Texas Promulgated Contracts, Exams of Business Finance

Download Texas Promulgated Contracts and more Exams Business Finance in PDF only on Docsity! Texas Promulgated Contracts What's a Promulgate? - Correct answer means that it is a widely used contract or form endorsed by a governing group. This group can be a trade association or a government entity. In Texas, what are the two entities that promulgate contracts? - Correct answer Texas Real Estate Commission (TREC) or the Texas Association of REALTORS® (TAR). TREC does not furnish - Correct answer employment contracts like the listing agreement, buyer's representation agreement, property management agreement, etc. But, the Texas Association of REALTORS® (TAR) attorneys have created promulgated employment agreements for their members to use. If a broker is not a member of TAR, the broker will have to - Correct answer have those forms created by a Texas licensed attorney. All real estate contracts must be in writing to be enforceable. when a form is promulgated by TREC, real estate license holders MUST use that particular form for that particular situation except: - Correct answer another contract form has been prepared by, and is REQUIRED by, the property owner. Real estate agents cannot create their own real estate contracts - Correct answer that would be the unauthorized practice of law What is the Practice of Law? - Correct answer is a general term that encompasses the actions of giving legal advice to clients, drafting legal documents for clients, and representing clients in legal negotiations and court proceedings such as lawsuits. Real estate license holders may NOT practice law unless they also hold a license to practice law. - Correct answer It's one thing to tell a client what a form means and present them with their options. License holders must stay on guard If the client wants advice, the license holder should refer them to an attorney. The client must choose and pay for their own attorney. - Correct answer Real estate license holders can never furnish an attorney for their client. What's A Contract? - Correct answer is a voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from performing) some legal act. Five Elements of a Valid Contract - Correct answer Competent Parties Mutual Agreement Lawful Objective Consideration In Writing Legal competency parties implies - Correct answer The individual has reached the age of majority (usually 18 years of age) or has had their disabilities of minority removed by a court. The individual has not been declared mentally incompetent by a judge. Majority laws protect minors from entering into agreements that they may not have the experience or knowledge to understand. - Correct answer if anyone under the age of 18 enters into a contract, the contract is considered voidable. Once the minor reaches the age of majority, all contracts entered into with a minor as one of the parties may be either ratified or voided. A void contract is one that is - Correct answer was never legally enforceable. A void contract lacks some or all of the essential elements of a contract and so was never a contract in the eyes of the law. Voidable Contract - Correct answer has all of the essential elements of a legally enforceable contract, but one or more of the parties has the authority to rescind the contract. Usually, in a voidable contract, one party is either mentally incompetent, or a minor, or the contract involves fraud or duress. Parol Evidence Rule - Correct answer When a dispute goes to court, the court is bound. This rule prevents a party to a written contract from presenting additional evidence that adds to the written terms of the contract. Statute of Limitations - Correct answer A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced. The Doctrine of Laches - Correct answer Base on legal common law on the idea that the courts should NOT help people who take an inordinate amount of time to raise their claims, whether that time is specified in codified law or not. Is Doctrine of Laches is the same thing as the Statutes of Limitations. - Correct answer No. The Doctrine of Laches is based on common law, while Statutes of Limitations are written and codified. Paragraph 23 gives the buyer the unrestricted right to terminate the contract if ________. - Correct answer the buyer has purchased an option to terminate. Third Party Financing Addendum: Paragraph B1 - Correct answer contract is subject to Buyer obtaining Buyer Approval. If Buyer cannot obtain Buyer Approval, Buyer may give written notice to Seller within _ days after the effective date of this contract and this contract will terminate and the earnest money will be refunded to Buyer. Addendum for Property Subject to Mandatory Membership - Paragraph A: Subdivision Information - Correct answer The buyer may also elect to terminate the contract under the language in Paragraph A of the Addendum Paragraph 7B: Seller's Disclosure Notice - Correct answer The buyer may elect to terminate under Paragraph 7B(2) of the One to Four Family Residential Contract regarding the Seller's Disclosure Notice. One of these boxes needs to be checked. Options B1 and B3 do NOT provide for an option to terminate. Paragraph 6D: Title Policy and Survey - Correct answer The buyer may elect to terminate under Paragraph 6D (Objections), located in the One to Four Family Residential Contract. Paragraph 15. Default - Correct answer One to Four Family Residential Contract, Paragraph 15 states that either party may elect to terminate if the other party is in default. When does an offer become a contract? four conditions that need to be met for the offer to become a valid contract. - Correct answer It must be in writing. It must be signed by all parties. All changes (if any) must be initialed by all parties. The agent obtaining the final initials (approval) must communicate (preferably in writing) the fact that they have written acceptance. If the client needs legal advice to decide, they must be advised to seek advice from an attorney. - Correct answer The license holder is free to explain to the principals the meaning of the factual statements or business details contained in the contracts as long as the license holder does not offer or give legal advice. Special Provisions section of the sales contract. Paragraph 11 of the One to Four Family Residential Contract - Correct answer License holders must take care that they do not cross the line and input anything that changes parties' legal rights. Paragraph 11 Special Provisions section of the sales contract example - Correct answer saying, "This contract is contingent upon a satisfactory appraisal or satisfactory inspection," changes the buyer's rights under the contract and may be viewed as the unauthorized practice of law Broker Lawyer Committee - Correct answer writes promulgated contracts 13 members 6 are brokers 6 lawyers and 1 public member C. Drafts and Edits Forms TREC approves and promulgates them. - Correct answer The Broker- Lawyer Committee A) promulgates forms. B) approves forms. C) drafts and edits forms. D) approves and promulgates forms. Protect both Parties - Correct answer TREC contract forms are designed to Parol Evidence Rules - Correct answer says that only items within the contract can be considered in a court of law. If you filled out the addendum but did not list it as being part of the contract, the courts would not be able to include it in their information. The addenda being attached to the contract will be made note of in Paragraph 22 of the sales contract. Offer, Acceptance, and Performance - Correct answer There are three stages of a contract: proof that the offer was presented - Correct answer Good business practice dictates that listing agents keep other agents informed about their offers. If a seller rejects an offer, the listing agent should ask them to write "rejected" on the offer and sign or initial For an offer to become a contract, four things are needed: - Correct answer it must be in writing, it has to be signed by all parties with changes initialed, acceptance must be completed, and acceptance of the contract must be communicated to the other party. These four things are usually performed by the agent that finalizes the contract. still available and the seller is free to sell it to someone else. - Correct answer While buyers are countering, license holders should let buyer know that the property is Binding and Effective - Correct answer when all parties have agreed to all terms of the offer and have signed the offer and initialed any changes that took place during negotiations. That final date of acceptance, better known as the effective date, is the date on which the contract becomes binding between the parties. Most civil fraud in real estate falls into one of these forms: - Correct answer One party knowingly makes a material misrepresentation One party makes a false statement with the intent to mislead