Mandatory Use Begins May 15, 2018 For All License Holders, Make Sure You Are Ready
The Commission adopted changes to the mandatory contract forms recommended by the Broker Lawyer Committee at its February 12, 2018 meeting. The forms are available for voluntary use immediately and will become mandatory on May 15, 2018. Redlined versions of the changes to the contracts can be found on TREC’s website in the Meeting Materials for the February meeting. Be sure to join us for our Facebook Live event with our very own General Counsel Kerri Lewis, where we go over all of these changes and answer your questions. We have published the full presentation from the Facebook Live event.
Below is a description of the changes to the contract forms. The changes apply to all contract forms unless specified otherwise. Paragraph numbers referenced are from the One to Four Family Residential Contract (Resale).
Is amended to clarify that any reservations of mineral rights must be done in a separate addendum.
is amended to require Earnest Money to be delivered within 3 days of the Effective Date. If the 3rd day falls on a Saturday, Sunday or legal holiday, the earnest money is due on the next day that is not a Saturday, Sunday or legal holiday. Seller may terminate the contract if buyer fails to timely deliver the Earnest Money. Seller must notify buyer of seller’s election to terminate the contract before buyer delivers the Earnest Money. Time is made of the essence for this paragraph.
Is made a defined term throughout the contracts but is still tied to the final date of acceptance provided on the signature page.
Is amended to include an exception for minerals as approved by the Texas Department of Insurance.
The phrase “due to factors beyond Seller’s control” is removed from the sentence allowing Buyer to terminate the contract if the Commitment and Exception documents are not timely received.
Paragraph 6 D
Is amended to: define the time by which seller is to cure objections as the“Cure Period”; provide a specific time frame by which the buyer must notify the seller that the buyer will terminate or waive the objections if the objections are not cured within the Cured Period; and addresses additional time periods for the buyer to object and the seller to cure if a revised commitment, revised survey, or updated exception documents are provided. A reference in this paragraph to items in 6A was also updated to include the new item 6A(9).
Is amended to clarify what is meant by “applicable law” and an “affidavit” when seller is a “foreign person.”
Broker’s Information Page.
The spaces for fax numbers were removed and spaces for phone numbers for the brokers were added. Initial boxes for Seller and Buyer were removed.
Earnest Money Receipt Page.
Separate receipt boxes were added to the forms for Earnest Money, the Contract and Additional Earnest Money. Initial boxes for Seller and Buyer were removed.
Paragraph 2B(2) and 2C (Condominium Contract Only)
Is amended to clarify that the seller bears the expense to deliver the condominium documents and the resale certificate to buyer.
Paragraph 2F. Reservations (Farm and Ranch Contract Only)
is amended to strike the parenthetical stating that reservations may be included in special provisions. Reservations are to be addressed in an addendum. The list of Addenda in Paragraph 22 was amended to add the Addendum for Reservation of Oil, Gas, and Other Minerals.
Addendum for Authorizing Hydrostatic Testing.
A new addendum was adopted to authorize a hydrostatic test to be performed at buyer’s expense and elect who will be responsible for damages caused by the test.
Addendum Concerning Right To Terminate Due To Lender’s Appraisal.
A new addendum was adopted to address the situation where the parties create a contingency to the contract based on the appraisal performed by the lender and termination rights or waiver associated with that contingency. There are three options available to the parties in this addendum.
Proposed Notice Forms Up For Adoption In May 2018
The Commission proposed the following notice forms at their February 12, 2018 meeting:
Notice of Buyer’s Termination of Contract.
Amendments were proposed to include the election to terminate given under one of the option in the new Addendum Concerning Right to Terminate Due to Lender’s Appraisal and under paragraph 6.D. when objections to title or survey are not timely cured. B
Notice of Seller’s Termination of Contract.
A new notice was proposed for Sellers to use to give notice of termination under rights granted under the mandatory contract forms or addenda.