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 12/01/2017
ACTION Final/Adopted
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 license holder shall use only those contract forms approved for mandatory use by the Texas Real Estate Commission (the Commission) for that type 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 property owner or prepared by a lawyer and required by a property owner; or

  (4)transactions for which no mandatory contract form or addendum has been approved by the Commission, and the license holder uses a form:

    (A)prepared by a lawyer licensed by this state, or a trade association in consultation with one or more lawyers licensed by this state, for the particular type of transactions involved that contains:

      (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 or trade association has approved the use of the form;

      (iv)any restrictions on the use of the form; and

      (v)if it is an addendum that changes the rights, obligations or remedies of a party under a contract or addendum form approved by the Commission for mandatory use, the form must also include:

        (I)a statement about how the addendum changes the rights, obligations or remedies of a party, with a reference to the relevant paragraph number in the mandatory use form;

        (II)a statement that the form is not a mandatory Texas Real Estate Commission form; and

        (III)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 for voluntary use by license holders.

(b)A license holder may not:

  (1)practice law;

  (2)directly or indirectly offer, give or attempt to give legal advice;

  (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;

  (5)draft language defining or affecting the rights, obligations or remedies 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)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.

(c)This section does not limit a license holder's fiduciary obligation to disclose to the license holder's principals all pertinent facts that are within the knowledge of the license holder, including such facts which might affect the status of or title to real estate.

(d)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 license holder shall only add factual statements and business details or shall strike text as directed in writing by the principals.

(e)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.

(f)When a transaction involves unusual matters that should be reviewed by a lawyer 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.

(g)A license holder may employ and pay for the services of a lawyer to represent only the license holder in a real estate transaction.

(h)A license holder shall advise the principals that the instrument they are about to execute is binding on them.

(i)Forms approved by the Commission may be reproduced only from the following sources:

  (1)electronically reproduced from the files available on the Commission's website;

  (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. 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.

(j)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.

(k)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 adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 16, 2017

TRD-201704640

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: May 15, 2018

Proposal publication date: August 25, 2017

For further information, please call: (512) 936-3092



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