(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 [commission]) for that kind of transaction with the following exceptions: (1)transactions in which the license holder [ 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 or prepared by an attorney and required by a principal to the transaction; or (4)transactions for which no standard contract form has been promulgated by the Commission [commission], and the license holder [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 license holders [licensees ] with the consent of the Commission [commission]. (b)A license holder [licensee] may not: (1)practice law;[,] (2)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)attempt to prevent or in any manner whatsoever discourage any principal to a real estate transaction from employing a lawyer. (c)This [Nothing in this] section does not [shall be deemed to] limit a [the ] license holder's [licensee's] fiduciary obligation to disclose to the license holder's [licensee's ] principals all pertinent facts which are within the knowledge of the license holder [licensee], including such facts which might affect the status of or title to real estate. (d)A license holder [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, a license holder may prepare forms using only forms that [the licensee may fill in forms for such transactions, using exclusively forms which] have been approved and promulgated by the Commission [commission] or such forms as are otherwise permitted by these rules. (f)When filling in a form authorized for use by this section, the license holder [licensee] may only fill in the blanks provided and may not add to or strike matter from such form, except that a license holder [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 license holder [licensee] 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. (h)This [Nothing in this] section does not [shall be deemed to] prevent the license holder [licensee] from explaining to the principals the meaning of the factual statements and business details contained in an [the said] instrument so long as the license holder [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 license holder [licensee] to complete a contract form which is either promulgated by the Commission [commission] or prepared by the committee and made available for trial use by license holder [licensee] with the consent of the Commission [commission]. (j)Contract forms prepared by the committee for trial use may be used on a voluntary basis after being approved by the Commission [commission]. (k)A contract form [Contract forms] prepared by the committee and approved by the Commission [ commission] to replace a previously promulgated form [forms] may be used by license holders [ licensees] on a voluntary basis before [prior to] the effective date of rules requiring use of the replacement form [forms]. (l)When a transaction involves unusual matters that should be reviewed by legal counsel before an instrument is executed, or if the instrument must be acknowledged and filed of record, [ 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 license holder [licensee] shall advise the principals that each should consult a lawyer of the principal's choice before executing the instrument [same]. (m)A license holder [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 license holder [licensee] is acting as an agent. The license holder [licensee] may employ and pay for the services of a lawyer to represent only the license holder [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)A license holder [licensee] shall advise the principals that the instrument they are about to execute is binding on them. (o)Forms approved or promulgated by the Commission [ commission] may be reproduced only from the following sources: (1)numbered copies obtained from the Commission [ commission], whether in a printed format or electronically reproduced from the files available on the Commission's website [commission's web 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. Blanks may be scalable to accommodate the inserted language [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 [commission] in printed copies of the particular form. (C)The text and number of pages must be identical to that used by the Commission [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 [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)Forms approved or promulgated by the Commission [ 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. (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 25, 2014
TRD-201404071 Kerri Lewis
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: October 5, 2014
For further information, please call: (512) 936-3092
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