Texas 1-4 Unit Contract Explained
This is the most commonly used contract that real estate agents in Austin use to bid on a single family home.
Today we're looking at the one of four-family residential contract, this is a contract that we use probably the most in our businesses at Spyglass Realty and I'm going to go over the parts of this contract that are most pertinent to the terms you're going to want to look at.
So, we're not even going to go over anything that can't be changed, the exclusions this would be something like if you will have had a chandelier that you want to take with you or some kind of appliance that you wanted to take.
That would need to go right there, cash portions would be the down payments if you're looking at a contract right now that you have received for your listing. The down payment would go right there and then the sells prices on this one right here.
The earnest money would be right here and then title Policy and Survey, this box right here is the one that you're going to see most in Texas. Ninety-nine-point-five percent of contracts, the seller pays the title policy and then on this page right here it says improvements.
This is for an additional title policy, it says will be amended, we always recommend that it will be amended to read shortages in the area and that it doesn't really matter who pays. I think that the cost on this is, Sunny what is it? Yeah fifteen hundred dollars, so it's nominal.
The survey, if you check this box and they usually put about fifteen days there what this means is that if you provide them with the survey and the lender does not accept that. Then what whoever’s, whatever boxes is put a check right here has to pay for it if it's not accepted, okay.
So, this is really important just because you provide them with a survey does not mean it will necessarily be accepted. I would say most times it is but every now and then it's not and then if you just don't want to go through that at all. You put check this box within X. amount of days, the buyer will obtain a new survey.
Objections to title, this is an interesting one right here we usually put residential use and then a number of days. This is an out on the contract that most people don't really pay attention to, it can you know you can extend your due diligence. A buyer can extend their due diligence time by objecting to a title, so if you put five days right here okay.
The title policy will issue a title commitment and if the buyer wants to object to that, then that adds more time because the seller has fifteen days to either cure the objection or say that they're not going to cure it.
And anyway, I've seen that use, we were up against an option period one time and we didn't, we couldn't get in touch with a seller and a buyer objected the title just so that we could buy a couple more days. So, we recommend this be three days, it doesn't take any more than three days to review the title policy.
And H.O.A it goes right here, seller disclosure. This is an important one right here, if you put buyer has not received the notice within X. amount of days what's important this is no more than three days. But what's important is and this is why we bug our seller so much about getting us a seller disclosure.
Because if we list your home without a seller disclosure and let's say a buyer put an offer in and they put a three-day inspection period on it. Well if we deliver that seller disclosure on day three, if you'll read right here most people missed this the buyer has seven days after he receives a notice in order to review and cancel.
And the money will be refunded to the buyer so very, very important right there, this section right here is probably the worst section in the contract. I think it's very misleading it says buyer except for the property as it is and I can't tell you how many times a year I get someone call me and say, "well they bought you know they bought it as is".
No, what this means is it's either as is, in its current state as you see it or they want something specific done to the property that they've seen. So, let's say you've got an above ground pool in the backyard well, then they would put remove above-ground pool in the backyard.
That does not mean that they're mine on as is contract, because if they were buying it as is they would not need an inspection correct? Okay, so moving on a residential service contract, this is a home warranty this is paid by the seller put right here.
Possession, this is upon closing or if you hit this, if you're going to have a temporary lease back. The settlement, this is closing costs to be paid by the seller we would go in this box.
Notices the buyer and seller right here, these or any other notices and then termination, this is where the option fee goes. In other states, we don't have option periods there just inspection periods.
But in Texas, it's an option fee and that gives the buyer an unrestricted right to cancel for whatever reason they want in X. amount of days. So, they can cancel for whatever reason, it doesn't matter and then nine times out of ten or more that fee, if they do not cancel, will be credited closing. And this is just the broker information right here.