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PROMULGATED CONTRACTS 256
QUESTIONS AND ANSWERS
Any investigation of an issue related to an Environmental Assessment, Threatened or Endangered Species, & Wetlands Addendum is ____. -
Correct Answer ✔️ ✔️ done at the buyer's expense
Residential Service Contract: - Correct Answer ✔️ ✔️ Also
known as a Home Warranty; an agreement by a company to maintain, repair, or replace applicable components of a home for a specified period of time
Whose responsibility is it to review and choose the coverage of the residential service contract? - Correct Answer ✔ ️ ✔️ the buyer
Which of the following is NOT true about title insurance? - Correct
Answer ✔️ ✔️ The title policy protects the buyer from losses considered "acts of God."
The decision of which title company to use should be left to _____. - Correct Answer ✔️ ✔️ the parties to the contract
According to Paragraph 5 of the One to Four Family Residential Contract, if the buyer fails to deposit the earnest money as agreed, the buyer will be _____. - Correct Answer ✔️ ✔️ in default
How much time does a seller have to cure a valid objection listed by the buyer in Paragraph 6D of the One to Four Family Residential Contract? - Correct Answer ✔️ ✔️ 15 days
A buyer is making an offer on a property but wants to be sure they will be able to have their four dogs in that property. The agent is not sure of the restrictions regarding pets. How can the agent protect the buyer and give them an out under the contract if they cannot keep their dogs there? - Correct Answer ✔️ ✔️ List it in Paragraph
6D as a valid objection.
Which of the following could be included in the Special Provisions section? - Correct Answer ✔️ ✔️ business details desired by
the principals
If no temporary residential lease is required on a property, when is the seller required to deliver possession to the buyer? - Correct
Answer ✔️ ✔️ upon closing and funding
When a seller remains in the property after closing, the seller now becomes the landlord and the buyer becomes the tenant. - Correct
Answer ✔️ ✔️ FALSE
(Explanation: When a seller remains in the property after closing, the buyer now becomes the landlord and the seller becomes the tenant.)
The seller's children broke the picture window with a baseball while they were in the property under a TREC Seller's Temporary Lease Agreement. Who is responsible for replacing the window? - Correct Answer ✔️ ✔️ tenant
When is rent for a Buyer's Temporary Residential Lease paid? - Correct Answer ✔️ ✔️ the day of the lease commencement
Seller's expense on recording fees would go to ________. - Correct
Answer ✔️ ✔️ county clerks' office
Casualty Loss: - Correct Answer ✔️ ✔️ A sudden, unexpected event, like a fire, flood, storm, earthquake that causes serious damage
Property taxes are paid: - Correct Answer ✔️ ✔️ In arrears
In the event of a casualty loss, who is responsible for restoring the property to its previous condition by the closing date? - Correct
Answer ✔️ ✔️ the seller
According to Paragraph 15, liquidated damages could be paid using the earnest money if which party defaults on the contract? - Correct Answer ✔️ ✔️ the buyer
If the seller wants to continue to show the property for backup offers:
- Correct Answer ✔️ ✔️ the contract already permits the
seller to do so
As long as the addenda is attached to the sales contract, there is no need to check those addenda on Paragraph 22 of the sales contract, as the court will accept the addenda anyway. - Correct Answer ✔
️ ✔️ FALSE
(Explanation: If an addendum is attached to a contract but not checked off in Paragraph 22 of the sales contract, the court will NOT consider the addendum part of the contract.)
Buyer Billy made an offer in writing to Seller Susan on October 5th. Seller Susan agreed in writing to all the terms on October 7th. Her agent communicated her acceptance on October 8th. What is the effective date of this contract? - Correct Answer ✔️ ✔
️ October 8
Shane has a contract with a 5-day option to terminate. The effective date was November 1st. Which is the latest that he can terminate? - Correct Answer ✔️ ✔️ November 6th
Paragraph 11 of the sales contract (Special Provisions) can only be used to add: - Correct Answer ✔️ ✔️ factual statements or business details
Buyer Bob purchases a home from Seller Sarah. Neither party requires a temporary residential lease. When is the Seller Sarah required to deliver possession of the property to Buyer Bob? - Correct Answer
✔️ ✔️ upon closing and funding
Under Paragraph 15 of the sales contract, the seller could receive liquidated damages could be paid if: - Correct Answer ✔️ ✔
️ the buyer defaults on the contract
How many TREC promulgated contracts are there? - Correct
Answer ✔️ ✔️ six
Which contract has different wording for Paragraph 14 to account for the owner owning the dwelling but not the land beneath it? - Correct Answer ✔️ ✔️ Residential Condominium Contract
TREC has six promulgated sales contract forms. The contracts are as similar as possible, but when they are different, it's because _____. - Correct Answer ✔️ ✔️ the types of properties have different requirements to fulfil the laws that apply to each
Which of the following is TRUE of condo ownership and townhouse ownership? - Correct Answer ✔️ ✔️ Townhouse owners
own the building and the land it sits on while condo owners only own the building
Important paragraphs on the Residential Condominium Contract (Resale) are 2, 14, and ___. - Correct Answer ✔️ ✔ ️ 12
Which TREC promulgated contract form allows for the sales price to be adjusted because of the survey? - Correct Answer ✔ ️ ✔
️ The Farm and Ranch Contract
A buyer and seller agreed that a property with 300 acres would sell for $150,000 and if the acreage varied, they would adjust the price by $500 per acre. The survey revealed that the property only had 295 acres. Based off this, can the buyer terminate the contract? - Correct Answer ✔️ ✔️ No, the adjustment does not exceed
$15,
Paragraph 6G(8) of the Farm and Ranch Contract informs the buyer that if the property is subject to a private transfer fee: - Correct
Answer ✔️ ✔️ the seller must notify them.
The seller of unimproved property provides a disclosure _____. - Correct Answer ✔️ ✔️ in paragraph 7E of the TREC
Unimproved Property Contract
Unimproved Property Contract 🀀
New Home Contract (Completed Construction) 🀀
New Home Contract (Incomplete Construction) 🀀
Paragraph 2 is _________. - Correct Answer ✔️ ✔️ always
where the property description goes
All of the following are true EXCEPT: - Correct Answer ✔️ ✔
️ Information about Exception Documents and Surface Leases are
only found in the Condominium Contract.
A rancher has a lease for a neighbor to use 20 acres out of his 200 acres. Before he sold his 200 acres, he gave the buyer a copy of the lease. It was also listed in the Farm and Ranch Contract. Can the buyer later use the existing lease as an objection to the title policy? - Correct Answer ✔️ ✔️ No, he waived his right when the lease
was listed in the contract in Paragraph 6F.
A broker is going to write an offer on a property that was built a year ago. The broker's client would be the first owner of the house. Which form should the broker use? - Correct Answer ✔️ ✔️ New
Home Contract
The seller cannot legally accept any other offers if they have agreed to an offer with the Addendum for Sale of Other Property by Buyer. - Correct Answer ✔️ ✔️ FALSE
(Explanation: The seller CAN accept back-up offers if they have agreed to an offer with the Addendum for Sale of Other Property by Buyer.)
The buyer wants his offer to be contingent upon his home, which is already under contract, closing as scheduled. He should use the _________. - Correct Answer ✔ ️ ✔️ Addendum for Sale of Other Property By Buyer
A back-up contract was executed on August 9th. The parties agreed to a 12-day option period. On August 15th, the seller notified the buyer
Which of the following is NOT true? - Correct Answer ✔ ️ ✔
️ If a property comes to be on a beach area, the state will remove it
at their expense.
A buyer considering buying property adjoining a beach area should: - Correct Answer ✔️ ✔️ ALL CHOICES ARE CORRECT (check the
rates of erosion, make sure they understand all the risks, and consult with their attorney)
The buyer cannot terminate the contract if the seller obtains, pays for, and delivers the Subdivision Information. - Correct Answer ✔
️ ✔️ FALSE
(Explanation: Regardless of who pays for the Subdivision Information, the buyer has three days to terminate the contract.)
When does the option money and earnest money need to be paid on a contract with a short sale addendum attached? - Correct Answer
✔️ ✔️ option money to seller within 3 days of original effective
date, earnest money to title company by the close of business on the 2nd working day
When does the right to terminate begin in the Short Sale Addendum and the Back-Up Addendum? - Correct Answer ✔️ ✔️ on the
original effective date
The Non-Realty Items Addendum clarifies that the items on the list _______. - Correct Answer ✔️ ✔️ are not included in the sales price, but paid for in addition to the sales price
Why might a buyer receive the Subdivision Information form? - Correct Answer ✔️ ✔️ because the property being bought is
subject to mandatory HOA membership
Can real estate agents charge referral fees? - Correct Answer
✔️ ✔️ No, they can only take money for actual services rendered.
If a buyer is exercising the unrestricted right to terminate the contract under Paragraph 23 of the contract, they are using the ______. -
Buyer Rebate: - Correct Answer ✔ ️ ✔️ Illegal action during a
transaction that causes money to go back to the buyer, either at or after closing, without the knowledge of the lender
Who is usually the victim in a transaction that involves loan fraud? - Correct Answer ✔️ ✔️ lender
Contract: - Correct Answer ✔️ ✔️ A legally binding and
enforceable agreement to do or not to do a specific thing
Promulgated Contract: - Correct Answer ✔ ️ ✔️ A contract that has been approved and is required to be used by license holders
In Texas, what are the two entities that promulgate contracts? -
Correct Answer ✔️ ✔️ TREC and TAR
In a real estate sale, the license holder must use the appropriate TREC-promulgated form UNLESS another contract form is required by the buyer's lender. - Correct Answer ✔️ ✔️ FALSE
(Explanation: In a real estate sale, the license holder must use the appropriate TREC-promulgated form UNLESS another contract form is required by the property owner. The buyer's lender has no influence over the sales contracts used in a transaction.)
A license holder should ___________. - Correct Answer ✔️ ✔
️ disclose all material facts to the client
Legally Competent: - Correct Answer ✔️ ✔️ When an
individual has reached the age of majority (18 years of age) and has not been declared mentally incompetent by a judge
Void Contract: - Correct Answer ✔️ ✔️ A contract that has
no legal effect
Voidable Contract: - Correct Answer ✔ ️ ✔️ When one or
more of the parties has the authority to rescind the contract
