© 2012 Cengage Learning

Texas Real Estate Sales Contracts Chapter 8

© 2012 Cengage Learning In This Chapter You will be introduced to real estate contracts, especially Texas promulgated forms.

© 2012 Cengage Learning Purpose of Sales Contracts Allows time to ascertain that the parties can each perform the terms of the agreement which are written and signed promises to perform.

© 2012 Cengage Learning Earnest Money Contracts 1. Must be in writing. 2. Must be signed by parties to be charged. 3. Must be evidence to convey an interest. 4. Must have identifiable vendor & vendee. 5. Must identify property to be conveyed.

© 2012 Cengage Learning Texas real estate agent must use standard forms promulgated by TREC - available at

© 2012 Cengage Learning What is in Contracts? Provision for buyer’s earnest money deposit Buyer’s offer to purchase Acceptance of the offer by seller Provisions for payment of broker fees Instructions to closing agent Possession details

© 2012 Cengage Learning “time is of the essence” This is a legal term which means the time limits set by the contract must be faithfully observed or the contract is voidable by the non-defaulting party. Due to the legal nature of this term, it should not be used by the real estate agent!

© 2012 Cengage Learning Disclosures Federal Clauses Negotiation Rollback Taxes Pipelines Lead Based Paint

© 2012 Cengage Learning LEAD-BASED PAINT IN HOUSING Approximately three-quarters of the nation's housing built before 1978 contains some lead-based paint. Federal law requires that before a buyer or tenant becomes obligated under a contract for sale or lease the seller or landlord must disclose the possibility lead based paint and lead based paint hazards and provide available reports along with the pamphlet “Protect Your Family From Lead in Your Home.”

© 2012 Cengage Learning TYPE OF HOUSING NOT COVERED Housing built after 1977 (Congress chose not to cover post-1977 housing because the CPSC banned the use of lead-based paint for residential use in 1978). Zero-bedroom units such as efficiencies. Leases for less than 100 days or short-term rentals. Housing for the elderly (unless children live there). Housing for the handicapped (unless children live there). Rentals free of lead & inspected by a certified inspector. Foreclosure sales.

© 2012 Cengage Learning More Disclosures Water districts Annexation Property owner’s association Property Located in a Certificated Service Area of Utility Service Provider Public Improvement District

© 2012 Cengage Learning Practicing Law The job of the real estate agent is to determine the business details of the transaction and not to practice law! A real estate license is not a license to practice law.

© 2012 Cengage Learning Other Methods Option Contracts Installment Contracts Repossession Lease with Option to Buy Right of First Refusal Exchange Agreements  delayed Exchanges 45 days to identify property 180 to complete purchase Must use intermediary

© 2012 Cengage Learning Possible Trading Combinations

© 2012 Cengage Learning Key Terms “As Is” Counteroffer Default Earnest money deposit Equitable title Installment contract Lease-option Right of first refusal Tax-deferred exchange “Time is of the essence”