyer. 4 year statute of limitations

60
Q

T-47 from Tex Dept of Insurance

A

Residential Real Property Affidavit – notarized document telling buyer of your home what you know about the home’s boundaries. I never added a fence or extension to house or moved a fence. Should be completed before you list your home for sale

61
Q

Survey cost in Austin

A

$400-$550

62
Q

Sellers Disclosure Notice

A

Buyer can terminate for any reason within 7 days of Notice and receive earnest money

63
Q

Lead based paint disclosure

A

Remember, you risk a $10,000 penalty and up to three times the damages to someone injured each time you violate the federal lead-based-paint disclosure requirement.

64
Q

When a contract is in writing, the parties have agreed to everything, all signatures and initials are in place and the acceptance has been communicated to the other party or their agent you can fill in the

A

Effective date

65
Q

Amendment to change exceptions in the title is paid by

A

Negotiated party

66
Q

Deed Restriction

A

Dictate how the buyer can and cannot use the property

67
Q

Good Funds

A

Wire transfer, cashier’s check, certified check

68
Q

Prepaid Interest

A

Discount points

69
Q

Buy Down

A

Mortgage subsidy made to the homebuyer on behalf of the seller.

70
Q

Commitment Fee

A

a banking term used to describe a fee charged by a lender to a borrower to compensate the lender for its commitment to lend

71
Q

Liquidate Damages

A

Estimated guess of actual damages

72
Q

Arbitration

A

Agreement in a dispute will be resolved on friendly basis. 3rd party (Judge) would make decision.

73
Q

Escrow

A

legal document that outlines the terms and conditions between parties involved in an escrow arrangement. An escrow, third party, agent would then follow the instructions outlined in the agreement

74
Q

Antitrust Violations

A

Protect trade and commerce from abusive practices

75
Q

The closing will be on or before such and such date or…

A

or within 7 days after objections made under Paragraph 6D have been cured or waived, whichever date is later (Closing Date).

76
Q

ABCs of Title Commitment

A

Schedule A – Actual facts (names, legal, price, lender)
Schedule B – Buyer Notice of things not covered by title policy
Schedule C – Clear in order to close must be resolved
Schedule D – Disclosure of all parties who will share any part of the title insurance premium

77
Q

The buyer made an objection to something on the survey and the seller cured the objection. The parties will be able to close but it will be four days after the on or before date. Do they parties need an amendment?

A

No, they have 7 days to close after the objection is cured

78
Q

The parties were to close on May 15th. The title company got the closing disclosure to the buyer on the 14th but they have to wait the three days and will close on the 17th. Do the parties need an amendment to the contract?

A

Yes

79
Q

If the buyer is concerned about the exclusion in the title insurance for the standard printed exception as to discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements, is there anything he or she can do about it?

A

Yes, the buyer can get an endorsement to change it to only shortages in area*

80
Q

203K

A

FHA Renovation Loan

81
Q

Do the requirements of the Texas Property Code relating to security issues apply to a property under a Temporary Lease Agreement of under 90 days?

A

No

82
Q

Most amortization schedules are based on 360 days

A

Statutory year

83
Q

5 Texas Constitutional Rules for Property Tax

A

Taxation must be equal and uniform
Taxation must be on its current market value
All property is taxable unless Federal or State law exempts it
Property owners have a right to reasonable notice of increases in appraised value
Each property must have one appraised value

84
Q

3 main parts to property tax system in Texas

A

Appraisal district in county sets value yearly – CAD district
Appraisal Review Board settles disagreements
Local taxing units decide how much money they will need

85
Q

Property Tax bills go out when

A

October 1st. Have until Jan 31st to pay their taxes. Feb 1st penalty and interest charges, legal action

86
Q

What is a form on interest that a lender collects up front?

A

Discount points

87
Q

How long does a broker have to keep escrow account records

A

4 years

88
Q

If a buyer has an escrow account on his new loan, how many months will they be debited at closing?

A

14 months

89
Q

Any party who fails or refuses to sign a release acceptable to the escrow agent within how many days will be liable to other party for damages

A

7

90
Q

Written demand for earnest money

A

Within 15 days

91
Q

Buyer Broker Contract

A

Exclusive – you can’t buy a property without owing a commission to that agent even if that agent didn’t write your offer

An agreement that you will be paid

92
Q

Which paragraph is used to add factual statements or business details as desired by the principals to conform to the negotiations?

A

Paragraph 11, Special Provisions, can only be used to add factual statements or business details as desired by the principals to conform to the negotiations. Factual statements and business details are clarifications of something in the contract. They are true, factual, and simply expand on a subject elsewhere in the contract, not a new negotiation.

93
Q

The seller may not accept a second offer unless the back-up addendum is part of the second offer

A

True

94
Q

Real Estate Developers

A

Not regulated

95
Q

Homeowners Association

A

Not regulated

96
Q

Mortgage Brokers

A

Texas Department of Savings an Mortgage Lending

97
Q

Property Tax Consultants

A

Texas Department of Licensing and Regulation

98
Q

Title Insurance Companies

A

Texas Department of Insurance

99
Q

Auctioneers

A

Texas Department of Licensing and Regulation

100
Q

Writ of Execution

A

Order of the court to any constable in the state of Texas ordering him to execute on any non-exempt assets. … A judgment creditor has the right, as a matter of law, to have a writ of execution issued unless and until the defendant files a proper supersedes bond.

101
Q

Abstract of Judgment

A

Court document that renders judgment and summarizes damages, attorney’s fees and court costs

102
Q

Max payment for a claim

A

$50,000 for single transaction and $100,000 for all claims against a single license holder

103
Q

IABS (Information about Brokerage Services)

A 
Cannot be a link in an email signature
Can be an attachment in an email
Can be in the body of the email, personal delivery, 1st class mail or overnight carrier
Can be link in body of email
Link is required on my website
104
Q

To terminate a contract during option period

A

The Notice of Termination is the proper way to give the required notices of termination. Only the buyer has to sign this document. Since the buyer has been given these rights in the contract, it is not necessary to get the sellers approval.

105
Q

If an agent is selling a new home and the builder has her own contract form, how can the agent ascertain that the buyer receives the required notice that he or she should have the abstract examined by an attorney or obtain a policy of title insurance?

A

Use TREC form OP-C, Notice to Prospective Buyer

106
Q

A transaction is contingent upon the sale of another property and the seller notifies the buyer that he has accepted another offer. What must this buyer do?

A

Waive contingency on or before the date agreed to in the Sale of Other Property Addendum

107
Q

A back-up contact was executed on July 1st. The buyer is willing to be in back-up position until July 16th and see if the first contact will terminate. What are the back-up buyer’s responsibilities while in back-up position?

A

Pay earnest money and option money agreed to in back-up contract

108
Q

Fraud for Profit

A

Insiders

109
Q

Fraud for Property

A

Borrow inflates information

110
Q

Occupancy Fraud

A

Borrow states the home will be primary or secondary residence but is an investment property which have higher interest rates

111
Q

Appraisal Fraus

A

Inflated appraisal value

112
Q

Income Fraud

A

Overstated income

113
Q

Equity Skimming

A

Multiple parties starting with appraiser inflating price, a phony buyer secures loan to hide ID of fraud organizers and then sign property over to organizers in quit claim deed and they rent the property until it goes into foreclosure

114
Q

Straw buyer

A

Phony

115
Q

Civil Rights Acts

A

Protects Race

116
Q

Fair Housing Act

A

Protects color, sex, familial status and not age

117
Q

Fair Housing Act

A

Protects color, sex, familial status and not age

118
Q

Well publicized events that make the property notorious like murder/suicide

A

Must be disclosed

119
Q

The seller has agreed to repair the front porch but he needs more time to finish. What is the maximum number of days the closing date can be delayed for repairs?

A

5 days

120
Q

The seller does not have a current survey of the property. How many days before the closing date must a new survey at the seller’s expense be provided?

A

3 days

Texas Real Estate Exam (5 decks)

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