Real Estate Pre-Contract Disclosures Quiz

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Questions and Answers

What happens if the parties do not mutually agree on the release of funds in an escrow situation?

  • The Broker escrow holder receives explicit instructions on handling the funds. (correct)
  • The funds remain untouched until a judge decides.
  • The funds are automatically returned to the Buyer.
  • The funds are divided between the parties involved.

What is the purpose of the affidavit the Seller must provide if specific conditions under FIRPTA are met?

  • To confirm the Seller’s citizenship status. (correct)
  • To determine the tax liability of the Buyer.
  • To verify the sale price of the property.
  • To disclose the reason for selling the property.

What is indicated by the clause that authorizes the Broker to accept delivery of the contract?

  • Any item received by the Broker is deemed received by the involved party. (correct)
  • Delivery to the Broker is considered received by the legal system.
  • The Broker must notify the parties of each delivery.
  • The Broker becomes the owner of items delivered.

What must a Seller provide at Closing if the sale price exceeds $300,000 and the property will not be a primary residence for the Buyer?

<p>An affidavit under penalty of perjury. (B)</p> Signup and view all the answers

What does the 'Termination of Offer' date signify in the context of a real estate transaction?

<p>The expiration date of the Buyer’s offer if not accepted. (D)</p> Signup and view all the answers

What is the function of the Earnest Money Form in a transaction?

<p>To address the receipt of Earnest Money separate from the Contract. (D)</p> Signup and view all the answers

What is the purpose of the pre-contract form?

<p>To ensure necessary disclosures and confirmations are communicated. (A)</p> Signup and view all the answers

What must brokers provide to fulfill the written disclosure requirement before signing a purchase contract?

<p>The 'Disclosure of Brokerage Duties, Responsibilities, and Services' form. (D)</p> Signup and view all the answers

What is automatically included with the property unless the seller reserves them?

<p>Mineral rights. (C)</p> Signup and view all the answers

Under which condition is a contract considered a 'cash' transaction?

<p>Unless there is a financing supplement included with the offer. (B)</p> Signup and view all the answers

What action must a buyer complete within three days of executing the contract?

<p>Deliver the earnest money to the trust fund holder. (C)</p> Signup and view all the answers

When does the contract's effective date begin?

<p>The day after the Time Reference Date. (A)</p> Signup and view all the answers

How must the previous disclosure of brokerage duties be confirmed?

<p>Within a provision of the contract or as an attachment. (D)</p> Signup and view all the answers

What consequence does a buyer face for failing to provide earnest money promptly?

<p>The seller can cancel the contract. (C)</p> Signup and view all the answers

Which of the following is NOT included in the essential disclosures communicated in the pre-contract form?

<p>Specific financing options for the buyer. (C)</p> Signup and view all the answers

What action can the Buyer take if they are dissatisfied with the results of inspections within 24 hours after the inspection period expires?

<p>Provide a Treatments, Repairs, and Replacements (TRR) form to the Seller. (B)</p> Signup and view all the answers

If the Seller does not provide Title Evidence within ten days before Closing, what happens next?

<p>The Closing Date is extended to allow for examination of Title Evidence. (B)</p> Signup and view all the answers

What constitutes a defect according to the outlined content?

<p>A malfunction that materially affects the value of a system or component. (D)</p> Signup and view all the answers

Who is responsible for obtaining an Attorney's Title Opinion or Title Insurance?

<p>The Buyer (C)</p> Signup and view all the answers

What happens if the Buyer cancels the contract due to unsatisfactory inspections?

<p>They can receive a refund of their Earnest Money. (B)</p> Signup and view all the answers

What is the key consequence described for failing to act within the specified time periods in the contract?

<p>It results in an incurable breach of the contract. (D)</p> Signup and view all the answers

What must the Buyer do upon receiving the Seller's Title Evidence?

<p>Notify the Seller of any objections within ten days. (B)</p> Signup and view all the answers

If an agreement on repairs is not reached within the stipulated negotiation period, what happens to the contract?

<p>The contract will terminate and the Buyer's Earnest Money will be refunded. (A)</p> Signup and view all the answers

What is the main purpose of Mediation as defined in the outlined content?

<p>To resolve disputes with an independent third party's assistance. (C)</p> Signup and view all the answers

Which of the following is NOT an option for the Buyer regarding the title requirements?

<p>Wait for an indefinite period for resolution. (A)</p> Signup and view all the answers

Flashcards

Pre-contract form purpose

Ensures all necessary disclosures (brokerage, property condition, lead-paint, costs) are communicated and confirmed by parties involved.

Broker disclosure requirement

Brokers must disclose their duties and responsibilities to involved parties in writing before the contract is signed.

Disclosure Confirmation

In writing, all parties involved should confirm receipt of the brokerage disclosure and other required information, either in the contract or as an attachment.

Mineral Rights Transfer

Mineral rights automatically transfer with the property unless the seller reserves them or they were previously reserved.

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Contract Default Consideration

A real estate contract is considered 'cash' by default unless financing is clearly specified.

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Earnest Money Deadline

Buyers must deliver earnest money to a trust fund holder within three days of contract execution; failure may lead to contract cancellation by the seller.

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Contract Effective Date

The contract's effective date begins the day after the Time Reference Date, not the signing date.

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FIRPTA Disclosure

The Seller must confirm they are not a "foreign person", as defined by the Foreign Investments in Real Property Tax Act (FIRPTA), when selling a property. If the sale price exceeds $300,000 or the buyer won't use it as their primary residence, the Seller must provide an affidavit with their US Social Security or taxpayer ID number.

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Contract Acceptance

When the Seller accepts the Buyer's offer, they sign and date the contract. This indicates their willingness to proceed with the sale.

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Offer Expiration

The Buyer's offer has a specific date by which the Seller must accept it. If the Seller doesn't accept by that date, the offer expires.

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Broker's Role

The Broker receives the contract on behalf of their client, both buyer and seller. This means the Broker's receipt is considered the client's receipt.

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Earnest Money

A separate form addresses the receipt of earnest money, which is a deposit made by the buyer to show their commitment to the contract.

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Contract Termination

If the Seller rejects the Buyer's offer, they sign and date the contract to indicate refusal. This ends the offer without acceptance.

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Time Reference Date

If not specified, time periods begin three days after the parties' final signatures.

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Buyer Inspection Period

Time allowed for the Buyer to inspect and review the property before making decisions.

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TRR Form

Form used by the Buyer to request repairs or replacements due to defects.

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Contract Cancellation

Buyer's right to cancel the contract if inspections are unsatisfactory, within a 24-hour period, notified in writing.

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Earnest Money Refund

Refund to the Buyer upon timely cancellation of the contract due to unsatisfactory inspections.

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Title Evidence

Supporting documents showing the seller's ownership rights to the property. The buyer is responsible to pay for opinions and insurance for title.

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Title Objections

Buyer's opportunity to point out issues with the property's ownership, within 10 days.

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Mediation

Process where a neutral third party helps resolve disputes.

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Breach of Contract

Failure to meet contract obligations within the specified time.

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"Time is of the Essence"

Deadlines are crucial; failing to meet them results in a broken contract.

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Study Notes

Pre-Contract Disclosures and Confirmations

  • Pre-contract forms ensure all necessary disclosures (brokerage, property condition, lead-based paint, transaction costs) are communicated to all parties.
  • All parties must sign the form to confirm receipt of disclosures.

Brokerage Duties and Responsibilities

  • Brokers must disclose their duties and responsibilities in writing before a purchase contract is signed.
  • This is done by providing a "Disclosure of Brokerage Duties, Responsibilities, and Services" form and obtaining a signature.
  • This disclosure must be confirmed in writing by the parties.

Property Condition

  • The contract includes disclosures about residential property conditions and lead-based paint.

Transaction Costs

  • Estimated transaction costs are disclosed in the pre-contract form.

Mineral Rights

  • Mineral rights automatically transfer with the property unless reserved by the seller.

Cash Transactions

  • The contract is considered a cash transaction unless a financing supplement is provided.
  • Buyer provides earnest money within three days of contract execution; failure results in seller cancellation of the contract.

Time Periods

  • The contract's effective date begins the day after the Time Reference Date, not the signing date.
  • Verify deadlines based on this reference date.

Inspections and Repairs

  • Buyer has a specified time for inspections and reviews.
  • If inspections are unsatisfactory, buyer can cancel the contract.
  • A Treatments, Repairs, and Replacements (TRR) form is used to request repairs from the seller.
  • Defects are conditions materially affecting property value.
  • Both parties negotiate repairs; the seller completes agreed-upon repairs before closing.
  • If no agreement, the contract is terminated, and earnest money is refunded.

Title Requirements

  • Buyer pays for title opinion or insurance.
  • Seller provides title evidence (abstract or title insurance) within 30 days before closing.
  • Buyer may have a land survey or mortgage inspection.
  • Buyer has 10 days to review title evidence and notify of objections.
  • The contract allows the seller to resolve title issues.
  • If title issues can't be resolved, the buyer may cancel and get their earnest money back.

Taxes and Prorations

  • Tax prorations, seller responsibilities, and handling property leases are included.
  • Utility districts, HOAs, and special taxing districts are also covered.

Residential Service Agreements

  • Existing service agreements can be transferred or the buyer can purchase new coverage.
  • Brokers may receive a fee.

Additional Provisions

  • Allows inclusion of items not already covered.

Mediation

  • Mediation is a process where parties use a third party to resolve disputes, often on financial matters.
  • Mediation is voluntary, and agreement is voluntary.

Choice of Law and Forum

  • Oklahoma law governs the contract.
  • Oklahoma state or federal courts handle disputes.

Breach and Failure to Close

  • Party breach occurs when they violate a material covenant.
  • Failure to meet deadlines results in an incurable breach.
  • Seller can retain up to 5% of purchase price in case of buyer breach.
  • If buyer fails to deliver earnest money, provisions allow for cancellation.

Expenses and Earnest Money

  • Parties cover their own expenses, unrelated to earnest money.
  • Earnest money isn't used to cover expenses.
  • Clear instructions for earnest money return if contract is terminated.

Party Authorization

  • Any item received by a broker is considered received by the party.

Non-Foreign Seller Disclosure

  • Seller must confirm not a foreign person (FIRPTA).
  • If sale exceeds $300,000 or not primary residence, a seller affidavit is needed.
  • Affidavit confirms non-foreign status, including US SSN or Tax ID.
  • This affidavit is required at closing.

Execution and Termination

  • Parties sign and date to acknowledge the contract.
  • Offers are valid until either accepted or terminated by the buyer.
  • Seller rejection is noted.

Earnest Money Form

  • A new form specifically addresses Earnest Money handling.

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