PROMULGATED CONTRACT FORM EXAM ACTUAL
EXAM 200+ QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) |AGRADE
TREC contract forms and their uses - ANSWER: - Sales Contracts:
1) One-to-Four Family Contract (Resale)
2) New Home Contract (Incomplete Construction)
3) New Home Contract (Completed Construction)
4) Unimproved Property Contract
5) Residential Condominium Contract (Resale)
6) Farm and Ranch Contract
- Leases:
1) Buyer's Temporary Residential Lease
2) Seller's Temporary Residential Lease
TREC rules regarding the buyer's use of inspectors - ANSWER: - seller permits buyer
access to the property at reasonable times for inspections; will turn on utilities and
leave utilities on during the time covered by this contract
- Seller is to permit the buyer to perform as many inspections as the buyer deems
necessary
- Inspector must be TREC licensed or another person allowed by law
The purpose and use of Paragraph 6 - ANSWER: - This paragraph protects both buyer
and seller in the event that there is an issue with the title
- If the seller fails to resolve these issues, it is an out for the buyer, and the buyer will
get their earnest money back if they terminate within the contract's allowed time
from receipt of the title commitment.
- It protects the seller in that it gives the seller time to resolve issues that are
identified before the buyer can back out for that reason.
The parties to the contract specifically as noted in Paragraph 18.A - ANSWER: Buyer
and seller; the escrow agent is not a party to the contract and has no liability for the
performance of either party; title company provides two primary functions: escrow
services and title insurance
Stigmatized properties - causes and/or features - ANSWER: A property where there
has been a murder or alleged haunting; can also be stigmatized if it is in the vicinity
of the residence of a known sexual offender
The unlawful practice of law - specific examples - ANSWER: - License holder must not
draw a deed, note, deed of trust, or other written instrument that can transfer or
affect the title to or an interest in land
- Must not advise or counsel a person as to the validity or legal sufficiency of an
instrument or as to the validity of real estate
, - License holders should not alter the pre-printed text of a promulgated form, as this
may lead to the unlawful practice of law
Items to be retained by the Seller as specified in the contract - ANSWER: Exclusions;
must have a name and a location; must be removed prior to the delivery of
possession
Paragraph 5 - features - ANSWER: - earnest money; deposit paid upfront by buyer to
show that he or she is serious in his or her intent
- option period; time allowed for inspections that the buyer may want
Requirements for buyer approval according to the TREC Third Party Financing
Addendum - ANSWER: - If the buyer cannot obtain credit approval and she wants to
exercise her right to terminate the contract under the Third Party Financing
Addendum, she must give written notice to the seller within the time period agreed
to in the addendum.
- If the buyer gives notice within the time required, the contract terminates, and the
earnest money is refunded to the buyer.
- If the buyer doesn't provide the notice within the time required, the contract will
no longer be subject to the addendum and the buyer could end up in breach of the
contract if she is unable to obtain credit approval.
Closing costs or settlement expenses - ANSWER: 1) Expenses payable by the seller
2) Expenses payable by the buyer
- If any expense exceeds an amount expressly stated in this contract for such
expense to be paid by a party, that party may terminate this contract unless the
other party agrees to pay such excess.
Items typically prorated/the proration process - ANSWER: - the process of dividing
ongoing expenses between the buyer and the seller at closing
- calculated through the day of closing for taxes, maintenance fees, and rents
Required used of TREC forms and exceptions to required use - ANSWER: 1) Required
Use:
- When a license holder is negotiating contracts for the sale, exchange, option, lease,
or rental of any interest in real property, he or she must use a mandatory TREC form
if one is available for the transaction.
2) Exceptions to Required Use:
- forms used by a property owner or attorney
- transactions without mandatory TREC forms or addenda
Types of contracts - valid, void, voidable, executory, executed, unenforceable -
ANSWER: - Valid Contract: one that meets all of the requirements of law
- Void Contract: invalid from the beginning and does not affect the parties
- Voidable Contract: one that cannot be enforced against one or more of the parties
- Executed Contract: all parties have fulfilled their promises
EXAM 200+ QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) |AGRADE
TREC contract forms and their uses - ANSWER: - Sales Contracts:
1) One-to-Four Family Contract (Resale)
2) New Home Contract (Incomplete Construction)
3) New Home Contract (Completed Construction)
4) Unimproved Property Contract
5) Residential Condominium Contract (Resale)
6) Farm and Ranch Contract
- Leases:
1) Buyer's Temporary Residential Lease
2) Seller's Temporary Residential Lease
TREC rules regarding the buyer's use of inspectors - ANSWER: - seller permits buyer
access to the property at reasonable times for inspections; will turn on utilities and
leave utilities on during the time covered by this contract
- Seller is to permit the buyer to perform as many inspections as the buyer deems
necessary
- Inspector must be TREC licensed or another person allowed by law
The purpose and use of Paragraph 6 - ANSWER: - This paragraph protects both buyer
and seller in the event that there is an issue with the title
- If the seller fails to resolve these issues, it is an out for the buyer, and the buyer will
get their earnest money back if they terminate within the contract's allowed time
from receipt of the title commitment.
- It protects the seller in that it gives the seller time to resolve issues that are
identified before the buyer can back out for that reason.
The parties to the contract specifically as noted in Paragraph 18.A - ANSWER: Buyer
and seller; the escrow agent is not a party to the contract and has no liability for the
performance of either party; title company provides two primary functions: escrow
services and title insurance
Stigmatized properties - causes and/or features - ANSWER: A property where there
has been a murder or alleged haunting; can also be stigmatized if it is in the vicinity
of the residence of a known sexual offender
The unlawful practice of law - specific examples - ANSWER: - License holder must not
draw a deed, note, deed of trust, or other written instrument that can transfer or
affect the title to or an interest in land
- Must not advise or counsel a person as to the validity or legal sufficiency of an
instrument or as to the validity of real estate
, - License holders should not alter the pre-printed text of a promulgated form, as this
may lead to the unlawful practice of law
Items to be retained by the Seller as specified in the contract - ANSWER: Exclusions;
must have a name and a location; must be removed prior to the delivery of
possession
Paragraph 5 - features - ANSWER: - earnest money; deposit paid upfront by buyer to
show that he or she is serious in his or her intent
- option period; time allowed for inspections that the buyer may want
Requirements for buyer approval according to the TREC Third Party Financing
Addendum - ANSWER: - If the buyer cannot obtain credit approval and she wants to
exercise her right to terminate the contract under the Third Party Financing
Addendum, she must give written notice to the seller within the time period agreed
to in the addendum.
- If the buyer gives notice within the time required, the contract terminates, and the
earnest money is refunded to the buyer.
- If the buyer doesn't provide the notice within the time required, the contract will
no longer be subject to the addendum and the buyer could end up in breach of the
contract if she is unable to obtain credit approval.
Closing costs or settlement expenses - ANSWER: 1) Expenses payable by the seller
2) Expenses payable by the buyer
- If any expense exceeds an amount expressly stated in this contract for such
expense to be paid by a party, that party may terminate this contract unless the
other party agrees to pay such excess.
Items typically prorated/the proration process - ANSWER: - the process of dividing
ongoing expenses between the buyer and the seller at closing
- calculated through the day of closing for taxes, maintenance fees, and rents
Required used of TREC forms and exceptions to required use - ANSWER: 1) Required
Use:
- When a license holder is negotiating contracts for the sale, exchange, option, lease,
or rental of any interest in real property, he or she must use a mandatory TREC form
if one is available for the transaction.
2) Exceptions to Required Use:
- forms used by a property owner or attorney
- transactions without mandatory TREC forms or addenda
Types of contracts - valid, void, voidable, executory, executed, unenforceable -
ANSWER: - Valid Contract: one that meets all of the requirements of law
- Void Contract: invalid from the beginning and does not affect the parties
- Voidable Contract: one that cannot be enforced against one or more of the parties
- Executed Contract: all parties have fulfilled their promises
