Texas Real Estate Sales Agent ExamContractsEasy
A buyer is interested in purchasing a property but wants to ensure they have the right to inspect it thoroughly, obtain financing, and receive a clear title before being fully committed. Which clause in the TREC One to Four Family Residential Contract (Resale) allows the buyer to terminate the contract if these conditions are not met?
- AParagraph 11 (Special Provisions)
- BParagraph 6C (Survey)
- CParagraph 23 (Termination Option)
- DParagraph 7D (Condition of Property)
Show answer & explanationAnswer & explanation
Correct answer: C. Paragraph 23 (Termination Option)
Paragraph 23 of the TREC One to Four Family Residential Contract (Resale) outlines the buyer's right to terminate the contract within a specified option period for any reason, typically in exchange for an option fee. This provision directly addresses the buyer's desire for contingencies like inspections and financing.
Why the other options are wrong
- A. Paragraph 11 is for factual statements and business details not covered elsewhere in the contract, not for a general right to terminate.
- B. Paragraph 6C addresses survey requirements, which is a specific condition, but not the overarching termination right for multiple contingencies.
- D. Paragraph 7D deals with the buyer's acceptance of the property's condition and repairs, not the right to terminate for general contingencies.
Termination Option (TREC 1-4 Contract)
A provision in the TREC One to Four Family Residential Contract (Resale) that allows the buyer to terminate the contract for any reason within a specified option period, typically for an option fee.
- Requires an option fee paid by the buyer.
- Must be exercised within a specific timeframe (option period).
- Buyer receives a refund of earnest money upon termination.
Memory trick: Options Offer Open Exits for Buyers.