The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §537.20, Standard Contract Form TREC No. 9-12; §537.28, Standard Contract Form TREC No. 20-13; §537.30, Standard Contract Form TREC No. 23-14; §537.31, Standard Contract Form TREC No. 24-14; §537.32, Standard Contract Form TREC No. 25-11; §537.37, Standard Contract Form TREC No. 30-12; new §537.55, Standard Contract Form TREC No. 48-0 and new §537.56, Standard Contract Form TREC No. 49-0, in Chapter 537, Professional Agreements and Standard Contracts, with changes as published in the December 1, 2017, issue of the Texas Register (42 TexReg 6674). The date in the rule was updated from 2017 to 2018 and non-substantive changes were made to the forms adopted by reference.

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 revisions to the contract forms adopted by reference under the proposed amendments to Chapter 537 to address issues that have arisen since the last contract revisions.

Forty-three comments were received on the proposed contract amendments, including one trade association. The vast majority of commenters, including the trade association were in favor of adoption of the proposed contract amendments.

The Broker Lawyer Committee considered all of the comments at an open meeting in January. One commenter requested a definition of "legal holiday" be placed in the contracts. After some discussion, the Committee declined to define the term in the contracts since it has not previously been an issue in industry contracts and noted that Government Code §662.003 set out dates and descriptions of holidays already. They recommended adoption of the amendments to the contracts as proposed with a few non-substantive revisions for greater clarity.

The Broker Lawyer Committee recommends the changes listed below for adoption. The changes apply to all contract forms unless specified otherwise. Paragraph numbers referenced are from the One to Four Family Residential Contract (Resale).

Paragraph 2 is amended to clarify that any reservations of mineral rights must be done in a separate addendum.

Paragraph 5 is amended to require Earnest Money to be delivered within 3 days of the Effective Date. If the 3rd day falls on a Saturday, Sunday or legal holiday, the earnest money is due on the next day that is not a Saturday, Sunday or legal holiday. Seller may terminate the contract if buyer fails to timely deliver the Earnest Money and time is made of the essence for this paragraph.

"Effective Date" is made a defined term throughout the contracts but is still tied to the final date of acceptance provided on the signature page.

Paragraph 6A(9) is amended to include an exception for minerals as approved by the Texas Department of Insurance.

Paragraph 6B the phrase "due to factors beyond Seller's control" is removed from the sentence allowing Buyer to terminate the contract if the Commitment and Exception documents are not timely received.

Paragraph 6 D is amended to define the time by which seller is to cure objections as the "Cure Period", provide a specific time frame by which the buyer must notify the seller that the buyer will terminate or waive the objections if the objections are not cured within the Cured Period, and address additional time periods for the buyer to object and the seller to cure if a revised commitment, revised survey, or updated exception documents are provided. A reference in this paragraph to items in 6A was also updated to include the new item 6A(9).

Paragraph 20 is amended to clarify what is meant by "applicable law" and an "affidavit" when seller is a "foreign person."

The space for fax numbers were removed from the Broker Information page and a space for phone numbers for the brokers were added.

Separate receipt boxes were added to the forms for Earnest Money, the Contract and Additional Earnest Money.

Initial boxes for Seller and Buyer were removed from the Broker Information Page and Earnest Money Receipt pages.

Paragraph 2B(2) and 2C (Condominium Contract Only) is amended to clarify that the seller bears the expense to deliver the condominium documents and the resale certificate to buyer.

Paragraph 2F. Reservations (Farm and Ranch Contract Only) is amended to strike the parenthetical stating that reservations may be included in special provisions (suggesting that reservations are to be addressed only in a properly drafted addendum). The list of Addenda in Paragraph 22 was amended to add the Addendum for Reservation of Oil, Gas, and Other Minerals.

A new addendum is proposed to address who pays for and is responsible for damages from a hydrostatic test, if the parties agree to have one performed.

A new addendum is proposed to address the situation where the parties create a contingency to the contract based on the appraisal performed by the lender and termination rights or waiver associated with that contingency.

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 to provide standard contracts that are up to date with statutory requirements, common law and current industry practices. An added goal is to create contracts that balance the rights of the parties and reduce unnecessary conflict and litigation.

The amendments and new sections 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 statute affected by these amendments and new sections is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the adoption.