The Texas Real Estate Commission on August 19 adopted a new rule and proposed forms changes.
Adopted “Safe Harbor” Rule
The new rule provides a business entity and sponsored sales agents a 14-day grace period from the day of a broker’s death before the broker’s license becomes inactive. This grace period will provide the entity with time to name a new designated broker.
Proposed Forms Changes
The commission proposed the changes listed below. You can comment at the TREC website about these changes. The public comment period will run for 30 days after the form changes are published in the Texas Register. The deadline for public comment is October 5, 2024. The commission will vote on whether to adopt the proposed rules at its November 4 meeting. Any adopted changes would go into effect in early 2025.
One to Four Residential Contract
- Amends Paragraph 4 to add the term “geothermal” to the definition of Natural Resource Leases.
- Amends Paragraph 6C(1) to include an option of providing the T-47.1 Declaration (which does not need to be notarized) in lieu of the T-47 Affidavit when the seller furnishes the buyer with an existing survey. This proposed rule change would make the contract consistent with a recently updated Texas Department of Insurance rule change regarding notarization requirements for the T-47 Affidavit that will go into effect in November.
- Amends Paragraph 6(C)2 to read “Buyer may obtain a new survey” instead of “Buyer shall obtain a new survey.” Add that if the buyer 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 because the survey was not obtained.
- Adds Paragraph 6E(11) to provide information regarding the required mold remediation certificate.
- Amends Paragraph 8B to add a disclosure that brokers’ fees are not set by law and are negotiable.
- Amends Paragraph 12A(1)(a) and 12A(2) to add that both parties pay the brokerage fees that they have agreed to pay.
- Amends Paragraph 12A(1)(b) to allow for a specific seller contribution to the buyer’s brokerage fees.
- Adds Paragraph 12(a)(1)(c) to separately address other seller contributions and the prior language that specific the order in which any contribution was to be paid as well as the limitation on the type of fee that could be paid is removed.
- 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.
Third Party Financing Addendum
- To ensure the buyer is terminating appropriately, Paragraph 2A (Buyer Approval) would be 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
- Amends Paragraph 3D to include the same sales price adjustment language as in the Farm and Ranch Contract.
Addendum for Back Up Contract
- Amends Paragraph 11, Special Provisions, 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 the timing and payment of additional fees.
New Addendum for Section 1031 Exchange
- Adds an addendum for Section 1031 Exchange that allows the seller or buyer to disclose an intent to use the property in a transaction as a 1031 exchange and includes a statement that the parties will reasonably cooperate with each other.
I beleave this reduced our abilty to negotiat terms for our buyers.
I believe that Buyers will begin to utilize sites such as Zillow to find listings and make offers unrepresented. Texas Real Estate Commission has always discouraged this and with the old system someone was going to receive the remaining commission so TREC’s concern was relieved. I suppose that it will take a few years to discover the level of harm.
I agree, TREC has put a strong emphasis on buyers being represented. Seems we are going backwards to the times of buyer beware
I would like to see the proposed changes in the actual contract for context instead of just reading the changes above. A
I agree, it would be helpful to see them in print.
the redline versions of the proposed changes are on the TREC website for viewing
I agree. I would like to see the verbiage in place.
http://www.trec.texas.gov/sites/default/files/20-18%20draft_1.pdf
agree
Agree. I forgot this about 10 seconds after I read it.
I agree. A redline version.
Totally unfair!
The previous system should have never been changed.
Agreed. Making it difficult and confusing for buyers and sellers.
Agree as well! Buyers were afraid of the process to begin with.
I agree. The seller pays the buyer agent as a convenience of the transaction out of sales proceeds, otherwise most buyers that are getting a loan may not be able to complete the transaction if they have to come out of pocket to pay their agent in addition to all their other costs. NAR should never had agreed to the settlement. It’s a bad deal that imposes confusing new rules on a system that worked fine.
They are attempting to kill-off the real estate business as it now exists. Broker fees are already addressed in the listing agreement, compensation agreements and the addendum regarding broker fees. How many times does it need to be repeated? This is ridiculous!
AGREED!!!!
Translation: Start looking for another Job!
Totally agree. Making it very confusing for buyers and sellers.
Agree as well! We were not represented well enough!!
I would hope if TREC makes the updates proposed that the need for TXR’s addendums created to address compensation would no longer be needed. It was my understanding TXR came up with these forms because the TREC contracts did not address the changes the settlement needed them to address. I would love to see the TREC contract change and absolve the need for the TXR forms created for that purpose.
To be fair, TREC, NAR, or TAR doesn’t REQUIRE you to use the compensation forms. The only requirement per said 3 is the Listing Agreement on sell side and Buyer Rep agreement on buy side. All these new forms are just to offer MORE transparency.
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Wondering who is looking out for buyers and Realtors with all of these changes… sigh. Taking away the professionalism of Realtors. If anything, Realtor school requirements, mentorship, and CE needs to be made more stringent and Realtors need to be held more accountable for actions. To many bad apples with lack of everything trying to advise inappropriately is going to kill the industry as a whole. With that being said, since the changes are already in action, I would like to see the amount sellers are willing to contribute towards buyers coop should be separated out from sellers concessessiong going… Read more »
100% agree!
Will the amendment to Paragraph 12A(1)(a) and 12A(2) , that adds that both parties pay the brokerage fees that they have agreed to pay, also have blanks to show specifically what those amounts ARE for both the seller/selling brokerage and the buyer’s agent brokerage?
http://www.trec.texas.gov/sites/default/files/20-18%20draft_1.pdf Here’s a link directly to the redlined version of the 1 to 4 Contract
There should be a sentence in the Buyer Rep Agreement ( short version) that says “Each broker sets their fees. It says that in the long version.
TREC doesn’t publish a Buyer Rep Agreement – that is TX Realtors.
There should be a sentence in the Buyer Rep Agreement ( Short Version) that says that each broker sets their fees. It says that in the long version.
I agree with Karen McCarty.
I applaud the new clarity. Texas did not need to further address compensation. Our forms always allowed negotiation of who pays what. NAR’s problems did not need to be settled by everyone bending to their issues in their lawsuit. Now they want to turn their need to exist by telling me how to vote, what type housing I want to promote. I am C2Ex certified tell me how they promote that to the public or any other expensive designation I earned has been promoted.. As far as Ethics they promoted steering at one time. Now they want to be in… Read more »
This is it:
Amends Paragraph 12A(1)(b) to allow for a specific seller contribution to the buyer’s brokerage fees.
Those sound like great changes thank you so much
It needs to be CLEARLY STATED and defined that Fees are negotiated between Seller and Broker/Agent, that Commissions are not Set bt TREC. That if/when Buyer wants to enter into a Contract for ALSO paying the Realtor that there is a form for that. As well, Broker and ie Buyer can also negotiate this as part of the Buyers/Broker Agreement. But to that end, it seems to have been stated and over stated.
it’s simple, bunch of attorneys’ sniffs where the big money is, they find NAR. None of the member had anything to do about the contract, we hire lots of attorneys to write these contracts and give it to us to use it. and after many years they find out it was wrong?! and settlement, and president of NAR resigns … MMMM. Are we able to go after those attorneys who wrote a “bad” contract for us? the contract that we had nothing to do with it.
My biggest concern is that in all of the legal wrangling NAR and the attorneys did noone thought about the buyers. I do not know of many first time homebuyers that can come to the table with a down payment, closing costs and now Realtor commission to pay their buyer agent. With the price of homes now just the down will be upwards of $9000 on the low end. What I anticipate is that buyers will either with go unrepresented or will go to new home sales where the builders will either deal directly or will pay their Realtor for… Read more »
NAR is running with their tail between their legs. TR followed alongside. TREC has done nothing so far to uniform the contracts. Talk about confusion!
where can we preview the changes