Texas Promulgated Contract Forms Chapter 4 Questions Q&A

Can a contract have 0 dollars as earnest money? - Answer-yes if the parties to the contract agree. What 2 things are earnest money used for in a real estate contract? - Answer-1. good faith money 2. Liquidated damages What are 2 types of options? - Answer-Option to terminate the contract and the option to buy. Both have time frames. What is meant by title insurance protecting consumers against hidden risks? - Answer-Deed could be threatened by forgery, similar names or errors in records. Title company will 1. Defend the title, in court if necessary, at the issuer's expense. 2. Bear the cost of settling the claim if it proves valid, in order to perfect the title and keep the buyers in possession of their property. Owner's Policy of Title Insurance - Answer-issued for the benefit of the new owner (buyer) of real property insuring that the title is "good and marketable". Mortagee's Policy of Title Insurance - Answer-issued to the LENDER on real property insuring that the title is "good and marketable". GOOD AND MARKETABLE TITLE - Answer-"good and marketable" is one that means that the property can be sold. The property may have encumbrances but those will not hinder the property from being sold. FREE AND CLEAR - Answer-"free and clear" means that the property can be sold and there are no encumbrances on the property. The problem with this is that almost every property sold has a utility easement. The easement creates an encumbrance. It is normal in the real estate industry to use the term "free and clear". We mean that the property owner has no liens on the property. TITLE OFFICER - Answer-closing agent. The title officer is a neutral third party who ensures that all conditions of a real estate transaction are met. They handle all of the paperwork involved with closing the transaction. TITLE ATTORNEY - Answer-put together all the legal papers to transfer title from one person to another. They do not represent either party. They facilitate the transaction.