Texas Register

TITLE 22 EXAMINING BOARDS
PART 23TEXAS REAL ESTATE COMMISSION
CHAPTER 537PROFESSIONAL AGREEMENTS AND STANDARD CONTRACTS
RULE §537.11Use of Standard Contract Forms
ISSUE 06/11/2010
ACTION Proposed
Preamble Texas Admin Code Rule

(a)When negotiating contracts binding the sale, exchange, option, lease or rental of any interest in real property, a real estate licensee shall use only those contract forms promulgated by the Texas Real Estate Commission (the commission) for that kind of transaction with the following exceptions:

  (1)transactions in which the licensee 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 has been prepared by a principal to the transaction [the property owner] or prepared by an attorney and required by a principal to the transaction; [the property owner;] or

  (4)transactions for which no standard contract form has been promulgated by the commission [Texas Real Estate Commission], and the licensee uses a form prepared by an attorney at law licensed by this state and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee (the committee) and made available for trial use by licensees with the consent of the commission [Texas Real Estate Commission].

(b)A licensee may not:

  (1)practice law,

  (2)offer, give or [nor] attempt to give legal advice, directly or indirectly; [the licensee may not act as a public conveyancer nor]

  (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)[the licensee may not] give opinions concerning the status or validity of title to real estate; or[ ; and the licensee may not]

  (5)attempt to prevent or [nor] in any manner whatsoever discourage any principal to a real estate transaction from employing a lawyer.

(c)Nothing in this section [However, nothing herein] shall be deemed to limit the licensee's fiduciary obligation to disclose to the licensee's principals all pertinent facts which are within the knowledge of the licensee, including such facts which might affect the status of or title to real estate.

(d) [(c)] A licensee 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, the licensee may fill in forms for such transactions, using exclusively forms which have been approved and promulgated by the commission [ Texas Real Estate Commission] or such forms as are otherwise permitted by these rules.

(f)When filling in [such] a form authorized for use by this section, the licensee may only fill in the blanks provided and may not add to or strike matter from such form, except that licensees shall add factual statements and business details desired by the principals and shall strike only such matter as is desired by the principals and as is necessary to conform the instrument to the intent of the parties.

(g)A licensee may not add to a promulgated [earnest money] 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.

(h)Nothing in this section [herein ] shall be deemed to prevent the licensee from explaining to the principals the meaning of the factual statements and business details contained in the said instrument so long as the licensee does not offer or give legal advice.

(i)It is not the practice of law as defined in this Act for a real estate licensee to complete a contract form which is either promulgated by the commission [Texas Real Estate Commission] or prepared by the committee [ Texas Real Estate Broker-Lawyer Committee] and made available for trial use by licensees with the consent of the commission [ Texas Real Estate Commission].

(j)Contract forms prepared by the committee [Texas Real Estate Broker-Lawyer Committee] for trial use may be used on a voluntary basis after being approved by the commission.

(k)Contract forms prepared by the committee [Texas Real Estate Broker-Lawyer Committee] and approved by the commission to replace previously promulgated forms may be used by licensees on a voluntary basis prior to the effective date of rules requiring use of the replacement forms.

(l)[(d)] Where it appears that, prior to the execution of any such instrument, there are unusual matters involved in the transaction which should be resolved by legal counsel before the instrument is executed or that the instrument is to be acknowledged and filed for record, the licensee shall advise the principals that each should consult a lawyer of the principal's choice before executing same.

(m)[(e)] A licensee 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 licensee is acting as an agent. The licensee may employ and pay for the services of a lawyer to represent only the licensee in a real estate transaction, including preparation of the contract, agreement, or other legal instruments to be executed by the principals to the transactions.

(n)[(f)] A licensee shall advise the principals that the instrument they are about to execute is binding on them.

(o)[(g)] 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 web [Internet] site;

  (2)printed copies made from copies obtained from the 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 or to strike through language at the direction of the parties to the contract.

    (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 number of pages must be identical to that used by the commission in printed copies of the particular form.

    (D)The spacing, length of blanks, borders and placement of text on the page must appear to be identical to that used by the commission in printed copies of the form.

    (E)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.

(p)[(h)] Forms approved or promulgated by the commission must be reproduced on the same size of paper used by the 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.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 24, 2010

TRD-201002839

Loretta R. DeHay

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: July 11, 2010

For further information, please call: (512) 465-3926



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