26 . Sale Contract - Secondary Provisions 27 . Sale Contract - Secondary Provisions (continued)
Flood plain; flood insurance. Seller discloses that the property is in a flood plain and that it must carry flood insurance if the buyer uses certain lenders for financing. Condominium assessments. Seller discloses assessments the owner must pay. Foreign seller withholding. The seller acknowledges that the buyer must withhold 10% of the purchase price at closing if the seller is a foreign person or entity, and forward the withheld amount to the Internal Revenue Service. Certain limitations and exemptions apply. Tax deferred exchange. For income properties only, buyer and seller disclose their intentions to participate in an exchange and agree to cooperate in completing necessary procedures. Merger of agreements. Buyer and seller state that there are no other agreements between the parties that are not expressed in the contract. Notices. The parties agree on how they will give notice to each other and what they will consider to be delivery of notice. End of Page Time is of the essence. The parties agree that they can amend dates and deadlines only if they both give written approval. Fax transmission. The parties agree to accept facsimile transmission of the offer, provided receipt is acknowledged and original copies of the contract are subsequently delivered. Survival. The parties continue to be liable for the truthfulness of representations and warranties after the closing. Dispute resolution. The parties agree to resolve disputes through arbitration, as opposed to court proceedings. Addenda. Addenda to the sale contract become binding components of the overall agreement. The most common addendum is the seller's property condition disclosure. Examples of other addenda are: financing, back-up contract, agency disclosure, asbestos/hazardous materials, liquidated damages, radon disclosure, flood plain disclosure, tenant's lease. End of Page 28 . Sale Contract - Secondary Provisions (continued) 29 . Promulgated Contracts
As we talked about in a previous chapter, TRELA established the Texas Real Estate Broker- Lawyer Committee to draft and revise the standard contracts that licensees use. After the committee drafts or revises a form, TREC will study the form and decide whether it will approve and promulgate the forms for use by Texas licensees. Forms that have been approved are not required to be use by licensees. However, if the commission promulgates the form, then licensees must use the form in the transaction for which it was designed. Section 537.11 of the Texas Rules allows the following four exceptions to the requirement for using promulgated forms: • Transactions in which the licensee is functioning solely as a principal, not as an agent • Transactions in which an agency of the United States government requires a different form to be used • Transactions for which a contract form has been prepared by a principal to the transaction or prepared by an attorney and required by a principal to the transaction
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- Fall '16