Texas Register Preamble

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §537.20, Standard Contract Form TREC No. 9-13; §537.28, Standard Contract Form TREC No. 20-14; §537.30, Standard Contract Form TREC No. 23-15; §537.31, Standard Contract Form TREC No. 24-15; §537.32, Standard Contract Form TREC No. 25-12; §537.37, Standard Contract Form TREC No. 30-13; §537.43, Standard Contract Form TREC No. 36-8; and new rules §537.58, Standard Contract form TREC No. 51-0; §537.59, and Standard Contract Form TREC No. 52-0, in Chapter 537, Professional Agreements and Standard Contracts. 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 and new rules to Chapter 537 to address issues that have arisen since the last contract revisions. Prior versions of these rules changes and new forms were posted in the June 12, 2020 issue of the Texas Register. At its July 17, 2020, meeting, the Broker Lawyer Committee considered comments submitted by members of the public and made significant revisions to these items. Because such changes were substantive in nature, the Broker Lawyer Committee withdrew the prior version of these items posted in the June 12, 2020 issue of the Texas Register and now re-proposes these items as amended. The changes listed below 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 remove quotes and add a parenthetical around the word "Property."

Paragraph 2.C is amended security systems and "Controls" as Accessories and defines "Controls."

The language of Paragraph 4 was moved to the end of Paragraph 8, which is retitled "License Holders."

Language was added to Paragraph 4 to address leases to which the Seller is a party, and requires the Seller to acknowledge that Buyer has received a copy of all Leases or will receive a copy within 3 days after the Effective Date. The Buyer may terminate the contract after receipt of the Leases within a period of days set in the contract. Paragraph 4 also prohibits the Seller from executing any new lease or amending any Lease without Buyer's written consent after the effective date of the contract.

Paragraph 4 is also amended to include language regarding disclosure of existing leases and prohibits, without Buyer's consent, any new leases, amendments to exiting leases, or conveyance of interest in the property. Language also requires disclosure of Residential Leases, Fixture leases, or Natural Resources Leases within 3 days after the effective date.

Paragraph 5 is amended is authorize payment of option fee to escrow agent separately or combined with earnest money in single payment. Clarifies order application of funds to be credited first to Option Fee and then to earnest money. Authorizes release of option money without further consent from Buyer. Paragraph 5 also now incorporates language previously found in Paragraph 23 relating to remedy for failure to timely deliver Option Fee and earnest money.

Paragraph 10.B is amended to remove redundancies found in Paragraph 4 by striking all language except "After the Effective Date, Seller may not convey any interest in the Property without Buyer's written consent."

Paragraph 10.C is amended to include definition of Smart Device and require delivery of access codes to Buyer and removal of seller access points.

Paragraph 18.A is amended to allow escrow agent to require any disbursement made under the contract to be made in good funds.

Paragraph 18.B is amended to further define expenses that an escrow agent may deduct.

Paragraph 23 is deleted in its entirety.

Paragraph 24 is renumbered to Paragraph 23.

The Option Fee Receipt is amended to strike reference to Seller/Broker and replace with Escrow Agent.

Language was deleted from the Broker Information page of all forms except the Farm and Ranch Contract form: "Listing Broker has agreed to pay Other Broker ___ of the total sales price when the Listing Broker's fee is received. Escrow agent is authorized and directed to pay Other Broker from Listing Broker's fee at closing." Language was added for informational purposes to disclose there is a separate commission agreement between the Listing Broker and Other Broker.

Language was added to the Incomplete Construction Contract to mirror the language in the Complete Construction Contract Paragraph 7.I. regarding Residential Service Contracts. The language was added to the Incomplete Construction Contract as Paragraph 7.J.

In the Residential Condominium Contract, all references to a survey were removed from Paragraph 6.

The Addendum for Property Subject to Mandatory Membership in a Property Owners Association adopted by reference in §537.43 is amended to add deposits and reserves to the list of payments the Buyer will make in association with the transfer of the property.

The Addendum Regarding Residential Leases is adopted by reference in §537.58 is a new form that supplements changes made to Paragraph 4 regarding required consent to enter into any new leases, amendments to exiting leases, or conveyance of interest in the property.

The Addendum for Disclosure of Fixture Leases adopted by reference in §537.59 is a new form protects the parties regarding fixture leases in place on the property at the time of contract execution.

Vanessa E. Burgess, 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 adverse economic effect anticipated for small businesses, micro-businesses, rural communities, or local or state employment as a result of implementing the proposed amendments. There is no significant economic cost anticipated for persons who are required to comply with the proposed amendments. Accordingly, no Economic Impact Statement or Regulatory Flexibility Analysis is required.

Ms. Burgess also has determined that for each year of the first five years the sections as proposed are in effect, the public benefits anticipated as a result of enforcing the sections as proposed will be improved clarity and greater transparency for members of the public and license holders, as well as requirements that are consistent with the statute and easier to understand, apply and process.

For each year of the first five years the proposed amendments are in effect the amendments and new rules will not:

-create or eliminate a government program;

-require the creation of new employee positions or the elimination of existing employee positions;

-require an increase or decrease in future legislative appropriations to the agency;

-require an increase or decrease in fees paid to the agency;

-create a new regulation;

-expand, limit or repeal an existing regulation;

-increase or decrease the number of individuals subject to the rule's applicability; or

-positively or adversely affect the state's economy.

Comments on the proposal may be submitted to Vanessa E. Burgess, 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 and new rules 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 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 rules is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the amendments and new rules.

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