Contract Comparisons

Contract Comparisons

© 2023 Independence Title Education

Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

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Did you know…? promulgates 6 residential contracts.

One to Four Family

Condo

Unimproved

Farm & Ranch

New Home (Incomplete)

New Home (Complete)

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Did you know…?

provides lease forms, commercial forms, and representation agreements.

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Want to know more..?

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Agenda o Condo Contract vs. One to Four Family Contract o Unimproved Property Contract vs. One to Four Family Contract o Farm & Ranch Contract vs. One to Four Family Contract

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Condo Contract vs. One to Four Family Contract There are 23 paragraphs in the Condo Contract and 23 paragraphs in the One to Four Family Contract. How many paragraphs are different?

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Paragr aph 2

Paragraph 2- Property and Condo Documents VS. How is this paragraph different from the One to Four Family?

• Identifies the condo unit, common elements, limited elements, parking areas.

• Requires the Seller to deliver the HOA resale cert and documents to the buyer.

• Addresses right of first refusal issues.

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Paragraph 4- Leases How is this paragraph different from the One to Four Family?

• The Condo Contract does not have section C regarding lease of natural resources because the Seller would not own any type of land resources in a condo scenario. rap

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Paragraph 6

Paragraph 6- Title Policy How is this paragraph different from the One to Four Family?

• The Condo Contract does not include: • The survey section.

• The additional option to amend the area and boundaries survey exception.

• The option to select if the property is or isn’t in an HOA. It's assumed that it is in one.

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Paragraph 12- Settlement and Other Expenses: How is this paragraph different from the One to Four Family?

• Number 3 addresses HOA fees. This is done in the HOA addendum for the 1-4.

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Paragraph 13- Prorations 13 How is this paragraph different from the One rto aphFour Family? g a • Condo assessments are to be prorated.

Pa r • Cash reserves or capital improvements are not credited to the seller and any due must be paid by seller at closing.

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Paragraph 14- Casualty Loss How is this paragraph different from the One to Four Family?

• Conditions that allow the buyer to terminate if common elements are damaged prior to closing and the condo association fails to acknowledge repairs will be made at no cost to Buyer.

Paragraph 14

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Paragraph 22- Agreement of Parties How is this paragraph different from the One to Four Family?

The Condo Contract does not include: • Addendum for Property Subject to Mandatory Membership in a POA 22 h p a • Addendum for Reservation of Oil, Gas, gr and Other Minerals Pa

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When to use the Condo Contract •

If the legal description is NOT lot and block.

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When the legal description contains a % interest.

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Check with the lender.

UNT 3940 BLD C CHIMNEY OAKS TOWNHOUSES PLUS 6.125 % INT IN COM AREA

Condo

Not a Condo

LOT 70A LAKEWOOD VILLAGE AMENDED PLAT OF LOTS 70&71 BLK F

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Unimproved Property Contract vs. One to Four Family Contract There are 23 paragraphs in the Unimproved Property Contract and 23 paragraphs in the One to Four Family Contract. How many paragraphs are different?

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Paragraph 2

Paragraph 2- Property VS.to Four Family?

How is this paragraph different from the One • No A,B,C,D breakdown. There are no improvements, accessories, or exclusions.

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Paragraph 4- Leases VS. How is this paragraph different from the One to Four Family?

• No reference to residential or fixture leases because that would not apply to unimproved property. g ra

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Paragraph 6- Title Policy and Survey How is this paragraph different from the One to Four Family?

• Must select if the property is or is not located in a Texas Ag Development District. www.texasagriculture.gov

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Paragraph 7- Property Condition How is this paragraph different from the One to Four Family?

• No Seller’s Disclosure Notice section (B of the 1-4) • No lead-based paint disclosure (C of the 1-4) • No lender required repairs and treatments (E of the 1-4) • No residential service contract (H of the 1-4) • The Unimproved Property Contract includes: • Section E – Seller’s Disclosure, which allows the seller to indicate whether the seller is or is not aware of certain items pertaining to the property.

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Paragraph 10- Possession How is this paragraph different from the One to Four Family?

• No option for a temporary leaseback.

• No section B. Smart Devices.

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Paragraph 13- Prorations & Rollback Taxes How is this paragraph different from the One to Four Family?

• If the sale or Buyers change of use to the property triggers roll back taxes/assessments, the buyer is responsible for payment.

• If seller changes use of the property and triggers roll back taxes/assessment, seller is responsible for payment.

• The listing agent should request, at the time of listing, a letter from the appraisal district stating which usage is qualifying the seller.

• The buyer’s broker/agent should request this letter during the option period. rag

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Paragraph 22- Agreement of Parties Paragraph 22 How is this paragraph different from the One to Four Family?

The Unimproved Property Contract does not include: • Shot Sale Addendum • Lead Based Paint Addendum • Residential Lease Addendum • Fixture Lease Addendum

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When to use the Unimproved Contract

NO IMPROVEMENTS

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Farm and Ranch Contract vs. One to Four Family Contract There are 23 paragraphs in the Farm & Ranch Contract and 23 paragraphs in the One to Four Family Contract. How many paragraphs are different?

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Paragraph 2

Paragraph 2- Property How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: A- Defines “land” B- Improvements include windmills, tanks, barns, pens, fences, gates, sheds, outbuildings, and corrals.

C- Only items selected will convey to the buyer.

D- Seller has the right to harvest all growing crops until closing/possession.

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Paragraph 3- Sales Price How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • The option to select if the sales price “will” or “will not” adjust based on a survey.

• If “will” is selected, parties agree to the per-acre price during initial contract negotiations. ph 3 ragra a P • If the sales price changes more the 10%, either party may terminate.

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Paragraph 4- Leases: How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • 4 D. Surface Leases (ex) grazing leases, hunting leases, recreational leases…

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Paragraph 6

Paragraph 6- Title Policy and Survey How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • Option box to not require a survey.

• Seller to provide buyer exception documents listed in this section prior to execution of contract.

• Items will be exceptions to title policy and cannot be objections to title.

• Seller must provide Buyer with copies of written and oral leases prior to execution of the contract.

• All leases will be exceptions to title insurance and cannot be objections to title.

• Must select if the property is or is not located in a a Texas Ag Development District. www.texasagriculture.gov

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Paragraph 7- Property Condition How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • Section H – Seller’s Disclosure, which allows the seller to indicate whether the seller is or is not aware of certain items pertaining to the property.

• The best practice is for all parties to tour the property together.

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Paragraph 13- Rollback Taxes How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • If the sale or Buyers change of use to the property triggers roll back taxes/assessments, the buyer is responsible for payment.

• If seller changes use of the property and triggers roll back taxes/assessment, seller is responsible for payment.

• The listing agent should request, at the time of listing, a letter from the appraisal district stating which usage is qualifying the seller.

• The buyer’s broker/agent should request this letter during the option period.

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Broker Information

Broker Information & Agreement for Payment of Brokers’ Fees How is this paragraph different from the One to Four Family?

The Farm & Ranch Contract includes: • An option to be used when a listing agreement is NOT in place.

• Many farm and ranch deals are “handshake deals” or “pocket listings”.

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When to use the Farm & Ranch Contract •

It’s based on improvements, not acreage.

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Look at tax exemptions.

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MLS might have different rules.

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Check with the lender.

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Now you know!

Condo

Unimproved One to Four Family

Farm & Ranch

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