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Texas Prom Contracts > The 1-4 Family Residential Resale > Flashcards

The 1-4 Family Residential Resale Flashcards

1
Q

The TREC promulgated purchase agreement should be used in which of the following transactions?

A duplex
A commercial property
A new construction single-family site built home
A condominium

A

A duplex

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2
Q

Suppose a buyer was willing to offer a seller $285,000 on a property with a first lien of $200,000 and a second lien of $60,000, with $25,000 as a down payment. What would the licensee put in paragraph 3.B of the TREC promulgated purchase agreement?

$25,000
$200,000
$260,000
$285,000

A

$260,000

3.B is the loan amount

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3
Q

Who is a “third party” to a contract?

Buyer
Seller
Buyer and seller
Anyone listed on the contract that is not the buyer or seller

A

Anyone listed on the contract that is not the buyer or seller

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4
Q

How should a licensee fill out a TREC purchase agreement if the seller is willing to finance the transaction for the buyer?

Use paragraph 4.C and fill it in completely.
Use paragraph 4.C and add any details that are necessary to meet the desires of the parties in paragraph 11.
Use paragraph 3 and check the appropriate box for Seller Financing.
Licensees cannot address this type of agreement and it must be drawn up by an attorney.

A

Use paragraph 3 and check the appropriate box for Seller Financing

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5
Q

Which addendum spells out the details of the loan and will be included on almost all contracts?

Loan Assumption addendum
Third Party Financing Addendum For Credit Approval
Good Faith Estimate and Loan Terms addendum
There is no addendum – Paragraph 4 Financing address these issues

A

Third Party Financing Addendum For Credit Approval

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6
Q

Using a TREC promulgated purchase agreement, who is required to pay for the title insurance?

The buyer
The seller
It’s negotiable
This is addressed in the Third Party Financing Addendum for Credit Approval

A

Its negotiable

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7
Q

Which of the following is true?

An REO company can require a buyer to use a specific title company.
Any seller can require a buyer to use a specific title company.
A national bank can require a buyer to use a specific title company.
A seller that has agreed to pay for the title policy can require a buyer to use a specific title company.

A

A seller that has agreed to pay for the title policy can require a buyer to use a specific title company.

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8
Q

What is the difference between a title policy and a title commitment?

The two are exactly the same - just different terms.
A title policy covers more than a title commitment will.
A title commitment is issued prior to closing to describe the items on the title policy which will be issued after closing.
The title policy is issued by a title company to the new owner. A title commitment is the sellers promise concerning title issues to the buyer (new owner).

A

A title commitment is issued prior to closing to describe the items on the title policy which will be issued after closing.

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9
Q

What is a disclosure statement by the seller that no changes have been made on the property that could affect the survey?

Seller’s Disclosure Notice
Affidavit, T-47
Property Disclosure Statement
Declaration of Survey

A

Affidavit, T-47

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10
Q

What is the fee that is charged every time a property changes hands?

Transaction fee
Transfer fee
Closing fee
Alienation fee

A

Transfer fee

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11
Q

The seller must allow the buyer the right to have the property inspected during which times?

Daylight hours
Work days not weekends
Between the hours of 9 AM and 9 PM
Reasonable times

A

Reasonable times

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12
Q

According to the TREC promulgated purchase agreement, who is responsible for having the utilities turned on?

Seller
Buyer
Licensee
No one

A

Seller

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13
Q

A lead-based paint notification is required on all properties built prior to what year?

1968
1972
1978
1984

A

1978

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14
Q

According to the TREC promulgated purchase agreement, who is required to pay for lender-required repairs?

Seller
Buyer
Both parties equally
Neither party

A

Neither party

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15
Q

What paragraph in the Texas Real Estate Commission promulgated residential contract is the sales price for the contract written?

  1. A.
  2. B.
  3. C.
  4. D.
A

3.C

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16
Q

Which one of the following is a TREC rule on filling in Paragraph 3 of the Texas Real Estate Commission promulgated residential contract?

All three blanks must have a number greater than zero.
The real estate agent should never fill in these blanks. It must be filled in by one of the principles.
3.A. + 3.B. = 3.C.
3.A. > 3.B.

A

3.A. + 3.B. = 3.C.

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17
Q

What paragraph in the Texas Real Estate Commission promulgated residential contract is the down payment for the contract written?

  1. A.
  2. B.
  3. C.
  4. D.
A

3.A.

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18
Q

How many days does the buyer have to terminate the contract after receiving the seller’s disclosure notice, if the disclosure was not provided on the effective date?

A

7 days – Paragraph 7B(2)

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19
Q

Which paragraph deals with the termination of the contract and the responsibility of the title company if the contract terminates?

A

18C – Escrow -Demand

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20
Q

How many days does the buyer or the buyer’s agent have to deliver the termination option check to the seller or the listing agent?

A

3 days – Paragraph 23-Termination Option

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21
Q

If the buyer does not receive the seller’s disclosure notice and the transaction is terminated by the buyer, what happens to the earnest money?

A

It is returned to the buyer. Paragraph 7B(2)

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22
Q

If the seller fails to make repairs that were agreed to, how many days may the buyer extend the closing date to give the seller time to perform?

A

5 days – Paragraph 7F

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23
Q

Which paragraph indicates the possibility of the buyer assuming the seller’s existing loan?

A

3B – Financing - Assumption

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24
Q

The buyer backs out of the contract before closing, what three options does the seller have?

A

Terminate the contract. Suit for specific performance. Sue for damages. Paragraph 15-Default.

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25
Q

Which paragraph mentions the extraterritorial jurisdiction?

A

6E(5) – Title Notices - Annexation

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26
Q

Which paragraph involves endangered species?

A

7G – Property Condition- Environmental Matters

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27
Q

Which paragraph is most likely to get a licensee into difficulty for practicing law?

A

11 – Special Provisions

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28
Q

How many days does the title company have after receiving a contract to produce a title insurance commitment?

A

20 days - Paragraph 6B – Title - Commitment

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29
Q

Which paragraph indicates that a buyer may be required to pay special costs before he or she can have water service?

A

6E(6) – Certified Utility Area

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30
Q

Where is the TREC Contract Form number located on the document?

A

The lower right corner of each page

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31
Q

If a tornado destroys the improvement on the property prior to closing day, which paragraph comes into play?

A

14 – Casualty Loss

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32
Q

Which paragraph indicates that the chandeliers will be staying with the home?

A

2B – Property Improvements

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33
Q

If the buyer sues the seller for something related to the contract, who will pay the attorney’s fees?

A

The losing party – Paragraph 17 – Attorney’s Fees

34
Q

Which paragraph indicates that the seller may continue to show the property while it is under contract?

A

19 - Representations

35
Q

Which paragraph includes a possible need for a statement from the seller indicating that the property may be influenced by coastal waters?

A

6E(4) – Title Notices-Tide Waters

36
Q

Which paragraph indicates that the tax bill will be divided between the seller and the buyer on closing day?

A

13 - Prorations

37
Q

Which paragraph warns the buyer that the property may have a special assessment tax on the property?

A

6E(7) – Public Improvement Districts

38
Q

Which paragraph mentions that negotiations may have to be entered into again after contract if the lender requires certain repairs?

A

7E – Lender Required Repairs

39
Q

On page 9, when will the section “Option Fee Receipt” be filled out?

A

When the termination option money is delivered to the seller or listing agent

40
Q

If the title commitment is not delivered to the buyer in time, what is the length of the extension in days?

A

15 days – Paragraph 6B

41
Q

How many days does the seller have to deliver the seller’s disclosure notice to the buyer after the effective date of the contract?

A

It’s negotiable – Paragraph 7B(2)

42
Q

On page 9, when will the section “Contract and Earnest Money Receipt” be filled out?

A

When the contract and earnest money check is delivered to the title company

43
Q

the most frequent form a licensee will use

A

the TREC No. 20-13: Parties and Property form. TREC No. 20-13 is named as such because it is the twentieth document promulgated by the Texas Real Estate Commission and this is the twelfth version of it.

44
Q

Paragraph 1 of the contract

A

identifies the parties involved, including spouses, if applicable.

45
Q

Paragraph 2

A

identifies the property being sold, as well as any additional items. It also describes the property in terms of lot, block and subdivision. This is also the paragraph where disputed items (ceiling fans, refrigerators, etc.) should be listed.

46
Q

Paragraph 3

A

contains the details of the financial offer, including down payment, loan amount and sales price. Dollar amounts should be used rather than percentages.

47
Q

Paragraph 4

A

is a license holder disclosure. Used if the licensee is a party to the transaction or acting on behalf or a spouse, parent, child,or business entity if the licensee has more than 10% ownership.

48
Q

Paragraph 5

A

is concerned with earnest money or the money going to buyer for his or her closing costs.

49
Q

Paragraph 6

A

is a more complex section concerning title policy and survey. There are several elements of this paragraph:

indicates which title company will be used to provide the title policy, as well as the eight standard exceptions that will not be covered
discusses title commitment,

50
Q

6.C.

A

discusses the survey, including who will perform the survey.

51
Q

6.D

A

gives the buyer the right to object to certain items but not others. It also allows the buyer to determine if the property can be used for a special function, including home-business and swimming pool installation. New owners are prohibited to misuse the property from what it had previously zoned for.

52
Q

6.E.1

A

is concerned with the fact that the broker must tell the buyer to have the title policy,

53
Q

E.2

A

discusses the disclosures that must be made when a buyer is purchasing a mandatory Home Owners Association membership.

54
Q

E.3

A

focuses on Statutory Tax Districts also called Municipal Utility Districts, both of which focus on water and sewer providers that are not owned by the city.

55
Q

E.4

A

addresses the addendum required because of the Tide Waters of the state when tides can have an impact on property lines.

56
Q

E.5

A

focuses on annexation,

57
Q

E6

A

covers the property located in a certificated service area of a utility service provider.

58
Q

E.7

A

deals with public improvements districts or areas where improvements are being made—this is relevant because the buyer may have to pay taxes on these improvements.

59
Q

Paragraph 6.E.8

A

states that if a property is subject to a private transfer fee obligation, §5.205, Property Code requires Seller to notify Buyer as follows: The private transfer fee obligation may be governed by Chapter 5, Subchapter G of the Texas Property Code. Anytime that the property is transferred to a new owner by sale, gift, inheritance or by any other means of changing the ownership of the property, the fee is to be paid to the original creator of the covenant or contractual agreement.

However, any transfer fee that was created after September 1, 2011 is void since that is the date that chapter 5 Subchapter G of the Texas Property Code was amended to read as such.

Whenever a seller who is obligated to pay a transfer fee offers his or her property to a buyer, the purchaser must be informed in writing about this obligation. An agreement between and seller and a buyer to attempt to end the transfer fee is void.

60
Q

Paragraph 6.E.9

A

is a disclosure paragraph that is applicable to persons who live in a propane gas system area.

61
Q

Paragraph 7

A

deals with the condition of the property and property inspections, including the seller allowing the buyer to inspect the property at reasonable times, disclosures, completion of repairs, environmental matters, and residential service contracts.

62
Q

Paragraph 8

A

addresses the fact that commission agreements and broker fees are all addressed in separate written agreements.

63
Q

Paragraph 9

A

regards the closing or consummation of the transaction, including the date of closing and the requirements of closing.

64
Q

Paragraph 10

A

focuses on the transfer of the occupancy, including when parties have to be in or out of a property.

65
Q

Paragraph 11

A

is the Special Provisions paragraph. It is used to put in items that have no other paragraph addressing them. Put ONLY factual statements and business details in this paragraph. This paragraph is possibly the most frequent paragraph that results in the disciplinary action against a licensee. The “smart” licensee does not put anything is this paragraph.

66
Q

Paragraph 12

A

deals with settlement and other expenses. It spells out the buyer’s and the seller’s expenses

67
Q

Paragraph 13

A

looks at proration or the dividing of expenses between the buyer and seller for fairness.

68
Q

Paragraph 14

A

examines casualty loss and describes the ramifications of the property being damaged or destroyed prior to closing.

69
Q

Paragraph 15

A

focuses on Default or when one or both parties do not perform according to the terms of the contract. This paragraph addresses the non-defaulting party’s remedies. If the earnest money is disbursed, then both parties are released from any further liability.

70
Q

Paragraph 16

A

looks at Mediation, a method of resolving conflicts in which a mediator listens to each side and helps make a mutually agreeable decision.

71
Q

Paragraph 17

A

addresses Attorney’s Fees and court costs will be paid for by the loser of any court case.

72
Q

Paragraph 18

A

deals with escrow, which is the holding of the earnest money typically in a non-interest banking account.

73
Q

Paragraph 19

A

states that all covenants, representations, and warranties survive closing. If the seller has made any representations that are untrue on the day of closing, the seller is in default. The seller may continue to show the property and entertain other offers as back up, unless doing so is strictly prohibited in the contract.

74
Q

Paragraph 20

A

Federal Tax Requirements - states that on the close of a real estate transaction if taxes are owed the IRS will still be paid.

75
Q

Paragraph 21

A

states that all notices from one party to another must be in writing and are effective when they are mailed, hand-delivered, e-mailed, or faxed. If this paragraph is not completed, the buyer or licensee for the buyer would not have a place to send a notification of major importance to the seller, such as the Notification of Termination of Contract. A licensee should not use paragraph 21 to fill in personal information.

76
Q

Paragraph 22

A

is the Agreement of Parties section that includes most of the frequently used addendums.

77
Q

Paragraph 23

A

is the Termination Option which allows the buyer to terminate this contract for any reason during an agreed amount of time for an agreed upon amount of money. The option fee can be credited at closing if agreed to. This is designed to allow the buyer time to get inspections and develop a prioritized repair list.

78
Q

Paragraph 24

A

is about Consulting an Attorney. This section emphasizes the fact that real estate licensees cannot give legal advice and cautions the parties to read the contract carefully and consult an attorney BEFORE signing if there is anything in the contract they do not understand

79
Q

Many real estate licensees do not realize the number of times the contract ties an action to a date. Paragraphs 5, 6, 7, 14, and 23 all tie to the “Effective Date.” It is critical that the effective date is

A

filled in to allow all the other paragraphs in the contract to connect to this date. Far too often a real estate licensee will “forget” to fill in this section and as a result have an undefined contract.

80
Q

Paragraphs 6, 7, 9, 10, 12, 13, 14, 15, 18, 19, and 23 all tie to the “Closing Date.” Non-verbal agreements to extend an option or days for financing approval will place the client at risk, place the salesperson at risk and place the real estate company at risk

A

Failure to include, use, and monitor the dates of a contract will place the licensee in a position of financial risk as well as place the licensee in a position to receive reprimands and other disciplinary actions from the Commission.

Texas Prom Contracts (16 decks)

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