This month we wanted to focus on answering more questions that we are frequently asked. Below are a few of the most popular ones we’ve received recently.
WHAT IS THE EFFECTIVE DATE AND WHAT DATE SHOULD I PUT FOR THE EFFECTIVE DATE ON MY CONTRACT?
In a TREC contract the effective date is determined by the final date of acceptance by all parties. This date, when all parties have come to agreement and signed the contract, is when the contract becomes binding between the parties. To have final acceptance we must have four items:
- The final contract must be in writing;
- All buyers and sellers must sign the final contract, including the initialing of any handwritten changes to the initially drafted offer, if applicable;
- Acceptance must be unequivocal;
- The last party to accept must communicate acceptance back to the other party or the other party’s agent.
The effective date of the contract is the date when the last element (typically communicating acceptance to the other party) is made after the other three elements are satisfied. The final step of communication is very important to begin the timelines for performance under the contract.
I AM USING A TAR CONTRACT. THE TREC CONTRACTS PROVIDE A PLACE TO INSERT THE EXECUTED DATE OF THOSE CONTRACTS. THERE IS NO SIMILAR PLACE FOR THE BROKERS OR THE PARTIES TO INSERT SUCH A DATE IN THE COMMERCIAL CONTRACTS SO HOW DO I MARK THE EFFECTIVE DATE?
The TAR commercial contracts address the matter of the effective date in paragraph 24. According to the Texas Realtors Association, the task force working on these TAR contracts felt that because of the way that many commercial contracts are negotiated it would be appropriate to provide that the time for performance of the parties should not begin until the escrow agent receipts the contract after all parties have signed. This was done to allow for delays often experienced in commercial transactions in getting the contract to the escrow agent and to allow the parties to not have to begin performance obligations until the contract was escrowed. Unlike TREC contracts, this makes TAR contracts have an effective date of the day that the title company receipts the contract. This is an important distinction and real estate agents should be careful to make sure they know the rules for the contract they are using.
I AM REPRESENTING A BUYER USING THE ONE TO FOUR FAMILY RESIDENTIAL CONTRACT. FOR THE SURVEY REQUIREMENTS WE HAVE SELECTED PARAGRAPH 6C(1). I HAVE JUST BEEN INFORMED BY THE SELLER’S AGENT THAT THE SELLER CANNOT LOCATE THEIR SURVEY. I AM BEING TOLD THAT MY BUYER MUST PAY FOR A NEW SURVEY NOW. IS THAT CORRECT?
No. The first sentence of Paragraph 6C(1) states: “Seller shall furnish to Buyer and Title Company Seller’s existing survey.” The paragraph also states, in bold: “If Seller fails to furnish the existing survey or affidavit within the time prescribed, Buyer shall obtain a new survey at Seller’s expense no later than _____ days prior to Closing Date.” This means the seller will be responsible for the cost of a new survey if he cannot find the existing survey. This also means that if the seller failed to provide the Residential Real Property Affidavit (T-47) in the prescribed timeline they could also be charged for a new survey – even if they actually provided a copy of the survey! This paragraph requires that both the survey and the T-47 be provided to satisfy delivery requirements.
Another important point involves the information that a seller puts in the T-47 affidavit. It is very important for a seller to include all of the modifications, if any, that have been made since the date of the survey. A seller providing an inaccurate T-47, or one that omits improvements, may also end up buying a new survey since they would have failed to provide a complete T-47 in the prescribed time frame.
WHAT ARE MUNICIPAL UTILITY DISTRICT (MUD) NOTICES, AND WHERE CAN I FIND THEM?
A MUD is a political subdivision of the state that’s authorized by the Texas Commission on Environmental Quality to provide water, sewage, drainage, and other services within its boundaries. The seller is required by the Texas Water Code to provide notice to a buyer that the property is located within a MUD prior to the buyer entering into a sales contract. The notice must provide information regarding the tax rate, bonded indebtedness, and fees, if any, of the MUD. Usually, the fact that the property is within a MUD should be fairly obvious to the seller because it will be listed on the tax bill that the county sends to the property owner. However, the seller will not always know what specific type of notice to provide to the buyer based on the requirements in the Water Code. There are three different forms of notice to use so when in doubt you should ask your Texas National Title closing team to assist you in obtaining the correct form. To look up a district’s information, including the contact information for the district’s agent, use TCEQ’s online database of utility districts.
Your trusted Texas National Title escrow team can help guide you through any questions that you may have and our in-house attorney is always available to help answer your questions!