Pre-Contract Disclosures Quiz

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Questions and Answers

What occurs if the parties do not mutually agree on the release of funds?

The funds are automatically released to the seller.

The Broker escrow holder receives explicit instructions on handling the funds. (correct)

The funds are put into a public account until agreed upon.

The Broker must wait for a court order before acting.

What does the clause stating that a party authorizes their Broker to accept delivery of the contract imply?

Any item received by the Broker is not valid until confirmed by the party.

The Broker acts on behalf of the party in all dealings.

Only the party can directly receive the contract details.

The Broker's acceptance is considered as the party's acceptance. (correct)

Which requirement must be met regarding the Non-Foreign Seller disclosure?

The Seller must provide a birth certificate.

The Seller must present a passport at the time of Closing.

The Seller must provide an affidavit if the sale price exceeds $300,000. (correct)

The Seller must confirm their foreign status with the IRS.

What does the Termination of Offer date signify?

The expiration date of the buyer's offer if not accepted. Signup and view all the answers

What does the Earnest Money Form address?

The receipt of Earnest Money separate from the Contract. Signup and view all the answers

If the Seller rejects the Buyer's offer, what is required from the Seller?

Signing and dating the rejection in the designated space. Signup and view all the answers

What is the primary purpose of the pre-contract form?

To confirm all necessary disclosures and communications Signup and view all the answers

What must brokers provide to fulfill the written disclosure requirement?

The 'Disclosure of Brokerage Duties, Responsibilities, and Services' form Signup and view all the answers

When are mineral rights automatically included with a property?

Unless the seller reserves them or they have been previously reserved Signup and view all the answers

In a real estate contract, what is the default assumption regarding transaction type?

It is considered a 'cash' transaction by default Signup and view all the answers

What is the time frame within which a buyer must deliver earnest money after contract execution?

Within three days Signup and view all the answers

How is the effective date of a contract determined?

The day after the Time Reference Date Signup and view all the answers

What is required in a transaction if the buyer intends to secure financing?

A financing supplement must be included Signup and view all the answers

What must be done to confirm the previously disclosed brokerage duties and responsibilities?

Including them within the main contract or as an attachment Signup and view all the answers

What happens if a buyer fails to provide earnest money within the specified time frame?

The seller may cancel the contract Signup and view all the answers

What is the maximum time allowed for a Buyer to notify the Seller of contract cancellation after the inspection period ends?

24 hours Signup and view all the answers

What document must be submitted by the Buyer to request repairs from the Seller?

Treatments, Repairs, and Replacements (TRR) form Signup and view all the answers

If a written agreement on repairs is not achieved within the stipulated period, what happens to the contract?

The contract will terminate. Signup and view all the answers

Who is responsible for paying the Attorney's Title Opinion or Title Insurance?

The Buyer Signup and view all the answers

What happens if the Title Evidence is not provided within ten days before Closing?

The Closing Date will be extended. Signup and view all the answers

What is meant by 'Time is of the essence' in the context of this contract?

No extensions to deadlines are allowed. Signup and view all the answers

What must the Seller provide to the Buyer within 30 days before the Closing Date?

A completed and current Abstract of Title Signup and view all the answers

What recourse does the Buyer have if title requirements identified in the Attorney’s Title Opinion are not resolved?

The Buyer may cancel the Contract. Signup and view all the answers

What should a Buyer do if an existing service agreement is in place on the property?

Transfer the service agreement to themselves or purchase new coverage. Signup and view all the answers

Which of the following statements best describes the responsibilities regarding earnest money in this contract?

Each party is accountable for their own expenses, and earnest money cannot cover these costs. Signup and view all the answers

Study Notes

Pre-Contract Disclosures and Confirmations

The pre-contract form ensures all disclosures (brokerage, property condition, lead-based paint, transaction costs) are communicated to all parties, requiring their signature for confirmation.
Brokers must disclose their duties and responsibilities in writing before contract signing, using the "Disclosure of Brokerage Duties, Responsibilities, and Services" form.
This must be confirmed in writing by parties, either in the contract or as an attachment; the form preceding the Residential Contract fulfills this.

Property Condition and Transaction Details

Residential Property Condition: Disclosures cover property condition.
Lead-Based Paint: Disclosures about lead-based paint are required.
Estimated Transaction Costs: Estimated transaction costs are disclosed.
Mineral Rights: Mineral rights transfer automatically unless reserved by the seller or previously reserved.
Cash Transaction: The contract defaults to "cash" unless a financing supplement is included. Financing supplements are needed if the buyer seeks financing.
Earnest Money: The buyer must deliver earnest money within three days of contract execution; failure results in the seller canceling the contract.

Timelines and Deadlines

Time Reference Date: The contract's effective date starts the day after the Time Reference Date, not the signing date. All deadlines are based on this date.
Default Time Period: If no Time Reference Date is given, the time period begins three days following the parties' final signatures.
Inspection Considerations: Licensees should consult with the buyer to determine necessary inspections. Complex inspections (e.g., foundation cracks) might have longer completion times.

Contractual Repairs

Buyer's Inspection Period (24 hours): The buyer has 24 hours after the inspection period to either cancel the contract if unsatisfactory or submit a Treatments, Repairs, and Replacements (TRR) form for requested repairs.
Defects (Repair): A defect is a condition, malfunction, or problem materially impacting the property value and is not purely aesthetic.
Seller's Response to TRR: Negotiation period for repairs is defined in the contract.
Repair Completion: Seller completes agreed-upon repairs by the closing date. Non-agreement leads to contract termination, with earnest money return.

Title and Title Requirements

Title Responsibility: Buyer pays for Attorney's Title Opinion or Title Insurance.
Seller's Title Evidence: The Seller provides title evidence (abstract or title insurance policy, UCC search) to the buyer within 30 days before closing.
Buyer's Title Examination: The buyer has ten days to examine title evidence and notify the seller of objections.
Title Issues Resolution: The seller can address title issues; closing may be delayed for agreed time periods. Buyer can cancel if issues aren't resolved.

Tax, Assessments, Prorations, and Leases

Tax Proration: The contract outlines tax proration at closing.
Seller Responsibilities: The responsibilities of the seller regarding the property taxes, assessments, leases, utility districts, HOAs, and special taxing districts are detailed.
Residential Service Agreement: Existing service agreements can be transferred or new ones purchased. Real estate brokers may receive a fee.

Additional Legal Clauses

Additional Provisions: This section allows for additional contract clauses. Licensees should avoid legal jargon.
Mediation: Negotiation and mediation are encouraged prior to legal action. Agreements in mediation are voluntary.
Choice of Law: All disputes will be governed by Oklahoma state law and Oklahoma courts.

Breach of Contract and Closing Issues

Breach of Contract: Any failure to meet agreement terms within the required timeframes constitutes a breach of the agreement.
"Time is of the Essence": Failure to act within the time limit results in an incurable breach.
Breach Remedies: Specified remedies are included for breaches (seller might retain earnest money).
Earnest Money: There's an added amendment addressing timely earnest money delivery as per provision 2.

Parties' Expenses and Release of Earnest Money

Expense Accountability: Each party is responsible for their expenses, and earnest money cannot cover them.
Earnest Money Return Conditions: Conditions outlined for earnest money return if the contract is terminated.
Broker's Role: Broker escrow holder's explicit role if the parties can't agree on earnest money release.

Seller's Affirmation

Non-Foreign Seller (FIRPTA): Seller must confirm they aren't a foreign person (defined by FIRPTA), especially if the sale exceeds $300,000 or the buyer isn't using the property as a primary residence. Seller must provide an affidavit verifying this at closing—providing the appropriate tax identification under penalty of perjury.

Contract Execution Termination, and Receipt of Earnest Money Forms

Execution and Dating: Parties need to sign and date the contract.
Offer Termination: Buyer's offer expiry date if seller doesn't accept. Buyer brokers should facilitate communication.
Earnest Money Form: A separate form for the receipt and management of earnest money.

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Description

Test your knowledge on pre-contract disclosures and confirmations required in real estate transactions. This quiz covers essential topics including property condition, lead-based paint disclosures, and transaction costs. Ensure you understand the responsibilities of brokers and the necessary forms involved before signing any contracts.