TREC TREC Contract Forms 2 — Questions and Answers
Question 1: The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association is required when:
- The property is in a flood zone
- The property is subject to mandatory HOA membership (Correct answer)
- The buyer is financing with FHA
- The seller has a lien on the property
Correct answer: The property is subject to mandatory HOA membership
This addendum must be attached whenever the property is subject to mandatory membership in a homeowners or property owners association.
Question 2: In a TREC contract, 'closing' is defined as:
- The day the buyer's loan is approved
- The date the deed and other closing documents are recorded (Correct answer)
- The date the seller vacates the property
- The date the earnest money is deposited
Correct answer: The date the deed and other closing documents are recorded
Under Texas contracts, closing occurs when the deed and other required closing documents are filed and recorded in the county records.
Question 3: Which TREC form is used for the sale of unimproved (vacant) lots in a residential subdivision?
- TREC Form 9-13
- TREC Form 25-14 (Correct answer)
- TREC Form 38-7
- TREC Form 1-4
Correct answer: TREC Form 25-14
TREC Form 25-14 (Residential Condominium Contract) is for condos, while vacant lots in residential subdivisions use Form 9-13.
Question 4: What is the purpose of the TREC Seller's Disclosure Notice?
- To list the property's current market value
- To inform the buyer of known material defects and conditions of the property (Correct answer)
- To authorize the listing agent to advertise the property
- To waive the buyer's right to an inspection
Correct answer: To inform the buyer of known material defects and conditions of the property
The Seller's Disclosure Notice requires sellers to disclose known material defects and conditions that could affect the property's value or desirability.
Question 5: Under a TREC contract, if the seller fails to complete agreed repairs before closing, the buyer may:
- Only accept the property as-is
- Terminate and receive the earnest money back, or accept the property with a credit (Correct answer)
- Sue the seller for double damages automatically
- Delay closing indefinitely
Correct answer: Terminate and receive the earnest money back, or accept the property with a credit
If the seller fails to complete agreed repairs, the buyer can terminate the contract and recover earnest money or accept the property with a negotiated credit.
Question 6: The 'Survey' section of a TREC residential contract typically requires:
- The buyer to pay for a new survey in all cases
- Delivery of an existing survey or a new survey within a specified number of days (Correct answer)
- The seller to always provide a brand-new survey
- No survey if the property is under 1 acre
Correct answer: Delivery of an existing survey or a new survey within a specified number of days
The contract allows parties to agree whether to use an existing survey or obtain a new one, with delivery required within the agreed timeframe.
TREC TREC Contract Forms 2
The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association is required when: