I’ve been hearing a lot from agents lately about two different issues regarding the contract, the one to four family resale contract, both of which are incorrect misconceptions.
The first one is regarding the executed date. The common misconception in the agent world is that the executed date shall be written in as soon as the buyers have completely initialed and signed the contract, the sellers have completely initialed and signed, and then the agent puts in the executed date. That is actually incorrect.
A valid, enforceable contract is not in place until it has been executed and execution has been communicated to the other agent. The executed date, the effective date of a contract, is not the date that all signatures and initials are put in place unless it is communicated to the other agent, to the other party, that same day.
If you complete a contract, everybody’s initialed and signed everything, and it’s 11 o’clock at night, but you don’t communicate acceptance and execution until 10 o’clock the next morning, that’s the executed date.
Another very common misconception is that if the buyer fails to deliver earnest money to the title company, or is tardy in delivering that earnest money, that that does not constitute an executed and valid and enforceable contract.
Incorrect. They are two separate things.
In fact, earnest money is not even required in the state of Texas for a valid, enforceable contract.
Now, the Texas Real Estate Commission this year just put in a new caveat in the contract regarding earnest money; that the buyer must deliver the earnest money within three days of the executed date.
These are not business days; these are calendar days. So, if the contract is executed on Thursday, then the first day is Friday, the second day is Saturday, the third day is Sunday, which means the deadline moves to Monday. So, if the third day falls on a weekend or a national holiday, it rolls over to the next business day.
Listen, here at All City Real Estate we’re big believers in a collaborative agent world. A world where information and knowledge can cross over broker boundaries, such that we’re all better agents; we’re all a better fiduciary for our clients at the highest possible level.