(a)When negotiating contracts binding the sale, exchange,
option, lease or rental of any interest in real property, a real estate
license holder [licensee] shall use only those contract
forms approved for mandatory use [promulgated]
by the Texas Real Estate Commission (the Commission) for that type [
kind] of transaction with the following exceptions:
(1)transactions in which the license holder is functioning
solely as a principal, not as an agent;
(2)transactions in which an agency of the United States
government requires a different form to be used;
(3)transactions for which a contract form, or
addendum to a contract form, has been prepared by a principal
to the transaction or prepared by a lawyer representing [
an attorney and required by] a principal to the transaction;
or
(4)transactions for which no mandatory [standard
] contract form or addendum has been approved [
promulgated] by the Commission, and the license holder uses
a form:
(A)prepared by a lawyer [an
attorney at law] licensed by this state, or a trade association
in consultation with one or more lawyers licensed by this state, [
and approved by the attorney] for the particular type [
kind] of transactions involved that contains: [or]
(i)the name of the lawyer or trade
association who prepared the form;
(ii)the name of the broker or trade
association for whom the form was prepared;
(iii)the type of transaction for
which the lawyer has approved the use of the form;
(iv)any restrictions on the use of
the form;
(v)a statement that the form has
not been approved by the Commission; and
(vi)a statement that Commission rules
prohibit real estate license holders from giving legal advice; or
(B)prepared by the Texas Real Estate Broker-Lawyer
Committee (the committee) and approved by the Commission [
made available] for voluntary [trial]
use by license holders [with the consent of the Commission].
(b)Subsection (a)(4)(A) does
not permit a license holder to use a form that changes the rights,
remedies or responsibilities of a principal contained in a mandatory
contract form or addendum.
(c)[(b)] A license holder may
not:
(1)practice law;
(2)directly or indirectly offer, give or
attempt to give legal advice[, directly or indirectly];
(3)give advice or opinions as to the legal effect
of any contracts or other such instruments which may affect the title
to real estate;
(4)give opinions concerning the status or validity
of title to real estate; [or]
(5)draft language defining or affecting
the legal rights, remedies, or responsibilities of the principals
of a real estate transaction, including escalation, appraisal or other
contingency clauses;
(6)add factual statements or business
details to a form approved by the Commission if the Commission has
approved a form or addendum for mandatory use for that purpose;
(7)[(5)] attempt to prevent
or in any manner whatsoever discourage any principal to a real estate
transaction from employing a lawyer; or[.]
(8)employ or pay for the services
of a lawyer, directly or indirectly, to represent a principal to a
real estate transaction in which the license holder is acting as an
agent.
(d)[(c)] This section does not
limit a license holder's fiduciary obligation to disclose to the license
holder's principals all pertinent facts that [which]
are within the knowledge of the license holder, including such facts
which might affect the status of or title to real estate.
[(d)A license holder may not undertake
to draw or prepare documents fixing and defining the legal rights
of the principals to a real estate transaction.]
[(e)In negotiating real estate transactions,
a license holder may prepare forms using only forms that have been
approved and promulgated by the Commission or such forms as are otherwise
permitted by these rules.]
(e)[(f)] It is not the
practice of law for a license holder to fill in the blanks in a contract
form authorized for use by this section. A [When filling
in a form authorized for use by this section, the license holder may
only fill in the blanks provided and may not add to or strike matter
from such form, except that a] license holder shall only add
factual statements and business details or [desired
by the principals and] shall strike text [only
such matter] as directed in writing [is desired]
by the principals [and as is necessary to conform the instrument
to the intent of the parties].
[(g)A license holder may not add
to a promulgated contract form factual statements or business details
for which a contract addendum, lease or other form has been promulgated
by the commission for mandatory use.]
(f)[(h)] This section does not
prevent the license holder from explaining to the principals the meaning
of the alternative choices, factual statements and business
details contained in an instrument so long as the license holder does
not offer or give legal advice.
[(i)It is not the practice of law
as defined in this Act for a real estate license holder to complete
a contract form which is either promulgated by the Commission or prepared
by the committee and made available for trial use by license holder
with the consent of the Commission.]
[(j)Contract forms prepared by the
committee for trial use may be used on a voluntary basis after being
approved by the Commission.]
[(k)A contract form prepared by the
committee and approved by the Commission to replace a previously promulgated
form may be used by license holders on a voluntary basis before the
effective date of rules requiring use of the replacement form.]
(g)[(l)] When a transaction
involves unusual matters that should be reviewed by a lawyer [
legal counsel] before an instrument is executed, or if the instrument
must be acknowledged and filed of record, the license holder shall
advise the principals that each should consult a lawyer of the principal's
choice before executing the instrument.
(h)[(m)] A [license holder
may not employ, directly or indirectly, a lawyer nor pay for the services
of a lawyer to represent any principal to a real estate transaction
in which the license holder is acting as an agent. The] license
holder may employ and pay for the services of a lawyer to represent
only the license holder in a real estate transaction[, including
preparation of the contract, agreement, or other legal instruments
to be executed by the principals to the transactions].
(i)[(n)] A license holder shall
advise the principals that the instrument they are about to execute
is binding on them.
(j)[(o)] Forms approved [or
promulgated] by the Commission may be reproduced only from the
following sources:
(1)[numbered copies obtained from the Commission,
whether in a printed format or] electronically reproduced from
the files available on the Commission's website;
(2)printed copies made from copies obtained from the
Commission [commission];
(3)legible photocopies made from such copies; or
(4)computer-driven printers following these guidelines:
(A)The computer file or program containing the form
text must not allow the end user direct access to the text of the
form and may only permit the user to insert language in blanks in
the forms. Blanks may be scalable to accommodate the inserted language.
The Commission may approve the use of a computer file or program that
permits a principal of a license holder to strike through language
of the form text. The program must be:
(i)limited to use only by a principal of a transaction;
and
(ii)in a format and authenticated in manner acceptable
to the Commission.
(B)Typefaces or fonts must appear to be identical
to those used by the Commission in printed copies of the particular
form.
(C)The text and order of the text must be identical
to that used by the Commission in printed copies of the particular
form.
(D)The name and address of the person or firm responsible
for developing the software program must be legibly printed below
the border at the bottom of each page in no less than six point type
and in no larger than 10 point type.
(k)[(p)] Forms approved or promulgated
by the Commission must be reproduced on the same size of paper used
by the Commission [commission] with the following
changes or additions only:
(1)The business name or logo of a broker, organization
or printer may appear at the top of a form outside the border.
(2)The broker's name may be inserted in any blank
provided for that purpose.
(l)[(q)] Standard Contract Forms
adopted by the Commission are published by and available from the
Commission at P.O. Box 12188, Austin, Texas 78711-2188 or www.trec.texas.gov.
The agency certifies that legal
counsel has reviewed
the proposal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office
of the Secretary of State on August 11, 2017
TRD-201703094 Kerri Lewis
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: September 24, 2017
For further information, please call: (512) 936-3092
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