When not to use the One to Four Family contract
11/10/2014 | Author: Editorial Staff
My client’s listing is a home on a 15-acre tract. A buyer’s agent submitted an offer for his client on the One to Four Family Residential Contract (Resale). My client is concerned that the residential form won’t address the outstanding mineral interests, but the buyer’s agent says he often uses this form for situations such as this and his client is OK with using that contract. Does the use of that form instead of the Farm and Ranch Contract make any difference?
Yes. Paragraph 6 of the Farm and Ranch Contract (TAR 1701, TREC 25-10) has specific language that deals with outstanding mineral interests that would be an exception to title in the owner's title policy and in any deed to the property. The Farm and Ranch Contract also covers outstanding surface leases, and any farm and ranch improvements and accessories that might be involved in this sale.
A buyer interested in purchasing the property even when mineral interests have already been conveyed to or reserved by another person can list the exception documents in the offer. The seller can provide documents that contain or reserve those mineral interests to any prospective buyer to list in Paragraph 6. When listed, those interests would be acknowledged by the parties and not subject to objection by the buyer during title commitment review.
To ensure the buyer and the seller have a meeting of the minds about the nature of the title to the property and the outstanding mineral interests, the seller could provide the appropriate documents to the buyer and require the use of the Farm and Ranch Contract as a condition of accepting any offer by this buyer.
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