Understanding Real Estate Contracts and Forms in Texas, Exams of Advanced Education

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Champions Promulgated Forms definitions of terms-100% tutor verified mutual consent meeting of the minds consideration something given in exchange for a promise option an agreement between a buyer and seller giving the buyer the right to purchase a property at a present price for a given period of time void contract invalid from the beginning and has no effect on the parties. contract to perform illegal act is a void contract voidable contract cannot be enforced against one or more of the parties. most contracts entered into with minors are voidable at the option of the minor. valid and enforceable contract competent parties, mutual consent (offer and acceptance), legal purpose, in writing (when required by law), consideration executory contract defined as a contract that is binding on the parties, with one or more of the parties having contractual duties that have not yet been performed (from effective date to closing, the contract is executory) "time is of the essence" time for performance is literally interpreted, and must be performed by the day stipulated amendments ___________ to the original contract may be needed. common amendments: changes to closing date, sales price, down payment and or amount financed, repairs that the seller agrees to perform, removal or waiver of contingencies addenda _______ to a contract is an attachment that adds or further describes the rights and duties of a party. (ex. Financing _______ to obtain acceptable financing) if _____addendum contradicts the main body of a contract, the provision in the ________ prevails assignment _____ of a contract transfers all the rights related to the contract to another party known as the assignee. assignee assumes primary liability for performance under the contracts, and the assignor, unless released, remains secondarily liable novation new contract is substituted for an existing one statute of limitations limitation of time in which an individual may file suit in court for damages because a party breached a contract. 2 years for oral agreement, 4 years for written lease-purchase agreement gives the tenant occupancy in the present time and the right to purchase at a future date(no promulgated form by TREC) imputed notice offer is presumed to have been delivered to the principal when it is delivered to agent when a seller receives an offer, "_______________?" is the first question asked what is the bottom line offer must meet certain legal requirements: communicated to a specific offeree, intended to be a serious offer, definite and certain communication is referred to as ________ notification net sheet an estimate of the net proceeds to the seller, and should be prepared based upon the offer being considered seller contribution reduce the amount of cash needs by the buyer at closing paragraph 1 parties-- buyer and seller paragraph 2A property--land (legal description and address) paragraph 2B property--improvements (all man-made additions to the land including the house, garage and other permanently installed and built in items) paragraph 2C property--accessories (not necessarily permanently installed or built in, are commonly converted to the buyer in the sale) paragraph 2D property--exclusions (ex. dining room chandelier not included in sale and with adequate name and location) paragraph 3 sales price paragraph 3A down payment is always the different between the ales price and the sum of all financing paragraph 3B sum of all financing from all sources paragraph 3C sale price is the sum of 3A and 3B paragraph 4 license holder disclosure (license holder who has familial relationship with a party to the transaction must disclose this info to other parties before entering contract) 3rd party financing: Government loans and conventional loans 1. government loans: often either FHA or VA loans 2. conventional financing: first mortgage financing, second mortgage financing or both USDA guaranteed loans 30 years, with a 0% down payment and is only made available in rural areas Disclosure of relationship with residential service company, to disclose to a party to a RE transaction in which the license holder represents one or both of the parties . form should be retained in the transaction records maintained by the broker as evidence the disclosure was provided The ____________ as promulgated eight exceptions to title insurance policies. Texas Department of Insurance title policy insurance policy against losses resulting from defects in title endorsement a change made to a standard insurance policy mediation processes of resolving contractual disagreements between parties escrow [Par 12] funds held by third party until performance of contract option period [Par 23] the time allowed for buyer-specified inspections prorations [Par 13] expenses divided between parties at closing --may be for taxes, maintenance fees and rents, etc. "good funds" cashiers check or wire transfere closing different than funding, funding is where: money exchanges hands Paragraph 10 Possession --seller delivers property in present condition with ordinary wear and tear --funding does not necessarily follow closing --if seller is to remain after closing Sellers Temporary Residential Lease form should be completed (90 days) --Buyers temporary release form (90 days) is for when a buyer moves in prior to closing Paragraph 11 Special Provisions only for factual business details or statements not addressed in the contract form and for which there is no TREC-promulgated addendum, less or other mandatory form [Par 12] Expenses payable by Seller releases of existing liens, including prepayable penalties and recording feeds; release of sellers loan liability; tax statements or certificates; preparation of deed; one-half of escrow fee; and other expenses payable by seller under this contract [Par 12] Expenses payable by Buyer appraisal feeds, loan application feeds and adjusted origination charges. Also would include PMI, MIP, or VA funding fee all oral negotiations are ______ and do not become binding until committed to __________ voluntary;writing when the sale is closed, we say that the contract has been __________ fully executed when buyer defaults, the seller has several options: 1. specific performance: file court action to get defaulting party to perform according to contract 2. Monetary damages: award of monetary damages by court 3. Liquidated damages: seller can choose to accept buyers earnest money which releases both parties from contract When seller defaults, buyer can: 1.1. specific performance: file court action to get defaulting party to perform according to contract 2. Monetary damages: award of monetary damages by court release of existing lien rollback taxes --tax assessed when a property no longer has an agricultural exemption --roll the taxes back for a period of 5 years farm and ranch contract contains provisions for surfaces leases related to property new home contract contains provisions for various concerns regarding new construction agricultural use exemption method for evaluating tax burden of properties used for agriculture unimproved property contract used for the sale of properties with no existing structures In a farm and ranch sale, the buyer receives all of the following: windmills tanks pens (NOT trucks etc) Which statement about earnest money is wrong: a. no standard amount prescribed, but is often 1% of sale b. in texas, earnest money is set at 6% of sales price c. not a legal requirement of a contract d. deposit paid up from by the buyer to show seriousness of intent B IS WRONG __________ are implemented when property operating under an exemption has its usage changed. rollback taxes buyers termination form used to notify the seller of a buyer-initiated contract termination non-realty items addendum used when personal property is to be included in a sale short sale addendum used when a seller is unable to sell at or above what is owed on a property consumer information form should be prominently displayed in a brokers office condominium resale certificate prepared by management of a condo project Buyer's Termination From used to notify the seller of a buyer-initiated contract termination non-realty items addendum used when personal property is to be included in a sale