The Texas Real Estate Commission (TREC) proposes amendments to §§537.11, 537.30, 537.31, 537.33, 537.42 and 537.46, concerning standard contract forms. These amendments would adopt by reference five 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 contacts 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 and six brokers appointed by TREC. Two of the proposed forms, TREC No. 23-4 and TREC No. 24-4, are contracts used in the sale of new homes. These forms have been revised to include statutory notices which builders will be required to provide to buyers under new Chapter 27, Texas Property Code, beginning September 1, 2000. Minor changes have been made to the other three one-page forms to make them easier to read or permit broader use of the forms.

The amendment to §537.11 would renumber the revised forms in a list of forms promulgated by the commission.

The amendment to §537.30 would adopt by reference a revised form TREC No. 23-4, New Home Contract (Incomplete Construction). The form has been revised to include a notice from Texas Property Code, Chapter 27. The notice advises the buyer that the buyer must notify the builder by certified mail at least 60 days prior to filing suit to recover damages from the builder and must provide the builder with an opportunity to inspect the property and cure a construction defect. The form also has been revised to clarify that the seller is responsible for any "rollback" taxes or penalties imposed after closing due to denial of a special use valuation on the property or a change in the use of the property by the seller for periods prior to closing. Information about insulation in the home has been transferred to the new home contract form from an existing TREC addendum, TREC No. 13-1, which would be repealed.

The amendment to §537.31 would adopt by reference a revised form TREC No. 24-4, New Home Contract (Completed Construction). The form has been revised to include the Chapter 27 Property Code notice and the information about insulation which was added to TREC No. 23-4.

The amendment to §535.33 would adopt by reference revised form TREC No. 26-3, Seller Financing Addendum. The form is an addendum used to create an agreement between the buyer and the seller in a seller-financed transaction to establish the provisions of the promissory note and deed of trust. The form has been rewritten to make it easier to read, primarily by replacing the terms "maker" and "payee", respectively, with "buyer" and "seller", identifying the parties by the same terms used in the main contract.

The amendment to §537.42 would adopt by reference revised form TREC No. 35-2, Mediation Addendum. The form is an addendum used to create an agreement for the parties to the contract, and any broker who signs the addendum, to submit disputes to mediation prior to resorting to litigation The addendum was rewritten to clarify that a broker who signs the addendum is bound by its terms. This language also may clarify that a broker is not a party to the main contract between the buyer and the seller. Minor language changes also were made to make the form easier to read.

The amendment to §537.46 would adopt by reference revised form TREC No. 39-2, Amendment. This form is used to amend an existing contract between the buyer and seller. The form has been revised to remove a caption which restricts use of the form to residential resales and to revise a reference to a paragraph in the contract to make it general enough to apply to all of the TREC contract forms. These actions will permit real estate licensees to use the form to amend the existing TREC contract forms for the sale of new homes and farms and ranches.

Mark A. Moseley, General Counsel, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections.

Mr. Moseley also has determined that for each year of the first five years the sections as proposed is in effect the public benefit anticipated as a result of enforcing the sections will be the availability of current standard contract forms which assist sellers in complying with statutory notice requirements. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections, other than the costs of obtaining copies of the forms, which would be available at no charge through the TREC web site, and available from private printers at an estimated cost of $7.50 per set of 50 copies.

Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas, 78711-2188.

The amendment is proposed under Texas Civil Statutes, Article 6573a, §5(h), which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties.

The statute which is affected by this proposal is Texas Civil Statutes, Article 6573a.