TREC TREC Contract Forms 3

Question 1

What happens to the earnest money if a buyer defaults under a TREC contract?

Accepted Answer

It may be retained by the seller as liquidated damages

Answer

It is automatically returned to the buyer

Answer

It must be split equally between buyer and seller

Answer

It is refunded minus inspection costs

Question 2

The TREC Addendum for Back-Up Contract is used when:

Accepted Answer

A secondary offer is accepted contingent on the failure of a prior contract

Answer

The first contract falls through

Answer

Both parties want to add additional conditions

Answer

The property has two separate owners

Question 3

Under TREC promulgated forms, who typically pays the title policy premium in a Texas residential resale transaction?

Accepted Answer

The seller pays by default, but it is negotiable

Answer

Always the buyer

Answer

Always the seller

Answer

Split equally between buyer and seller by law

Question 4

What must a licensee do if a TREC promulgated form does not contain a provision needed for a transaction?

Accepted Answer

Use a Special Provisions paragraph or attach an attorney-drafted addendum

Answer

Create a custom addendum themselves

Answer

Leave a blank space in the form

Answer

Refuse to use the form

Question 5

The TREC Farm and Ranch Contract is used for:

Accepted Answer

Properties used for agricultural purposes, including farm/ranch land

Answer

Any property with a pool or outbuildings

Answer

Properties in rural counties only

Answer

Commercial multi-family properties

Question 6

If a buyer exercises the option period termination right, who receives the option fee?

Accepted Answer

The seller retains it regardless of outcome

Answer

The buyer receives it back

Answer

It is applied to the purchase price at closing

Answer

The broker keeps it as a commission