Texas Law of Contracts - Chp. 7 Contingencies, Addenda, and Amendments

Voidable

Contingencies that are added to a contract create a/an .................. contract?

Unenforceable

Executed

Assigned

Voidable

Escape clause

If a buyer cannot fulfill a contingency, the seller may be able to terminate the contract through which of the following clauses...?

Financing clause

Escape clause

Closing clause

All of the above

All of the above

Which of the following is an element that must be included with a contingency...?

How will the contingency be satisfied

What is the deadline for the contingency to be satisfied

How the contingency could be removed

All of the above

Appraisal contingency

Even after a buyer secures a mortgage, he/she is still protected by which of the following contingencies...?

Appraisal contingency

Moving contingency

Closing contingency

Credit contingency

Loan-to-value ratio

The amount of money that a bank will lend a buyer is based on which of the following ratios...?

Credit-to-value ratio

Loan-to-value ratio

Income-to-value ratio

Debit-to-value ratio

All of the above

Which of the following contingencies may be found in a sales contract...?

Title contingency

Mortgage contingency

Appraisal contingency

All of the above

Options period

The inspection contingency protects the buyer during which phase of the closing process...?

Approval period

Options period

Loan origination period

Transfer period

Property inspector

Who should the buyer hire during the options period...?

Escrow agent

Broker

Property inspector

Surveyor

1978

A property should be tested for lead-based paint if it was built prior to what year...?

1964

1978

1988

2001

Amendments

Changes or modifications to the existing content of a contract are known as...?

Amendments

Addendums

Bulletins

Notice

All of the parties to the contract

An amendment to a contract must be signed by which of the following...?

The seller only

The buyer only

Either the buyer or seller

All of the parties to the contract

Addendums

Which of the following is used to add content to an existing contract...?

Amendments

Addendums

Bulletins

Notices

A change to the contract price

A change to the closing date

Lender required repairs to be paid by the buyer and seller

All of the above

Which of the following is an example of an amendment to a sales contract...?

A change to the contract price

A change to the closing date

Lender required repairs to be paid by the buyer and seller

All of the above

Addendum

Additional pages of material that are added to and become part of a contract.

Addendum for back-up contract

Sellers financing addendum

Addendum for coastal property

All of the above

Which of the following addendum forms can be found on the TREC website...?

Addendum for back-up contract

Sellers financing addendum

Addendum for coastal property

All of the above

Third party financing addendum

Which of the following is the second most used addendum for residential sales contracts...?

Loan assumption addendum

Short sale addendum

Third party financing addendum

Sellers financing addendum

The title company

Abby is in the process of purchasing a house and needs to add a third party financing addendum to the contract. After the third party financing addendum is signed by both Abby and the seller, who should receive a copy of the addendum...?

The appraiser

The title company

The surveyor

All of the above

Should Buyer Susan and Weldon decide that the appraised price is lower than what they were expecting and cannot obtain a loan from the lender because of this issue, what contingency paragraph can they invoke to terminate the contract?

Mortgage contingency

Appraisal contingency

Home sale contingency

Inspection contingency

Appraisal contingency

No. Lender required repairs are not allowable within the state of Texas. However, the lender may still back out of the contract if they feel the repairs are of substantial nature.

Since the bank has informed Buyer Susan and Weldon of needed repairs to the property for this conventional loan, is Buyer Susan and Weldon required to make these repairs in order to obtain the loan?

Appraisal contingency

Inspection contingency

Both b and c

What is the most utilized contingency found within any real estate sales contract and that was discussed within this case study?

Mortgage contingency

Appraisal contingency

Inspection contingency

Both b and c

Which of the following is the most common type of contingency found in sales contracts...?

AMortgage contingency

B1031 Exchange contingency

CInsurance contingency

DSeller financing contingency

Mortgage contingency

Who selects the appraiser to be used to appraise a property under contract...?

AAn independent third party service

BThe lender

CThe buyer's broker

DThe seller's broker

An independent third party service

The amount that a bank will lend on a property is based on which of the following...?

AThe lesser of the contract price or the appraised value

BThe higher of the contract price or the appraised value

CThe appraised value only

DThe contract price only

The lesser of the contract price or the appraised value

Lisa recently signed a sales contract to purchase a new house. In the contract, Lisa needed to add a mortgage contingency. This contingency makes the contract a/an ................contract?

AVoidable

BUnenforceable

CExecuted

DAssigned

Voidable

Amy is negotiating the purchase of a new house. What contingencies may Amy add to the sales contract...?

AAll of the above

BTitle contingency

CMortgage contingency

DAppraisal contingency

All below:

Title contingency

Mortgage contingency

Appraisal contingency

How do addendums affect a contract...?

AThey add content to the existing contract

BThey modify the existing content of the contract

CThey void the contract

DAll of the above

They add content to the existing contract

Which of the following addenda are used when the buyer is obtaining a conventional mortgage to purchase a property...?

AThird party financing addendum

BLoan assumption addendum

CReverse mortgage addendum

DSellers financing addendum

Third party financing addendum

Ely is in the process of purchasing a new house and needs to obtain a mortgage. In addition to a mortgage contingency, what other contingency may Ely add to the sales contract...?

AAppraisal contingency

BDisclosure contingency

CCredit contingency

DMoving contingency

Appraisal contingency