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					Real Estate October 20, 2006  Real Estate Contracts o Basic contract that is use in the majority in residential  Fee simple  Uses warranty deed  Most uses ―1-4faminly resale contract‖  Earnest money in an earnest money contract is not the consideration that makes this a valid contract  Earnest money only has a small rollA contract signed by 1 party = offeragreement Contract between buyer and seller= bilateral contract o 2 performances –  Buyer must buy  Seller must sell In terms of a valid/enforceable contract, what are the central elements: it must have… o competent parties o consideration o have legal purpose o In writing o a description of the propery o mutual assent  meeting of the minds parol evidence= once a contract is reduced to writing the courts say we will not hear any oral evidence offer: what are the option available for a recipence o they can accept o they can reject o they can counter= I offered $125, when you change that from 125 to 135 this now becomes an offer to sell. Now it is presented ot the buyer as an offer to sell they can ignore the offer o an offer remains outstanding until – 1- it will expire if there is a time limit 2- if the offer was withdrawn time o o

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timelimits are a critical part of a valid contract if there is not time limit then time must be ―reasonable‖ to assume

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Real Estate October 23, 2006    A contract that is said that is said to be a void contract- is one though it had never existed 1. You can have a vaid contract with a minor  But they can void the contract at anytime Voidable contract2. One that can be set aside for a reason Pg 46 typical errors 1. no effective date was entered by the agent before openting title 2. signatures or initials were missing on the contract or on one or ore of the addenda a. the four corners doctrine: the entire agreement must be used to interpret an element of the contract i. 3. addenda not listed in paragraph 22 of the contract were attached a. must check and indicate what part of the addenda are relavent 4. legal descriptions were incomplete or incorrect because they did not provide a section number a. material issue 5. documents, such as TREC form OP-H, seller’s disclosure of property conditions, were listed as addenda that should not have been listed as such 6. the appropriate TREC temporary leases—when possession is to be granted before or after the funding of the transaction—were not used a. temporary lease= less then 90 days 7. time frames to accomplish all of the tasks needing to be done before closing were poorly coordinated 8. agents tired to define legal rights and remedies in paragraph 11- special provisions 9. agents failed to define where notices can be effectively delivered to the buyer and the seller 10. agents failed to complete paragraph 21, and they also failed to complete the broker info and ratification of fee of page 8 of the contract a. the merger doctrine- the contract merges into the deeed—once the transaction goes from contract to conveyance it is said then thet all elements of the contract have bee performed i. after this happens- a party can not go back and say that there are some things that have not been done 1. timeline of the transaction

Offer

Contract signed

Closing Executed contract Excretory contract

2. once the contract has been sign--- closing, then we are in the contract period a. exctory contract

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b. executed contract 3. during this time, what goes on a. title issues b. financing c. appraisal d. survey e. implications 4. pg 49— 5. pg 50— a. we are not required to know every way that a party can be named

personal property is not conveyed with deed o equitable title recived with a contract- when both parties sign the contract, the buyer holds equitable title—when then contract is delivered, equitable title is not longer the buyers  assignment-unless stipulated by statute or by agreement, the buger has the right of assignment when they have equitable title. All is assignable unless there is seller financing  assignment= the conveyance of equitable title  pg 53—real property vs. personal property Real Estate October 27, 2006 1. Closing expenses 2. prorations- property expenses allocated by tenure of ownership a. property taxes b. insureance 3. section 12 a. on the back side we come up with buyers and sellers expenses i. #1400 buyers expenses ii. #1400 sellers expenses 4. selltlement charges a. what we did on the back (buyer expenses) will impact 2 things i. it reducese the amount of proceeds that the seller gets at closing ii. it increases the amount the by the buyer 5. how do we handle the transaction if the deal had changed 6. section 15- this spells out the fault of the parties a. specific performance- fulfill the elements of the contranct b. if someone does not want to buy the prop. You can’t force someone to c. typically it is forfeiture of the earnest money 7. section16- agreement of the parties to mediate a. mediation is not binding b. use before courts will hear a case 8. section18- escrow and escrow agent a. escrow agents have liability 9. section 21- notices 10. section2211. section 23- termination option a. if you pay the fee the seller is giving the buyer to terminate the contract for any reasone b. OPTION- choic; you have the right to exersize the option or not i. In an option contract one party is required to act ii. If you choose to do the option then the other party must perform 12. pg 161- new home contracts a. in a resale the buyer is taking info that the seller is giving and using it in the decision making process 1. merger doctrinea. all elements for the contract have been completed except in …

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i. warranties- they survive cloing 2. pg 166a. the first 6 elements there is not distinction b. item 13- prorations and roll back i. property condingtion and in the roll back taxes 1. rollback takes= 5 years 3. pg 184a. item 2- a much more extensive section for the description of the property i. don’t have t memorize all the parts ii. sale priceb. specific performance i. townhomes ii. condos- 1/5 undevided interest c. item 2b i. a condo is created by declaration d. resale certificate- It is a financial certification e. pg 201- unimoroved i. unimproved vs forman ranch 1. unimproced= a vacant lot f. pg 205

Real Estate October 30, 2006      Pg 50 parties Pg 52 description of the prop Pg 53- additional items that are not real prop Pg 54 sale price a. $200000 Pg 329 a blank closing statement a. Item 303: 200000 b. Item 603: 200000 c. Item 101: 200000 d. Item 401: 200000 e. Item 202: f. The amt the buyer pays and the amt the seller receives: what we want to see on the closing statement POC= paid outside the closing Insurance in the closing statement- this is a POC; it is an info entry that doesn’t effect how much buyer or seller get Pg 102 earnest money in the closing a. This decreases the amt the buyer will pay not home much the seller will receive Pg 57 Pg 59 Settlement datea. Also assumer that the transfer of title is this date and closing and possession occur on this date unlsee otherwise said in the contract Pg 142 how do we handle the escrow fee of $250 a. Buyer and seller each pay half Recording fees- who is responsible a. Release of lein- seller pays b. Recording the deed- buyer pays c. Deed of trust/ mortgages- buyer pays Document preparation Ever entry on the buyers side a. Every entry to they buyers side increases what they have to pay at closing EVERY entry on the sellers side a. Decreases what they receive at closing Seee handout***********

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Real Estate November 1, 2006   Pg 294- difference between this one and the last example o Assumption o Condominium How does a loan assumption fit into a transaction o It reduces the amt of cash the seller receives o Jajfkdajfkdsa o The interest has to be prorated  We have to divide the interest of the prorate share between the two parties

seller buyer March 1 April 1 March 17

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$600/30=20 per day x 17= $340 Insurance o See back of hand out RESPA- law that governs o No kick backs o Good faith of all closing costs o Standardized settlement statement o Booklet- explains what every line item does o

RE November 3, 2006  *pg 161-162 o Pg 167-notice the info given to the buyer in new constrcuction o 179o Pg 184- forman ranch contract  Item 3 o Pg 186- item 6, item 13  Roll back taxes is the common theme in all of these contrancts- because the land could be in a state of change that will effect the value for 5 years on o Pg 193- condo’s o Pg 211- condo retail certificate  This sums the financial and legal condition of the association

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Item b- item d- gives a perspective buyer a complete look at what they are getting into o Pg 212- notice similar to condo certificate  Here a buyer is buying a home where there is a mandatory membership in homeowners association Form listing handout -------------------------------------------------------------------------------------------Valid contract in RE has two additional elements o Description of the property o In writing Concept of reasonable time 4 corner doc- must be interpreted in the context ***don’t do legal effect Statute of frauds- in writing Assignement of a contract o Unless seller fin is involved a RE contract is assigened o Conveyance of equitable title Merger doctrine o When buyer get deed then law says all elements of the contract are performed  What things in a contract servive closing  Warranties- don’t fall uner merge doct When we have an option- gives buyer right to terminate without lass of earnest moeney Role of the escrow agent o Facilitating the cloing process o Responsible for all legaland fin in cloing ***no relation back doc Specific performance- section 15 in the contracts Prorations Closing statement- *only responsible for 3 rd party fin-this is first one we did in class ****don’t’ have to know anything by the item numbers

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