The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §§537.20, Standard Contract Form TREC No. 9-12; §537.28, Standard Contract Form TREC No. 20-13; §537.30, Standard Contract Form TREC No. 23-14; §537.31, Standard Contract Form TREC No. 24-14; §537.32, Standard Contract Form TREC No. 25-11; §537.37, Standard Contract Form TREC No. 30-12; new §537.55, Standard Contract Form TREC No. 48-0 and new §537.56, Standard Contract Form TREC No. 49-0, in Chapter 537, Professional Agreements and Standard Contracts.

Texas real estate license holders are generally required to use forms promulgated by TREC when negotiating contacts for the sale of real property. These forms are drafted and recommended for adoption by the Texas Real Estate Broker-Lawyer Committee, an advisory body consisting of six attorneys appointed by the President of the State Bar of Texas, six brokers appointed by TREC, and one public member appointed by the governor.

The Broker Lawyer Committee recommended revisions to the contract forms adopted by reference under the proposed amendments and new rules to Chapter 537 to address issues that have arisen since the last contract revisions.

The changes listed below apply to all contract forms unless specified otherwise. Paragraph numbers referenced are from the One to Four Family Residential Contract (Resale).

Paragraph 2 is amended to clarify that any reservations of mineral rights must be done in a separate addendum.

Paragraph 5 is amended to require Earnest Money to be delivered within 3 days of the Effective Date. If the 3rd day falls on a Saturday, Sunday or legal holiday, the earnest money is due on the next day that is not a Saturday, Sunday or legal holiday. Seller may terminate the contract if buyer fails to timely deliver the Earnest Money and time is made of the essence for this paragraph.

"Effective Date" is made a defined term throughout the contracts but is still tied to the final date of acceptance provided on the signature page.

Paragraph 6A(9) is amended to include an exception for minerals as approved by the Texas Department of Insurance.

Paragraph 6B the phrase "due to factors beyond Seller's control" is removed from the sentence allowing Buyer to terminate the contract if the Commitment and Exception documents are not timely received.

Paragraph 6D is amended to define the time by which seller is to cure objections as the "Cure Period", provide a specific time frame by which the buyer must notify the seller that the buyer will terminate or waive the objections if the objections are not cured within the Cured Period, and address additional time periods for the buyer to object and the seller to cure if a revised commitment, revised survey, or updated exception documents are provided.

Paragraph 20 is amended to clarify what is meant by "applicable law" and an "affidavit" when seller is a "foreign person."

The space for fax numbers were removed from the Broker Information page and a space for phone numbers for the brokers were added.

Separate receipt boxes were added to the forms for Earnest Money, the Contract and Additional Earnest Money.

Paragraph 2B(2) and 2C (Condominium Contract Only) is amended to clarify that the seller bears the expense to deliver the condominium documents and the resale certificate to buyer.

Paragraph 2F. Reservations (Farm and Ranch Contract Only) is amended to strike the parenthetical stating that reservations may be included in special provisions (suggesting that reservations are to be addressed only in a properly drafted addendum).

A new addendum is proposed to address who pays for and is responsible for damages from a hydrostatic test, if the parties agree to have one performed.

A new addendum is proposed to address the situation where the parties create a contingency to the contract based on the appraisal performed by the lender and termination rights or waiver associated with that contingency.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments and new rules are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses, rural communities, or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments and new rules.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater clarity in the standard contract forms and greater consistency and consumer protection for the newly proposed addenda.

For each year of the first five years the proposed amendments and new rules are in effect, the amendments and new rules will not:

• create or eliminate a government program;

• require the creation of new employee positions or the elimination of existing employee positions;

• require an increase or decrease in future legislative appropriations to the agency;

• require an increase or decrease in fees paid to the agency;

• create a new regulation;

• expand, limit or repeal an existing regulation;

• increase or decrease the number of individuals subject to the rules' applicability;

• positively or adversely affect the state's economy.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments and new rules are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by these amendments and new rules are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the amendments and new rules.