The Texas Real Estate Commission (TREC) proposes amendments to §537.20 concerning Standard Contract Form TREC No. 9-7; §537.28 concerning Standard Contract Form TREC No. 20-8; §537.30 concerning Standard Contract Form TREC No. 23-8; §537.31 concerning Standard Contract Form TREC No. 24-8; §537.32 concerning Standard Contract Form TREC No. 25-6; §537.37 concerning Standard Contract Form TREC No. 30-7; §537.39 concerning Standard Contract Form TREC No. 32-2; §537.43 concerning Standard Contract Form TREC No. 36-5; §537.44 concerning Standard Contract Form TREC No. 37-3; and §537.45 concerning Standard Contract Form TREC No. 38-2. The amendments propose to adopt by reference six revised contract forms and four addenda for use 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, six brokers appointed by TREC, and a public member appointed by the governor.

The amendment to §537.20 proposes to adopt by reference Standard Contract Form TREC No. 9-7, Unimproved Property Contract. The proposed revisions are the same as those proposed for Standard Contract Form TREC No. 20-8 and further described below except for the following: Paragraph 2 is not amended, and a new checkbox is not added to paragraph 22 regarding the Addendum Containing Required Notices Under §5.01, §420.001, and §420.002, Texas Property Code.

The amendment to §537.28 proposes to adopt by reference Standard Contract Form TREC No. 20-8, One to Four Family Residential Contract (Resale). Paragraph 1 is rewritten to define the parties to the contract. New language is added to paragraph 2D to clarify that improvements and accessories retained by Seller must be removed prior to delivery of possession. In paragraph 5, "both" is replaced by "all" as there may be more than two parties to a contract. In paragraph 6D, the sentence that addresses the time for Buyer to object is rewritten for clarity. Paragraph 6E(2) is amended to address issues relating to membership in a "property owners' association" rather than a "mandatory owners' association" to track statutory language in §5.012, Texas Property Code. Also, paragraph 6E(2) is amended to indicate that the residential community the Property is located in is identified in Paragraph 2A to conform to §5.012, Texas Property Code, and the last sentence is bolded for extra emphasis. Paragraph 7D is amended to provide checkboxes to choose whether Buyer accepts property in its present condition or in its present condition with specific repairs enumerated. Under paragraph 9, subparagraphs C and D are moved to paragraph 19, and a new clause, (4), is added to subparagraph B regarding Seller's representations. The text for the new clause is moved from paragraph 19. Under paragraph 12A(1)(b), the reference to the Veterans Housing Assistance Program is changed to a reference to the Texas Veterans Land Board because there are more than one loan programs available from the Veterans Land Board. Paragraph 17 is amended to substitute "Buyer, Seller, Listing Broker, Other Broker or escrow agent who prevails" for "The prevailing party" to clarify that the attorney fee provision applies to all of the named persons and not just the parties to the contract. Paragraph 18D is amended to clarify that damages for wrongfully failing or refusing to sign a release of earnest money include the sum of the earnest money, three times the earnest money, reasonable attorney's fees and all costs of suit. Paragraph 19 is revised to add text that was deleted from subparagraphs 9(C) and (D). Paragraph 22 is revised to add a checkbox for the Addendum Containing Required Notices Under §5.01, §420.001, and §420.002, Texas Property Code, and to revise the title of the Addendum for Property Subject to Membership in a Property Owners' Association. Paragraph 23 is amended to clarify that if the Buyer fails to pay the Option Fee to Seller within the time prescribed, the option paragraph will not be a part of the contract. Currently it is not clear that the Buyer must pay the Option Fee to Seller.

The amendment to §537.30 proposes to adopt by reference Standard Contract Form TREC No. 23-8, New Home Contract (Incomplete Construction). The proposed revisions are the same as those proposed for Standard Contract Form TREC No. 20-8 described above except for the following: The checkbox added to paragraph 22 regarding the Addendum Containing Required Notices Under §5.01, §420.001, and §420.002, Texas Property Code is pre-checked and a parenthetical is included to explain that the addendum must be attached and Paragraphs B and C must be completed.

The amendment to §537.31 proposes to adopt by reference Standard Contract Form TREC No. 24-8, New Home Contract (Completed Construction). The proposed revisions are the same as those proposed for Standard Contract Form TREC No. 20-8 described above except for the following: The checkbox added to paragraph 22 regarding the Addendum Containing Required Notices Under §5.01, §420.001, and §420.002, Texas Property Code is pre-checked and a parenthetical is included to explain that the addendum must be attached and Paragraphs B and C must be completed.

The amendment to §537.32 proposes to adopt by reference Standard Contract Form TREC No. 25-6, Farm and Ranch Contract. The proposed revisions are the same as those proposed for Standard Contract Form TREC No. 20-8 described above.

The amendment to §537.37 proposes to adopt by reference Standard Contract Form TREC No. 30-7, Residential Condominium Contract (Resale). The proposed revisions are the same as those proposed for Standard Contract Form TREC No. 20-8 described above.

The amendment to §537.39 proposes to adopt by reference Standard Contract Form TREC No. 32-2, Condominium Resale Certificate. The proposed revisions are nonsubstantive in nature and conform paragraph N and the signature line of the form with TREC No. 37-3, Subdivision Information, Including Resale Certificate for Property Subject to Membership in a Property Owners' Association.

The amendment to §537.43 proposes to adopt by reference Standard Contract Form TREC No. 36-4, Addendum for Property Subject to Membership in a Property Owners' Association. The title of the form is changed to conform to §5.012, Texas Property Code; the term "property" is substituted for "mandatory" to more accurately reflect the terminology in §5.012, Texas Property Code; and the term "owners" is deleted from paragraph B and the last paragraph.

The amendment to §537.44 proposes to adopt by reference Standard Contract Form TREC No. 37-3, Subdivision Information, Including Resale Certificate for Property Subject to Membership in a Property Owners' Association. The title of the form is changed to conform to §5.012, Texas Property Code; the parenthetical below the title is amended to read "Chapter 207, Texas Property Code"; the term "owners" is deleted from various provisions in the form; another line is added near the end of the form for the name of the person signing the form.

The amendment to §537.45 proposes to adopt by reference Standard Contract Form TREC No. 38-2, Notice of Buyer's Termination of Contract. The termination notice is modified to serve as an all purpose Buyer's notice of termination to be used under various circumstances detailed in the form including but not limited to notifying the Seller that the contract is terminated under paragraph 23; Buyer cannot obtain Financing Approval; Property does not satisfy the lenders' underwriting requirements for the loan; Buyer elects to termination under Paragraph A of the Addendum for Property Subject to Mandatory Membership in an Owners' Association; Buyer elects to termination under paragraph 7B(2) of the contract; or that Buyer is terminating pursuant to a specific paragraph in the contract or addendum to be identified in the form.

Loretta R. DeHay, 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.

Ms. DeHay also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be the availability of current standard contract forms. 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.

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

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1101; and to establish standards of conduct and ethics for its licensees to fulfill the purposes of Chapter 1101 and ensure compliance with Chapter 1101.

The statute affected by this proposal is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.