The Texas Real Estate Commission met November 4 and adopted changes to residential sales forms. Updated forms will soon be available on the TREC website for voluntary use. The mandatory effective date of the updated forms is January 3. TREC also proposed several changes that will be open for public comment before being voted on at the February 10 meeting.
Texas REALTORS® is working with the approved forms vendors, including zipForms, to have the new and updated forms posted for use ahead of the mandatory effective date and will publicize the post date soon.
Changes to All Residential Contract Forms
Paragraph 4 is amended to add the term “geothermal” to the definition of Natural Resources Leases as a result of a 2023 law change that stipulates property owners own the geothermal energy below the surface of their land.
Paragraph 6C(1) is amended to include the option of providing the T-47.1 Declaration in lieu of the T-47 Affidavit when the seller furnishes the buyer with an existing survey. Paragraph 6C(2) is amended to read “Buyer may obtain a new survey” instead of “Buyer shall obtain a new survey” and adds that if the buyer ultimately fails to obtain the survey, the buyer does not have the right to terminate the contract under Paragraph 2B of the Third Party Financing Addendum.
Paragraph 6E(11) is added to provide information regarding mold remediation certificate requirements (except in the Unimproved Property Contract).
Paragraph 6E(12) is modified to add specific examples of the types of notices that should be listed in the paragraph and to add a caution that the seller’s failure to provide required notices may provide the buyer with certain remedies, like the ability to terminate the contract.
In light of industry changes around broker compensation, Paragraph 12A(1)(a) and 12A(2) add that each party pays the brokerage fees that the party has agreed to pay. Paragraph 12A(1)(b) is amended to allow for a specific seller contribution to the buyer’s brokerage fees. A new Paragraph 12A(1)(c) has been added to separately address other seller contributions (previously in Paragraph 12A(1)(b)) and the prior language that specified the order in which any contribution was to be paid, as well as a limitation on the type of fee that could be paid, is removed. Conforming changes are also made in the Amendment to Contract.
Additionally, the compensation disclosure in the Broker Information section of the contracts (except for the Farm and Ranch Contract) has been modified to remove the parenthetical referencing the MLS and to add checkboxes to allow for the fee to be reflected either as a percentage or a dollar amount.
Third Party Financing Addendum Changes
Paragraph 2A, Buyer Approval, has been changed to require both a notice of termination and a copy of a written statement of the lender’s determination like in Paragraph 2B, Property Approval.
Unimproved Property Contract Changes
Paragraph 3D is amended to include the same sales price adjustment language as in the Farm and Ranch Contract.
Addendum for “Back-Up” Contract Changes
Paragraph 11, Special Provisions, is modified to provide more clarity on the timing and payment of the earnest money and option fee by incorporating similar language from Paragraph 5 of the contract and by addressing timing and payment of additional fees.
New Addendum for Section 1031 Exchange Adopted
A new Addendum for Section 1031 Exchange was drafted that allows the seller or buyer to disclose an intent to use the subject property as a 1031 exchange and includes a statement that the parties will reasonably cooperate with one another. Providing this as an addendum, rather than in the contract, allows the parties to use it when applicable without causing unnecessary confusion. A reference to the new Addendum for Section 1031 Exchange is also added to Paragraph 22 of the contract.
Proposed Form Changes
TREC proposed several changes that will be open for public comment before being voted on at the February 10, 2025 meeting. Public comments can be made on the TREC website once they are published in the Texas Register. The proposed changes are as follows:
Add disclosures to the Information About Brokerage Services that broker’s and owner’s agent fees are not set by law and are fully negotiable.
Revise Paragraph 2 of the Notice of Buyer’s Termination of Contract to ensure that the buyer has delivered the lender’s written statement to the seller in accordance with the recent changes to Paragraph 2A, Buyer Approval, of the Third Party Financing Addendum.
Texas REALTORS® Appointed to Education Standards Advisory Committee
Congratulations to the members appointed to the Education Standards Advisory Committee: Kara Bang, Christopher Gonzalez, Kandi Luensmann, Jean Mitchell, Bill Steddum, Paul Silverman, and Christina Valero.
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