UNIT 3: JOHN MATHIS CONTRACTS

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1 TEXAS INTERACTIVE STUDY GROUP 1 UNIT 3: JOHN MATHIS CONTRACTS

2 Study Group Information 2 Information regarding the Study Group may be found at: At this location you will find: Calendar of discussion topics Links to discussion questions

3 Notes for Tonight Chat has now been switched to a Moderated Mode. 3 Presenter (John Mathis) will still see your Chat; however, the other students will no longer see Your chat unless either instructor sends your chat to the classroom. This will help preserve the anonymity of your answers. Even so, do not put anything into the chat that you would not want everyone to see.

4 Contact Information 4 Contact Information releadinstructortx@brightwood.edu If you would like to discuss something on the phone, please send your phone number in the and the best times to reach you.

5 Question License holders may use a contract forms that is not promulgated or approved by the TREC in all of the following instances EXCEPT 5 A. transaction in which the license holder is functioning solely as a principal, not an agent. B. transaction in which an agency of the U.S. government requires that a different form be used. C. transaction in which a form has been prepared by an attorney and required by a principal to the transaction. D. transaction for which no standard form exists and the license holder uses a form prepared by an attorney-at-law licensed in any state.

6 Question Forms may be reproduced only from the following sources EXCEPT 6 A. numbered copies obtained from TREC. B. printed copies made from copies obtained from TREC. C. legible photocopies made from such copies. D. handwritten contracts.

7 Question Which of the following is an acceptable change to TREC promulgated forms? 7 A. The business name or logo of a sales agent may appear at the top of a form outside the border. B. The broker s name may be inserted in any blank provided for that purpose. C. The business name or logo of a broker may appear at the top of a form inside the border. D. The sales agent s name may be inserted in any blank provided for that purpose.

8 Question The promulgated form for the purchase of One to Four Family Residential Contract (Resale) was authored by the 8 A. Texas Real Estate Commission. B. Texas TREC-Lawyer Committee. C. Texas Broker-TREC Committee. D. Texas Broker-Lawyer Committee.

9 TOPICS TO BE DISCUSSED: Unit 3: Contracts 9 Use and understanding of standard contract forms Statute of frauds Seller disclosure requirements.

10 Review 10 Use of standard contract forms When negotiating contracts binding the sale, exchange, option, lease, or rental of property, license holders must use only those contract forms promulgated or approved by the Texas Real Estate Commission (TREC) for that kind of transaction.

11 Review 11 Exceptions Transaction in which the license holder is functioning solely as a principal, not an agent Transaction in which an agency of the U.S. government requires that a different form be used Transaction in which a form has been prepared by a principal to the transaction or by an attorney and required by a principal to the transaction

12 Review 12 Exceptions (cont d) Transaction for which no standard form exists and the license holder 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

13 Review Forms may be reproduced only from the following sources: 13 Numbered copies obtained from TREC Printed copies made from copies obtained from TREC Legible photocopies made from such copies Computer-driven printers following mandatory guidelines

14 Review No changes may be made to TREC promulgated forms, except as follows: 14 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.

15 Review License holders may not add to or strike matter from forms, with the following exceptions: 15 To add factual statements and business details desired by the principals To strike only such matter as is desired by the principals and as is necessary to conform the instrument to the intent of the parties Only if no other TREC-promulgated form exists for that purpose

16 Review 16 It is not the practice of law as defined in this act for a real estate license holder to complete a contract form that is either TREC-promulgated, or by license holders with TREC s consent.

17 Question 17 Which law requires a contract for real property to be in writing and signed to be enforceable? A. Texas Real Estate License Act B. Texas Statute of Frauds C. Texas Contract Law Act D. Texas Statute of Contracts

18 Question 18 Which of the following would have to be in writing, according to the Statute of Frauds, to be enforceable in court? A. Month-to-month lease B. Six month lease C. Twelve month lease D. Eighteen month lease

19 Question Steve and Wally orally enter into a six-month lease. If Wally defaults, which of the following statements is TRUE? 19 A. Steve may not bring a court action because six-month leases must be in writing under the parol evidence rule. B. Steve may not bring a court action because the statute of frauds governs six-month leases. C. Steve may bring a court action because six-month leases need not be in writing to be enforceable. D. Steve may bring a court action because the statute of limitations does not apply to oral leases, regardless of their term.

20 STATUTE OF FRAUDS Review 20 According to the statute of frauds, a promise or agreement for the sale of real property, or for the lease of real property for more than one year, is not enforceable unless the agreement is in writing and signed by the person to be charged with the agreement or by someone lawfully authorized to sign for that person, and both spouses sign agreements to release community property and homestead rights.

21 Review 21 Purpose of the statute of frauds Prevent fraud by someone seeking the enforcement of a contract that was never made Disallow fraudulent oral evidence of a fictitious contract Protect spouses rights in property

22 Question 22 The seller of a single residential dwelling unit must complete and sign a Seller s Disclosure of Property Condition form. Which of the following types of sales is an exception to the Seller s Disclosure of Property Condition form being provided? A. Sale pursuant to a court order or foreclosure sale B. All of these are exemptions. C. Sale by a trustee in bankruptcy D. Sale to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest

23 Question 23 If the Seller s Disclosure of Property Condition form is required and not provided on or before the effective date of an executory contract binding the purchaser to purchase the property, which of the buyer may A. terminate the contract within ten days after receiving the notice B. terminate the contract at any time before closing, if the disclosure form is not provide. C. sue the seller for specific performance D. extend the closing date for up to 15 days

24 Review SELLER DISCLOSURE REQUIREMENTS 24 The seller of a single residential dwelling unit must complete and sign a Seller s Disclosure of Property Condition form. The TREC form is a voluntary form, which meets the minimum standards of the Texas Property Code.

25 Review 25 If the Seller s Disclosure of Property Condition form is required and not provided on or before the effective date of an executory contract binding the purchaser to purchase the property the buyer may terminate the contract within seven days after receiving the notice or before closing, whichever is earlier, and the earnest money will be returned to the buyer; or if the disclosure form is not provided, the buyer may terminate the contract at any time before closing, and the earnest money will be returned to the buyer.

26 Question Which addendum is commonly used in a transaction involving an 80% fixed-rate loan? 26 A. Addendum for Property Subject to Mandatory Membership in an Owners' Association B. Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum C. Third Party Financing Addendum D. Addendum for Coastal Area Property

27 Question Which of the following is NOT addressed by a TRECpromulgated form? 27 A. Assumption of an FHA-insured loan B. A purchase using a contract for deed C. A purchase using seller financing D. The purchase of a fee-simple town house

28 Question 28 Which of the following is the BEST way to extend the closing date on a contract? A. Change the date on the original contract and have the buyer, the seller, and both agents initial it. B. Change the date on the original contract and have the buyer and the seller initial and date the change. C. Cross out the old date, enter the new date, and send a written notification of the change to the title company. D. Use the TREC Amendment to Contract and have the buyers and the sellers sign it.

29 Question According to the preprinted language of the TREC promulgated contract form, what type of deed is to be used at closing to convey the title? 29 A. Quitclaim B. General Warranty C. Bargain and Sale D. Special Warranty

30 Question The maximum tenancy that is allowed in a TREC Temporary Lease is: 30 A. 48 hours B. 72 hours C. 90 days D. 180 days

31 Question 31 Which of the following statements is TRUE concerning the Seller s Disclosure of Property Condition form as required by the Texas Property Code? A. The sales contract is void without this form attached. B. It must be used in all single-family transactions. C. It requires the seller to disclose all adverse conditions pertaining to the property. D. It requires the seller to disclose the seller s knowledge of the condition of the property.

32 Notes for Tonight 32 Contact Information A PDF of tonight s slides will be ed to you tomorrow.

33 Topics To Be Discussed Next Week Commission Duties and Powers Activities Requiring a License Licensing Process 33

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