The Texas Real Estate Commission (TREC) proposes amendments to §537.20, concerning Standard Contract Form TREC No. 9-11, Unimproved Property Contract; §537.28, concerning Standard Contract Form TREC No. 20-12, One to Four Family Residential Contract (Resale); §537.30, concerning Standard Contract Form TREC No. 23-13, New Home Contract (Incomplete Construction); §537.31, concerning Standard Contract Form TREC No. 24-13, New Home Contract (Completed Construction); §537.32, concerning Standard Contract Form TREC No. 25-10, Farm and Ranch Contract; §537.37, concerning Standard Contract Form TREC No. 30-11, Residential Condominium Contract; §537.44, concerning Standard Contract Form TREC No. 37-5, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in a Property Owners' Association; and §537.47, concerning Standard Contract Form TREC No. 40-6, Third Party Financing Addendum for Credit Approval; and new §537.53, concerning Standard Contract Form TREC No. 46-0, Mutual Termination of Contract.

The amendments and new section propose to adopt by reference six revised contract forms, two revised addenda, and one new addendum 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 and recommended for adoption 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 one public member appointed by the governor.

The amendments to §537.28 propose to adopt by reference Standard Contract Form TREC No. 20-12, One to Four Family Residential Contract (Resale). The proposed amendments are as follows. The definition of "Property" is moved from the end of Paragraph 2 to the beginning of the paragraph. Paragraph 6.A.(8) is amended to provide that, at buyers' expense, the exception shall be amended to read "shortages in area" unless the buyer instructs the title company otherwise. The third sentence in Paragraph 6.B regarding delivery of Commitment and Exception Documents is amended to read "the time for delivery will be automatically extended up to 15 days or 3 days before the Closing Date, whichever is earlier" to foreclose the delivery of such documents at closing. Paragraph 7.D is amended to define "As Is" as "the present condition of the Property with any and all defects and without warranty except for the warranties of title and the warranties in this contract." The notice after paragraph 7.D is moved to the body of the paragraph after the definition of "As Is" and the defined term "As Is" is added to that sentence and subparagraphs (1) and (2) to replace "in its present condition." The parenthetical at the end of paragraph 7.D is changed to add "and treatments" at the end of the sentence. The second sentence in Paragraph 7.F is amended to clarify that, if no license is required by law to perform a repair or treatment, all repairs and treatments must be performed by persons "who are commercially engaged in the trade of providing such repairs or treatments" rather than "authorized by law to provide such repairs or treatments." Paragraph 7.F is amended to change the number of days in the last sentence from 15 to 5 days regarding the Buyer's option to extent the Closing Date if Seller fails to complete agreed repairs and treatments prior to closing. Paragraph 9 is amended by adding a new Paragraph 9.B regarding leases wherein the Seller (1) agrees not to execute any lease or convey any interest in the Property after the effective date without the Buyer's written consent, and (2) incorporates existing Paragraph 9.B(5) and renumbers existing Paragraph 9B to 9C to contain 9B(1)-(4). Paragraph 14 is amended to add the clause "or cause to be restored" in the first sentence. Paragraph 16 is amended to remove the mediation check boxes to require mediation to resolve disputes between Buyer and Seller related to the contract. Paragraph 23 is amended to provide that the Seller or Listing Broker must receive the option fee within 3 days after the effective date of the contract rather than Buyer paying Seller the option fee within two days after the effective date of the contract to make it clear that it is not enough that the Buyer puts the option fee in the mail within 2 days after the effective date; the Seller or Listing Broker must receive the option fee within 3 days after the effective date. The last page is amended to clarify that the agents should not sign on the blank lines, they should insert their names only.

The amendment to §537.20 proposes to adopt by reference Standard Contract Form TREC No. 9-11, Unimproved Property Contract. The proposed revisions are the same as those proposed for TREC Form No. 20-12 except as follows. The definition of "Property" in Paragraph 2 is not changed. Paragraph 7.E(1) is amended to be the same as Paragraph 7.H(1) in Form 25-10, Farm and Ranch Contract. Paragraph 7.E(3) regarding environmental hazards is amended to change "any environmental hazards or conditions affecting" to "any environmental hazards that materially and adversely affect" the property.

The amendment to §537.30 proposes to adopt by reference Standard Contract Form TREC No. 23-13, New Home Contract (Incomplete Construction). The proposed revisions are the same as those proposed for TREC Form No. 20-12, except as follows. The definition of "Property" in Paragraph 2 is not changed. There are no amendments to paragraph 7 except to insert missing parentheses as the paragraph has no reference to "as is" condition or repairs and treatments. Paragraph 7.I(3) regarding seller's disclosure of environmental hazards is amended to change "any environmental hazards or conditions materially affecting" to "any environmental hazards that materially and adversely affect" the property. Paragraph 9 is amended by adding a new Paragraph 9.B regarding leases wherein the Seller agrees not to execute any lease or convey any interest in the Property after the effective date without the Buyer's written consent.

The amendment to §537.31 proposes to adopt by reference Standard Contract Form TREC No. 24-13, New Home Contract (Completed Construction). The proposed revisions are the same as those proposed for TREC Form No. 20-12 except as follows. The definition of "Property" in Paragraph 2 is not changed. Paragraph 7.H(3) regarding seller's disclosure of environmental hazards is amended to change "any environmental hazards or conditions materially affecting" to "any environmental hazards that materially and adversely affect" the property. Paragraph 9 is amended by adding a new Paragraph 9.B regarding leases wherein the Seller agrees not to execute any lease or convey any interest in the Property after the effective date without the Buyer's written consent.

The amendment to §537.32 proposes to adopt by reference Standard Contract Form TREC No. 25-10, Farm and Ranch Contract. The proposed revisions are the same as those proposed for TREC Form No. 20-12, except as follows. Paragraph 2 is amended to except exclusions and reservations. The definition of "Property" in Paragraph 2 is not changed. Paragraph 7.H(3) regarding seller's disclosure of environmental hazards is amended to change "any environmental hazards or conditions materially affecting" to "any environmental hazards that materially and adversely affect" the property. The last page is not amended.

The amendment to §537.37 proposes to adopt by reference Standard Contract Form TREC No. 30-11, Residential Condominium Contract. The proposed revisions are the same as those proposed for TREC Form No. 20-12 except as follows. The definition of "Property" in Paragraph 2 is not changed. Paragraph 2.B(3) is deleted as a typographical error. No changes were made to paragraph 6.A.(8).

The amendment to §537.44 proposes to adopt by reference Standard Contract Form TREC No. 37-5, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in a Property Owners' Association. Paragraph H is amended to more closely track statutory changes to Chapter 207, Property Code.

The amendment to §537.47 proposes to adopt reference by Standard Contract Form TREC No. 40-5, Third Party Financing Addendum for Credit Approval. New paragraph E is added to reference USDA Guaranteed Financing.

New §537.53 proposes to adopt reference by Standard Contract Form TREC No. 46-0, Mutual Termination of Contract. The form is to be used when the Buyer and Seller mutually agree to terminate the contract and release the earnest money, or to terminate the contract without releasing the earnest money.

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. There is no anticipated economic cost to persons who are required to comply with the proposed 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 that, among other things, conform to new or recently revised statutory requirements.

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 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

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 Chapters 1101 and 1102; and to establish standards of conduct and ethics for its licensees to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

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