Promulgated Contracts Exam 2023 (Answered)

Promulgated Contracts Exam 2023 (Answered) Accessories in the real estate contract - definition, features, disposition PARAGRAPH 2.(C) Describes accessories, which, while not necessarily permanently installed or built-in, are commonly conveyed to the buyer in the sale Window air conditioning units, stove, fireplace screen, curtains and rods, blinds, window shades, door keys, mailbox keys, above ground pool, swimming pool equipment and maintenance accessories, artificial fireplace logs, and controls: garage door, entry gates, and other accessories and improvements Items to be retained by the Seller as specified in the contract Paragraph 2.D EXCLUSIONS: The following improvements and accessories will be retained by the seller and must be removed prior to delivery of possession ______________________ Paragraph 3.B. - contents The sum of all financing from all sources. Insert only the amount actually being financed. Paragraph 4 - disclosure of agency coupled with an interest and family relationships LICENSE HOLDER DISCLOSURE: Texas law requires a real estate license holder who is a party to a transaction or acting on behalf of a spouse, parent, child, business entity in which the license holder owns more than 10%, or a trust for which the license holder acts as trustee or of which the license holder or the license holder's spouse, parent or child is a beneficiary, to notify the other party in writing before entering into a contract of sale. Disclose if applicable: . Paragraph 5 - features PARAGRAPH 5. EARNEST MONEY: Earnest money is a "deposit" paid upfront by Buyer to show that he or she is serious in his or her intent. There is no standard for the dollar amount of earnest money, but it is often in the range of 1% of the purchase price. Insert the amount of earnest money and the name and address of the title company. If additional earnest money is required, enter the amount and the number of days. Time is of the essence for this paragraph The purpose and use of Paragraph 6 Title policy, (title) commitment, and endorsements Number of days for the title company to deliver the title commitment PARAGRAPH 6.B. COMMITMENT: The title company has 20 days from the date that they receive the contract to furnish a commitment to the buyer for title insurance. This paragraph also provides for an automatic extension of the delivery period for up to 15 days or 3 days prior to closing if the commitment cannot be delivered within the 20 days allowed TREC rules regarding the buyer's use of inspectors 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." Paragraph 7A. ACCESS, INSPECTIONS AND UTILITIES: Seller shall permit Buyer and Buyer's agents access to the Property at reasonable times. Buyer may have the Property inspected by inspectors selected by Buyer and licensed by TREC or otherwise permitted by law to make inspections. Any hydrostatic testing must be separately authorized by Seller in writing. Seller at Seller's expense shall immediately cause existing utilities to be turned on and shall keep the utilities on during the time this contract is in effect. What are good funds? PARAGRAPH 9.B.(2) Buyer is to bring "good funds" to closing. Good funds is described as a cashier's check or wire transfer. Title companies may accept a small personal check from a buyer. Check with the title company for their policy Lender required repairs as addressed in the sales contract PARAGRAPH 7.E. LENDER REQUIRED REPAIRS AND TREATMENTS: Lender required repairs, if any, are a negotiated expense item between the parties. If the lender repairs exceed 5% of the sales price, the buyer may terminate the contract and receive a refund of earnest money. Seller must complete all agreed to repairs prior to closing, or the closing date may be extended up to 5 days to complete repairs. Closing costs or settlement expenses 12. SETTLEMENT AND OTHER EXPENSES: A. The following expenses must be paid at or prior to closing: (1) Expenses payable by Seller (Seller's Expenses): (a) Releases of existing liens, including prepayment penalties and recording fees; release of Seller's loan liability; tax statements or certificates; preparation of deed; one-half of escrow fee; and other expenses payable by Seller under this contract. (b) Seller shall also pay an amount not to exceed $ to be applied in the following order: Buyer's Expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Land Board or other governmental loan programs, and then to other Buyer's Expenses as allowed by the lender. Initialed for identification by Buyer and Seller TREC NO. 20-14 Contract Concerning Page 6 of 10 2-12-18 (Address of Property) (2) Expenses payable by Buyer (Buyer's Expenses): Appraisal fees; loan application fees; origination charges; credit reports; preparation of loan documents; interest on the notes from date of disbursement to one month prior to dates of first monthly payments; recording fees; copies of easements and restrictions; loan title policy with endorsements required by lender; loan-related inspection fees; photos; amortization schedules; onehalf of escrow fee; all prepaid items, including required premiums for flood and hazard insurance, reserve deposits for insurance, ad valorem taxes and special governmental assessments; final compliance inspection; courier fee; repair inspection; underwriting fee; wire transfer fee; expenses incident to any loan; Private Mortgage Insurance Premium (PMI), VA Loan Funding Fee, or FHA Mortgage Insurance Premium (MIP) as required by the lender; and other expenses payable by Buyer under this contract. B. 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. Buyer may not pay charges and fees expressly prohibited by FHA, VA, Texas Veterans Land Board or other governmental loan program regulations. 13. PRORATIONS: Taxes for the current year, interest, maintenance Items typically prorated/ the proration process PARAGRAPH 13. PRORATION: Proration is the process of dividing ongoing expenses between the buyer and the seller at closing. Prorations are generally calculated through the day of closing for taxes, maintenance fees, and rents, if any, that the seller pays for on the closing day. Tax prorations may be calculated to take into consideration any change in exemptions that will affect the current year's taxes. The parties to the contract specifically as noted in paragraph 18.A. Paragraph 18.A = Escrow The escrow agent is not a party to the contract, and has no liability for the performance of either party. The title company performs two primary functions: be in default. Unless expressly prohibited by written agreement, Seller may continue to show escrow services and title insurance. Escrow services are performed when something of value, such the Property and receive, negotiate and accept back up offers. as a deed, money, or written instrument, is put into the custody of a third person to be retained until Paragraph 20 - Federal Tax Requirements 20. FEDERAL TAX REQUIREMENTS: If Seller is a " foreign person," as defined by Internal Revenue Code and its regulations, or if Seller fails to deliver an affidavit or a certificate of nonforeign status to Buyer that Seller is not a "foreign person," then Buyer shall withhold from the sales proceeds an amount sufficient to comply with applicable tax law and deliver the same to the Internal Revenue Service together with appropriate tax forms. Internal Revenue Service regulations require filing written reports if currency in excess of specified amounts is received in the transaction. Paragraph 22 - features, numbers of days 22. AGREEMENT OF PARTIES: This contract contains the entire agreement of the parties and cannot be changed except by their written agreement. Addenda which are a part of this contract are (check all applicable boxes): Paragraph 23 - features, numbers of days/time 23. TERMINATION OPTION: For nominal consideration, the receipt of which is hereby acknowledged by Seller, and Buyer's agreement to pay Seller $ (Option Fee) within 3 days after the Effective Date of this contract, Seller grants Buyer the unrestricted right to terminate this contract by giving notice of termination to Seller within days after the Effective Date of this contract (Option Period). Notices under this paragraph must be given by 5:00 p.m. (local time where the Property is located) by the date specified. If no dollar amount is stated as the Option Fee or if Buyer fails to pay the Option Fee to Seller within the time prescribed, this paragraph will not be a part of this contract and Buyer shall not have the unrestricted right to terminate this contract. If Buyer gives notice of termination within the time prescribed, the Option Fee will not be refunded; however, any earnest money will be refunded to Buyer. The Option Fee will will not be credited to the Sales Price at closing. Time is of the essence for this paragraph and strict compliance with the time for performance is required.