The Texas Real Estate Commission (TREC) adopts new §537.51, concerning Standard Contract Form TREC No. 44-0, and new §537.52, concerning Standard Contract Form TREC No. 45-0, without changes to the proposed text as published in the November 14, 2008, issue of the Texas Register (33 TexReg 9197) but with changes to the forms as submitted to the Texas Register; therefore, the text of the rules will be republished.

New §537.51 adopts by reference a new TREC addendum for reservation of oil, gas, and other minerals. The addendum would be used in situations where a seller in a real estate transaction wishes to reserve all or an identified percentage interest in the mineral estate owned by the seller, as defined in the addendum.

New §537.52 adopts by reference a new TREC short sale addendum. The addendum would be used in transactions where the seller requires the consent of the lienholder to sell the property and the lienholder agrees to accept the seller's net proceeds in full satisfaction of seller's liability under the mortgage loan.

The changes to the forms as adopted from those that were originally proposed are detailed below and include the following: The Commission made typographical corrections to the forms adopted by reference and made other changes to the text of the forms in response to comments and further review and recommendation by staff and the Broker Lawyer Committee. A number of comments did not result in changes to the text of the forms. All comments regarding this adoption, including any not specifically referenced herein, were fully considered by the Commission and the Broker Lawyer Committee.

The revisions to the forms as adopted do not change the nature or scope so much that they could be deemed different forms. The forms as adopted do not affect individuals other than those contemplated by the forms as proposed. The forms as adopted do not impose more onerous requirements than the proposed versions and do not materially alter the issues raised in the proposed forms. Changes in the forms adopted by reference reflect non-substantive variations from the proposed rules and forms to clarify their intent and improve style and readability.

The reasoned justification for the amendments to the rules and contract forms adopted by reference is to maintain consistency, reduce controversy and misunderstanding, reduce redundancy, and address significant new issues relative to real estate contract forms.

The contract forms are published by TREC and available at the TREC web site (www.trec.state.tx.us) or at the Texas Real Estate Commission, P.O. Box 12188, 1101 Camino La Costa, Austin, Texas 78711-2188. Texas real estate licensees are generally required to use forms promulgated by TREC when negotiating contacts for the sale of real property. The two new forms may be used on a voluntary basis upon adoption; licensees will be required to use the forms on a mandatory basis as of March 1, 2009. 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.

Drafts of the contract forms were released for comment and displayed on the TREC web site during the notice and comment period after posting in the Texas Register. Approximately 7 comments were received during the notice and comment period

The comments and Commission responses to those comments are summarized as follows.

Comment: One commenter suggested addressing the conveyance or reservation of surface substances such as sand, dirt, gravel, iron ore, lignite and coal in the mineral rights addendum.

Response: The Commission respectfully disagrees with the suggestion as the primary purpose of the addendum is to address the conveyance and reservation of the mineral estate and surface rights related thereto. If the conveyance or reservation of surface substances is at issue in a real estate transaction, licensees should advise the parties to discuss the matter with an attorney.

Comment: One commenter suggested adding another check box in paragraph B of the mineral rights addendum for situations in which the seller is conveying all of the mineral estate owned by the seller.

Response: The Commission partially agrees with the commenter and in response, has moved the note which states in part that "The Mineral Estate owned by Seller, if any, will be conveyed unless reserved" from the bottom of the addendum to the beginning of paragraph B to emphasize the statement rather than adding another checkbox.

Comment: Two commenters suggested adding a provision to the mineral rights addendum to clarify that, in situations where the seller owns only part of the mineral estate, the percentage reserved in paragraph B(2) is only a percentage of the part interest owned by the seller and not a percentage of the entire mineral estate.

Response: The Commission agrees with the commenters and added the following note at the end of paragraph B(2): If Seller does not own all of the Mineral Estate, Seller reserves only this percentage of Seller's interest.

Comment: Two commenters suggested adding another paragraph to the mineral rights addendum to address situations in which the seller may lease the mineral estate and keep the bonus after execution of the contract.

Response: The commission respectfully disagrees with the commenters as paragraph 10 of the contract promises delivery of the property at closing in its present condition.

Comment: One commenter suggested changing the phrase "provide evidence to" in the first sentence of paragraph D of the short sale addendum to "notify."

Response: The Commission agrees with the commenter and has changed the addendum as recommended.

Comment: Two commenters suggested changing paragraph F of the short sale addendum regarding the time period in which the buyer may terminate the contract under the option period in paragraph 23 of the contract.

Response: In response to the commenters, the Commission has added "under Paragraph 23" to the end of paragraph F to clarify that the unrestricted right to terminate the contract is pursuant to paragraph 23 of the contract.

Comment: One commenter suggested changing paragraph D of the short sale addendum to provide that instead of the contract terminating if the seller fails to obtain the lienholders consent before the specified date, the buyer may terminate the contract by notifying the seller, thereby putting the burden on the buyer to notify the seller that the contract is terminated rather than the contract automatically terminating under that condition.

Response: The Commission respectfully disagrees with the commenter as the buyer may easily amend the contract if in fact the buyer wishes to extend the deadline for the seller to provide evidence of the lienholder's consent.

Comment: Two commenters suggested adding the following three sentences to further clarify the existing proposed provisions of the short sale addendum: "Seller shall apply promptly for and make every reasonable effort to obtain Lienholder's Consent and Agreement, and shall furnish all information and documents required by the lienholder. Seller shall promptly notify Buyer of any lienholder's refusal to provide or withdrawal of a Lienholder's Consent and Agreement. Seller authorizes any lienholder to furnish to Buyer or Buyer's representatives information relating to the status of the request for a Lienholder's Consent and Agreement.

Response: The Commission agrees with the suggestions and added the sentence requiring the seller to promptly obtain the lienholder's consent to paragraph C. The Commission added the sentence requiring seller to promptly notify the buyer of the lienholder's refusal or withdrawal to paragraph E. The Commission added the sentence authorizing the lienholder to furnish information to the buyer as a new paragraph H and moved paragraph H of the proposed addendum to new paragraph I.

The new rules are adopted 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 the adoption of the new rules is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the new rules.