The Texas Real Estate Commission (TREC) proposes amendments to §§537.11, 537.21, 537.22, 537.28, 537.33, 537.37, 537.41, 537.45, and 537.46. New §537.47 and §537.48, concerning standard contract forms. These amendments and new sections would adopt by reference ten new or revised contract forms to be used by Texas real estate licensees.

Texas real estate licensees are generally required to use forms promulgated by TREC when negotiating contacts for the sale of real property. These forms are drafted 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 and six brokers appointed by TREC.

The amendment to §537.11 would renumber the revised forms and add the new forms to a list of forms promulgated by TREC.

The amendment to §537.21 would adopt by reference Standard Contract Form TREC No. 10-4, Addendum for Sale of Other Property Belonging to Buyer, an addendum creating a contingency for the sale of other property belonging to the buyer. The form has been modified to delete reference to an inapplicable paragraph number so as to permit its use with the revised one-to-four family residential resale contract form.

The amendment to §537.22 would adopt by reference Standard Contract Form TREC No. 11-4, Addendum for "Back-Up" Contract, an addendum for use with a contract that is contingent upon the termination of a prior contract between the seller and another buyer. The form has been modified to clarify that the second contract is the "back-up" contract and to permit its use with the revised one-to-four family contract by deleting a reference to an inapplicable paragraph number.

The amendment to §537.28 would adopt by reference Standard Contract Form TREC No. 20-5, One to Four Family Residential Contract (Resale). The form would be revised to permit its use as a contract for in all residential resale transactions, other than condominium transactions, by use of addenda for various kinds of financing. The contract form also has been modified to reorganize the list of improvements or accessories included in sale. The revised form permits a prequalified buyer to make the contract subject only to the property satisfying lender's loan underwriting requirements. Other changes permit the buyer to have survey exception to title policy deleted at the buyer's expense and rely upon the seller's existing survey in lieu of having a new survey. The parties may agree when the buyer must be furnished or obtain a new survey and the period of time for the buyer to make title objections. Financing conditions, seller financing details and loan assumption provisions would be moved to new separate addenda. A provision has been added for payment for a residential service contract. An automatic extension of closing for up to 15 days for satisfaction of lender's closing requirements would be eliminated. The revised form also clarifies when the buyer takes possession. Closing cost provisions are combined for conventional and FHA/VA transactions. A blank has been added for the seller to pay a portion of the buyer's expenses. The revised form also permits the parties to agree to mediate their disputes without using an addendum. A list of contract addenda has been added along with boxes to indicate which addenda have been made part of the contract. Adds list of addenda with check boxes. An option clause has been moved to a new paragraph and made applicable only if all blanks have been filled in and the option fee has been paid. A receipt has been added for the option fee. Office addresses and facsimile numbers have been added to the contract for listing and selling associates.

The amendment to §537.33 would adopt by reference Standard Contract Form TREC No. 26-4, Seller Financing Addendum. The form is an addendum 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. A provision has been added to the form to list the documentation the buyer will supply the seller to establish the buyer's creditworthiness. Previously, this information has been contained in the main contract between the parties.

The amendment to §537.37 would adopt by reference Standard Contract Form TREC No. 30-3, Residential Condominium Contract (Resale). The form has been revised to permit its use as a resale contract for a condominium unit involving all cash, third party financing, FHA/VA loans, assumptions or seller financing, combining two prior contract forms in the same manner and with many of the same text changes proposed for the revised TREC residential resale contract form.

The amendment to §537.41 would adopt by reference Standard Contract Form TREC No.34-1, Addendum for Property Located Seaward of the Gulf Intracoastal Waterway, which has been modified to reflect a change in the notice required by the Natural Resources Code. Under §61.025, Natural Resources Code, a seller of property located seaward of the Gulf Intracoastal Waterway is required to provide the buyer with a notice relating to public rights affecting beach property. Effective September 1, 1999, §61.025 was amended to include a statement that the buyer should determine the rate of shoreline erosion in the vicinity of the property. The amendment would revise the statutory notice in the TREC form to consistent with the change in the law.

The amendment to §537.45 would adopt by reference Standard Contract Form TREC No. 38-1, Notice of Termination of Contract, a form which a buyer may use to terminate the contract under an option clause contained in the contract. The form has been modified to eliminate a reference to a specific paragraph of the contract, because the option clause may be in different paragraphs of the various TREC contract forms once the revised contract forms are adopted.

The amendment to §537.46 would adopt by reference Standard Contract Form TREC No. 39-3, Amendment, a form used by the parties to amend a contract. The form has been revised to eliminate references to a specific paragraph containing the option clause, since the paragraph number may vary in the TREC contract forms, and to clarify that the amount of expenses that the seller may agree to pay for the buyer is in addition to the amounts which Seller is obligated to pay under the provisions of the main contract.

New §537.47 would adopt by reference Standard Contract Form TREC No. 40-0, Third Party Financing Condition Addendum, a new form developed by the Texas Real Estate Broker-Lawyer Committee. Those provisions concerning a contingency for the buyer to obtain a loan have been relocated from the main TREC contract forms to the addendum primarily to save space in the main contract. The addendum would be used if the contract is to be contingent upon the buyer obtaining conventional financing, a Texas Veterans' Housing Assistance Program Loan, FHA insured financing, or VA guaranteed financing.

New §537.48 would adopt by reference Standard Contract Form TREC No. 41-0, Loan Assumption Addendum, a new form developed by the Texas Real Estate Broker-Lawyer Committee. The addendum contains provisions relating to the assumption of an existing loan by the buyer previously contained in the TREC main contract form.

Mark A. Moseley, general counsel, has determined that for the first five-year period the sections 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.

Mr. Moseley 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 the availability of current standard contract forms. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections, other than the costs of obtaining copies of the forms, which would be available at no charge through the TREC web site, and available from private printers at an estimated cost of $7.50 per set of 50 copies.

Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

The amendments and new sections are proposed 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.

The statute which is affected by this proposal is Texas Civil Statutes, Article 6573a.