What paragraph of the contract deals with the most troublesome issues in the sale of a house and one of the larges causes of lawsuits against brokerage firms and licensees?
paragraph 7 of the contract: property conditions
Paragraph 7 of the contract discloses what?
-discloses the condition of the house, get it inspected, specify repairs, pay for repairs, and complete repairs.
-Buyer must have the Seller's Disclosure before** or during making an offer
-Three choices for Seller to give:
1. giving the notice before the contract: buyer has received the notice
2. Giving the Seller time in the contract to give the notice; buyer has not received notice. Within ___ days...; lower the better
3. Sales exempt from giving the seller's disclosure notice; seller is not required to furnish the notice under the Texas Property Code
Even after receipt, the buyer gets seven days to back out for ANY REASON, it doesn't have to have anything to do with the items disclosed on the seller's disclosure.
True
What are the 11 exemptions from the seller not providing a 5.008 Seller's Disclosure Notice?
1. Court ordered or actual courthouse sale
2. Bankruptcy trustee's sale
3. Deed in lieu of foreclosure sale
4. Resale of property a lender acquired through foreclosure
5. Probate sale; guardian, conservator ship, or trust sale
6. Co-owner sale from one co-owner to another
7. Family sale to one's spouse, children, or grandchildren
8. Divorce sale just between spouses
9. Government sale - either to or from it
10. Homebuilder sale of a home never occupied as a home
11. Land sale; a dwelling on it must be under 5% of its value
Probate
to prove; in court the will
Even if the property contract falls under the 11 exemptions of not providing a 5.008 Seller's Disclosure Notice, it is still best to for the seller (co-owner to co-owner) to give a disclosure if they know something is wrong with the property.
True; they can still be held liable
A broker/agent should not give legal advice on whether a particular sale fits an exemption or not.
true; should consult an attorney
Investor sales and corporation relo resales are not exempt from giving a seller's disclosure. Investors try to get around giving a disclosure, espically when they have multiple properties and don't know their conditions. What should the broker/agent do?
-broker/agent should not accept such reasoning, broker/agent should consider doing at least three things:
1. if condition is unknown; check the box that says unknown
2. get inspection for info
3. unless it's a foreclosure resale, none of the exemptions apply to the know nothing corporate or investor seller; get seller's attorney to write up an addendum on why seller doesn't know condition of property
The 5.008 statute does not require the seller to actually know the condition of the property to complete the disclosure form.
true; however if the seller knows something, it must be disclosed.
Subparagraph 7.C. Seller's Disclosure of Lead Based Paint and Lead-Based Paint Hazards
Seller must disclose if they know of any lead paint in the home
-Agents must attach a lead based paint addendum if it's pre-1978 construction
You are not responsible to give the buyer a "Protect Your Family fro Lead in Your Home" pamphlet.
false; by law you must give a pamphlet and if they speak spanish you give them one in spanish and one in english.
Lead-based paint rules and laws are very important for the agent to explain and comply to the seller and buyer; agent must sign off on addendum.
true
Both agents (seller and buyer) must follow through on the lead-based laws.
true
Which paragraph favors the buyer? and which favors the seller?
paragraph 23
-7.D Paragraph
Subparagraph 7.D. "As Is" sale
-this section is favorable to the seller; how buyer accepts the property on walk through; first glance.
-"As Is" check box; if buyer does not see anything; does not keep buyer from having the option and inspection done.
-"As Is" but with Few SPECIFIC Repairs; Obvious repairs buyer sees during walk through; better for simple and few repairs; more complex repairs based on inspections are addressed on an Amendment to Contract form negotiated during a paragraph 23 option period.
Subparagraph 7.E. Lender Repairs
-Appraisal repairs; what appraisal's see that needs to be repaired; either party can pay. If neither party pays or the repairs exceed over 5% of the purchase price, buyer can back out and get refunded the earnest money
-There is no limitation on what the lender wants repaired
Subparagraph 7.F. Completion of Repairs and Treatment
-Repairs have to be done by licensed contractors if a license is required; otherwise it can be a handyman job
-makes the seller responsible for arranging the repairs, unless otherwise agreed in writing.
The real estate inspector, according to the contract, will be picked by the seller and paid by the seller to do the inspection.
false; picked by the buyer and paid by the buyer; unless specified in writing
A broker or salesperson should recommend an inspector.
false; can make them liable if inspector misses something
-brokers can give a list of inspectors, but most won't because of liability
The buyer could bring in a variety of experts to inspect the property, such as licensed plumbers, electricians, carpenters and termite inspector (most lenders require).
true
Who can a buyer bring to look at foundation problems?
structural engineer; usually cost between $200-$500, but it may help save the broker, salesperson, and seller from a lawsuit; common lawsuits; push for a structural engineer if problems occur.
Structural engineers have a license that has the letters P.E. next to their name. What does P.E. stand for?
Professional engineer
A broker/agent who is also an inspector licensee can act as an agent and inspector in the same transaction.
false
The inspector licensee is restricted to inspecting in a given transaction, and may not act as the contractor who does repairs in the same transaction.
true
Inspectors do not inspect for building codes, adequate design, soil conditions, termites, flooding, internal parts of a machine or the suitability of the property for a particular use the buyer has in mind.
true; regular inspectors can point out termite damage, but it is not their expertise and is led up to termite inspectors, usually lenders require
Broker/agent should NOT go on inspections.
true; liability
Termite inspectors hold a special license issued under the Texas Structural Pest Control Act.
-true; termite inspection should be done, buyer can sue seller if they find termites; termite inspection is cheap $35-$150.
Lead inspectors have their own special license.
True: Texas Environmental Lead Reduction Rules (TELRR) certified by Texas Department of Health (TDH)
What are the four particular property condition risk areas for agents for lawsuits?
-Foundations; if problems are visible broker/agent should push for a P.E. inspector. Clay soil is hazardous to foundations; clay soil absorbs water or loses water, its volume may expand or contract greatly; uneven backyard equals poor drainage; near creeks, ponds, etc.; trees can pull water from the house; should water soil during summer to keep from soil shrinkage; not too much water; pine trees ok, root grows straight down; more info, Department of Agriculture's Soil Conservation Service; foundation repairs expensive; tend to break at corners, or between greater mass; to fix bell bottom piers may be installed (long cylindrical concrete structures; usually the most expensive out of all repairs.
-Termites; broker/agent can be in a lawsuit of a house that develops severe termite danmage after the sale; subterranean termites (live underground); all termites need water (live closer to ground or leaking roof, pipes), except drywood termites; wood looks sold from the outside, but is hollow on the inside; ants are enemies of termites; bettles (power-post beetles, furniture beetles, old house borer bettles, attack houses (hardwoods mostly); carpenter ants (look like termites); carpenter bees; treatment of termits is diging and drilling holds to spray pesticides or fumigation (tent, 16 hours or more), termites can have huge burrows; termite warrenties usually last a year and can be contiued; advoiding termits, story firewood away from house, abstrain from bark mulch bed up against the hous, decks with wooden supports, fences, stumps, wooden sheds are favorite targets.
-Flooding; lender usually check, agaents can obtain a set of FEMA maps showing areas that may flood, surveyor
-Roofs; many agents and inspectors note roof characteristics the moment they first see the house; check MLS listing is correct on roof status; if not be quiet and get inspector.
Subparagraph 7.G. Environmental Matters
-mainly for farm and ranch matters
-if there is a presence of wetlands (can come later) protection, toxic substances (near a dumpsite), asbestos material, radioactivity, black mod, must be disclosed in the Environmental Addendum
Subparagraph 7.H. Residential Service Contracts
-extended warranty; not an insurance policy; separate requested home warranty that cover the seller against unexpected breakdowns during the time after the property is listed and before it is closed and sold to the buyer, also covers the buyer after the closing against unexpected breaksdowns for a limited time; does not cover pre-existing issues; often used by builders; paid by seller at closing; cost $375-$675; just patches, no new fixtures; the key is it must be buyer's idea to buy a residential service contract, not sellers requirment; brokers should advise buyers to look into one