The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §§537.11, 537.20, 537.28, 537.30 - 537.32, 537.37, 537.43, 537.44, 537.46, and 537.47, concerning professional agreements and standard contracts. These amendments would adopt by reference ten revised contract forms to be used by Texas real estate licensees.

Texas real estate licensees are generally required to use forms promulgated by TREC when negotiating contracts for the sale of real property. These forms are drafted 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 a public member appointed by the governor.

The amendment to §537.11 would renumber the revised forms promulgated by TREC.

The amendment to §537.20 would adopt by reference Standard Contract Form TREC No. 9-6, Unimproved Contract Form. Paragraph 4A would be reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender's approving the buyer's financial condition pursuant to the Third Party Financing Conditions Addendum. Paragraph 6C would be reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6D would be revised to clarify the provisions regarding buyer's right to object to any portion of the property lying in a special flood hazard area (Zone V or A) to parallel language in Federal Emergency Management Agency maps; and to provide that if Paragraph 6C(2) applies, the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. Paragraph 6E would be revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A would be reformatted to be consistent with other TREC contract forms. Paragraph 7E. would be revised regarding seller's disclosures about flooding of the property and environmental hazards or conditions. Paragraph 12 would be revised to be consistent with other TREC contract forms. Paragraph 18 would be reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C would provide that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D would be added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses would be added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 would be modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option would be in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box would be placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials would be deleted from the signature page. The seller's receipt of the option fee on the last page would be clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.28 would adopt by reference Standard Contract Form TREC No. 20-7, One to Four Family Residential Contract (Resale). The form would be revised to bold the phrase in Paragraph 2B to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A would be reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender's approving the buyer's financial condition pursuant to the Third Party Financing Conditions Addendum. Paragraph 6C would be reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6D would be revised to provide that if Paragraph 6C(2) applies, the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. Paragraph 6E would be revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A would be reformatted to be consistent with other TREC contract forms. Paragraph 12 would be revised to be consistent with other TREC contract forms. Paragraph 18 would be reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C would provide that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D would be added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses would be added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 would be modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option would be in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box would be placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials would be deleted from the signature page. The seller's receipt of the option fee on the last page would be clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendments to §537.30 would adopt by reference Standard Contract Form TREC No. 23-6, New Home Contract (Incomplete Construction). The amendment to §537.31 would adopt by reference Standard Contract Form TREC No. 24-6, New Home Contract (Complete Construction). Paragraph 4A of both forms would be reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender's approving the buyer's financial condition pursuant to the Third Party Financing Conditions Addendum. Paragraph 6C of Form No. 24-6 would be reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6D would be revised to provide that if Paragraph 6C(2) applies, the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. Paragraph 6E would be revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A would be reformatted to be consistent with other TREC contract forms. Paragraph 12 would be revised to be consistent with other TREC contract forms. Paragraph 18 would be reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C would provide that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D would be added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses would be added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 would be modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option would be in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box would be placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The notice required by Chapter 27 of the Texas Property Code adjacent to the signature lines would be revised to reflect the current statutory language. The blanks for the parties' initials would be deleted from the signature page. The seller's receipt of the option fee on the last page would be clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendments to §537.32 would adopt by reference Standard Contract Form TREC No. 25-5 Farm and Ranch Contract. The form would be revised to bold the phrases in Paragraph 2B(1) and (2) to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A would be reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender's approving the buyer's financial condition pursuant to the Third Party Financing Conditions Addendum. Paragraph 6C would be revised to rearrange the check boxes for consistency with other TREC contract forms. Paragraph 6D would be revised to clarify the provisions regarding buyer's right to object to any portion of the property lying in a special flood hazard area (Zone V or A) to parallel language in Federal Emergency Management Agency maps; and to provide that if Paragraph 6C(2) applies, the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. Paragraph 6G would be revised to add two notices. The notice under Paragraph 6G(5) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6G(6) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A would be reformatted to be consistent with other TREC contract forms. Paragraph 12 would be revised to be consistent with other TREC contract forms. Paragraph 18 would be reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C would provide that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D would be added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses would be added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 would be modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option would be in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box would be placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials would be deleted from the signature page. The seller's receipt of the option fee on the last page would be clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.37 would adopt by reference Standard Contract Form TREC No. 30-5, Residential Condominium Contract (Resale). The form would be revised to bold the phrase in Paragraph 2B to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A would be reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender's approving the buyer's financial condition pursuant to the Third Party Financing Conditions Addendum. Paragraph 6E would be revised to add a notice as 6E(5) which is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. Paragraph 7A would be reformatted to be consistent with other TREC contract forms. Paragraph 12 would be revised to be consistent with other TREC contract forms. Paragraph 18 would be reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C would provide that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D would be added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses would be added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 would be modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option would be in two parts: the option fee and nominal consideration, Cont'd...