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Part XXIII. Texas Real Estate Commission

Chapter 537. Professional Agreements and Standard Contracts

Standard Contract Forms

22 TAC §§537.11, 537.20, 537.28-537.32, 537.37, 537.38

The Texas Real Estate Commission proposes amendments to §§537.11, 537.20, 537.28-537.32, 537.37 and 535.38, concerning standard contract forms.

The amendment to §§537.11 would add eight revised forms to the list of standard contract forms promulgated by the commission. Three previously promulgated addendum forms would be deleted from the list, because the sections adopting those forms by reference are being proposed for repeal in connection with the adoption of the revised contract forms. The forms were developed by the Texas Real Estate Broker-Lawyer Committee, a committee of six real estate brokers appointed by the commission and six attorneys appointed by the President of the State Bar of Texas. Licensed real estate brokers and salesmen are generally required to use contract forms promulgated by the commission when negotiating the sale of real property. The eight revised forms are TREC Number 9-3, Unimproved Residential Property Contract; TREC Number 20-3, One-to-Four Family Residential Contract (Resale) All Cash, Assumption, Third-Party Conventional or Seller Financing; TREC Number 21-3, One-to-Four Family Residential Contract (Resale) FHA Insured or VA Guaranteed Financing; TREC Number 23-2, New Home Contract (Incomplete Construction);TREC Number 24-2, New Home Contract (Completed Construction); TREC Number 25-2, Farm and Ranch Contract; TREC Number 30-1, Residential Condominium Contract (Resale) All Cash, Assumption, Third-Party Conventional or Seller Financing; and TREC Number 31-1, Residential Condominium Contract (Resale) FHA Insured or VA Guaranteed Financing. The three forms being deleted from the list of promulgated forms are TREC Number 2-4, Property Condition Addendum, TREC Number 27-0, Addendum for Inspection with Right to Terminate, and TREC Number 35-0, Agreement for Mediation.

Provisions in the forms which have been revised include personal property included in the sale, financing terms, title insurance and survey, statutory disclosure requirements, inspections and repairs, notices to the parties, representation and brokers fees, settlement and other expenses, proration of taxes and interest, casualty repairs, dispute resolution, and attorney's fees. A number of nonsubstantive wording changes have been made to make the provisions clearer. The forms have been reprinted in a larger font which makes them easier to read and distinguishes them from the forms currently in use. These actions are necessary to update and standardize the forms used by real estate licensees in negotiating real estate sales.

The amendment to §537.20 adopts by reference form TREC Number 9-3, Unimproved Property Contract, replacing form TREC Number 9-2. The amendment to §537.28 adopts by reference form TREC Number 20-3, , replacing form TREC Number 20-2. The amendment to §537.29 adopts by reference form TREC Number 21-3, replacing form TREC Number 21-2. The amendment to §537.30 adopts by reference form TREC Number 23-2, replacing form TREC Number 23-1. The amendment to §537.31 adopts by reference form TREC Number 24-2, replacing form TREC Number 24-1. The amendment to §537.32 adopts by reference form TREC Number 25-2, replacing form TREC Number 25-1. The amendment to §537.37 adopts by reference form TREC Number 30-1, replacing form TREC Number 30-0. The amendment to §537.38 adopts by reference form TREC Number 31-1, replacing form TREC Number 31-0.

Mark A. Moseley, general counsel, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Any revenue received by the Texas Real Estate Commission from the sale of copies of the forms would be offset by the costs of making the copies available. There is no anticipated impact on local or state employment as a result of implementing the section.

Mr. Moseley also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be the availability of sandardized contract forms for use in real estate transactions. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed sections other than the cost of the forms, estimated at $5.00 per pad of 50 copies.

Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

The amendment and new sections are proposed under Texas Civil Statutes, Article 6573a, §16(e), which authorize the Texas Real Estate Commission to adopt rules requiring real estate brokers and salesmen to use contract forms which have been prepared by the Texas Real Estate Broker-Lawyer Committee and promulgated by the Texas Real Estate Commission.

The proposed sections affect Texas Civil Statutes, Article 6573a, §16.

§537.11.Use of Standard Contract Forms.

(a)

[Standard Contract Form TREC No. 2-4 is promulgated for use as an addendum only to another promulgated standard contract form. ] Standard Contract Form TREC No. 9-3 [9-2] is promulgated for use in the sale of unimproved property where intended use is for one to four family residences. Standard Contract Form TREC No. 10-2 is promulgated for use as an addendum concerning sale of other property by a buyer to be attached to promulgated forms of contracts. Standard Contract Form TREC No. 11-3 is promulgated for use as an addendum to be attached to promulgated forms of contracts which are second or "back-up" contracts. Standard Contract Form TREC No. 12-1 is promulgated for use as an addendum to be attached to promulgated forms of contracts where there is a Veterans Administration release of liability or restoration entitlement. Standard Contract Form TRECNo. 13-1 is promulgated for use as an addendum concerning new home insulation to be attached to promulgated forms of contracts. Standard Contract Form TREC No. 15-2 is promulgated for use as a residential lease when a seller temporarily occupies property after closing. Standard Contract Form TREC No. 16-2 is promulgated for use as a residential lease when a buyer temporarily occupies property prior to closing. Standard Contract Form 20-3 [20-2] is promulgated for use in the resale of residential real estate where there is all cash or owner financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 21-3 [21-2] is promulgated for use in the resale of residential real estate where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 23-2 [23-1] is promulgated for use in the sale of a new home where construction is incomplete. Standard Contract Form TREC No. 24-2 [24-1] is promulgated for use in the sale of a new home where construction is completed. Standard Contract Form TREC No. 25-2 [25-1] is promulgated for use in the sale of a farm or ranch. Standard Contract Form TREC No. 26-2 is promulgated for use as an addendum concerning seller financing. [Standard Contract Form TREC No. 27-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where there is an inspection with a right to terminate.] Standard Contract Form TREC No. 28-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where reports are to be obtained relating to environmental assessments, threatened or endangered species, or wetlands. Standard Contract Form TREC No. 29-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where an abstract of title is to be furnished. Standard Contract Form TREC No. 30-1 [30-0] is promulgated for use in the resale of a residential condominium unit where there is all cash or seller financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 31-1 [31-0] is promulgated for use in the resale of a residential condominium unit where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 32-0 is promulgated for use as a condominium resale certificate. Standard Contract Form TREC No. 33-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property adjoining and sharing a common boundary with the tidally influenced submerged lands of the state. Standard Contract Form TREC Form No. 34-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property located seaward of the Gulf Intracoastal Waterway. [Standard Contract Form No. 35-0 is promulgated for use as an addendum to be added to promulgated forms of contracts as an agreement for mediation.] Standard Contract Form TREC Form No. 36-0 is promulgated for use as an addendum to be added to promulgated forms in the sale of property subject to mandatory membership in an owners' association. Standard Contract Form TREC Form No. 37-0 is promulgated for use as a resale certificate when the property is subject to mandatory membership in an owners' association.

(b)-(h)

(No change.)

§537.20.Standard Contract Form TREC No. 9-3 [9-2].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 9-3 [9-2] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.28.Standard Contract Form TREC No. 20-3 [20-2].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 20-3 [20-2] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.29.Standard Contract Form TREC No.21-3 [21-2].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 21-3 [21-2] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.30.Standard Contract Form TREC No. 23-2 [23-1].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 23-2 [23-1] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.31.Standard Contract Form TREC No. 24-2 [24-1].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 24-2 [24-1] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.32.Standard Contract Form TREC No. 25-2 [25-1].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 25-2 [25-1] approved by the Texas Real Estate Commission in 1997 [1993]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.37.Standard Contract Form TREC No. 30-1 [30-0].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 30-1 [30-0] approved by the Texas Real Estate Commission in 1997 [1994]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.38.Standard Contract Form TREC No. 31-1[31-0].

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 31-1 [31-0] approved by the Texas Real Estate Commission in 1997 [1994]. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Issued in Austin, Texas, on March 18, 1997.

TRD-9703738

Mark A. Moseley

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: April 17, 1997

For further information, please call: (512) 465-3900


22 TAC §§537.13, 537.34, 537.42

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Real Estate Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Real Estate Commission proposes the repeal of §§537.13, 537.34 and 537.42, concerning standard contract forms. These sections adopt by reference standard contract addendum forms which are promulgated for use by Texas real estate licensees. The repeals are proposed in connection with revisions of the other contract forms promulgated by the commission. If the revised contract forms are adopted by the commission, the addenda would no longer be necessary; because their subjects would be addressed in the revised forms.

Section 537.11 concerns the Property Condition Addendum, form TREC No. 2-4, a contract addendum providing for the inspection of a property for termites and items in need of repair. Section 537.34 concerns the Addendum for Inspection with Right to Terminate, form TREC No. 27-0, an addendum permitting the buyer to inspect the property with a right to terminate the contract within a stated period. Section 537.42 concerns the Agreement for Mediation, form TREC No. 35-0, an addendum obligating the parties to submit disputes to mediation before litigation.

Mark A. Moseley, general counsel, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. There is no anticipated impact on local or state employment as a result of implementing the repeals.

Mr. Moseley also has determined that for each year of the first five years the repeals as proposed are in effect the public benefit anticipated as a result of enforcing the repeals will be the availability of standardized contract forms for use in real estate transactions. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed repeals.

Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

The repeals are proposed under Texas Civil Statutes, Article 6573a, §16(e), which authorize the Texas Real Estate Commission to adopt rules requiring real estate brokers and salesmen to use contract forms which have been prepared by the Texas Real Estate Broker-Lawyer Committee and promulgated by the Texas Real Estate Commission.

The proposed repeals affect Texas Civil Statutes, Article 6573a, §16.

§537.13.Standard Contract Form TREC No. 2-4.

§537.34.Standard Contract Form TREC No. 27-0.

§537.42.Standard Contract Form TREC No. 35-0.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Issued in Austin, Texas, on March 18, 1997.

TRD-9703737

Mark A. Moseley

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: April 17, 1997

For further information, please call: (512) 465-3900