Champions Promulgated Contract Forms Test Questions with Complete Solutions

One to Four Family Residential Contract (Resale) - The promulgated contract used by real estate licensees for the sale of residential property. It's used when purchasing residential real estate, but variations of forms are available for other types of real property. Residential Condominium (Resale) - A TREC promulgated contract for use where the seller does not own fee simple title to the land beneath the unit. New Home Contract (Completed Construction) - This contract form is used for new homes where the construction has been completed by the builder and no one has previously lived in the home. New Home Contract (Incomplete Construction) - The contract is used for the sale of new homes when construction has not yet been completed by the builder and when the closing will occur after construction has been completed. Unimproved Property Contract - Used for the sale of properties with no existing structure. This contract has no improvements, or accessories. No seller disclosure. Farm and Ranch Contract - A TREC promulgated contract for use where the land being sold is greater than 10 acres and includes land, improvements, accessories and crops. Contains provisions for surface leases related to a property The parties to the contract specifically as noted in paragraph 18.A - The escrow agent is not a party to this contract and does not have liability for the performance or non-performance of any part of this contract, or liable for any interest or loss on any earnest money cause by the failure of any financial institution. The purpose and use of Paragraph 6- - The owner's Title policy being paid for by buyer or seller. The Title company has 20 days from when they receive the contract to furnish a commitment to buyer for Title Insurance. Objections, who will furnish the survey, the intended use of the property (residential use) and any membership in property associations. Stigmatized properties - Any property where there has been a murder, alleged haunting, or in the vicinity of the residence of a known sexual offender The unlawful practice of law - License holders should not alter the pre-printed text of a promulgated form. Specific examples - agents add provisions to contracts other than business details: Example: Inserting terms into a contract when a TREC promulgated form is available. Adding terms into a contract that are not addressed by a TREC promulgated form. Items to be retained by the seller as specified in the contract - any items retained should be written in Paragraph 2D. EXCLUSIONS. PARAGRAPH 5 features - Earnest Money and Option periods. The option period is the time allowed for inspections that Buyer may want. The buyer is required to deposit the earnest money with the escrow agent within 3 calendar days after the effective date of the contract. Requirements for buyer approval according to the TREC Third Party Financing Addendum - allows the buyer to terminate the transaction if the property doesn't meet the lender's underwriting requirements. Closing Costs or settlement expenses - if any of these listed expenses exceed what the party agreed to pay, the contract will terminate, UNLESS the other party agrees to pay the excess Proration - Dividing property taxes, hazard insurance and other expenses or income between the buyer and seller, as of date of settlement. Required use of TREC forms and exceptions to required use - when the licensee is acting as a principal and not as an agent. One of the exceptions for when a licensee must use a TREC-promulgated contract form is in transactions in which the licensee is functioning solely as a principal, not as an agent. Valid Contract - An agreement that meets the requirements of law. Void Contract - An agreement that is invalid from the beginning and does not affect the parties Executory Contract - A contract that has been signed by the parties, but not yet carried out. (It's the sales contract before closing or contract for deed) Fully Executed - A contract is fully executed when all parties have performed. Use of third-party financing addendum - Allows the buyer to terminate the transaction if the property doesn't meet the lender's underwriting requirements. It is divided into two broad categories: government loans and conventional loans. Requirements of a valid contract- - Consideration, Offer and Acceptance, Legal Purpose, In writing, Competent parties When does an offer become a contract? - When it is accepted and the acceptance is communicated. PARAGRAPH 8.A - is closure of agency coupled with an interest and family relationships - TX law requires a RE broker or sales agent who is a party to a transaction or acting on behalf of a spouse, parent, child, business entity in which the broker or sales agent owns more than 10%, or if acting as a trustee to a trust, or beneficiary, to notify the other party in writing before entering into a contract of sale.