A buyer and seller have signed a TREC One to Four Family Residential Contract (Resale). The buyer's loan officer informs them that their mortgage application requires additional documentation, delaying the loan approval beyond the contract's specified closing date. The buyer's agent advises them that they can likely extend the closing date without breaching the contract, thanks to a specific provision. Which provision is the agent most likely referring to?
- AParagraph 11 (Special Provisions)
- BParagraph 5 (Earnest Money)
- CParagraph 23 (Termination Option)
- DParagraph 21 (Notices)
Show answer & explanationAnswer & explanation
Correct answer: A. Paragraph 11 (Special Provisions)
While Paragraph 5 requires earnest money to be delivered within a certain time, Paragraph 11 (Special Provisions) is the section where specific, non-promulgated terms unique to the transaction can be added. A common and acceptable use of this paragraph by a licensee is to add a clause for a short extension of the closing date, provided it's factual and doesn't change legal rights.
Why the other options are wrong
- B. Paragraph 5 (Earnest Money) deals with the deposit, not extensions of the closing date.
- C. Paragraph 23 (Termination Option) provides a period for the buyer to terminate for any reason, but doesn't directly allow for extending the closing date due to loan delays.
- D. Paragraph 21 (Notices) specifies how notices must be delivered, not a provision for extending contract terms.
Paragraph 11 (Special Provisions)
A section in TREC-promulgated contracts where factual statements or business details pertinent to the transaction may be inserted by a licensee, provided they do not change the legal rights or obligations of the parties. It is not for adding legal advice.
- For factual statements only
- Cannot change legal rights
- Commonly used for short extensions
Memory trick: Special Provisions for those special little delays.