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Texas Register Preamble


The Texas Real Estate Commission (TREC) proposes amendments to §§537.11, 537.22, 537.43, and 537.47, and proposes new §535.49 concerning standard contract forms. These amendments and new section would adopt by reference four 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, six brokers appointed by TREC, and a public member appointed by the governor.

The amendment to §537.11 would renumber the revised forms promulgated by TREC.

The amendment to §537.22 would adopt by reference Standard Contract Form TREC No. 11-5, Addendum for "Back-up" Contract. The form would be revised to clarify Paragraph B. regarding the contingency date and paragraph E. regarding the time for giving notice of termination. Under paragraph B, If the first contract terminates, the effective date of the Back-Up Contract automatically changes to the date the buyer receives notice of termination of the first contract or the contingency date, whichever is earlier and is called the Amended Effective Date. The time for giving notice of termination in Paragraph E. is clarified to conform to the changes in Paragraph B.

The amendment to §537.43 would adopt by reference Standard Contract Form TREC No. 36-3, Addendum for Property Subject to Mandatory Membership in an Owners' Association, a form that a seller may use to provide certain statutory notices regarding membership in an owners' association. Paragraph A.3. would be changed to delete the language which states that buyer waives the right of termination under the addendum if buyer does not require delivery of the subdivision information.

The amendment to §537.47 would adopt by reference Standard Contract Form TREC No. 40-1, Third Party Financing Condition Addendum. The form would be revised to clarify that "every reasonable effort to obtain financing approval" includes but is not limited to furnishing all information and documents required by lender for approval. The sentence in the introductory paragraph regarding the date by which the buyer must obtain financing approval is revised for buyer to provide written notice to seller within a stated period of days after the effective date if buyer cannot obtain financing approval within the time period. If buyer gives notice within the time period, the contract will terminate and the earnest money will be refunded to buyer. If buyer does not give the notice within the time period, the contract will not be subject to buyer financing approval as described in the addendum. The proposed revised form deletes the options in subparagraphs A.1. and A.2. as to whether the loan will or will not include private mortgage insurance (PMI). Finally, the commission proposes to delete the second part of paragraph C. of the addendum to avoid a potential conflict between the language in the first part of paragraph C regarding the appraised value of the property.

New §537.49 would adopt by reference Standard Contract Form TREC No. 42-0, Notice Pursuant to Third Party Financing Condition Addendum. The form provides a notice to seller that the buyer is unable to obtain financing approval according to the terms of the Third Party Financing Addendum.

Loretta R. DeHay, 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.

Ms. DeHay 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 Loretta R. DeHay, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

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 licensees to fulfill the purposes of chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statute affected by this proposal is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.



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