Promulgated Contract Forms Champions school of real estate Exam with Correct Answers 2024, Exams of Marketing Business-to-business (B2B)

Download Promulgated Contract Forms Champions school of real estate Exam with Correct Answers 2024 and more Exams Marketing Business-to-business (B2B) in PDF only on Docsity! 1 2023/2024 PROMULGATED CONTRACT FORMS CHAMPIONS SCHOOL OF REAL ESTATE EXAM VERIFIED 100% 2 Promulgated Contract Forms Champions school of real estate Exam with Correct Answers 2024 Pre-Test 1: 1. Mutual Consent 2. Unilateral Contract 3. Consideration 4. Option 5. Unenforceable contract 1. A "Meeting of the Minds" 2. A contract in which only one party is obligated to perform 3. Something given in exchange for a promise 4. An agreement between a buyer and seller giving the buyer the right to purchase a property at a preset price for a given period of time 5. A contract that cannot be enforced due to some flaw or other issue in the contract Valid Contract is one that meets all of the requirements by law "COLIC" Void Contract is invalid from the beginning and does not affect the parties Voidable Contract is one that cannot be enforced against one or more of the parties. - Minors - all contracts are voidable by the minor 5 corrections to a contract Common ones include : -Changes to closing date -Changes to sales price -Repairs seller agrees to perform -Removal of Waiver or Contingencies Addenda is an attachment to a contract that adds or further describes the rights and duties of the parties. - if addenda contradicts contract ADDENDA PREVAILS Assignment transfers all of the rights related to the contract to another party known as an assignee - contracts for personal services are not assignable Assignee assumes primary liability for performance under a contract that has been assigned Novation occurs when a new contract is substituted for an existing one - happens when a contract has been market up with many changes so it is replaced with a clean copy Statute of Limitations the time in which an individual may file a suit in court for damages because a party breached a contract Doctrine of Laches 6 failure to file a suit within this time results in the party losing the rights under the contract (statute of Limitations) Termination when further performance of duties under the agreement in brought to a premature end Reasons for Termination (6) 1. Mutual Agreement 2. Partial Performance 3. Substantial Performance 4. Impossibility 5.Operation of Law 6. Breach of Contract Q1.1 : 5 Essential Elements of a Contract COLIC 1. Competent parties 2.Offer and Acceptance 3. Legal Purpose 4.In Writing 5. Consideration Q1.2 : If a contract has been entered into with a person who has been judged to be incompetent, that contract is considered because that person never had the capacity to enter into it. VOID Q1.3 : Tammy is interested in Jolene's property but wants to research the zoning laws before purchasing. She has an agreement in which she paid a fee of $100 to keep the property available for a preset price for 30 days, during which time 7 Jolene cannot sell the property to another. Tammy, however, can change her mind if she likes. What kind of agreement is this? Option Pre-Test 2 : 1. Promulgated Forms 2. Counter Offer 3. Unauthorized Practice of Law 4. Communication 5. Offeror 1. Contracts published by TREC 2. A rejection of the original offer coupled with a new offer 3. when license holders add complex provisions to a contract 4. also referred to as NOTIFICATION 5. The party making the offer TREC was established to enforce TRELA - has 9 members 6 - are Brokers 3 - are Individuals with no financial interest in real-estate other than ownership Unauthorized Practice of Law when agents add provisions to contracts other than business details - often resulting in considerable dispute over the meaning Broker-Lawyer Committee writes residential contract forms that, with few exceptions, are mandatory for license holders 10 is made when a party changes an offer in some way and communicates the change to the other party Two Steps : - Rejection of original offer - coupled with a new offer Acceptance means that the accepting party does so with no change to the contract whatsoever. Any change turns into a counteroffer Termination of Offers an offer can be terminated prior to acceptance due to : 1. acts of the parties 2. Operation of Law Communication or "Notification" is when an offer becomes a binding contract, all parties sign it Seller Contribution reduces the amount of cash needed by the buyer at closing Q2.1 : Bertha, a law school dropout is a licensed real estate agent who wants to make sure that she is providing her buyers with the best representation possible, so she drafts an iron-clad purchase contract for them. Bertha's sponsoring broker is horrified because Bertha is guilty of . Unauthorized Practice of Law Q2.2 : Which of the following correctly defines a counteroffer? A rejection of the original offer coupled with a new offer 11 Q2.3 : John and Bev made an offer on Fernando's 3-bed, 2-bath home. When does that offer become a contract? When it is accepted and communicated Pre-Test 3 : 1. Loan Assumption 2. Parties 3. Government Loans 4. Non-Realty items 5. Legal Description 1. Buyer pays the seller's existing mortgage as part of a contract for sale. 2. The buyer and seller 3. mortgages insured or guaranteed by the U.S. Government 4. Personal property included in a sale 5. location and size of a property Improvements are any man-made additions to the land Accessories additions to land that are not necessarily permanently installed or built-in "Exclusions" to a sale items that are to be removed prior to delivery of property possession -should have a name & location Down-payment always the difference between the sales price and the sum of all financing Fixture Lease 12 a lease on property items - EX. Solar panels (w/ PPA) Natural Resource Leases oil, natural gas, mineral resources -should be provided to buyer 3 days before contract's effective date Seller can NOT enter into any lease prior to the contract of sale being signed by both parties Third Party Financing Mortgages 1. Government Loans -FHA or VA 2. Conventional Loans Fixed-Rate Mortgage loan with an interest rate that is fixed over the entire term, or until refinanced Buyers 3 options if credit approval has not been obtained within the allotted time... 1. Terminate the contract 2. Allow allotted time to run out... will likely lose earnest money 3. Request an extension from seller Loan Assumption occurs when a buyer assumes and agrees to pay the seller's existing mortgage. -Rare but Benefits Include : 1. buyer obtaining a rate that is not currently available 2. assumption can be less expensive than obtaining a new loan 15 Title Policy an owners policy of title insurance - insures all property taxes are paid -can be paid by buyer or seller, usually the seller Endorsement a change that is made to a standard insurance policy Objections where the buyer can object to any matters that prohibit a certain use or activity of the property -buyers usually have a limited # of days Notice to Prospective Buyer (Paragraph 6) TRELA requires license holders advise buyers to have an abstract examined or to obtain title insurance Paragraph 7 : Property Condition 7A : buyer & buyer agent should have access to property 7B : Sellers Disclosure Notice 7C : Lead-Based Hazards 7D : "as is" - (2) w/ specific repairs 7E : Lender Required Repairs 7F :repairs should be done before CLOSING Seller's Disclosure Notice : 7B where the property owner discloses all known facts and defects concerning the property - Tool in DTPA Law suits : deceptive trade practices, buyer can sue seller for not disclosing property defects 16 - not necessary in the case of foreclosure or bankruptcy trustee or to a spouse or for a new residence with no previous occupancy ***they don't have to fill out the form but they still have to convey any knowledge of defect to a buyer!!!! Agent should never mark on this form!!! Paragraph 5A : If earnest money is 30,000 and there is no termination option Title Company -- TC Address -- Earnest Money -- Option Payment Name -- Address -- 30,000 -- 0 Paragraph 6C : -Seller pay for Title Policy XXXX Don't matter X -Buyer prefers using Seller's existing survey but if it is unacceptable buyer will pay for new one -Receive Survey within 7 days 6A : Title Policy @ "Sellers" or "Buyer's" expense 6C : Survey (1) Sellers existing Survey (Days --Who pays if the survey is unacceptable to title company) (2) New @ Buyer's Expense (Days) (3) New @ Seller's Expense (Days) --(1) -- 7 Days -- Buyer's Expense Buyer wants to move forward with purchasing a property with out receiving a LEAD-Based Paint Addendum... What should Agent do? - advise buyer this could be risky - Advise buyer of their right to obtain an inspection report and their right to terminate the 17 transaction with in 14 days if there is a Lead Based Paint Hazard - Make sure buyer has received the Pamphlet, "Protect your Family from Lead in your Home" and signed the addendum for "Seller's Disclosure of Info on Lead-Based Paint as Required by Law" Residential Service Companies Commonly referred to as home warranty companies, seller often contributes to some if not all of the costs. Sometimes Broker's have relationships with these companies and this must be disclosed to clients using, "Disclosure of Relationship with Residential Service Company" - these forms should be kept by the brokers In most cases the "Tile Policy" is paid by the . Seller Both 7.D(1)&(2) state a property is being sold . "AS IS" A title company has 20 days from the date they received the contract to furnish a to the for title insurance "commitment" to the "buyer" Seller is to permit buyer to perform as many as they deem necessary, provided they are done at reasonable times. Inspections A Public Improvement District (PID) is a special entity established by area property owners to enhance a neighborhood. 20 -Or buyer can accept condition and accept Seller's insurance proceeds - Or buyer can terminate contract & be refunded earnest money Paragraph 15 : DEFAULT once an executory contract is created and the parties are bound to perform. If either party fails to perform its duties this will result in a default by that party 1. Liquidated Damages - earnest money 2. Monetary Damages -court awarded monetary damages 3. Specific Performance -required performance Buyer Default 1. seller can accept earnest money, which release both parties from further obligation 2. Seller may seek further relief as may be provided by law 3. Seller can file court action to direct the buyer to perform Seller Default 1. Buyer can accept earnest money refund, which release both parties from further obligation 2. Buyer may seek further relief as may be provided by law 3. Buyer can file court action to direct the seller to perform Paragraph 16: MEDIATION buyer and seller agree to mediate when a dispute arises that cannot be solved by informal discussion Paragraph 17 : Attorney's Fees in the event of MEDIATION the attorney fees will be paid for by the losing party in the dispute 21 -Also applies in the case of a dispute between listing broker or escrow broker and and buyer and seller Paragraph 18 : Escrow escrow services are performed when something of value, such as a deed, money, or written instrument, is put into the custody of a third person to be retained until the occurrence of a contingency or performance of a contract. Paragraph 18 : Expenses Earnest money is applied first to the cash down-payment then to the buyers expenses. Excess is refunded to the buyer Two Types of Sales Exist Cooperative Sale : one firm works with the buyer and one works with the seller In House Sale : same broker represents the buyer and seller Escrow Agents signs and dates the Option Fee acknowledging receipt of the option fee The broker is responsible for ensuring that the effective date is filled in Q5.1 : What is TRUE of the Special Provisions paragraph in the TREC- promulgated forms? Only factual Statements and business details of the transaction should be inserted into this section Q5.2 : Failure to meet a contractual deadline is . Default 22 Q5.3 : Buyer Dale defaulted on a sales contract when he failed to apply for financing within the time period specified in the document. As the injured party, Seller Ling can choose to accept Dale's earnest money as . Earnest money is Liquidated Damages Pre-Test 6 : 1. Rollback Taxes 2. Farm and Ranch Contract 3. New Home Contract 4. Agricultural Use Exemption 5. Unimproved Property Contract 1. Tax assessed when a property no longer has an agricultural exemption 2. Contains provisions for surface leases related to a property 3. Contains provisions for various concerns regarding new construction 4. Method for evaluating tax burden of properties used for agriculture 5. Used for the sale of properties with no existing structures Q6.1 : All of the TREC-promulgated contracts were drafted with identical provisions to the . the One to Four Family Residential Contract Q6.2 : What is true regarding earnest money? 1. There is no standard amount prescribed but is often 1% of sales price. 2. Earnest Money is not a legal requirement for a contract 3. Earnest money is paid upfront by a buyer to show seriousness of intent Q6.3 : are implemented when property operating under an exemption has its usage changed. Rollback taxes 25 accept less than what is owed on his property. What addendum should be filled out when purchasing Sean's property? Short Sale Addendum Q7.2 : By default, TREC-promulgated contract forms . Convey all of the mineral estate owned by the seller Q7.3 : House Bill 2532 establishes notice requirements for a homeowner who proposes to sell or convey real property located in a(n) . Propane Gas System Service Area Pre-Test 8 : 1. Blockbusting 2. Stigmatized 3. Steering 4. Straw Buyer 5. Equity Theft 1. An attempt to induce panic selling in a given neighborhood 2. Property where a murder or alleged haunting has occurred 3. Also known as channeling 4. A person used to buy property in order to conceal the actual owner 5. Fraudsters use forgery to obtain new liens on a property Mortgage Fraud a borrower making false statements in a loan application Common Types: 1. Chunking 2. Equity Theft 26 3. Foreclosure Rescue Scam 4. Property Flipping 5. Straw Buyer 6. Churning Chunking Fraudster tells unsuspecting investors to submit multiple loan applications to various lenders then give promises to handle the transactions. The fraudster takes a significant portion of the loan amounts as his fee and never leases the property Equity Theft occurs when fraudsters forge a deed transfer or a satisfaction of lien and then obtain new liens on the property. Foreclosure Rescue Scam involves a homeowner who is deceived into signing over title to the property with the belief that he or she will be able to remain in the house as a renter and eventually repurchase it over time. Property Flipping occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value. Straw Buyer is a person who is used to buy property in order to conceal the actual owner. Churning is excessive selling/lending activity for the purpose of generating fees and commissions. Lenders encourage refinancing to earn additional fees rather than to help the customer. Red Flags of Mortgage Fraud 27 - Employer's address shown as a post office box - The commute is significantly unrealistic - The borrower is downgrading to a smaller or less expensive home - Significant changes as the application process proceeds - Lack of accumulation of assets compared to income - Accumulation of assets compared to income appears to be too high Broker's Fees - an attempt to fix brokerage fees is a violation of the Sherman Act and the Clayton Act. Fair Housing Laws essentially prohibits the discrimination in housing based in race, religion, national origin, Familial status, handicap or sex.... Age is not a protected category under this law. Steering (Channeling) taking buyers or renters to, or away from, a particular area based on the race, religion, etc. of the buyer or renter and is the most common cause for complaint under the law. Steering can be blatant or quite subtle. Blockbusting any attempt to induce panic selling in a neighborhood for financial gain. Required Disclosures Seller's Disclosure Notice : the seller is responsible for its accuracy. The agent's role is to encourage honesty and full disclosure. Errors & Omissions insurance