Promulgated Contract Forms - Study Guide

Information Needed to Complete Contract Forms - -Elements and Practice 1-4 Family Residential Contract (Resale): The heading of this contract contains; date the contract form was approved by the Commission. License holders must take care to use only the most current version of a contract form. Failure to use the most current version is a violation of the license act. The title of the form reveals its intended use. The contract form is the 1-4 family residential contract (resale). 1-4 means it can be used for single-family properties. duplexes, triplex properties, and 4-unit buildings. Paragraph 1. Parties: The document will include the parties-buyer and seller. The seller's name should appear on the doc in the same manner in which they took title. Paragraph 2. Property: A. Enter the legal description and address of the property. B. Improvements (man-made). C. Accessories (built-in). D. Enter exclusions to the sale. Paragraph 3. Sales Price: A. The down payment is always the difference between the sales price and the sum of all fi Use of Promulgated Forms - if the license holder property uses TREC-promulgated forms, the unlawful practice of law issue is more easily avoided. The use of a form by license holders, which was prepared and approved by a licensed Texas attorney for the particular transaction involved or a form prepared by the property owner or prepared by an attorney and required by the property owner, is also authorized. 1. 1-4 family contract (resale) 2. New home contract (incomplete construction) 3. New home contract (complete construction) 4. Unimproved property contract 5. Residential condominium contract (resale) 6. Farm and ranch contract TREC-Promulgated Forms and Leases - 1. Buyers temporary residential lease: for use when buyer occupies the property for no more than 90 days prior to closing. 2. Sellers temporary residential lease: for use when the seller occupies the property for no more than 90 days after closing. Property Condition: Inspection, Acceptance, and Repairs - property condition is one of the more important considerations when purchasing residential real estate. All TREC-promulgated contracts stipulate that the buyer is purchasing the property "as is". This concept is often misunderstood on the part of buyers, sellers, and license holders. Paragraph 7. Access, Inspections, and Utilities: seller permits buyer access on the property at reasonable times for inspections. Seller will turn on utilities and leave utilities on during the time covered by this contract. Paragraph 6.D. Objections - buyer may object to any matters that might prohibit a certain use or activity of the property, such as the installation of a satellite dish, operating a business out of the home, or parking of an RV within view of the street. Whatever the intended use of the property, it must be listed here. If the buyer is using the property for residence only, many license holders insert the words "residential use" in this paragraph. Stigmatized - a property where there has been a murder or alleged haunting. A property can be considered stigmatized if it is in the vicinity of the residence of a known sexual offender. Megan's law is a federal law requiring all states to release information to the public about known convicted sex offenders, when necessary, to protect the public safety. Elements and Practice 3rd Party Financing and Loan Assumption Addenda - most common form of mortgage financing is through 3rd-party lenders such as banks, mortgage companies, and other lending institutions. 3rd-party financing is divided into two broad categories: government loans (FHA or VA loans) and conventional loans. In paragraph 1, the buyer agrees to apply for financing promptly and to make a good faith effort to obtain credit approval. Note that this addendum addresses the credit approval of the borrower, and is independent of the lender's approval of the property itself. A. Conventional financing B. Texas Veterans Loan C. FHA Insured Financing D. VA Guaranteed Financing E. USDA Guaranteed Financing F. Reverse Mortgage Financing Settlement and Other Expenses - Paragraph 12. Settlement and Other Expenses: buyers and sellers expenses and settlement costs are stated. Even though printed in the form to be paid by one party or the other, they are negotiable. (a. shows typical sellers expense at or prior to closing, b. expense the seller is willing to pay on the buyers behalf. c. includes typical buyer expenses.) Paragraph 12b. if any of these listed expenses exceeds what the party agreed to pay, the contract will terminate, unless the other party agrees to pay the excess. Prorations, Causality Loss, Default and Mediation of Contract - Paragraph 13. Proration: is the process of dividing ongoing expenses between the buyer and the seller at closing. Paragraph 14. Casualty Loss: a fire or other casualty loss does not release the buyer or seller from the contract.