The Texas Real Estate Broker-Lawyer Committee (BLC) met October 14 to discuss public comments on proposed form changes from the August TREC Meeting. After reviewing 123 public comments, the committee made some non-substantive changes and recommended the forms be adopted at the November 7 TREC Meeting.
Changes Based on Public Comment
The PID Notice Will Stay in Paragraph 22
Several comments suggested keeping the Addendum Containing Notice of Obligation to Pay Improvement District Assessment form listed within Paragraph 22, Agreement of Parties, which is the list of addenda that are considered a part of the contract. The committee agreed with this suggestion.
Extra Clarification on Transfer Fees
Based on public comments, the committee decided to add the following as the last sentence in Paragraph 9B(5): "Transfer fees assessed by a Property Owner’s Association are governed by the Addendum for Property Subject to Mandatory Membership in a Property Owners Association." In the Condominium contract form, they decided to add a similar sentence in Paragraph 9B(5) to read: "This paragraph does not apply to fees assessed by the Association."
More Lines in the Notices Paragraph
Because of public comment, the committee decided to add an additional line in Paragraph 21, Notices, for a second email address or fax number for each of the parties. It also decided to delete "with a courtesy copy to" and substitute "with a copy to Buyer’s agent at:" and "with a copy to Seller’s agent at:".
What the Proposed Changes to Paragraph 11 Really Mean
A number of public commenters were concerned about the proposed change to Paragraph 11, Special Provisions:
"(This paragraph is intended to be used only for additional informational items. An informational item is a statement that completes a blank in a contract form, discloses factual information, or provides instructions. Real estate brokers and sales agents are prohibited from practicing law and shall not add to, delete, or modify any provision of this contract unless drafted by a party to this contract or a party's attorney.)"
Specifically, commenters believed adding that real estate brokers and sales agents cannot practice law and are prohibited from adding to, deleting, or modifying the contract means a license holder who is a party to the contract is not allowed to modify the contract. The committee noted this is an incorrect interpretation: Modifying the contract is allowed if "drafted by a party to this contract."
What Happens Next?
Since the changes to the proposed forms are minor, the committee recommends that the Commission approve the proposed form changes at its next meeting in November. The Commission will then vote at its November meeting whether to adopt the forms with the committee’s recommended changes.
When Would Approved Revised Forms Become Effective?
If adopted at the November TREC Meeting, the revised forms would be available for voluntary use shortly after the meeting with a mandatory use date effective February 1, 2023.
Where to Find Meeting Materials
Watch a video recording of the meeting and download related meeting materials on the meeting page.
What’s Next for the Broker-Lawyer Committee?
The Broker-Lawyer Committee will next discuss comments received on contract forms, relevant case law, and whether to include notice of other statutory termination rights in contract forms. Stay tuned for an announcement from TREC on the committee’s next meeting date.