We identify these two contacts, explore their pros and cons and give our recommendation of the two.
Let’s examine the differences between utilizing a Texas Real Estate Commission, otherwise known as TREC Farm and Ranch contract, versus the Texas Association of Realtors, otherwise known as TAR Commercial Unimproved Property contract. There are some slight differences between these contracts which could have large implications to you when purchasing property.
Some of the advantages of the TAR contract:
First and foremost, is regarding the earnest money. It has a provision that allows the buyer to instruct the title company to place the earnest money in an interest bearing account with a federally insured institution.
It also talks about estoppel certificates which we covered in a previous video.
Another advantage that I like with the TAR contract is it allows you to utilize a special warranty deed versus a general warranty deed which we will cover in a future video.
Some of the disadvantages of the TAR contract:
It really isn’t written in a way that acts as if structures are on the property. So, certain things such as farm and ranch accessories or residential accessories conveying to the buyer you would need to add that in the special provisions.
But, I think the biggest pitfall of the TAR contract is that it says Commercial Property contract. Sometimes sellers will think that their property is worth more because you’re using a commercial contract or that maybe you’re trying to pull the wool over their eyes and for that reason I prefer to use the TREC Farm and Ranch contract.
Usually, agents and brokers are more accustomed to this contract as well, so we prefer to use the TREC Farm and Ranch contract.
Of course, we always recommend consulting an attorney as well.
Feel free to reach out to us with questions or other topics you’d like to see covered.
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