Law of Contracts - Champions

Commission's main focus is to protect the ________. Therefore, the rules and regulations are construed ________, with a view toward their purpose.

Public , liberally

Broker-Lawyer Committee to write residential contract forms that, with few excep- tions, are mandatory for license holders. These forms are known as _____

promulgated forms

Failure to use TREC-promulgated forms, a form written by an attorney, or a form required by a party can result in a

license revocation or suspension by TREC.

commercial transactions.

TREC does not promulgate contract forms for the sale of cooperatives (co-ops) or any forms for ___

90

Buyer's Temporary Residential Lease - for use when the buyer occupies the property for no more than ____days prior to closing.

Sellers Temporary Residential Lease - for use when the buyer occupies the property for no more than ___ days after to closing.

90

right of first refusal

giving the tenant the right to purchase the leased property by matching or bettering any offer before the property is sold to someone else

House is a ____

good

Brokerage is a ______

Service

Common Law

is a body of law developed in England and based upon “common sense” and local custom.

real estate

includes all that is encompassed in land, with the addition of all man-made addi- tions to the land (improvements) such as roads, houses, and commercial buildings.

Personal Property

Things of a temporary or movable nature are not part of the real property. They are considered

If personal property is being transferred along with real property, a ___________ is generally used to accomplish the transfer, which would normally accompany the deed.

bill of sale

fixture

Personal property that has become attached to the land in such a way as to become real property is called a ______

Annexation

process of attaching personal property so that it becomes real property is called _________

Severance

Removing fixtures (by detaching them from real property or by uninstalling them) to create personal property is _______

improvements

Shrubs, trees, and landscaping are considered _______and go with the property.

emblements

Annual crops produced with labor fall into a special category known as________.

Modification

___________ value is affected by man-made changes to the land. These changes can be on the land itself or off-site.

Estate in severalty

_____ involves ownership of real estate by one individual or entity.

Joint Tenancy

________has been referred to as a "poor man's will." When a joint tenant dies, the decedent's share passes to the surviving joint tenant(s); a will is not required for this to happen

sole proprietorship

a venture that is owned by one individual.

Corporation (CO-OPs) owners the

entire complex

Cannot have an ad turns away Single Parents

what violates fair housing act

a contract

an agreement between two or more parties to do something or to refrain from

doing something

unilateral contract

under an option, the seller must sell if the buyer chooses to buy. The contract is said to be a ________ because only one party is obligated to perform.

Mutuality

A unilateral contract is said to lack _____

contractual capacity

Certain persons do not have full contractual capacity, including minors, individuals who have had guardians appointed, and those under the influence of drugs or alcohol.

mutual consent

is often referred to as mutual consent or a “meeting of the minds.”

Five essential elements must exist for a contract to be considered valid and enforceable. C.O.L.I.C

Competent parties

Offer and acceptance (mutual agreement)

Legal purpose

In writing (when required by law)

Consideration

Consideration

_______ in a contract could be nothing more

than a promise made by one party in exchange for a promise made by the other. (valuable) Money or (good) Love

writing

in order to comply with the Statute of Frauds, contracts for the conveyance of an interest in real estate or leases for a term of more than one year must be in _____

fully executed

When the sale finally closes, the contract is _______. However, according to the TREC-promulgated contract forms, all representations made by seller and buyer “survive closing,” which means that both parties remain liable beyond closing for their representations made in the contract.

Police Power

is the right of the government to regulate and control the way land is used. The most common example of police power is zoning

buffer zone

an area of land separating one land use from another

Life Estate

ownership for the duration of someone's life.

community properties

example of a Statutory estates is

Dower

is the interest a wife has in the property of her husband.

Necessity

the courts may award an easement to a property owner who has no legal access to his or her land. (Usually in the case of "landlocked" property.)

Condemnation

The government, under its power of eminent domain, takes an easement.

encumbrance

A claim, lien, charge, or liability attached to and binding real property is an

The Texas Railroad Commission

who controls all drilling for oil and gas in the state. It regulates all drilling activity in the state.

Lead is found in paint, pipes, and soil – use the Lead Paint Disclosure for all properties built before

1978

If a buyer has concerns about possible contamination of a potential property, the buyer or the lender may opt to have an _______ performed on the property to deter- mine

Environmental Site Assessment (ESA)

Radon

is a naturally occurring, colorless, and odorless gas produced by the decay of radioactive materials in rocks under the ground

Percentage Lease

In the retail environment, a percentage lease obligates the tenant to pay a base rent and a percentage of the gross sales. The percentage may vary, depending on the level of sales, and will be calculated based on breakpoints in the lease.

Open Listing

The open listing gives the seller the right to list the property with multiple competing brokers and to sell the property personally without liability for payment of a commission.

gross lease

the landlord pays costs regularly incurred in ownership, such as taxes, insurance, utilities, and maintenance. The tenant pays only rent.

Estate for years

a lease with a definite beginning date and definite ending date.

Subletting

is the transfer of some or all of the tenant's rights and/or leased space to another, with liability remaining with the lessee.

Tenancy at sufferance

is an interest in leased property created when the holdover tenant

Tenancy at will

a leasehold in which a tenant occupies real estate with the permission of the owner for an uncertain or unspecified length of time; this is a very loose agreement. Depending on the lease agreement, little or no notice may be required, and either party

An assignment

of a lease occurs when a tenant's rights and liabilities are transferred to another.

_______ allows a tenant to buy the property at a preset price and terms for a given period. This can also be called a lease with an option to buy.

A lease option

when selling to a investor - They then lease back the property, usually on a long-term lease. ___________ then frees up the investor's capital.

The sale and leaseback

how can an offer be presented

phone,fax, email, letter, ahnd delivery

a contract becomes binding when its signedby all parties, and the acceptance is communicated to the offering party. Communication is also referred to as _________

notification

all offers must be_______

presented

Some states have __________requirements for the presentation of offers.

specific time

counteroffer

the rejection of the original offer coupled with a new offer

how to respond to an offer

do nothing, accept , counteroffer, reject

An agent

should never discourage a party from consulting an attorney for advice in a transaction. If one or both of the parties are represented by an attorney, the attorney's contact information is generally included in the contract.

lot and block method

Commonly used in residential subdivisions and commercial developments, the ____________ method of describing land most often refers to a recorded map or plat.

The most common type of financing is obtained from a ________, such as a mort- gage company or bank.

third party

Earnest money

is deposited in an escrow account when the contract is signed by all parties and acceptance is communicated.

The final--------- of a transaction is the closing, where the buyer pays for the property, and the seller conveys title.

consummation

SPECIAL PROVISIONS

where terms can be addressed that are not covered in standard contracts or addenda forms. In all states, license holders are barred from the unlawful practice of law. Therefore, license holders should ensure that any special provisions added to a con- tract are factual statements that do not change the legal effect of the contract.

At closing, ___________ for property taxes and property owner association fees will be calculated

prorations

all lease agreements should be in _____

writing

Liquidated damages.

The seller can choose to accept the buyer's earnest money as liquidated damages, releasing all parties from any further obligation under the contract. Liquidated damages are damages that are established in the contract.

Specific performance.

The injured party files a courtaction seeking an order of the court directing the defaulting party

contingency

is a provision in a contract that requires that a specific act or event happens for the contract to be binding on the part

sale of other property contingency.

While the financing contingency is common in residential real estate, it is by no means the only one. Another contingency is the

As a transaction progresses, amendments to the original contract may be needed. Common amendments include:

• Changes to the closing date• Changes to the sales price, downpayment, and/or amount financed • Repairs that the seller agrees to perform• Removal or waiver of contingencies

An addendum

to a contract is an attachment that adds or further describes the rights and duties of the parties

promissory note

also known as a real estate lien note, is the borrower’s unconditional promise to repay

Federal Reserve

central banking system of the United States.

primary mortgage market

The market in which borrowers and mortgage lenders come together to create and negotiate the terms of a mortgage transaction is called the

Servicing

includes sending monthly payment statements and collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow and impound funds), remitting funds to the note holder, and following up on delinquencies.

fixed-rate mortgage loan

has dominated residential lending in the United States for many years and is amortized.

blanket mortgage

covers more than one piece of property

Capacity

is a measure of the borrower’s ability to repay the debt and is demonstrated through current earnings and job stability.

The Texas Veterans Land Board Housing Assistance Program (VHAP) The qualification process is the same as for any other

FHA, VA, or conventional loan.

Residential Mortgage Loan Originators (RMLOs). The term Residential Mortgage Loan Originator is mandated by the _______

SAFE ACT

The Equal Credit Opportunity Act (ECOA)

ensures that all consumers are given an equal chance to obtain credit.

passed in 1974

Devise

Real property conveyed by will

A codicil

is an addition or an amendment to an existing will - Change Will

formal judicial proceeding to prove or confirm the validity of a will

probate

general warranty deed.

The most common type of deed used in Texas, and the one that affords the purchaser the greatest degree of protection - protects solviterty of the soil

quitclaim deed

one with no guarantees, warranties, or covenants. The grantor does not even claim to own the property.

is the combination of two or more properties into one.

An assemblage or plottage

. The action of combining the properties is usually called ______

assemblage

the increased usability and value are referred to as

plottage.

abstract of title

complete history of the title of a piece of property that includes deeds, easements, liens, foreclosures, wills, marriages, deaths, life estates, fee simple estates, and anything else that may have ever been recorded about a property.

title commitment , 20

________is divided into sections called "schedules" and must be delivered by the title company within ________ days of its receipt of the contract.

title company

Most closings in Texas are conducted at a _____________

Buyer Signs the _______ Note

Promissory Note

RESPA

RESPA prohibits any person who, pursuant to any agreement or understanding, gives or receives a fee or a thing of value

controlled business arrangement

If the lender has either an affiliate relationship or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services and the lender directly or indirectly refers business to the provider it is

Attempting to extend the termination option without paying an additional ________will not create a valid right to terminate, and _________ can never be set at zero under Texas law.

Option Fees