22 TAC §§537.11, 537.20, 537.28, 537.30 - 537.32, 537.37, 537.43, 537.46
The Texas Real Estate Commission (TREC) adopts amendments
to §§537.11, 537.20, 537.28, 537.30, 537.31, 537.32, 537.37, 537.43,
and 537.46, concerning standard contract forms, without changes to the proposed
text as published in the November 22, 2002, issue of the
Texas Register
(27 TexReg 10878) and will not be republished. These
amendments adopt by reference six revised contract forms and two addenda to
be used by Texas real estate licensees. The forms are published by TREC and
available at the TREC web site (www.trec.state.tx.us) or at the Texas Real
Estate Commission, P.O. Box 12188, 1101 Camino La Costa, Austin, TX 78711-2188.
The effective date for mandatory use of the adopted contract forms is April
1, 2003; however, the forms may be used by licensees on a voluntary basis
prior to the effective date.
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 pursuant to Texas Civil Statutes,
Article 6573a, §16.
The amendment to §537.11 renumbers the revised forms promulgated by
TREC.
The amendment to §537.20 adopts by reference Standard Contract Form
TREC No. 9-5, Unimproved Contract Form. The form is revised as follows. The
form permits a prequalified buyer to make the contract subject only to the
property satisfying the lender's loan underwriting requirements. The paragraph
regarding Earnest Money is modified to measure the deposit date for additional
earnest money from the effective date of the contract. Other changes permit
the buyer to have the survey exception to title policy deleted at the buyer's
expense. The form provides that the parties may agree on the period of time
for the buyer to make title objections and clarifies the time period to cure
objections. Title defects to which buyer can object are rewritten for clarity
and include an objection for any part of the property lying in a flood plain.
The form is revised to add title notices for property located in a certificated
service area of a utility service provider and a Texas Agricultural Development
District. Financing conditions, seller financing details and loan assumption
provisions are deleted; existing separate addenda contain the financing details.
The form adds sellers disclosures regarding, among other things, flooding,
litigation, environmental hazards, dumpsites, wetlands, and endangered species.
An automatic extension of closing for up to 15 days for satisfaction of lender's
closing requirements is eliminated. The revised form clarifies when the buyer
takes possession. Closing cost provisions are combined for conventional and
FHA/VA transactions. A blank is added for the seller to pay a portion of the
buyer's expenses. "Transfer fees for cooperative or association membership
for utility services" is added to the list of Buyer's expenses. The revised
form permits the parties to agree to mediate their disputes without using
an addendum. A list of contract addenda is added along with boxes to indicate
which addenda will be made part of the contract. An option clause is 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 is added for the option fee.
Office addresses and facsimile numbers are added to the contract for listing
and selling associates.
The amendment to §537.28 adopts by reference Standard Contract Form
TREC No. 20-6, One to Four Family Residential Contract (Resale). The form
is revised as follows. The form clarifies the time period to cure objections.
The paragraph regarding Earnest Money is modified to measure the deposit date
for additional earnest money from the effective date of the contract. Closing
cost provisions are clarified by combining buyers expenses into one paragraph
rather than two separate subparagraphs for conventional/FHA financing and
VA financing. The form deletes the "not to exceed" blank for PMI, VA loan
funding fee and MIP, which fixed a maximum on the amount of such fees to be
paid by buyer, and replaces the blank with a clause that states that buyer
shall pay such fees as required by lender.
The amendment to §537.30 adopts by reference Standard Contract Form
TREC No. 23-5, New Home Contract (Incomplete Construction). The form is revised
as follows. The form permit a prequalified buyer to make the contract subject
only to the property satisfying the lender's loan underwriting requirements.
The paragraph regarding Earnest Money is modified to measure the deposit date
for additional earnest money from the effective date of the contract. Other
changes permit the buyer to have the survey exception to title policy deleted
at the buyer's expense. The parties can agree on the period of time for the
buyer to make title objections. Financing conditions, seller financing details
and loan assumption provisions are deleted; existing separate addenda contain
the financing details. The revised form provides that change orders to the
construction documents must be in writing and a decrease in costs resulting
from change orders and unused allowances reduces the sales price and proportionately
adjusts the cash portion of the sales price and the amount financed as required
by lender. The construction commencement date is measured from the effective
date of the contract rather than from the date of loan approval. The form
adds sellers disclosures regarding, among other things, flooding, litigation,
environmental hazards, dumpsites, wetlands, and endangered species. An automatic
extension of closing for up to 15 days for satisfaction of lender's closing
requirements is eliminated. The revised form clarifies when the buyer takes
possession. Closing cost provisions are combined for conventional and FHA/VA
transactions. A blank is added for the seller to pay a portion of the buyer's
expenses. In the default paragraph, Buyer may extend closing for up to 45
days, changed from 15 days, under certain circumstances. The revised form
permits the parties to agree to mediate their disputes without using an addendum.
A list of contract addenda are added along with boxes to indicate which addenda
have been made part of the contract. An option clause is 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 is added for the option fee. Office addresses
and facsimile numbers are added to the contract for listing and selling associates.
The amendment to §537.31 adopts by reference Standard Contract Form
TREC No. 24-5, New Home Contract (Complete Construction). The form is revised
as follows. The form now permits a prequalified buyer to make the contract
subject only to the property satisfying the lender's loan underwriting requirements.
The paragraph regarding Earnest Money is modified to measure the deposit date
for additional earnest money from the effective date of the contract. Other
changes permit the buyer to have the 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 are deleted; existing separate addenda contain the financing details.
The form adds sellers disclosures regarding, among other things, flooding,
litigation, environmental hazards, dumpsites, wetlands, and endangered species.
An automatic extension of closing for up to 15 days for satisfaction of lender's
closing requirements is eliminated. The revised form clarifies when the buyer
takes possession. Closing cost provisions are combined for conventional and
FHA/VA transactions. A blank is added for the seller to pay a portion of the
buyer's expenses. The revised form permits the parties to agree to mediate
their disputes without using an addendum. A list of contract addenda is added
along with boxes to indicate which addenda have been made part of the contract.
An option clause is 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 is
added for the option fee. Office addresses and facsimile numbers are added
to the contract for listing and selling associates.
The amendment to §537.32 adopts by reference Standard Contract Form
TREC No. 25-4, Farm and Ranch Contract. The form is reformatted and revised
as follows. The property description is divided into four major parts: land,
improvements, accessories and crops. The form permits a prequalified buyer
to make the contract subject only to the property satisfying the lender's
loan underwriting requirements. Financing conditions, seller financing details
and loan assumption provisions are deleted; existing separate addenda contain
the financing details. The paragraph regarding Earnest Money is modified to
measure the deposit date for additional earnest money from the effective date
of the contract. Other changes permit the buyer to have the survey exception
to title policy deleted at the buyer's expense. The parties may agree on the
period of time for the buyer to make title objections measured from receipt
of the commitment, exception documents and survey. Title defects to which
buyer can object are rewritten for clarity and include an objection for any
part of the property lying in a flood plain. The reference to the TREC Addendum
for Abstract of Title is deleted. Blank lines are provided for the seller
to list exception documents and surface leases; the form clarifies that exception
documents and leases will be permitted exceptions in the title policy and
will not be a basis for objection to title. The form adds sellers disclosures
regarding, among other things, flooding, litigation, environmental hazards,
dumpsites, wetlands, and endangered species. The form is revised to add title
notices for property located in a certificated service area of a utility service
provider and a Texas Agricultural Development District. The form includes
blanks for seller to identify governmental programs that the property is subject
to and provides for allocation or proration of governmental program by separate
agreement. An automatic extension of closing for up to 15 days for satisfaction
of lender's closing requirements is eliminated. The form clarifies when the
buyer takes possession. Closing cost provisions are combined for conventional
and FHA/VA transactions. A blank is added for the seller to pay a portion
of the buyer's expenses. The form provides for proration of unknown rentals
such as those related to crop production once such rentals become known. The
form permits the parties to agree to mediate their disputes without using
an addendum. A list of contract addenda is added along with boxes to indicate
which addenda have been made part of the contract. An option clause is 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 is added for the option fee.
Office addresses and facsimile numbers are added to the contract for listing
and selling associates.
The revised Farm and Ranch Contract form contains an agreement for payment
of broker's fee; the parties indicate whether the buyer or seller will pay
the listing/ principal broker and whether the buyer or seller will pay the
Other Broker; the parties select the amount and type of payment (cash fee
or percentage of total sales price) to listing/principal broker and other
broker. The form includes a notice in bold font that broker's fees are negotiable
and not controlled by TREC and provides for separate signatures by buyer and
seller to indicate their agreement for payment of broker's fees.
The amendment to §537.37 adopts by reference Standard Contract Form
TREC No. 30- 3, Residential Condominium Contract (Resale). The form is revised
as follows. The form clarifies the time period to cure objections. The paragraph
regarding Earnest Money is modified to measure the deposit date for additional
earnest money from the effective date of the contract. Closing cost provisions
are clarified by combining buyers expenses into one paragraph rather than
two separate subparagraphs for conventional/FHA financing and VA financing.
The "not to exceed" blank for PMI, VA loan funding fee and MIP, which fixed
a maximum on the amount of such fees to be paid by buyer is deleted in the
new form and replaced with a clause that states that buyer shall pay such
fees as required by lender.
The amendment to §537.43 adopts by reference Standard Contract Form
TREC No. 36-2, 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. The form is modified
to add a provision to clarify that if the buyer terminates the contract pursuant
to the provisions of the addendum, the earnest money will be refunded to buyer.
The amendment to §537.46 adopts by reference Standard Contract Form
TREC No. 39-4, Amendment, a form used by the parties to amend a contract.
The form is revised to change a reference to a specific paragraph in item
number 5 since the paragraph number has changed in the TREC contract forms.
Drafts of the proposed forms were released for comment and displayed on
the TREC web site for several months prior to the filing of the formal rulemaking
proposal to adopt them. Approximately 30 comments were received and considered
by the Broker-Lawyer Committee during this period, and a number of changes
were made in the drafts as a result of the comments. After the proposals appeared
in the Texas Register, approximately 30 comments were received regarding the
content of the proposed contract forms. The Texas Association of Realtors
(TAR), the San Antonio Board of Realtors (SABOR) and the Greater Dallas Association
of Realtors (GDAR) commented on the proposed forms.
The Commission has made typographical corrections to the forms adopted
by reference, and other changes were made to the text of the proposed forms
in response to comments. TAR suggested that paragraph 12 of both proposed
new home contracts, TREC Nos. 23-5 and 24-5, be amended to add "tax deletion
fee" and "EPA endorsement" to Buyer's expenses in paragraph 12.A.(2)(b) of
both new home contracts; one commenter suggested adding Paragraph 12.A.(4)
from the current condominium contract regarding payment of transfer expenses
to be numbered 12.A.(3) in the proposed condominium contract; TAR suggested
adding "transfer fees for cooperative or association membership for utility
services" to Buyer's expenses in paragraph 12.A.(2)(b) of the proposed unimproved
contract. All the above changes were originally proposed and discussed by
the Broker Lawyer Committee but were inadvertently deleted from the proposed
forms as a result of a typographical error in succeeding drafts. SABOR recommended
that "Address of Property" be added underneath the address line on each page
of the Farm and Ranch Contract form, TREC No. 25-4. The Commission agrees
to these changes to the forms.
A number of comments did not result in changes to the text of the proposed
forms. The comments and Commission responses to those comments are summarized
as follows.
Comment: One commenter asked that the paragraph listing expenses payable
by seller include "lender required repairs."
Response: The Commission determined that lender required repairs are dealt
with sufficiently in paragraph 7.E. where neither party is obligated to pay
for lender required repairs unless otherwise agreed in writing, and if the
parties cannot agree as to who pays, the contract will terminate and the earnest
money refunded to buyer.
Comment: One commenter believes that paragraph 21 should include check
boxes for buyer and seller contact information to indicate to whom notices
must be delivered.
Response: The Commission determined that the public interest was best served
by the proposed text of paragraph 21 without additional checkboxes as the
checkboxes are unnecessary.
Comment: Two commenters suggested reinserting in paragraph 7 the buyer's
right to reinspect the property.
Response: The Commission declined to make the suggested change as the paragraph
states that the seller shall permit access to the buyer and buyer's agents
at reasonable times, which would include reinspection as necessary.
Comment: It was suggested that the Commission delineate how mortgage interest
premiums (MIP) or private mortgage interest (PMI) will be paid in the main
body of the contract.
Response: The Commission declined to make the suggested change as the payment
of MIP and PMI is addressed in the Third Party Financing Addendum.
Comment: One commenter advised that the Commission should add buyer and
seller initials to the last page of the contract forms.
Response: The Commission declined to make the suggested change as it is
not necessary for buyer and seller to initial that page.
Comment: One commenter suggested that the Commission add more space for
buyers and sellers, property description, and signature lines in all the contracts.
Response: The Commission concluded that there is sufficient space for this
information in all forms. A broker can attach additional exhibits to the contract
if necessary.
Comment: A commenter asked that the Commission add a blank line before
the sales price and financed price to make room for changes to those prices.
Response: The Commission declined to make the suggested change as licensees
may use the amendment form if those figures change.
Comment: Several commenters requested that the forms include text to indicate
that the offer to buy or sell terminates at a certain time or that include
an "acceptance time" for seller response.
Response: Adding an acceptance time or offer termination date raises complexities
that cannot be anticipated in a standard form. Additional issues raised by
the suggestions include whether the acceptance time applies only to acceptance
of offers, or also to acceptance of counter-offers; would the time to accept
or counter offer apply only to the seller or also to the buyer in response
to a counter from the seller. Because of the complexity of the matter, the
commission believes that the public interest is best served by the proposed
text of the form without the suggested change.
Comment: One commenter asked that the Commission add a space to the forms
for buyer, seller, and agent email addresses.
Response: The Commission declined to make the suggested change as the contracts
already provide for telephone and facsimile numbers and addresses to contact
the parties. Parties are free to add their e-mail addresses to the contract
as necessary.
Comment: One commenter suggested putting the effective date on page one
of the contract forms.
Response: The effective date is adjacent to the signatures on the signature
page. The Commission determined that adding the effective date to the first
page takes up additional space and is unnecessary.
Comment: A commenter asked for the Commission to add disclosures regarding
flood plains, sewer systems and water wells to all the contract forms.
Response: Similar disclosures are in the proposed text of relevant contracts
wherein the issue may arise. In addition, a disclosure regarding flood plains
is in the sellers disclosure notice.
Comment: One commenter requested adding a parenthetical to paragraph 4A
to clarify that the amount does not include mortgage insurance and funding
fees.
Response: The parenthetical is already in paragraph 3B of the relevant
contracts and the Third Party Financing Condition Addendum. The amount in
4A should be the same amount indicated in 3B and the Third Party Financing
Condition Addendum; therefore it is redundant to include the parenthetical
again.
Comment: One commenter suggested adding a space or check box to Paragraph
6C to all the contracts to provide for situations in which no survey is required
similar to the proposed text in the Farm and Ranch Contract.
Response: Few residential property sales in Texas are closed where no survey
is required. The Commission believes that the benefits of leaving out the
"no survey" option in paragraph 6 significantly outweigh the risks to the
public where the buyer or seller has an option to choose that no survey is
provided in a typical residential property transaction. A seller does have
the option, however, to provide an existing survey if the title company or
buyer's lender approve. The Commission believes that the public interest is
best served by the proposed text of the forms without the suggested change.
Comment: Three commenters stated that they liked the changes, one especially
liked the changes to paragraph 12 concerning the MIP and PMI.
Response: The Commission appreciates the comments in support of the proposed
changes.
Comment: Two commenters requested that the Commission stop making changes
to the forms and stated that the proposed changes are unnecessary.
Response: The Commission appreciates the input; however, due to constant
changes in industry practice and law, updates to the contract forms are necessary
and for the benefit of the public.
Comment: One commenter suggested that paragraph 7.G. in the new home contracts
should be filled in with the minimum FTC required insulation standards.
Response: The Commission determined that the proposed change was unnecessary
and the public interest was best served by the proposed text of the forms
without the suggested change.
Comment: One commenter asked that the Commission change "shall" to "will"
in paragraph 5 of the contract forms.
Response: The Commission determined that the suggested change was a stylistic
preference and therefore unnecessary.
Comment: One commenter requested that paragraph 23 of all the contract
forms specify that the option fee is an amount in addition to the earnest
money.
Response: The Commission determined that the proposed change was unnecessary
as it is sufficiently clear in paragraph 23 that the option fee is to be paid
to the seller and is separate from the earnest money.
Comment: One commenter suggested changing all the contract forms to prohibit
buyers from bargaining for several different properties at the same time by
using the option fee and time period because it is unfair to sellers.
Response: The Commission determined that the public interest was best served
by the text of the forms without the suggested change as it would eliminate
protections for the parties established in the text as proposed.
Comment: One commenter suggested changing paragraph 6.A.(8) (paragraph
6.A.(6) in the Farm and Ranch Contract) of the contract forms to include check
boxes for a buyer to accept or decline the option to amend the exceptions
in the Title Policy to read, "shortages in area".
Response: The Commission believes that the public interest is best served
by the proposed text without the suggested change. It is unnecessary to add
additional check boxes for the buyer to indicate a choice as it clear in the
current language of the provision that the buyer, at the buyer's expense,
may have the exception amended to read "shortages in area."
Comment: One commenter requested that the appraisal fee should be treated
differently from other costs in paragraph 12 because it is a significant "upfront"
cost and deserves separate treatment.
Response: The Commission appreciates the input but it is unclear what changes
the commenter is suggesting. The Commission believes that the public interest
is best served by the proposed text of paragraph 12 without additional changes
except as noted above.
Comment: One commenter suggested changing the dates in paragraph 6.C.(1)&(2)
to be the same as the last sentence of paragraph 6.C.(3) which sets the time
in which to provide a new survey if the title company or buyer's lender does
not approve an existing survey to a period of time prior to the closing date.
Response: All three deadlines for providing a survey in paragraph 6, whether
at buyer's expense, at seller's expense, or an existing survey, run from the
effective date of the contract. The only survey date that is tied to the closing
date is the time in which to provide a new survey if the title company or
buyer's lender does not approve an existing survey. The Commission determined
that it is more consistent to leave the text as proposed.
Comment: One commenter proposed adding a provision to the termination option
in paragraph 23 to permit the Buyer to provide the option fee within 2 days
of the effective date of the contract.
Response: The current option paragraph requires that the buyer pay the
option fee on or prior to the effective date of the contract. The Commission
determined that the public interest is best served by the text of paragraph
23 without the suggested change as it would affect protections for the parties
already established in the text as proposed.
Comment: Three commenters suggested adding an automatic 15 day extension
of contract to provide for satisfaction of lender's closing requirements.
Response: The amendment form can be used for the parties to extend the
closing date for any reason, or the parties can agree to provide for an automatic
extension for lender's closing requirements in paragraph 11 of the contracts.
The automatic 15 day extension was removed from the current residential contract,
TREC. No. 20-5, last year when the Broker Lawyer Committee proposed that the
Commission adopt the change as one of several to the residential contract.
At that time, the Commission considered similar suggestions to leave the extension
in the forms and ultimately decided to remove the automatic extension. The
Commission has determined at this time that the public interest is best served
by the proposed text without the suggested change as an extension of the closing
date to satisfy lender's closing requirements can be made by agreement of
the parties.
Comment: One commenter suggested that the Commission delete paragraph 12B
from the forms and place "mortgage insurance premium or loan funding fee"
under Buyer's Expenses in paragraph 12A(2).
Response: MIP and PMI are defined terms in paragraph 12.B. and then referenced
in the Third Party Financing Addendum. The terms would need to be defined
in paragraph 12 which would be the same as the proposed text of paragraph
12.B.
Comment: Regarding paragraph 12.A(1)(b) in the TREC form No. 20-6, two
commenters requested that the Commission consider limiting the dollar amount
in this blank to include only fees charged by the lender which the Buyer may
not pay, and adding another paragraph (c) which would include a blank for
any other expenses the Buyer is asking the Seller to pay.
Response: The commenter's proposed text achieves the same purpose as the
text proposed by the Commission but unnecessarily makes the forms longer.
Comment: One commenter requested that the forms be changed to add a paragraph
that addresses whether the property will be owner occupied. Whether an owner
occupies a property may affect financing because the buyer may not be approved
for a loan at the interest rate indicated on the financing addendum.
Response: While the Commission understands the concerns raised by the suggestion,
it determined that the public interest was best served by the text of the
forms without the suggested change as it would affect protections for the
parties established in the text as proposed.
Comment: A commenter suggested modifying the escrow agreement in all of
the contract forms to include instructions to the title companies that will
affect the immediate release of all earnest money in the event that the buyer
terminates per the termination option.
Response: All the contract forms have been modified to provide for a refund
of the earnest money to Buyer in any instance where the buyer has a right
to terminate under the contract. This proposed text should address the concerns
raised by this commenter to provide for quick refund of earnest money to the
Buyer in appropriate instances.
Comment: One commenter asked that paragraph 7 (A) clarify that 1) access
to the property is only during the Option Period or during a defined period
if there is no Option; and, 2) it should read "Buyer's Agents or Buyers accompanied
by their Buyer's Agent".
Response: The Commission reviewed the suggestion and determined that the
public interest was best served by the text of the forms without the proposed
change as it would alter protections for the parties established in the text
as proposed.
Comment: On TREC No. 24-5, one commenter recommended that Paragraph 2 have
the same format as TREC No. 20-6 Paragraph 2(B-D) to include a separate paragraph
for Improvements; Accessories; and Exclusions.
Response: The Commission appreciates the suggestion, but has determined
that the recommended change is not necessary at this time.
Comment: On TREC No. 9-5, paragraph. 6.E.(5), and TREC No. 25-4, paragraph
6.G.(4), one commenter recommended that the last sentence include the following
to be added to the end of the sentence: "and/or possible restrictions on the
use of the property" in bold print.
Response: The language in both contract forms' disclosures is quoted verbatim
from Property Code §5.011 which requires the disclosure. The Commission
determined that the disclosure should track the language of the statutory
provision requiring the disclosure.
Comment: One commenter suggested adding a contingency requiring the buyer
to deliver a written waiver of the financing contingency on or before the
financing contingency deadline in the Third Party Financing Condition Addendum.
The commenter also suggests the creation of a new form containing the text
of the buyer's written waiver.
Response: The contracts already contain a contingency in paragraph 4.A.(2)
that is similar to the suggestion. A buyer can choose to enter into the contract
without the contract being subject to buyer being approved for financing.
If the buyer cannot get financing approval, the buyer will be in default.
However, in all cases, if the property does not satisfy the lenders' underwriting
requirements for the loan, the contract will terminate and the earnest money
refunded to the buyer. Furthermore, the Third Party Financing Condition Addendum,
which currently contains the financing approval deadline, is not under review
at this time, and the creation of a new form for the written waiver is not
feasible at this step of the rulemaking process adopting the revised forms.
Adoption of these amendments is necessary for TREC to update the contract
forms used by Texas real estate licensees when negotiating the sale of real
estate and to modify the forms to reflect changes in the real estate market
and the law. The actions also are necessary for TREC to comply with the mandate
in Texas Civil Statutes, Article 6573a, §16, for the Broker-Lawyer Committee
to revise forms to expedite real estate transactions and reduce controversies
to a minimum while safeguarding the interests of the principals to the transaction.
The amendments are adopted under Texas Civil Statutes, Article
6573a, §5(h), which authorizes the Texas Real Estate Commission to make
and enforce all rules and regulations necessary for the performance of its
duties, to establish standards of conduct and ethics for its licensees in
keeping with the purposed and intent of the Act or to insure compliance with
the provisions of the Act; and Texas Civil Statutes, Article 6573a, §16(e),
which authorizes the commission to adopt rules and regulations requiring real
estate brokers and salesperson to use contract forms which have been prepared
by the Texas Real Estate Broker-Lawyer Committee and promulgated by the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on January 9, 2003.
TRD-200300086
Loretta DeHay
General Counsel
Texas Real Estate Commission
Effective date: April 1, 2003
Proposal publication date: November 22, 2002
For further information, please call: (512) 465-3900
22 TAC §537.36, §537.42,
The Texas Real Estate Commission (TREC) adopts the repeal
of §537.36 and §537.42, concerning standard contract forms in connection
with the adoption of revised contract forms, without changes, as published
in the November 22, 2002, issue of the
Texas Register
(27 TexReg 10881) and will not be republished. The forms adopted by
reference in §537.36 and §537.42 are no longer needed as a result
of consolidation of forms. The effective date for repeal of the forms is April
1, 2003.
Section 537.36 concerns a form promulgated for use as an addendum to be
attached to promulgated forms of contracts where an abstract of title is to
be furnished. A provision in the Farm and Ranch Contract that provided the
parties a choice of using the addendum has been deleted. As none of the remaining
promulgated contract forms reference the addendum, the form is no longer required.
Section 537.42 concerns a form promulgated for use as an addendum to be
added to the promulgated forms of contracts as an agreement for mediation.
All the promulgated contracts forms now have an agreement for mediation provision
for the parties to choose whether to submit disputes regarding the contracts
to alternative dispute resolution. Therefore, the mediation addendum is no
longer necessary.
Repeal of the forms is necessary for TREC to update the contract forms
used by Texas real estate licensees when negotiating the sale of real estate
and to modify the forms to reflect changes in the real estate market and the
law. The actions also are necessary for TREC to comply with the mandate in
Texas Civil Statutes, Article 6573a, §16, for the Broker-Lawyer Committee
to revise forms to expedite real estate transactions and reduce controversies
to a minimum while safeguarding the interests of the principals to the transaction.
No comments were received regarding the repeal.
The repeal is adopted 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, to establish
standards of conduct and ethics for its licensees in keeping with the purposed
and intent of the Act or to insure compliance with the provisions of the Act;
and Texas Civil Statutes, Article 6573a, §16(e), which authorizes the
commission to adopt rules and regulations requiring real estate brokers and
salesperson to use contract forms which have been prepared by the Texas Real
Estate Broker-Lawyer Committee and promulgated by the commission.
The statute which is affected by this adoption is Texas Civil Statutes,
Article 6573a.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on January 9, 2003.
TRD-200300085
Loretta DeHay
General Counsel
Texas Real Estate Commission
Effective date: April 1, 2003
Proposal publication date: November 22, 2002
For further information, please call: (512) 465-3900