The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §537.11, Use of Standard Contract Forms in Chapter 537, Professional Agreements and Standard Contracts, with changes, as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4242).

The amendments to §537.11 clarifies when a license holder can hire an attorney to prepare a form for use by the license holder's clients and the specific disclosures such a form must contain. The remaining amendments to the rule consolidate and update how a license holder can use the standard contract forms approve by the Commission and what is considered the unauthorized practice of law.

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.

Twenty-seven comments were received on the amendments as published. Four were from trade associations. One comment was in full support of the changes. The other non-association comments were from members of one of the associations in support of the letter written by that association. All of the associations expressed concern over having to revise their forms used by Commission license holders to meet the requirements of proposed amendments. The Commission did not feel that this presented an undue burden on the associations, especially in light of the increased consumer protection in the form of greater transparency in the forms. However, some of the comments presented by the associations did result in staff recommended changes to the proposal. One comment was received regarding the possibility that the changes proposed in subsection (a)(3) was an overly restrictive interpretation of the statutory exception in Texas Occ. Code §1101.155(b). The Commission agreed and changed that provision to mirror the statutory language. While most of the associations understood and agreed with the intent behind subsection (a)(4), they opposed new subsection (b) and requested revisions to (a)(4) to allow the associations to be able to quickly respond to changes in the market and meet the needs of their members. The Commission agreed and deleted new subsection (b) and revised subsection (a)(4) to require several additional disclosures only when a form changed the rights, obligations or remedies of a party under a contract or addendum form approved by the Commission for mandatory use by license holders.

The revisions to the rules as adopted do not change the nature or scope so much that they could be deemed different rules. The rules as adopted do not affect individuals other than those contemplated by the rules as proposed. The rules as adopted do not impose more onerous requirements than the proposed rules.

The reasoned justification for the amendments is greater clarity in the rule for license holders and greater transparency in forms given to consumers to use in transactions by license holders.

The amendments are adopted 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 license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this amendment are Texas Occupations Code, Chapters 1101 and 1102. No other statute, code or article is affected by the amendments.