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tx- chp5
contracts
| Term | Definition |
|---|---|
| 5-1 texas promulgated contract forms -*texas requires use of promulgated forms when negotiating contracts binding the sale, exchange, option, lease, or rental of property | *licensees must use only those contract forms promulgated or approved by the Texas Real Estate Commission (TREC) for that kind of transaction |
| promulgated means | that the contracts are issued by TREC for mandatory use by license holders |
| exceptions include the following: transactions in which (4) | 1. the licensee is functioning solely as a principal, not an agent 2. an agency of the US gov requires that a diff form be used 3. form has been prepared by a principal to the transaction or by an attorney & required by a principal to the transaction |
| ...4. transaction for which no standard form exists and the licensee uses a form prepared by an | attorney at law licensed in texas and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by TREC |
| forms may be reproduced only from the following sources: | -#ed copies obtained from TREC -printed copies made from copies obtained from TREC -legible photocopies made from such copies -computer-driven printers following mandatory guidelines |
| *no changes except the | business name or logo of a broker may appear at the top of a form outside the border -the broker's name may be inserted in any blank provided for that purpose |
| licensees may not add to or strike matter from forms | except that licensees shall add factual statements & bus details desired by principals -shall strike only such matter as is desired by principals & as is necessary to conform the instrument to the intent of the parties -only if no other TREC-form exist |
| it is not the practice of law as defined in this act for a real estate licensee to | complete a contract form which is either TREC-promulgated or prepared by TREC and made available for trial use by licensees w/ TREC's consent |
| Texas promulgated contracts (6) | 1. One- to Four-Family Residential Contract (Resale) 2. Unimproved Property Contract 3. Farm and Ranch Contract 4. New Home Contract (completed construction) 5. New Home Contract (in-completed) 6. residential condominium contract (resale) |
| One- to Four-Family Residential Contract (Resale) | freestanding home, duplex, triplex, one to 4 units |
| farm and ranch contract | deals w/ roll-back taxes & provides for sale of minerals, royalties, timber interests & crops -who will pay rb taxes for periods prior to closing (buyer pays if buyer changed the use; the seller pays if the seller changed the use) |
| ...roll-back taxes are assessed if the use of property changes from | agricultural or open space to another classification |
| selected texas addenda (8) | 1. 3rd party financing addendum for credit approval 2. seller financing addendum 3. addendum for sale of other property by buyer 4. ..."back-up" contract 5. ...coastal area property- natural resources code 6. ...property located seaward of the gulf |
| *3rd party financing addendum for credit approval | -to be used if the buyer is applying for a 3rd party loan to purchase property -used for conventional, Texas VA loan, FHA Insured, & VA Guaranteed Financing -time is of the essence |
| *seller financing addendum | -buyer and seller can agree that buyer shall provide certain docs to establish buyer's creditworthiness or seller can terminate contract -seller has 7 days after receipt of the buyer's credit doc to terminate the contract at the seller's sole discretion |
| *addendum for sale of other property by buyer | -time is of the essence -addendum provides a contingency for buyer to terminate contract w/out default, or continue in the contract by removing contingency & depositing additional earnest money in case buyer cannot sell the named property owned by buyer |
| ...seller may continues to show property and if subsequent offer from 2nd buyer is accepted by seller | -seller can require buyer to waive contingency & put up additional earnest money, or terminate the 1st contract & take her earnest money back |
| ...if 1st buyer elects to terminate, | the 2nd buyer's contract (which should have Addendum For "Back-Up" Contact attached) will become the primary contract |
| *time is of the essence clause | states, "Strict compliance with the times for performance stated herein is required" |
| addendum for "back-up" contract | -time is of the essence -makes an offer or contract contingent upon an existing offer terminating -neither party is required to perform during the contingency period, although earnest money & any option fee must be paid if required by the contract |
| 5. addendum for coastal area property- natural resources code | -owner of property may gain or lose portions of tract b/c of changes in boundary of state-owned tidally influenced submerged lands -state law prohibits use, encumbrance, construction, or placing of any structure in, on, or over state-owned sub. lands |
| 6. addendum for property located seaward of the gulf intracoastal waterway- natural resources code | -provides notice, according to that if property is in close proximity to a beach fronting the Gulf of Mexico, public has easement to or over the area of any public beach |
| .... | -states that state law prohibits any obstruction to the public easement and that structures erected on or over the easement are subject to a lawsuit to remove them |
| 7. seller's temporary residential lease | used when the seller retains possession of the property for no more than 90 days after closing |
| 8. buyer's temporary residential lease | used when the buyer takes possession of the property not more than 90 days prior to closing |
| selected notices, amendments, and other forms (not addenda) -6 | none are used as addenda and should not be part of or attached to an offer or contract as addenda -some promulgated, some approved therefore optional |
| 1. notice of buyer's termination of contract | -promulgated notice -to be used by a broker when the buyer wishes to notify the seller that the contract is terminated pursuant to one or more of 6 diff. contractual rights to terminate contained in the contract of an addendum |
| 2. amendment to contract concerning the property at____ - | -promulgated form -to be used to modify an existing contract and/or addendum to a contract -contains 9 contract subject areas to amend or modify, including one labeled other modifications |
| 3. notice to prospective buyer | -approved & optional form -to be used by a licensee working w/ buyer when TREC-promulated contract forms are not used under the exceptions rule and/or buyer's agent has not used a buyer rep agreement that already contains these notices |
| 4. texas real estate consumer notice concerning hazards or deficiencies | -used optionally -to increase buyer awareness to hazards and reduce broker liability |
| 5. seller's disclosure of property condition | -used optionally -contains only the minimum requirements of the Texas Property Code Section -many brokers use their own versions or TAR versions w/ many additional items of disclosure than those required |
| 6. info about brokerage services | -format is approved but optional -have to give them the info but doesn't have to be that form -used to give the statutorily required written statement concerning forms of agency or non-agency relationships lawfully provided to consumers by RElicensees |
| ...written statement must be in at least | 10-point type -not addendum -shouldn't be attached to or made part of offer/contract -statue doesn't require anyone to sign it, good idea so licensee can prove in court or to TREC that he gave notice as required by law |
| 5-2 *statues of frauds | a promise or agreement for sale of real property, or for lease of real property for > 1year, is not enforceable unless agreement is IN WRITING & SIGNED BY THE PERSON TO BE CHARGED W/ THE AGREEMENT OR BY SOMEONE LAWFULLY AUTHORIZED TO SIGN FOR THAT PERSON |
| ...debt agreements & contracts for the transfer of real estate | but not leases of 12 months or less, are included |
| ...oral contracts for the sale of real estate or for the lease of real estate for more than one year are not | illegal, but bc of this statute, these oral contracts are unenforceable by law |
| agreement signed | certain agreements must be signed by the parties to be charged w/ the responsibility to perform -*both spouses must sign agreements to release community property and homestead rights |
| purpose of statue of frauds | -not designed to prevent oral contracts -to prevent fraud by someone seeking the enforcement of an executory contract that was never made or to disallow fraudulent oral evidence of a fictitious contract -to protect spouses' rights in property |
| 5-3 remedies for breach of contract/default replacement notice contained in TREC-promulated contract forms | 1. seller's remedies for buyer's default, according to paragraph 15 (default) of the TREC 20-10 contract form 2. buyer's remedies for seller's default, " " (buyer has 2 diff sets of options) 3. statue of limitations |
| *1. seller's remedies for buyer's default, according to paragraph 15 (default) of the TREC 20-10 contract form | -enforce specific performance (court action to force breaching party to perform), seek other relief as provided by law (suit for damages, injunction, etc.) or both -terminate contract & receive earnest money as liquidated damages=releasing both parties |
| 2. buyer's remedies for seller's default, " " (buyer has 2 diff sets of options) | -if due to factors beyond seller's control, seller fails w/in the time allowed to make any non-casualty repairs to deliver the commitment, or survey, if required of seller, buyer may |
| two options of option 1 | a) extend time for performance up to 15 days & closing date will be extended as necessary or b) terminate this contract as the sole remedy and receive the earnest money |
| option two of buyer's remedies | if seller fails to comply w/ contacts for any reason -seller in default & buyer may a) enforce specific performance, seek other reliefs as may be provided by law, or both, or b)terminate the contract & receive earnest money (releasing both parties) |
| *3. statue of limitations (2) | 1) action to bring suit or enforce rights must be w/in 4 years for a written contract & 2 years for an oral contract (remember some oral contracts can't be enforced due to the statute of frauds) |
| *2) suit brought for a violation of the Deceptive Trade Practices Act | must commence w/in 2 years from the date a buyer discovered or should reasonably have discovered the deceptive act |
| 5-4 termination option (2) | 1) certain Texas-promulgated contract forms contain the possibility of a termination option, which allows a buyer, for a nominal fee, the unrestricted right to terminate a contract based on accepted terms (time is of the essence w/ this option) |
| 2) | -option fee= directly to seller w/in 2 days after the effective date of contract for this right -earnest money= deposited by buyer w/ escrow agent as soon as the buyer & seller have reached final agreement & have a contract |
| according to TREC 20-10, earnest money is never given to | the seller's agent, but deposited by the buyer -buyer's agent may deposit it if so instructed by the buyer |
Created by:
kmills5
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