The last page of the contract are places for the broker information, option fee receipt, and contract and earnest money receipt. End of Page 34 . Sample Real Estate Contract-TREC NO 20-13 (continued)
Print this screen, answer the questions and then advance to the next screen to see the answers. 1.What does a due-on-sale clause say? 2.If the seller of a property is a foreign person, what must the buyer do with respect to the IRS? 3. What is a licensee’s responsibility for using forms drafted by the Broker-Lawyer Committee? 4.What is a broker’s authority to prepare real estate contracts? 1.What does a due-on-sale clause say? 2.If the seller of a property is a foreign person, what must the buyer do with respect to the IRS? 3. What is a licensee’s responsibility for using forms drafted by the Broker-Lawyer Committee? 4.What is a broker’s authority to prepare real estate contracts? 35 . Check Your Understanding 36 . Check Your Understanding Answers
A broker cannot prepare any contracts unless he or she is also a licensed attorney. Brokers may only fill in the blanks on contracts approved and promulgated by the commission. End of Page An option-to-buy is an enforceable contract in which a potential seller, the optionor , grants a potential buyer, the optionee , the right to purchase a property before a stated time, for a stated price and terms. In exchange for the right of option, the optionee pays the optionor valuable consideration. For example, a buyer wants to purchase a property for $150,000, but needs to sell a boat to raise the down payment. The boat will take two or three months to sell. To accommodate the buyer, the seller offers the buyer an option to purchase the property at any time before midnight on the day that is ninety days from the date of signing the option. The buyer pays the seller $1,000 for the option. If buyer exercises the option, the seller will apply the $1,000 toward the earnest money deposit and subsequent down payment. If the optionee lets the option expire, the seller keeps the $1,000. Both parties agree to the arrangement by completing a sale contract as an addendum to the option, then executing the option agreement itself. End of Page Contract Requirements An option-to-buy places the optionee under no obligation to purchase the property. However, the seller must perform under the terms of the contract if the buyer exercises the option. An option is thus a unilateral agreement. Exercise of the option creates a bilateral sale contract
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- Fall '16