TEXAS REAL ESTATE CONTRACTS - 360training.com

CHAMPIONS SCHOOL OF REAL ESTATE

TEXAS REAL ESTATE CONTRACTS

Texas Real Estate Sales Contracts

CONTRACTS FOR THE SALE OF REAL ESTATE Four essential elements must exist for a contract to be created. They are: (1) (2) (3) (4)

competent parties legal subject matter consideration mutual assent (offer and acceptance)

Competent Parties The general rule of law is that all parties to a contract have read it and understand it. This is true even if they are “slow” or are illiterate. Certain persons do not have full contractual capacity. These are minors, mentally insane persons and those under the influence of drugs or alcohol. Minors are defined by the Texas Family Code as people who have not yet attained the age of 18 years. Contracts executed by a minor are generally considered to be voidable at the option of the minor. Therefore, anyone who contracts with a minor always contracts with the possibility that the minor may choose to void his contract. However, when the minor achieves legal age, it then becomes valid and binding. Contracts with the mentally insane can be either void or voidable. If the person has been judged to be insane, the contract is void because the person never had the capacity to enter into the contract. When such a judgement has not been made, however, and the contracting party is attempting to prove insanity, mental infirmity, senility or mental retardation, the contract becomes voidable at the option of the informed party, their agent or guardian.

Legal Subject Matter A contract for an illegal purpose is void and the law treats the contract as if it were never created. (Example: A contract on someone’s life has an illegal purpose, therefore it is a void contract.)

Consideration Consideration is often thought of as money or goods exchanged by the parties. However, it is defined as something of value given in exchange for a promise. In a unilateral contract, only one party makes a promise and the other party completes his half of the contract by performance. In some respects, a listing agreement might be thought of as an example because only one party (the seller) makes a promise. He conditionally promises to pay a commission if the broker produces a ready, willing and able buyer, but the other party (the broker) does not promise to sell the property. He accepts the offer (promise to pay commission) when he secures a ready, willing and able buyer because this is the performance that meets the offer. Copyright 2004


Mutual Assent Mutual assent is an essential prerequisite to the formation of a contract. There must have been a “meeting of the minds” (offer and acceptance) between the parties. The determination of mutual assent is usually a question of fact and is completed by the process of offer and acceptance.

Offers The one making the offer is called the offeror. The one to whom the offer is made is the offeree. To be effective, the offer must meet certain legal requirements. It must be: (1) communicated to a specific offeree (2) intended to be a serious offer (3) definite and certain enough to be accepted by the offeree It must also be specific so that the offeree, in exercising his power of acceptance, knows exactly what he is accepting. In most real estate situations, the offer is usually completed upon the purchaser submitting the earnest money contract to the seller.

Acceptance In determining whether or not there was an effective acceptance of the contract, the points generally considered are those of intent, the manner of acceptance, and the timeliness of the acceptance and whether or not that acceptance was unconditional. The manner of acceptance is also important. There must not have been any jest or proposed change in the offeree’s mind or in the manner in which he accepted the offer. The offeree must also have been the party to whom the offer was made and not someone who simply overheard the offer being made. Any acceptance that is not acceptance of the whole offer becomes a counter offer.

Termination of Offers If an offer has been made, it can be terminated prior to acceptance by the offeree due to: (1) the acts of the parties or (2) operation of law. Acts of the parties depend on the conduct of the offeror and offeree. The offer, if no time is specified, remains open for a reasonable time and the offeree may accept this offer within the reasonable time period. If there is a specified time period, the offer terminates when the time period is expired. “This offer is in effect until midnight (Month, date, year).” Operation of law may terminate an offer. The law terminates the offer upon the death of the offeror or offeree, prior to the acceptance, bankruptcy of either party, or a change in the law that renders the contract illegal. Copyright 2004


Sales Contract Default Remedies “If Buyer fails to comply with this contract, Buyer shall be in default, and Seller may either (a) enforce specific performance, seek such other relief as may be provided by law, or both, or (b) terminate this contract and receive the Earnest Money as liquidated damages, thereby releasing both parties from this contract. If Seller is unable without fault to make any non-casualty repairs or deliver the Commitment within the time allowed, Buyer may either terminate this contract and receive the Earnest Money as the sole remedy or extend the time for performance up to 15 days and the Closing Date shall be extended as necessary. If seller fails to comply with this contract for any other reason, Seller shall be in default and Buyer may either: (a) enforce specific performance, seek such other relief as may be provided by law, or both, or (b) terminate this contract and receive the Earnest Money, thereby releasing both parties from this contract.”

PROVISIONS OF SALES CONTRACTS 1. There must be a written instrument. 2. The instrument must be signed by the party to be charged. 3. There must be evidence of intent to convey an interest in the real estate some time in the future. One party offers to give his money and the other party offers to convey his interest in some real estate at a future date. (Consideration) 4. There must an identifiable grantor and grantee. The grantor and grantee must be competent. 5. The subject matter to be conveyed must be identifiable (Proper Legal Description).

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THE PROPERTY DESCRIPTION An adequate legal description of the property is an important element of the deed (contract). One should be able to take the description from the deed (deed) and go right to the land itself and identify the actual property. An absolute necessity in the description is the county in which the land is located. Some hold that a street address is not a sufficient description to support a legal instrument. There are four basic methods of describing land: (l) Metes and Bounds (2) Monuments (3) Rectangular Survey (4) Lot and Block. Of the four, only two are actually used in Texas; metes and bounds for property outside the city, and lot and block for neighborhoods and property within the city. 1. Metes and Bounds

“Metes” generally refers to distance while “bounds” refers to boundary lines. Thus, a metes and bounds description will give the distance and boundary lines of the tract of land. The surveyor prepares these figures, usually referred to as “calls”. He will pick a point of beginning. If the parcel is a square or rectangle, there will be four “calls”, but if it is irregular with eight sides, it will have eight “calls”. Some tracts of land may have dozens or more “calls”. The many sided plot of land must have a single point for the beginning and ending of the description. 2. Monuments

Surveyors use benchmarks placed at strategic points throughout the county and use these as reference points. A square tract of land could be described by four monuments at its four corners. 3. Rectangular Survey

This system of land description is based upon principal meridians and base lines. Principal meridians are north and south lines. Base lines are east and west. 4. Lot and Block

This method describes a parcel of land by reference to lot and block numbers that appear on a surveyed map or plat of the subdivided land which has been recorded with the county clerk. The map or plat has been drawn to scale by a surveyor and shows all lots, streets, alleys and easements. The description includes the volume and page of the plat pertaining to the designated lot. All information concerning the lot shown on the recorded plat is incorporated by reference in the deed description.

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ADDITIONAL ITEMS IN THE SALE PERSONAL PROPERTY Personal property is all the property that is not real estate. Personal property is often called “chattel” and is usually considered movable property. Personal property should be transferred with a document called a “Bill of Sale”. The agreement for the sale of personal property should be kept separate from the sales contract. Items of personal property that are so attached to realty as to become real estate are called “fixtures”.

FIXTURES There are three methods used in determining fixtures: Mode of Attachment The most common method of making personal property part of the real estate is to attach it firmly in place. If the property is removed and it damages the real estate, it should have remained with the property as part of real property. This is also known as the “annexation test.” Fitness or Adaptation to Use Items such as mini blinds or a hot water heater, are not firmly attached to the house, but have been held to be real estate because they are fitted and adapted to use therein. Intention of the Parties The buyers and sellers may determine by agreement that certain described items of property are realty and pass with the sale. This is done by specifying in the written real estate sales contract that such items are included in the transaction. Intention of the parties is the most important test to determine if the item is real property. It is sometimes determined by a judge in a court of law.

AVOIDING PROBLEMS AND MISUNDERSTANDING Real estate brokers should be especially careful to avoid controversies over real and personal property. By including in the contract the items that might create problems, trouble can be avoided. Having the buyers “walk through” the property prior to closing will help as well. Remedies, if fixtures are removed: (1) notify the seller and ask that the fixtures be returned or (2) take the issue to court, usually a J.P. court, where the parties often represent themselves and it is less costly.

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CONTRACT FOR SALE OF LAND Substantial real estate is sold under what is sometimes called a “contract for deed”, “contract of sale” or “land contract”. In reality, it is a method of financing real estate as it creates an effective lien by not giving the buyer a deed until some future date. The contract will contain all the necessary facts regarding the transaction including sales price, payment schedule, interest rate, agreement to repairs and others. Title does not transfer. The buyer is literally under contract to buy and often takes possession of the property. If a lender (mortgagee) is involved, the seller of a contract for deed financing agreement should notify him. To protect the purchaser, the contract should be recorded in the county courthouse in the county where the property is located.

DISADVANTAGES OF CONTRACT FOR SALE OF LAND There are advantages to the seller, and serious disadvantages to the buyer. If the seller dies, becomes divorced, is declared bankrupt or disappears prior to the time he has agreed to give a deed, the buyer has problems. The buyer may have paid on the property for the full period, only to discover that the seller has not, at any time, had good title to the property. During the period the buyer is faithful in making his payments, the seller may borrow money by creating a mortgage on the property. Should he fail to make the payments on this mortgage, the buyer’s equity is eliminated.

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ADDITIONAL ITEMS IN THE SALE PERSONAL PROPERTY Personal property is all the property that is not real estate. Personal property is often called “chattel” and is usually considered movable property. Personal property should be transferred with a document called a “Bill of Sale”. The agreement for the sale of personal property should be kept separate from the sales contract. Items of personal property that are so attached to realty as to become real estate are called “fixtures”.

FIXTURES There are three methods used in determining fixtures: Mode of Attachment The most common method of making personal property part of the real estate is to attach it firmly in place. If the property is removed and it damages the real estate, it should have remained with the property as part of real property. This is also known as the “annexation test.” Fitness or Adaptation to Use Items such as mini blinds or a hot water heater, are not firmly attached to the house, but have been held to be real estate because they are fitted and adapted to use therein. Intention of the Parties The buyers and sellers may determine by agreement that certain described items of property are realty and pass with the sale. This is done by specifying in the written real estate sales contract that such items are included in the transaction. Intention of the parties is the most important test to determine if the item is real property. It is sometimes determined by a judge in a court of law.

AVOIDING PROBLEMS AND MISUNDERSTANDING Real estate brokers should be especially careful to avoid controversies over real and personal property. By including in the contract the items that might create problems, trouble can be avoided. Having the buyers “walk through” the property prior to closing will help as well. Remedies, if fixtures are removed: (1) notify the seller and ask that the fixtures be returned or (2) take the issue to court, usually a J.P. court, where the parties often represent themselves and it is less costly.

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THE SALES PROCESS - RESIDENTIAL •

Agent meets with buyer

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Buyer is “pre-qualified” or pre-approved by loan officer

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Buyer acknowledges the IABS form

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Agency is determined by the parties and reduced to writing

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Agent shows properties to buyer

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Agent writes offer for buyer on seller’s property

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Selling agent delivers offer to listing agent

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Listing agent presents buyer’s offer to seller

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Negotiations begin

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Contract negotiations are completed and agreed to by all parties

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Contract and earnest money is delivered to title company Title is opened and G. F. number is assigned Title examination is done Title commitment is issued

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Buyer makes loan application Lender sends out verifications Credit report is ordered Appraisal is done

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Buyer has property inspections done

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Buyer gets loan approval Survey is ordered

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Buyer and Seller close on property when all contract requirements are completed Lender delivers money on buyer’s behalf Seller delivers deed to buyer Buyer receives possession of the property at funding Seller receives the sale proceeds Brokers receive commissions

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THE SALES PROCESS - COMMERCIAL •

Agent meets buyer/tenant

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Buyer/tenant acknowledges the IABS form

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Agency is determined by the parties and reduced to writing

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Agent shows property to buyer/tenant

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Letter of Intent is written (non-binding offer)

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Negotiation of major points of concern per “letter” form

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Reduce to sales contract form with earnest money attached (attorney involvement)

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Contract and earnest money is delivered to title company Title is opened and GF number is assigned Title examination is done Title commitment is issued

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Buyer makes loan application with lender and/or gives credit information to landlord. Lender has appraisal done.

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Lender has survey done

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Buyer/tenant has property inspections done; Environmental Site Assessment Feasibility study is done and demographics are gathered

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Renegotiate and/or remedy the problems from the inspections

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Sales Contract goes “hard”

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Default and remedies Seller retains earnest money or buyer is returned earnest money Liquidated damages paid to non-defaulting party by defaulting party Suit for specific performance

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Buyer and Seller close on property All contract requirements have been completed Lender delivers money on buyer’s behalf Seller delivers deed to buyer Buyer receives possession of the property at funding Seller receives the sale proceeds Brokers receive commissions Copyright 2004

TEXAS SALES CONTRACTS SUMMARY AND REMINDERS On May 1, 2006 real estate agents in Texas must use the new TREC forms for 1-4 Family Residential Contract (Resale). To help with the understanding of the contracts and their separate paragraphs the following summary of significant changes and paragraph reminders are provided for you. It is not intended to be all encompassing. Paragraph numbers and their contents in this summary are specific to the One to Four Family Residential Contract (Resale) 02-13-06. Paragraph numbers and contents of other forms may vary, based on the particular transaction for which the form is intended. Although many items are identical in all the forms, licensees should be familiar with, and have knowledge of all of them. Paragraph 1

List the seller’s names and buyer’s legal names as they will appear on all documents and closing instruments. Types of ownership or relationships should be identified, i.e., LLP, LLC, tenants in common, joint tenants and partnerships. When the buyer is a single man, include the words “a single man, when the buyer is a single woman, include the words “a single woman”, when husband and wife are purchasing property together, use the words “and wife” or “and husband” between their names. Et ux is an older, outdated phrase meaning “and wife”. Someone purchasing as a sole proprietor may sometimes purchase using a DBA, “Doing Business As”, or assumed name.

Paragraph 2

Identifies the legal description and address of the property to be conveyed, Lot and Block and Addition. Be sure to add the zip code and county where the property is located. Any fixtures, or other items retained by the seller should be noted here at the Exclusions paragraph, which is listed “removed prior to delivery of possession”. Personal property items purchased by buyer from seller should be listed on a separate agreement called a Bill of Sale. The paragraph refers to “Accessories” which are collectively referred to as the “Property” and are a part of the real property sale. Mailbox keys were added to the new form. Permanently installed and built-in items have been set in bold print.

Paragraph 3

Identifies down payment, amount financed, and total price of the Property. A + B = C always!!! (Even on FHA financing.) This is where an “all cash” sale is identified.

Paragraph 4

By checking the appropriate box, the buyer acknowledges the type of financing desired. Buyer must satisfy the lender’s underwriting requirements or the earnest money will be refunded to the buyer. The contract is subject to the approval described in the Third Party Financing Condition Addendum. A buyer who has been pre-approved for a loan may make the contract subject only to the Property satisfying the lender’s loan requirements. If the buyer checks (4A2) and does not get loan approval, he has forfeited his earnest money. The Third Party Financing Addendum would not be used in this case. For Assumption or Seller Financing, the TREC Addenda must be used as well. (THE TERM “DAYS” IN ALL FORMS REFERS TO CALENDAR DAYS).

Paragraph 5

Earnest money amount, the title company and address where the money is being held are identified. Additional earnest money, generally, is not necessary. Contracting with a homebuilder to build is an example of an appropriate situation for additional earnest money. If the buyer fails to deposit earnest money as agreed, the buyer is in default. (An NSF check!)

Paragraph 6

Title Policy and Survey expenses are negotiable. The Title Company has 20 days to furnish a Commitment to the Buyer for Title Insurance. Under OBJECTIONS, Buyer may object to any matters that might prohibit a certain use or activity of the property, e.g., installation of satellite dish, operating a business out of the home, parking of an RV within view of the street, etc. There are 8 exceptions in the Title Policy listed of record. There are three choices for the survey: Seller or Buyer to provide at their individual expense, or the use of the existing survey, if the lender and title company agree. Mandatory Owner’s Association Membership is recognized here. The notices and restrictive covenants and foreclosure issues of a homeowner’s association is given. STATUTORY TAX DISTRICTS for water, sewer, drainage, flood control notices are disclosed and if this applies to a buyer, he is obligated to sign the tax rate and bonded indebtedness notice of the district prior to contract execution. The TIDE WATERS notice regarding coastal area property and the use of the TREC Addendum for such a property is mandatory. The ANNEXATION notice is to inform buyers that their Property may now or later be subject to an annexation by a municipality. This generally means if they are within an “ETJ” they will become part of a city and subject to additional taxes. Paragraph 6C(1) clarifies that if the seller fails to deliver the existing survey and residential real property affidavit within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller’s expense. Paragraph 6D requires the buyer to Object not later than the earlier of the closing dated or the negotiated number of days after buyer received the commitment, exception documents and the survey. Provided Seller does not incur any expense to the provision that requires the seller to cure the timely objections of the buyer or any third party lender. Paragraph 6E(2) if a buyer is concerned, the TREC Addendum for Property Subject to Mandatory Membership in an Owner’s Association should be used. Paragraph 6E(6 and 7) gives notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer and another statutorily required notice that a seller of property in a public improvement district (PID) must provide notice to a buyer.

Paragraph 7

Property Condition paragraph is to allow buyers to have inspections performed on the property by licensed TREC inspectors. The Seller’s Disclosure should be received by the buyer prior to making an offer. The buyer can back out up to 7 days after receiving the notice or prior to closing whichever occurs first. The notice of LEAD-BASED PAINT is here, and if the property were built prior to 1978 the required Addendum must accompany the contract. 7D states the buyer accepts the property in its present condition, provided the seller completes the specific repairs the buyer lists. Lender required repairs, if any, must be a negotiated expense item between the parties. If the lender repairs exceed 5% of the sales price, buyer may terminate the contract. Seller must complete all repairs prior to closing, or the closing date may be extended up to 15 days to complete repairs. Environmental Matters are listed as a notice to buyer. If the buyer is concerned that any of these might affect his use of the property, the TREC Environmental Addendum is mandatory use.

RESIDENTIAL SERVICE CONTRACTS are home warranties. If the buyer purchases a home warranty, he is to be reimbursed by the Seller at closing for an amount listed in the contract. This does not mean the buyer is automatically entitled to a warranty. It is a negotiated item. Paragraph 8 Selling broker’s commission is on page 8 of the contract; the total amount of the commission agreed to be paid by the seller is on the listing agreement. Paragraph 9

The closing date may be extended up to 7 days, when necessary, after curing objections to the Commitment or Survey. Buyer to bring “good funds” to closing and Seller to bring a General Warranty Deed to Buyer to convey title to the property. The Seller may continue to show and accept back up offers on his property. All warranties and representations survive the closing.

Paragraph 10 Possession should be given when the seller receives his proceeds. A Seller’s Temporary Residential Lease form should be used if the seller occupies the property 90 days or less after closing, and a Buyer’s Temporary Residential Lease form should be used if the buyer occupies the property 90 days or less prior to closing. Seller shall deliver the property in its present condition. Two boxes with one to check: possession will take place upon funding, or upon the signing of a lease. Paragraph 11 Special Provisions is only for factual business details or statements not addressed in the contract form, and for which there is no TREC promulgated addendum, lease or other mandatory form. Paragraph 12 Buyer’s and seller’s expenses and settlement costs are stated. Even though printed in the form to be paid by one party or the other, they are negotiable. 12A(1)(a) shows the typical seller’s expenses at or prior to closing. 12A. (b) are expenses the seller is willing to pay on the buyer’s behalf. Expenses the buyer is not allowed to pay on an FHA Financing, or other governmental loan program, or just expenses the seller and buyer have negotiated that the seller will pay for the buyer. 12A(2)(a) Typical buyer expenses are explained here including Loan Fees; these include loan origination, discount fees, buy-down fees, and commitment fees. 12A(2)(b) include other expenses the buyer can be liable for at closing. 12B. Buyer shall pay PMI, MIP, or VA Funding Fee per the requirement of the lender. 12C. If any of these listed expenses exceeds what the party agreed to pay, the contract will terminate, UNLESS the other party agrees to pay the excess. Paragraph 13 Pro rations are calculated through the day of closing for taxes, insurance, maintenance fees and rents, if any. Tax pro rations may be calculated to take into consideration any change in exemptions that will affect the current year’s taxes. Paragraph 14 A fire or other casualty loss does not release the buyer from the contract. The seller has until closing to bring the property back to its prior condition. Or the buyer can accept the property in its damaged condition and the seller assign the insurance proceeds to the buyer. The buyer can terminate and receive his earnest money if the seller cannot perform. The loss is a problem for the seller, since the seller has not transferred title.

Paragraph 15 Default remedies, for both buyer and seller are outlined. Buyer and Seller have the availability of Suit for Specific Performance, or seek other relief from a court, or release each other from the contract, generally with the earnest money retained by the seller. Paragraph 16 The dispute resolution issue is brought up with the seller and buyer checking a box to agree to mediation, will or will not. The cost of the mediation issue will be shared equally. This paragraph does not cause the parties to give up their right to go to court. The TREC Mediation Addendum is no longer available. This paragraph takes its place. Paragraph 17 Attorney’s fees and court costs are paid by a non-prevailing party. Paragraph 18 Uncontested forfeited earnest money can be disbursed by the escrow agent. The escrow agent will give a 15-day notice to other party before disbursing the earnest money. The escrow agent will reduce the amount of the earnest money if there are unpaid expenses incurred on behalf of the party receiving the earnest money. The escrow agent is not a party to the contract and does not pay interest on the earnest money deposit. Paragraph 18C provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days, the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D provides that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. Paragraph 19 Representations: If any are untrue on the day of closing, the buyer may terminate the contract and receive the earnest money. Paragraph 20 A seller is a foreign person if he has no social security card or green card. If he is a foreign person, the escrow agent will withhold 10% of the sales proceeds, until the IRS allows release of the money to the seller. This applies to sales prices over $300,000; however, some title companies collect the 10% on any sale by a foreign person seller. The contract says buyer has the obligation to do this but in reality the escrow agent provides this service. Paragraph 21 Notices are to be in writing. Facsimile notices are effective as well as handdelivered, or mailed notices and e-mail notices are acceptable. Paragraph 22 Check the applicable Addenda that should be a part of this agreement. Paragraph 23 Termination Option: For an Option Fee ($) the buyer has the unrestricted right to terminate this contract by giving notice of termination. (Written Notice) The option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. The option fee is non-refundable if notice is given by buyer to terminate within the option period. However, the earnest money is refundable to the buyer. If the buyer does not terminate his contract with the seller during the option period and continues to closing, the option money is to either be credited to the sales price or simply given to the seller.

The use of the boxes will note the choice of the parties. There must be $ for there to be an option. The contract also states both blanks must be filled in. Paragraph 24 Licensees cannot give legal advice Consult an Attorney. If the parties used an attorney, the attorney would sign on these blanks with their contact information filled in. The execution date is in this paragraph. When the last party signs, and all changes have been initialed by both parties, the date of final acceptance is filled in. Page 8 is a “Courtesy Page”. Seller’s Receipt: A place for the Option Fee to be acknowledged by seller. The listing agent may sign on behalf of their principal. Broker Information and Ratification of Fee: Other broker is the selling broker, the one representing the buyer, either as a buyer’s agent or a subagent. Notice of agency once again is disclosed by the listing broker disclosing if they worked in an intermediary status, or strictly as a seller’s representative. It is the broker’s license number that goes here, not the agent’s license number. Receipt:

The escrow agent will fill out this part of the form when title is “opened” by the delivery of the contract to the title company. Either agent may open title.

Third Party Financing Condition Addendum (TREC Promulgated): Buyer must make every reasonable effort to obtain financing approval. Financing approval under the addendum does not include approval of the property. If financing cannot be obtained within _______days, this contract will terminate and the earnest money returned to buyer. Check applicable boxes: Conventional, Texas Veteran’s Housing Assistance Program Loan, FHA Insured, VA Guaranteed Financing with the VA Notice to Buyer stating that if the Certificate of Reasonable Value is less than the sales price of the property the buyer may cancel the sale and get his earnest money. The seller can reduce the sales price to the CRV value and the sale will continue to go through. The buyer can pay the difference in cash if he chooses. For a complete summary of all contract www.trec.state.tx.us/formslawspubs/forms/forms-contracts.asp

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Contract Concerning

Page of 8

02-13-06

(Address of Property)

EQUAL HOUSING OPPORTUNITY

PROMULGATED BY THE TEXAS REAL ESTATE COMMISSION (TREC)

ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE) NOTICE: Not For Use For Condominium Transactions

1. PARTIES: sell and convey to and Buyer agrees to buy from Seller the Property described below.

(Seller) agrees to (Buyer)

2. PROPERTY: A. LAND: Lot Block , Addition, City of , County of , Texas, known as (address/zip code), or as described on attached exhibit. B. IMPROVEMENTS: The house, garage and all other fixtures and improvements attached to the above-described real property, including without limitation, the following permanently installed and built-in items, if any: all equipment and appliances, valances, screens, shutters, awnings, wall-to-wall carpeting, mirrors, ceiling fans, attic fans, mail boxes, television antennas and satellite dish system and equipment, heating and air-conditioning units, security and fire detection equipment, wiring, plumbing and lighting fixtures, chandeliers, water softener system, kitchen equipment, garage door openers, cleaning equipment, shrubbery, landscaping, outdoor cooking equipment, and all other property owned by Seller and attached to the above described real property. C. ACCESSORIES: The following described related accessories, if any: window air conditioning units, stove, fireplace screens, curtains and rods, blinds, window shades, draperies and rods, controls for satellite dish system, controls for garage door openers, entry gate controls, door keys, mailbox keys, above ground pool, swimming pool equipment and maintenance accessories, and artificial fireplace logs. D. EXCLUSIONS: The following improvements and accessories will be retained by Seller and removed prior to delivery of possession: . The land, improvements and accessories are collectively referred to as the “Property”. 3. SALES PRICE: A. Cash portion of Sales Price payable by Buyer at closing.................. $ B. Sum of all financing described below (excluding any loan funding fee or mortgage insurance premium)........................................... $ C. Sales Price (Sum of A and B)...................................................... $ 4. FINANCING: The portion of Sales Price not payable in cash will be paid as follows: (Check applicable boxes below) A. THIRD PARTY FINANCING: One or more third party mortgage loans in the total amount of $ (excluding any loan funding fee or mortgage insurance premium). (1) Property Approval: If the Property does not satisfy the lenders' underwriting requirements for the loan(s), this contract will terminate and the earnest money will be refunded to Buyer. (2) Financing Approval: (Check one box only) (a) This contract is subject to Buyer being approved for the financing described in the attached Third Party Financing Condition Addendum. (b) This contract is not subject to Buyer being approved for financing and does not involve FHA or VA financing. B. ASSUMPTION: The assumption of the unpaid principal balance of one or more promissory notes described in the attached TREC Loan Assumption Addendum. C. SELLER FINANCING: A promissory note from Buyer to Seller of $ , secured by vendor's and deed of trust liens, and containing the terms and conditions described in the attached TREC Seller Financing Addendum. If an owner policy of title insurance is furnished, Buyer shall furnish Seller with a mortgagee policy of title insurance. 5. EARNEST MONEY: Upon execution of this contract by both parties, Buyer shall deposit $ as earnest money with , as escrow agent, at (address). Buyer shall deposit additional earnest money of $ with escrow agent within days after the effective date of this contract. If Buyer fails to deposit the earnest money as required by this contract, Buyer will be in default. 6. TITLE POLICY AND SURVEY: A. TITLE POLICY: Seller shall furnish to Buyer at Seller’s Buyer’s expense an owner policy of title insurance (Title Policy) issued by (Title Company) in the amount of the Sales Price, dated at or after closing, insuring Buyer Initialed for identification by Buyer

and Seller

TREC NO. 20-7

Contract Concerning

Page 2 of 8

02-13-06


against loss under the provisions of the Title Policy, subject to the promulgated exclusions (including existing building and zoning ordinances) and the following exceptions: (1) Restrictive covenants common to the platted subdivision in which the Property is located. (2) The standard printed exception for standby fees, taxes and assessments. (3) Liens created as part of the financing described in Paragraph 4. (4) Utility easements created by the dedication deed or plat of the subdivision in which the Property is located. (5) Reservations or exceptions otherwise permitted by this contract or as may be approved by Buyer in writing. (6) The standard printed exception as to marital rights. (7) The standard printed exception as to waters, tidelands, beaches, streams, and related matters. (8) The standard printed exception as to discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements. Buyer, at Buyer’s expense, may have the exception amended to read, "shortages in area". B. COMMITMENT: Within 20 days after the Title Company receives a copy of this contract, Seller shall furnish to Buyer a commitment for title insurance (Commitment) and, at Buyer's expense, legible copies of restrictive covenants and documents evidencing exceptions in the Commitment (Exception Documents) other than the standard printed exceptions. Seller authorizes the Title Company to deliver the Commitment and Exception Documents to Buyer at Buyer's address shown in Paragraph 21. If the Commitment and Exception Documents are not delivered to Buyer within the specified time, the time for delivery will be automatically extended up to 15 days or the Closing Date, whichever is earlier. C. SURVEY: The survey must be made by a registered professional land surveyor acceptable to the Title Company and any lender. (Check one box only) (1) Within days after the effective date of this contract, Seller shall furnish to Buyer and Title Company Seller's existing survey of the Property and a Residential Real Property Affidavit promulgated by the Texas Department of Insurance (Affidavit). If the existing survey or Affidavit is not acceptable to Title Company or Buyer's lender, Buyer shall obtain a new survey at Seller's Buyer's expense no later than 3 days prior to Closing Date. If Seller fails to furnish the existing survey or Affidavit within the time prescribed, Buyer shall obtain a new survey at Seller's expense no later than 3 days prior to Closing Date. (2) Within days after the effective date of this contract, Buyer shall obtain a new survey at Buyer's expense. Buyer is deemed to receive the survey on the date of actual receipt or the date specified in this paragraph, whichever is earlier. (3) Within days after the effective date of this contract, Seller, at Seller's expense shall furnish a new survey to Buyer. D. OBJECTIONS: Buyer may object in writing to defects, exceptions, or encumbrances to title: disclosed on the survey other than items 6A(1) through (7) above; disclosed in the Commitment other than items 6A(1) through (8) above; or which prohibit the following use or activity: . Buyer must object not later than (i) the Closing Date or (ii) days after Buyer receives the Commitment, Exception Documents, and the survey, whichever is earlier. Buyer’s failure to object within the time allowed will constitute a waiver of Buyer’s right to object; except that the requirements in Schedule C of the Commitment are not waived. Provided Seller is not obligated to incur any expense, Seller shall cure the timely objections of Buyer or any third party lender within 15 days after Seller receives the objections and the Closing Date will be extended as necessary. If objections are not cured within such 15 day period, this contract will terminate and the earnest money will be refunded to Buyer unless Buyer waives the objections. E. TITLE NOTICES: (1) ABSTRACT OR TITLE POLICY: Broker advises Buyer to have an abstract of title covering the Property examined by an attorney of Buyer’s selection, or Buyer should be furnished with or obtain a Title Policy. If a Title Policy is furnished, the Commitment should be promptly reviewed by an attorney of Buyer’s choice due to the time limitations on Buyer’s right to object. (2) MANDATORY OWNERS' ASSOCIATION MEMBERSHIP: The Property is is not subject to mandatory membership in an owners' association. If the Property is subject to mandatory membership in an owners' association, Seller notifies Buyer under §5.012, Texas Property Code, that, as a purchaser of property in the residential community in which the Property is located, you are obligated to be a member of the owners' association. Restrictive covenants governing the use and occupancy of the Property and a dedicatory instrument governing the establishment, maintenance, and operation of this residential community have been or will be recorded in the Real Property Records of the county in which the Property is located. Copies of the restrictive covenants and dedicatory instrument may be obtained from the county clerk. You are obligated to pay Initialed for identification by Buyer

and Seller

TREC NO. 20-7

Contract Concerning

Page 3 of 8

02-13-06


assessments to the owners' association. The amount of the assessments is subject to change. Your failure to pay the assessments could result in a lien on and the foreclosure of the Property. If Buyer is concerned about these matters, the TREC promulgated Addendum for Property Subject to Mandatory Membership in an Owner's Association should be used. (3) STATUTORY TAX DISTRICTS: If the Property is situated in a utility or other statutorily created district providing water, sewer, drainage, or flood control facilities and services, Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory notice relating to the tax rate, bonded indebtedness, or standby fee of the district prior to final execution of this contract. (4) TIDE WATERS: If the Property abuts the tidally influenced waters of the state, §33.135, Texas Natural Resources Code, requires a notice regarding coastal area property to be included in the contract. An addendum containing the notice promulgated by TREC or required by the parties must be used. (5) ANNEXATION: If the Property is located outside the limits of a municipality, Seller notifies Buyer under §5.011, Texas Property Code, that the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information. (6) PROPERTY LOCATED IN A CERTIFICATED SERVICE AREA OF A UTILITY SERVICE PROVIDER: Notice required by §13.257, Water Code: The real property, described in Paragraph 2, that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If your property is located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to your property. You are advised to determine if the property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to your property. The undersigned Buyer hereby acknowledges receipt of the foregoing notice at or before the execution of a binding contract for the purchase of the real property described in Paragraph 2 or at closing of purchase of the real property. (7) PUBLIC IMPROVEMENT DISTRICTS: If the Property is in a public improvement district, §5.014, Property Code, requires Seller to notify Buyer as follows: As a purchaser of this parcel of real property you are obligated to pay an assessment to a municipality or county for an improvement project undertaken by a public improvement district under Chapter 372, Local Government Code. The assessment may be due annually or in periodic installments. More information concerning the amount of the assessment and the due dates of that assessment may be obtained from the municipality or county levying the assessment. The amount of the assessments is subject to change. Your failure to pay the assessments could result in a lien on and the foreclosure of your property. 7. PROPERTY CONDITION: A. ACCESS,INSPECTIONS AND UTILITIES: Seller shall permit Buyer and Buyer’s agents access to the Property at reasonable times. Buyer may have the Property inspected by inspectors selected by Buyer and licensed by TREC or otherwise permitted by law to make inspections. Seller at Seller's expense shall turn on existing utilities for inspections. B. SELLER'S DISCLOSURE NOTICE PURSUANT TO §5.008, TEXAS PROPERTY CODE (Notice): (Check one box only) (1) Buyer has received the Notice. (2) Buyer has not received the Notice. Within days after the effective date of this contract, Seller shall deliver the Notice to Buyer. If Buyer does not receive the Notice, Buyer may terminate this contract at any time prior to the closing and the earnest money will be refunded to Buyer. If Seller delivers the Notice, Buyer may terminate this contract for any reason within 7 days after Buyer receives the Notice or prior to the closing, whichever first occurs, and the earnest money will be refunded to Buyer. (3) The Seller is not required to furnish the notice under the Texas Property Code. C. SELLER’S DISCLOSURE OF LEAD-BASED PAINT AND LEAD-BASED PAINT HAZARDS is required by Federal law for a residential dwelling constructed prior to 1978. D. ACCEPTANCE OF PROPERTY CONDITION: Buyer accepts the Property in its present condition; provided Seller, at Seller’s expense, shall complete the following specific repairs and treatments: E. LENDER REQUIRED REPAIRS AND TREATMENTS: Unless otherwise agreed in writing, neither party is obligated to pay for lender required repairs, which includes treatment for wood Initialed for identification by Buyer

and Seller

TREC NO. 20-7

Contract Concerning

Page 4 of 8

02-13-06


destroying insects. If the parties do not agree to pay for the lender required repairs or treatments, this contract will terminate and the earnest money will be refunded to Buyer. If the cost of lender required repairs and treatments exceeds 5% of the Sales Price, Buyer may terminate this contract and the earnest money will be refunded to Buyer. F. COMPLETION OF REPAIRS AND TREATMENTS: Unless otherwise agreed in writing, Seller shall complete all agreed repairs and treatments prior to the Closing Date. All required permits must be obtained, and repairs and treatments must be performed by persons who are licensed or otherwise authorized by law to provide such repairs or treatments. At Buyer’s election, any transferable warranties received by Seller with respect to the repairs and treatments will be transferred to Buyer at Buyer’s expense. If Seller fails to complete any agreed repairs and treatments prior to the Closing Date, Buyer may do so and receive reimbursement from Seller at closing. The Closing Date will be extended up to 15 days, if necessary, to complete repairs and treatments. G. ENVIRONMENTAL MATTERS: Buyer is advised that the presence of wetlands, toxic substances, including asbestos and wastes or other environmental hazards, or the presence of a threatened or endangered species or its habitat may affect Buyer’s intended use of the Property. If Buyer is concerned about these matters, an addendum promulgated by TREC or required by the parties should be used. H. RESIDENTIAL SERVICE CONTRACTS: Buyer may purchase a residential service contract from a residential service company licensed by TREC. If Buyer purchases a residential service contract, Seller shall reimburse Buyer at closing for the cost of the residential service contract in an amount not exceeding $ . Buyer should review any residential service contract for the scope of coverage, exclusions and limitations. The purchase of a residential service contract is optional. Similar coverage may be purchased from various companies authorized to do business in Texas. 8. BROKERS' FEES: All obligations of the parties for payment of brokers’ fees are contained in separate written agreements. 9. CLOSING: A. The closing of the sale will be on or before , 20 , or within 7 days after objections made under Paragraph 6D have been cured or waived, whichever date is later (Closing Date). If either party fails to close the sale by the Closing Date, the non-defaulting party may exercise the remedies contained in Paragraph 15. B. At closing: (1) Seller shall execute and deliver a general warranty deed conveying title to the Property to Buyer and showing no additional exceptions to those permitted in Paragraph 6 and furnish tax statements or certificates showing no delinquent taxes on the Property. (2) Buyer shall pay the Sales Price in good funds acceptable to the escrow agent. (3) Seller and Buyer shall execute and deliver any notices, statements, certificates, affidavits, releases, loan documents and other documents required of them by this contract, the Commitment or law necessary for the closing of the sale and the issuance of the Title Policy. C. Unless expressly prohibited by written agreement, Seller may continue to show the Property and receive, negotiate and accept back up offers. D. All covenants, representations and warranties in this contract survive closing. 10. POSSESSION: Seller shall deliver to Buyer possession of the Property in its present or required condition, ordinary wear and tear excepted: upon closing and funding according to a temporary residential lease form promulgated by TREC or other written lease required by the parties. Any possession by Buyer prior to closing or by Seller after closing which is not authorized by a written lease will establish a tenancy at sufferance relationship between the parties. Consult your insurance agent prior to change of ownership and possession because insurance coverage may be limited or terminated. The absence of a written lease or appropriate insurance coverage may expose the parties to economic loss. 11. SPECIAL PROVISIONS: (Insert only factual statements and business details applicable to the sale. TREC rules prohibit licensees from adding factual statements or business details for which a contract addendum, lease or other form has been promulgated by TREC for mandatory use.)

Initialed for identification by Buyer

and Seller

TREC NO. 20-7

Contract Concerning

Page 5 of 8

02-13-06


12. SETTLEMENT AND OTHER EXPENSES: A. The following expenses must be paid at or prior to closing: (1) Expenses payable by Seller (Seller's Expenses): (a) Releases of existing liens, including prepayment penalties and recording fees; release of Seller’s loan liability; tax statements or certificates; preparation of deed; one-half of escrow fee; and other expenses payable by Seller under this contract. (b) Seller shall also pay an amount not to exceed $ to be applied in the following order: Buyer’s Expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Housing Assistance Program or other governmental loan programs, and then to other Buyer’s Expenses as allowed by the lender. (2) Expenses payable by Buyer (Buyer's Expenses): (a) Loan origination, discount, buy-down, and commitment fees (Loan Fees). (b) Appraisal fees; loan application fees; credit reports; preparation of loan documents; interest on the notes from date of disbursement to one month prior to dates of first monthly payments; recording fees; copies of easements and restrictions; mortgagee title policy with endorsements required by lender; loan-related inspection fees; photos; amortization schedules; one-half of escrow fee; all prepaid items, including required premiums for flood and hazard insurance, reserve deposits for insurance, ad valorem taxes and special governmental assessments; final compliance inspection; courier fee; repair inspection; underwriting fee; wire transfer fee; expenses incident to any loan; and other expenses payable by Buyer under this contract. B. Buyer shall pay Private Mortgage Insurance Premium (PMI), VA Loan Funding Fee, or FHA Mortgage Insurance Premium (MIP) as required by the lender. C. If any expense exceeds an amount expressly stated in this contract for such expense to be paid by a party, that party may terminate this contract unless the other party agrees to pay such excess. Buyer may not pay charges and fees expressly prohibited by FHA, VA, Texas Veterans Housing Assistance Program or other governmental loan program regulations. 13. PRORATIONS: Taxes for the current year, interest, maintenance fees, assessments, dues and rents will be prorated through the Closing Date. The tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available. If taxes are not paid at or prior to closing, Buyer shall pay taxes for the current year. 14. CASUALTY LOSS: If any part of the Property is damaged or destroyed by fire or other casualty after the effective date of this contract, Seller shall restore the Property to its previous condition as soon as reasonably possible, but in any event by the Closing Date. If Seller fails to do so due to factors beyond Seller’s control, Buyer may (a) terminate this contract and the earnest money will be refunded to Buyer (b) extend the time for performance up to 15 days and the Closing Date will be extended as necessary or (c) accept the Property in its damaged condition with an assignment of insurance proceeds and receive credit from Seller at closing in the amount of the deductible under the insurance policy. Seller’s obligations under this paragraph are independent of any other obligations of Seller under this contract. 15. DEFAULT: If Buyer fails to comply with this contract, Buyer will be in default, and Seller may (a) enforce specific performance, seek such other relief as may be provided by law, or both, or (b) terminate this contract and receive the earnest money as liquidated damages, thereby releasing both parties from this contract. If, due to factors beyond Seller’s control, Seller fails within the time allowed to make any non-casualty repairs or deliver the Commitment, or survey, if required of Seller, Buyer may (a) extend the time for performance up to 15 days and the Closing Date will be extended as necessary or (b) terminate this contract as the sole remedy and receive the earnest money. If Seller fails to comply with this contract for any other reason, Seller will be in default and Buyer may (a) enforce specific performance, seek such other relief as may be provided by law, or both, or (b) terminate this contract and receive the earnest money, thereby releasing both parties from this contract. 16. MEDIATION: It is the policy of the State of Texas to encourage resolution of disputes through alternative dispute resolution procedures such as mediation. Any dispute between Seller and Buyer related to this contract which is not resolved through informal discussion will will not be submitted to a mutually acceptable mediation service or provider. The parties to the mediation shall bear the mediation costs equally. This paragraph does not preclude a party from seeking equitable relief from a court of competent jurisdiction. 17. ATTORNEY'S FEES: The prevailing party in any legal proceeding related to this contract is entitled to recover reasonable attorney’s fees and all costs of such proceeding incurred by the prevailing party. Initialed for identification by Buyer

and Seller

TREC NO. 20-7

Contract Concerning

Page 6 of 8

02-13-06


18. ESCROW: A. ESCROW: The escrow agent is not (i) a party to this contract and does not have liability for the performance or nonperformance of any party to this contract, (ii) liable for interest on the earnest money and (iii) liable for the loss of any earnest money caused by the failure of any financial institution in which the earnest money has been deposited unless the financial institution is acting as escrow agent. B. EXPENSES: At closing, the earnest money must be applied first to any cash down payment, then to Buyer's Expenses and any excess refunded to Buyer. If no closing occurs, escrow agent may require payment of unpaid expenses incurred on behalf of the parties and a written release of liability of escrow agent from all parties. C. DEMAND: Upon termination of this contract, either party or the escrow agent may send a release of earnest money to each party and the parties shall execute counterparts of the release and deliver same to the escrow agent. If either party fails to execute the release, either party may make a written demand to the escrow agent for the earnest money. If only one party makes written demand for the earnest money, escrow agent shall promptly provide a copy of the demand to the other party. If escrow agent does not receive written objection to the demand from the other party within 15 days, escrow agent may disburse the earnest money to the party making demand reduced by the amount of unpaid expenses incurred on behalf of the party receiving the earnest money and escrow agent may pay the same to the creditors. If escrow agent complies with the provisions of this paragraph, each party hereby releases escrow agent from all adverse claims related to the disbursal of the earnest money. D. DAMAGES: Any party who wrongfully fails or refuses to sign a release acceptable to the escrow agent within 7 days of receipt of the request will be liable to the other party for liquidated damages of three times the amount of the earnest money. E. NOTICES: Escrow agent's notices will be effective when sent in compliance with Paragraph 21. Notice of objection to the demand will be deemed effective upon receipt by escrow agent. 19. REPRESENTATIONS: Seller represents that as of the Closing Date (a) there will be no liens, assessments, or security interests against the Property which will not be satisfied out of the sales proceeds unless securing payment of any loans assumed by Buyer and (b) assumed loans will not be in default. If any representation of Seller in this contract is untrue on the Closing Date, Seller will be in default. 20. FEDERAL TAX REQUIREMENTS: If Seller is a "foreign person,” as defined by applicable law, or if Seller fails to deliver an affidavit to Buyer that Seller is not a "foreign person,” then Buyer shall withhold from the sales proceeds an amount sufficient to comply with applicable tax law and deliver the same to the Internal Revenue Service together with appropriate tax forms. Internal Revenue Service regulations require filing written reports if currency in excess of specified amounts is received in the transaction. 21. NOTICES: All notices from one party to the other must be in writing and are effective when mailed to, hand-delivered at, or transmitted by facsimile or electronic transmission as follows: To Seller at:

To Buyer at:

Telephone: (

)

Telephone: (

)

Facsimile:

)

Facsimile:

)

(

E-mail:


(

E-mail:

and Seller

TREC NO. 20-7

Contract Concerning

Page 7 of 8

02-13-06


22. AGREEMENT OF PARTIES: This contract contains the entire agreement of the parties and cannot be changed except by their written agreement. Addenda which are a part of this contract are (Check all applicable boxes): Third Party Financing Condition Addendum for Property Subject to Mandatory Addendum Membership in an Owners' Association Seller Financing Addendum

Environmental Assessment, Threatened or Endangered Species and Wetlands Addendum

Loan Assumption Addendum

Addendum for "Back-Up" Contract

Buyer’s Temporary Residential Lease

Addendum for Coastal Area Property

Seller's Temporary Residential Lease

Addendum for Property Located Seaward of the Gulf Intracoastal Waterway Addendum for Release of Liability on Assumption of FHA, VA, or Conventional Loan Restoration of Seller’s Entitlement for VA Guaranteed Loan Other (list):

Addendum for Sale of Other Property by Buyer

Addendum for Seller's Disclosure of Information on Lead-based Paint and Lead-based Paint Hazards as Required by Federal Law 23.TERMINATION OPTION: For nominal consideration, the receipt of which is hereby acknowledged by Seller, and Buyer's agreement to pay Seller $ (Option Fee) within 2 days after the effective date of this contract, Seller grants Buyer the unrestricted right to terminate this contract by giving notice of termination to Seller within days after the effective date of this contract. If no dollar amount is stated as the Option Fee or if Buyer fails to pay the Option Fee within the time prescribed, this paragraph will not be a part of this contract and Buyer shall not have the unrestricted right to terminate this contract. If Buyer gives notice of termination within the time prescribed, the Option Fee will not be refunded; however, any earnest money will be refunded to Buyer. The Option Fee will will not be credited to the Sales Price at closing. Time is of the essence for this paragraph and strict compliance with the time for performance is required. 24.CONSULT AN ATTORNEY: Real estate licensees cannot give legal advice. READ THIS CONTRACT CAREFULLY. If you do not understand the effect of this contract, consult an attorney BEFORE signing. Buyer's Attorney is:

Seller's Attorney is:

Telephone: (

)

Telephone: (

)

Facsimile:

)

Facsimile:

)

(

E-mail:

(

E-mail:

EXECUTED the day of , 20 (BROKER: FILL IN THE DATE OF FINAL ACCEPTANCE.)

Buyer

Seller

Buyer

Seller

(EFFECTIVE DATE).

The form of this contract has been approved by the Texas Real Estate Commission. TREC forms are intended for use only by trained real estate licensees. No representation is made as to the legal validity or adequacy of any provision in any specific transactions. It is not intended for complex transactions. Texas Real Estate Commission, P.O. Box 12188, Austin, TX 78711-2188, 1-800-250-8732 or (512) 4596544 (http://www.trec.state.tx.us) TREC NO. 20-7. This form replaces TREC NO. 20-6.


and Seller

TREC NO. 20-7

Contract Concerning

Page 8 of 8

02-13-06


BROKER

INFORMATION

AND

RATIFICATION

OF

FEE

Listing Broker has agreed to pay Other Broker of the total sales price when Listing Broker’s fee is received. Escrow Agent is authorized and directed to pay Other Broker from Listing Broker’s fee at closing.

Other Broker represents

License No. Buyer only as Buyer’s agent

Listing Broker

License No.

represents

Seller and Buyer as an intermediary

Seller as Listing Broker’s subagent

Associate

Seller only as Seller’s agent

Telephone

Broker's Address

Listing Associate

Telephone

Listing Associate’s Office Address

City

State

Zip

Facsimile

City

State

Zip

Facsimile

Email Address

Email Address

Selling Associate

Telephone

Selling Associate’s Office Address

Facsimile

City

State

Zip

Email Address

OPTION FEE RECEIPT Receipt of $

(Option Fee) in the form of

Seller or Listing Broker

is acknowledged.

Date

CONTRACT AND EARNEST MONEY RECEIPT Receipt of Contract and is acknowledged. Escrow Agent:

$

Earnest Money in the form of Date:

By:

Email Address

Address

City


State

Zip

and Seller

Telephone (

)

Facsimile: (

)

TREC NO. 20-7

02-09-2004



NOTICE PURSUANT TO THIRD PARTY FINANCING CONDITION ADDENDUM

To: Seller(s)

In accordance with the Third Party Financing Condition Addendum attached to the Contract between

as Seller and

as Buyer dated

,

for the Property located at Buyer notifies Seller that Buyer cannot

obtain financing approval.

Buyer

Date

Buyer

Date

This form has been approved by the Texas Real Estate Commission for use with similarly approved or promulgated contract forms. Such approval relates to this form only. TREC forms are intended for use only by trained real estate licensees. No representation is made as to the legal validity or adequacy of any provision in any specific transactions. It is not suitable for complex transactions. Texas Real Estate Commission, P.O. Box 12188, Austin, TX 787112188, 1-800-250-8732 or (512) 459 -6544 (http://www.trec.state.tx.us) TREC No. 42 -0.

Copyright 2004

01A

02-13-06



THIRD PARTY FINANCING CONDITION ADDENDUM TO CONTRACT CONCERNING THE PROPERTY AT

(Street Address and City)

Buyer shall apply promptly for all financing described below and make every reasonable effort to obtain approval for the financing (Financing Approval). Buyer shall furnish all information and documents required by lender for Financing Approval. Financing Approval will be deemed to have been obtained when (1) the terms of the loan(s) described below are available and (2) lender determines that Buyer has satisfied all of lender's financial requirements (those items relating to Buyer's assets, income and credit history). If Buyer cannot obtain Financing Approval, Buyer may give written notice to Seller within ____ days after the effective date of this contract and this contract will terminate and the earnest money will be refunded to Buyer. If Buyer does not give such notice within the time required, this contract will no longer be subject to Financing Approval. Time is of the essence for this paragraph and strict compliance with the time for performance is required. NOTE: Financing Approval does not include approval of lender's underwriting requirements for the Property, as specified in Paragraph 4.A.(1) of the contract. Each note must be secured by vendor’s and deed of trust liens. CHECK APPLICABLE BOXES:

A.

CONVENTIONAL FINANCING: (1) A first mortgage loan in the principal amount of $ (excluding any financed PMI premium), due in full in year(s), with interest not to exceed % per annum for the first year(s) of the loan with Loan Fees (loan origination, discount, buy-down, and commitment fees) not to exceed % of the loan. (2) A second mortgage loan in the principal amount of $ (excluding any financed PMI premium), due in full in year(s), with interest not to exceed % per annum for the first year(s) of the loan with Loan Fees (loan origination, discount, buy-down, and commitment fees) not to exceed % of the loan. B. TEXAS VETERANS HOUSING ASSISTANCE PROGRAM LOAN: A Texas Veterans Housing Assistance Program Loan of $ for a period of at least years at the interest rate established by the Texas Veterans Land Board. C. FHA INSURED FINANCING: A Section FHA insured loan of not less than $ (excluding any financed MIP), amortizable monthly for not less than years, with interest not to exceed % per annum for the first year(s) of the loan with Loan Fees (loan origination, discount, buy-down, and commitment fees) not to exceed % of the loan. As required by HUD-FHA, if FHA valuation is unknown, "It is expressly agreed that, notwithstanding any other provision of this contract, the purchaser (Buyer) shall not be obligated to complete the purchase of the Property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser (Buyer) has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement Lender setting forth the appraised value of the Property of not less than $ . The purchaser (Buyer) shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the


and Seller

TREC NO. 40-2

Third Party Financing Condition Addendum Concerning

Page 2 of 2 02-13-06


appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value or the condition of the Property. The purchaser (Buyer) should satisfy himself/herself that the price and the condition of the Property are acceptable." NOTE: HUD 92564-CN "For Your Protection: Get a Home Inspection" must be signed and dated by Buyer and attached to this Addendum. D. VA GUARANTEED FINANCING: A VA guaranteed loan of not less than $ (excluding any financed Funding Fee), amortizable monthly for not less than years, with interest not to exceed % per annum for the first year(s) of the loan with Loan Fees (loan origination, discount, buy-down, and commitment fees) not to exceed % of the loan. VA NOTICE TO BUYER: "It is expressly agreed that, notwithstanding any other provisions of this contract, the Buyer shall not incur any penalty by forfeiture of earnest money or otherwise or be obligated to complete the purchase of the Property described herein, if the contract purchase price or cost exceeds the reasonable value of the Property established by the Department of Veterans Affairs. The Buyer shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs." If Buyer elects to complete the purchase at an amount in excess of the reasonable value established by VA, Buyer shall pay such excess amount in cash from a source which Buyer agrees to disclose to the VA and which Buyer represents will not be from borrowed funds except as approved by VA. If VA reasonable value of the Property is less than the Sales Price, Seller may reduce the Sales Price to an amount equal to the VA reasonable value and the sale will be closed at the lower Sales Price with proportionate adjustments to the down payment and the loan amount. Buyer hereby authorizes any lender to furnish to the Seller or Buyer or their representatives information relating only to the status of Financing Approval of Buyer.

Buyer

Seller

Buyer

Seller

This form has been approved by the Texas Real Estate Commission for use with similarly approved or promulgated contract forms. Such approval relates to this form only. TREC forms are intended for use only by trained real estate licensees. No representation is made as to the legal validity or adequacy of any provision in any specific transactions. It is not intended for complex transactions. Texas Real Estate Commission, P.O. Box 12188, Austin, TX 78711-2188, 1800-250-8732 or (512) 459-6544 (http://www.trec.state.tx.us) TREC No. 40-2. This form replaces TREC No. 40-1.

TREC NO. 40-2

Third Party Financing Condition Addendum (TREC Promulgated): ◆

Buyer must make every reasonable effort to obtain financing approval

◆

If financing cannot be approved within ________days, this contract will terminate and the earnest money returned to buyer.

◆

If buyer does not give such notice within the time allowed, this contract will no longer be subject to Buyer being approved for the financing described.

◆

Each note must be secured by a vendor’s and deed of trust liens.

◆

Check applicable boxes: Conventional, Texas Veteran’s Housing Assistance Program Loan, FHA Insured, VA Guaranteed Financing with the VA Notice to Buyer stating that if the Certificate of Reasonable Value is less than the sales price of the property the buyer may cancel the sale and get his earnest money. The seller can reduce the sales price to the CRV value and the sale will continue to go through. The buyer can pay the difference in cash if he chooses.

Copyright 2004