TREC Contract Forms Flashcards

Which entity promulgates the standard real estate contract forms used in Texas?

Answer: Texas Real Estate Commission (TREC)

TREC promulgates mandatory contract forms that licensees must use when representing parties in real estate transactions.

What is the name of the TREC form used for the purchase of a residential property with an existing structure?

Answer: TREC Form 1-4

TREC Form 1-4 (One to Four Family Residential Contract – Resale) is the standard form for purchasing existing residential properties.

Under TREC rules, when is a licensee permitted to use a form NOT promulgated by TREC?

Answer: When an attorney-drafted form is provided for a specific transaction

A non-promulgated form may be used only when it is prepared by a licensed attorney and provided for a specific transaction.

In a TREC contract, the 'Third Party Financing Addendum' is used when:

Answer: The buyer obtains a conventional, FHA, or VA loan

The Third Party Financing Addendum is attached when the buyer plans to finance the purchase through a conventional, FHA, or VA loan.

What does the 'Option Period' in a Texas TREC contract allow the buyer to do?

Answer: Terminate the contract for any reason within an agreed timeframe

During the option period, the buyer pays an option fee for the unrestricted right to terminate the contract for any reason.

How must earnest money be handled after a TREC contract is executed?

Answer: Deposited with the title company or escrow agent within the time stated in the contract

Earnest money must be deposited with an authorized escrow agent or title company within the timeframe specified in the contract.