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Flashcards in Promulgated contracts Deck (18)
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1

The parol evidence rule prevents

use evidence made prior to or after the written contract to contradict the writing.

2

I am a seller and I signed a contract with a buyer. Before the earnest money was deposited, the buyer backed out. Am I entitled to the earnest money?

The Commission does not have jurisdiction to decide which party is entitled to the earnest money. However, a real estate license holder's failure to deposit earnest money in accordance with the terms of the contract could form the basis of a complaint. Please note that TREC cannot order a license holder to pay money damages. You will need to consult a private attorney about monetary damages or other civil remedies.

3

We tried to buy a house but our loan application was not approved. Our $500 earnest money had been deposited with a title company and they said they wouldn't return it without a release signed by the seller, which the seller won't sign. What can you do to help us?

The Commission does not have jurisdiction over title companies. While a license holder is encouraged to assist the parties in the exchange of the necessary earnest money release and need to sign the release as appropriate, there is nothing in TRELA or the Rules to determine who is entitled to the earnest money. You will need to consult a private attorney.

4

I was trying to buy a house and the earnest money was deposited in the broker's escrow or trust account. The transaction has fallen through and now the broker won't return the earnest money.

If the broker used a Commission promulgated form, it contains provisions permitting the broker to require the buyer and seller to agree on who gets the earnest money and to sign a release before the money is disbursed. See Rule 535.146(d) for proper procedures for handling earnest money disputes where the broker is holding the money in a trust or escrow account.

5

How long does an agent have to deposit the earnest money once a binding contract has been negotiated?

The earnest money must be deposited by the close of business on the second working day after execution of the contract by the principals, unless a different time is agreed upon in writing by the principals to the transaction. [Rule 535.146(b)(3)]

6

When a contract falls through, can part of the earnest money be held to pay the commission fee for the other real estate license holder?

No, unless the parties agree in writing otherwise.

7

reasonable time

can change a little if circumstances demand it.

8

if a contract includes the phrase "time is of the essence"

It is due as soon as possible!
Failure to act within the specified time required would equal a breach of the contract.

9

After my buyer completed his inspection, he sent the seller an amendment to ask for several repairs. The seller responded with his own amendment that stated he would complete one of the requested repairs and that the contract would terminate if the buyer didn’t sign the amendment within 24 hours. Can the seller terminate the contract if the buyer doesn’t accept the amendment? (Updated Jan. 12, 2016)

No. Even though a buyer or seller can propose an amendment to the contract at any time, merely proposing an amendment to a contract–or refusing to accept a proposed amendment–does not give either party a unilateral right to terminate an existing contract. The contract is only changed after the parties sign the amendment signifying their agreement. Without a fully executed amendment, the original contract remains in effect as written.

10

The transfer of rights to a third party is known as

Assignment

11

The transfer of duties to a third party is known as

Delegation

12

The Doctrine of Laches is based on the idea that the courts should NOT

help people who take an inordinate amount of time to raise their claims, whether that time is specified in codified law or not.

13

Loan-to-Value Ratio (LTV):

A ratio that represents how much of the sales price is covered by the mortgage loan

14

Recourse Loan:

A loan in which the lender is allowed to seize the collateral property, and could also go after the borrower’s other assets if the sale of the property doesn't cover the whole amount owed to the lender

15

House Flipping:

A type of real estate fraud in which someone purchases a property and then quickly resells it at an artificially high value through the use of a false appraisal

16

Predatory Lending:

Lending practices that take advantage of consumers by charging unnecessary fees or unsubstantiated interest rates, making loans that are too big or risky for the borrower, or pressuring buyers into loans

17

Buyer Rebate:

Illegal action during a transaction that causes money to go back to the buyer, either at or after closing, without the knowledge of the lender

18

Occupancy Standards:

Rules about the maximum number of people allowed to live together in a single dwelling