Based on recommendations from the Unauthorized Practice of Law Working Group, the Commission proposed at its November 2022 meeting a new rule—Section 537.1, Definitions—and amendments to Section 537.11, Use of Standard Contract Forms. The proposals were published in the Texas Register to allow for public comment.

The Unauthorized Practice of Law Working Group reviewed hundreds of public comments TREC received, most opposing the proposed amendment to 537.11 (a)(4) to eliminate the ability of license holders to use contract forms prepared by an attorney for a brokerage when no Commission-approved contract form for mandatory use exists as long as certain requirements are met.

After reviewing these comments, the working group recommended dropping this change and reverting back to the current language for this section, which allows license holders to use brokerage forms prepared by an attorney when no mandatory TREC form exists.

The Commission will discuss the working group’s recommendation and vote whether to re-propose the new rule and amendments to Section 537.11—without the change prohibiting brokerage forms—at its February 13 meeting. The recommended re-proposal of 537.1 and 537.11 would allow stakeholders to see the updated draft and provide public comment again.

What Would Be in the Proposed Changes at the February TREC Meeting?

The Commission would re-propose Section 537.1, which includes a definition for the new term "informational items," which is intended to better describe the type of information that a license holder can add to a contract form. This definition mirrors the newly adopted language in Paragraph 11 of the Commission's contract forms.

It would also re-propose amendments to Section 537.11 reorganize and consolidate the rule for clarity and simplify the language regarding when a license holder is required to use a Commission-approved contract form and what is considered the unauthorized practice of law.

Specifically, the re-proposed changes in subsection (a) align the rule language more closely with the applicable statutory language and simplify the list of exceptions related to contract form use by license holders.

Subsections (b) through (d) provide further guidance to license holders and members of the public on what the Commission considers to be the unauthorized practice of law.

Subsection (d)(2) provides that it is not the practice of law to add language to or strike language from a contract form, if specifically instructed in writing by a principal, as long as any change is made conspicuous, including underlining additions, striking through deletions, or employing some other method which clearly indicates the change being made.

Finally, the Commission would re-propose changes to subsection (h) update the language regarding reproduction of Commission-approved contract forms to better account for changes in technology.