The Texas Real Estate Commission (TREC) adopts amendments to §§537.11, 537.33, 537.42 and 537.46, concerning standard contract forms, without changes to the proposed text as published in the October 13, 2000, issue of the Texas Register (25 TexReg 10263). These amendments adopt by reference three revised contract forms to be used by Texas real estate licensees.

The amendment to §537.11 renumbers the revised forms in a list of forms promulgated by the commission. The amendment to §535.33 adopts by reference revised form TREC No. 26-3, Seller Financing Addendum, a form 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.

The amendment to §537.42 adopts by reference revised form TREC No. 35-2, Mediation Addendum, a form 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 and 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 adopt by reference revised form TREC No. 39-2, Amendment, a form used to amend an existing contract between the buyer and seller. The form has been modified to remove a caption restricting use of the form to residential resales, to revise a reference to a paragraph in the contract to make it general enough to apply to all of the TREC contract forms and to clarify that the waiver of the right to terminate the contract under an option clause does not affect other rights of termination in the contract.

Adoption of the revised forms was necessary to make them easier to use and thus reduce controversies in real estate transactions involving Texas real estate licensees.

Two comments were received regarding the content of the seller financing addendum adopted by reference in §537.33. One comment suggested that a blank be provided in the addendum to specify the interest rate of the note. The commission determined that since the main contract between the parties specifies the interest of a seller-financed note, it would not be appropriate to specify the rate in the addendum. Another comment suggested that a provision be added to allow for a penalty to be collected for late note payments. The commission determined that the addendum should not be modified as suggested; the language relating to a late penalty should be determined by legal counsel drawing the instruments for the transaction so as to avoid the possibility of the penalty causing the interest to be usurious.

The amendments are adopted 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.