Contract tips from the MetroTex Forms & Contracts Committee:
1. The Unrestricted Right to Terminate Option time period in Paragraph 23 was changed effective January 1, 2016, to 5:00 pm on the last day of the option period, per the contract terms, in the time zone the property is located.
2. TAR form #1926, “Seller’s Invitation To Buyer To Submit New Offer” is available for use by Sellers that do not wish to “counter” offer(s), but want to encourage the Buyer(s) to continue negotiations. Consult your Broker or Manager for proper use of this form.
3. MLS Status TIP: There are three (3) flags that appear on an Active (ACT) Listing, and remain there for 5 days: “$” means there is a price change; “B” indicates the listing is Back on the Market; “N” indicates a New Listing.
4. In Paragraph 6D, Objections, it is a good idea to consult a real estate attorney for appropriate language to insert if the Buyer intends, or is considering, tearing down the current structure and rebuilding. There could be restrictions the Seller and/or Buyer are unaware of.
5. MetroTex form, “Notice of Withdrawal of Offer” is available for use by members. It will function for either the Buyer or Seller wishing to withdraw their offer or counteroffer, prior to acceptance by the other party. Consult your Broker or Manager prior to using this form. It is in the MetroTex library of ZipForms.
6. MLS Status Tip: Active Contingent (CON) means the Seller has accepted an offer, but has requested the property remain available for showings, and Seller will entertain back-up offers. This status may be used in any situation and is not tied to a specific contingency in the Contract. Ask the Listing Agent before you show.
7. General Information and Notice to Buyers (TAR1506) is an excellent form to provide to all buyers – not just first-time buyers! It contains a wealth of valuable information about appraisal, environmental concerns, inspections, home owner associations, mineral interests, property insurance, residential service contracts, termination option…and more!! (Your find this in the TAR library on ZipForms.)
8. TREC has six (6) Promulgated contract forms. Please be sure you are using the correct form for the type of property: 1-4 Family Residential is for 1-4 UNITS; condominium contract form has specific condo requirements. Do not use the 1-4 Family for condos! Unimproved is for vacant land, whether a lot in a subdivision or many acres with no structures on it; New Construction has 2 forms; Complete (ready to move in!) and Incomplete (which can be anything from “dirt” with a build job to not-quite-finished). Farm and Ranch has very specific provisions for those properties. USE THE CORRECT FORM!
9. MLS Status Tip: Active Option Contract (OPT) means the Seller has accepted an offer and the Buyer is exercising the Unrestricted Right to Terminate Option in Paragraph 23 of the Contract. The property is available for showings and back-up offers.
10. Paragraph 21 calls for the contact information of the Principals to the Contract, meaning Buyer and Seller, NOT the Listing or Selling Agent.
11. Most title companies are not able to provide copies of earnest money checks due to regulations about redacting the bank information on the checks. A good business practice for all real estate professionals would be to blackout the account number and routing number on copies of checks before they are sent to other parties, such as listing agents, etc.
12. MLS Status Tip: Active Kick Out (KO) means the Seller has accepted an offer contingent on Sale of Other Property by Buyer, and the property is available for showings and Back-Up offers. There is a “Kick-Out” time period for the Buyer to waive their contingency. Good idea to check with the Listing Agent before showing!
13. Paragraph 4 of the revised contract forms, effective January 1, 2016, calls for disclosure of a relationship between the license holder and “spouse, parent or child,” or business entity in which the license holder owns more than 10%, or a trust where the license holder is a trustee. Be sure you read this paragraph carefully and make all appropriate disclosures.
14. Paragraph 7-F, Completion of Repairs and Treatments, states “unless otherwise agreed to in writing…. Repairs and treatments must be performed by persons who are licensed to provide such repairs or treatments, or if no license is required by law, are commercially engaged in providing such repairs and treatments.” SELLERS MAY NOT MAKE REPAIRS THEMSELVES UNLESS BUYER HAS AGREED IN WRITING!!
15. MLS Status Tip: Pending (PND) means the Seller has accepted an offer, the property is not available for showings, and the Seller will not entertain Back-Up offers.
16. There is no provision in the contract for an “automatic extension” of closing delays for lender or title company (TRID) issues. If the closing is being delayed past the date in Paragraph 9, an amendment to extend the closing date is required, signed by the parties.
17. Buyer should give Seller a specific time for submitting repair receipts, at least 5 days prior to closing date, so that no delays will be incurred. If buyer is having property re-inspected prior to closing, that should also be scheduled several days prior to closing. Any changes to the closing documents will require at least a 3-day delay.
18. MLS Status Tip: Withdrawn (WTH) means that based on the terms agreed to between the Seller and Listing Broker in the Termination of Listing form (TAR-1410), the property is no longer available for showings. Due to the conditions agreed to in the Termination of Listing, the property cannot be listed with another broker. The listing will expire on the original expiration date entered into the MLS.
19. Explain to Sellers at time of listing that any known inspections by buyers who do not close will have to be disclosed to subsequent buyers. This alleviates the need for that discussion at a later time.
20. When the Buyer notifies the Seller they are exercising their unrestricted right to terminate under Paragraph 23, the notification should include the Release of Earnest Money form for the title company to release the funds.
21. When the Buyer is specifying the POA/HOA be provided by the Seller during the Option period, and this requires an additional “rush” fee be paid to the Association, there should be a statement with the provision of who is going to pay that additional fee, the Seller or Buyer, and the amount of the fee to be paid.
22. MLS Status Tip: Temp Off Market (TOM) means the Seller has a reason not to show the property for a period of time, and is still in a Listing Agreement with the Broker. There can be various reasons for not showing the home, such as illness, remodeling, etc. THIS IS A TEMPORARY STATUS, and should not be used in place of Cancelled or Withdrawn statuses.
23. Advise Sellers that they will be required to pay the POA/HOA Resale Certificate and Subdivision Information fees at the time of contract, not at closing.
24. The Listing Agent should contact the POA (aka HOA) to obtain information regarding fees, procedures, time required to get Subdivision Information and Resale Certificate, etc AT TIME OF LISTING THE PROPERTY!! This will save time and stress when an offer comes in!
25. MLS Status Tip: Expired (EXP) means the listing has expired and the property was not sold. If the property is re-listed within 31 days, Cumulative Days On Market (CDOM) will display the combined days on market (DOM) for the current and prior listing, or listings.
26. Most POA/HOA fees paid by the Seller are good for 60-90 days – check with the POA/HOA for confirmation.
27. DO NOT DELIVER THE OPTION FEE TO THE TITLE COMPANY!! The Option Fee goes to the Listing Agent/Broker to be transmitted to the Seller. The Title Company cannot – and should not – accept the option fee!
28. MLS Status Tip: Sold (SLD) means title to the property has been transferred to a new owner and all photos will remain in MLS indefinitely. After 30 days all documents will be purged from MLS.
29. An additional Option Fee is required to extend the option. It must be delivered to the Listing Agent/Broker or Seller, and must be receipted to confirm delivery.
30. If a property will not qualify for FHA or VA financing, note that fact in the MLS – and don’t check VA or FHA financing.
31. MLS Status Tip: Look at History in MLS to fully understand a property’s entire history. Days on Market (DOM) is calculated from the list date through the “off market” date, at the change to Pending (PND), Sold (SLD), Expired (EXP), Withdrawn (WTH), Temporarily Off Market (TOM), or Cancelled (CAN) status. A property could be on the market one day, Pending or Temporarily Off the Market for 30 days, and back on the market showing a DOM of one day!
32. If you have a legal question, call the TAR Legal Hotline; 800-873-9155. Want more information on current topics? Visit the “Advice for Realtors” blog at texasrealestate.com/our-blogs.
33. MLS Status Tip: All pictures, other media, and listing data remain on file indefinitely for all listing statuses, except Expired (EXP) and Cancelled (CAN). When in Expired or Cancelled status, all media is purged after six months and listing data is purged after 3 years.
34. Make sure the prospective purchaser of a house built before 1978 receives a copy of the pamphlet, “Protect Your Family From Lead-Based Paint in Your Home.” It is the Realtor’s responsibility to comply with this federal law! It is available on ZipForms.
35. If a buyer of a home built before 1978 is contemplating remodeling or renovations, advise them to consult an EPA-certified contractor, per the Renovation Repair Program.
36. MLS Status Tip: Cumulative Days On Market (CDOM) is calculated by adding the Days on Market (DOM) from a previous listing with the DOM of the current listing when the break between listings is less than 31 days.
37. Use the Information About Property Insurance for a Buyer or Seller form (TAR 2508) to assist the Seller in accurately completing the Seller’s Disclosure regarding the importance of disclosing previous damage and insurance claims, and the CLUE report.
38. When representing a buyer making an offer on a condominium, USE THE TREC PROMULGATED CONTRACT FORM FOR CONDOMINIMUMS (TREC No. 30-12, dated 11-2-2015).
38. MLS Status Tip: The calculation for Days On Market (DOM) continues to accrue if the status is Active (ACT), Active Option (OPT), Active Contingent (CON), and Active Kick Out (KO).
39. Confirm that Buyer and/or Seller know the HOA transfer fees and assessments prior to negotiating a contract. The Listing Agent should get this information from the HOA/POA.
40. There are 11 statutory exceptions to the requirement for the Seller to complete a seller’s disclosure of property condition for the buyer. They do NOT include, “never lived in the house” as some investors will tell you!! Know what the exceptions are!
41. MLS Status Tip: Days On Market (DOM) is calculated from the list date through the off-market status change. If Pending (PND) or Temporarily Off the Market (TOM) status is changed back to one of the Active statuses, Days on Market is less than the calendar days on the market by the number of days the property was in an off-market status.
42. There are several versions of a seller’s disclosure – your broker will advise which one to use, or the seller may choose the one they prefer. The form that is approved by TREC meets the minimum basic statutory requirements of the Property Code.
43. In Paragraph 6-D, Objections, it is not necessary, nor advised, to enter the clause, “single family residential use” in the blank after “or which prohibit the following use or activity…”
44. If the buyer wishes to add language to the offer regarding the buyer’s willingness to pay above appraised value, an attorney should be consulted to draft the language according to the intent of the parties in that specific transaction. AVOID THE UNLAWFUL PRACTICE OF LAW!!
45. All executed Listing Agreements, Leases and Sales Contracts, including terminated agreements, are to be retained by the Broker for 4 years, per TREC. This does not apply to Buyer Representation Agreements.
46. In addition to the 6 TREC Promulgated contract forms, there are 4 contract forms provided by TAR for the voluntary use of Realtors when appropriate to the proposed transaction: New Residential Condominium Contract (complete construction), TAR-1608; New Residential Condominium Contract (incomplete construction), TAR-1609; Commercial Contract – Improved Property, TAR-1801; Commercial Contract – Unimproved Property, TAR-1802.