Texas Register Preamble

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC Chapter 537, §§537.11, 537.20 - 537.23, 537.26 - 537.28, 537.30 - 537.33, 537.35, 537.37, 537.39 - 537.41, 537.44 - 537.48, 537.51, 537.52, and 537.54, concerning Professional Agreements and Standard Contracts.

The proposed amendments to Chapter 537 are made following a comprehensive quadrennial rule review of Chapter 537 to better reflect current TREC procedures and to simplify and clarify where needed. Throughout the Chapter, the proposed amendments capitalize the term "Commission" and replace the term "licensee" with "license holder."

The proposed amendments also contain two substantive changes that were recommended by the Broker Lawyer Committee.

Texas real estate license holders 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 Broker Lawyer Committee recommended that §537.11, Use of Standard Contract Forms be revised to prohibit a computer file or program version of the Standard Contract forms to allow an end user to strike through the text of the promulgated form and to clarify that the blanks may be scalable to the text.

The Broker Lawyer Committee also recommended proposal of a revised Addendum for Reservation of Oil, Gas and Other Minerals, which is adopted by reference in §537.51. Standard Contract Form TREC No. 44-1. This proposed addendum revises the definitions of "mineral estate" and "surface rights", allows the portion reserved by a seller to be reflected as a percentage or fractional interest, adds an "Important Notice" paragraph alerting the parties about the complex nature of reserving mineral rights, and changes the language regarding "Consult an Attorney" to be consistent with that provision in other TREC contract forms. This proposed addendum was revised by the Broker Lawyer Committee following receipt of several comments by the public and two trade associations following publication of a different proposed addendum. One association, after consulting with several oil and gas attorneys, presented new language that they felt better reflected industry definitions practices. Much of that language has been incorporated into this new proposed addendum.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments 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 amendments.

Ms. Lewis 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 better readability of the Chapter, clarity in the Addendum for Reservation of Oil, Gas and Other Minerals and greater consumer protection the elimination of the ability to digitally strike out provisions of the promulgated contract forms.

Comments on the proposal may be submitted to Kerri Lewis, 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 proposal.

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