(a)When negotiating contracts binding the sale, exchange,
option, or 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 the [
a] property owner or prepared by an attorney [a
lawyer] and required by a property owner; or
(4)transactions for which no [mandatory]
contract form [or addendum] has been approved for
mandatory use 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 an attorney [
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;]
(ii)[(iii)] a statement
indicating the type of transaction for which the [lawyer
or] trade association has approved the use of the form; and
[(iv)any restrictions on the use
of the form; and]
(iii)[(v)] if applicable,
an explanation of how the form [it is an addendum that]
changes the rights, obligations, or remedies of a party
under a contract [or addendum] form approved for mandatory
use by the Commission and [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 may not practice
law or give [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 contract forms [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 or recommend language to
be included in a contract form 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 informational items [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
an attorney [a lawyer]; or
(8)obtain legal advice from an attorney [
employ or pay for the services of a lawyer], directly or indirectly,
for [to represent] a principal in [to]
a real estate transaction in which the license holder is acting as
an agent.
(c)This section does not:
(1)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;
(2)prevent the license holder from
explaining to the license holder's principals the meaning of informational
items or choices in a contract form, as long as the license holder
does not practice law or give legal advice;
(3)limit a license holder from employing
and paying for the services of an attorney to represent only the license
holder in a real estate transaction; or
(4)limit a license holder from reimbursing
a principal for attorney's fees incurred.
(d)It is not the practice of law for a license holder
to:
(1)add informational items to [
fill in the blanks in] a contract form authorized for use by
this section; or[.]
(2)if specifically instructed in writing
by a principal, add language to or strike language from a contract
form, as long as any change is made conspicuous, including underlining
additions, striking through deletions, or employing some other method
which clearly indicates the change being made. [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.]
(e)[(f)] When a transaction
involves unusual matters that should be reviewed by an attorney [
a lawyer] before an instrument is executed, or if the instrument
must be acknowledged and filed of record, the license holder shall
advise the license holder's principals to [that each
should] consult an attorney [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.]
(f)[(h)] A license holder shall
advise the license holder's principals that the instrument
they are about to execute is binding on them.
(g)Contract forms approved by the
Commission are published by and available from the Commission at www.trec.texas.gov.
[(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.]
(h)[(j)] Contract forms [
Forms] approved [or promulgated] by the Commission
may be reproduced, including through use of a software application,
provided that the text and format of the form, including the sizing,
spacing, and pagination, is identical to the Commission's published
version, except that [must be reproduced on the same size
of paper used by the Commission with the following changes or additions
only]:
(1)the [The] business name or
logo of a broker, trade association, or other organization
[or printer] may appear [at the top of a form]
outside the form's border; and
(2)a form may be scaled to accommodate viewing
on smaller screens, including mobile devices, as long as the final
executed copy of the form otherwise complies with this subsection [
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 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 November 8, 2022
TRD-202204508 Abby Lee
Deputy General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: December 25, 2022
For further information, please call: (512) 936-3057
|
