Is my client required to use a TREC form?

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09/07/2016 | Author: TAR Legal Staff

My client wants to sell his house using a contract drafted by his attorney instead of the TREC-promulgated form. Is that OK?

Yes. While license holders are required by law to use a TREC-promulgated form when one exists for a particular transaction, there is an exception when your client, a principal to the transaction, requires you to use a contract prepared by his attorney. This exception only applies if the contract has been prepared by an attorney at the request of the principal. You should document that your client made this requirement and remind him to direct any questions he may have about the contract to his attorney.

Categories: Legal, Commercial real estate
Tags: legal, choice of contracts


Comments

David Davis on 09/10/2016

Rick, Looks like you even caught your own typo.  Mine was speech recognition that got it wrong…..

Rick DeVoss on 09/10/2016

...the last word on the third line should be “our”...

Rick DeVoss on 09/10/2016

David gave a very good answer to the previous question.  ~So maybe we should advise our clients to seek an attorney’s advise whenever some other agent writes something into Special Provisions that was not intended by TREC.  —Are we truly able to advise out clients what to do if the wording in the contract is other than the TREC promulgated version??

And what about a builder’s contract form?  ~This is not TREC’s language, so don’t we have to advise our client to seek an attorney if they are about to sign a builder’s contract?  ...And are we all documenting that advice in writing?

I have found more than one error in a builder’s contract over the years, but I did not document in writing that I told them to change it for the benefit of my client.  ...I think I will in the future.

David Davis on 09/10/2016

Monica Holvey,
Obviously you would present the offer to your seller.  I think you are spot on in advising the seller to have an attorney review the contract.  I would send the offer to the seller via email with a disclaimer that you are advising them to have the contract reviewed by an attorney before they (seller) accept it (the offer).  Keep the email as evidence that you gave that disclosure & advice.

Using a form, or a contract that has not been promulgated by TREC (when you are not one of the principals of the contract) is the practice of law.  The same would apply in advising a principal on the use or acceptance of a form or contract that has not been promulgated by TREC.  Check out the TREC website and see the TREC Advisor for August 2016.  This is addressed on the very first page.

Monica Holvey on 09/09/2016

How would I guide my clients if they decide to accept an offer written by an attorney (and they were not the party who decided to use an attorney’s contract)?  I know that I would have to advise them to get an attorney at the very least, but what if they opt not to hire an attorney?  Have there been any cases where a licensed real estate agent fell under legal scrutiny, or did get into legal trouble during a transaction involving an attorney-drafted contract?  If so, what was the nature of the infraction and how should (s)he have handled the situation properly?

Rick DeVoss on 09/09/2016

Who cares, Shaunie…?  ~We all should.
This Professional website is open to the public, and everything written on here reflects on the Realtor community.  David has written a very technical reply, (as he is prone to do), and I’m sure he understood my comment.

As far as my tongue-in-cheek comment about the question, it would seem that any licensed agent should know the answer after going through all the classes to acquire a license.  TREC may require licensed sales people to use their promulgated forms, but they cannot require a buyer or seller to do so.

Shaunie Smith on 09/09/2016

Rick, does it matter whether or not the person who asked the question is newly licensed or not? Maybe they are newly licensed. Maybe they haven’t done a new home transaction before. Is this not an advice column? What better place to ask the question? Please don’t get self righteous because you’ve been in the business X amount of years and you know what you are doing. This is a very good question and there may be quite a few agents out there, new and old, who didn’t know the answer.
Your self righteousness peaked through again on the comment about weather vs. whether. Who cares? You understood what he was talking about.

Rick DeVoss on 09/09/2016

It seems that the person who wrote this question is pretty newly licensed, or needs additional training.  ~Have you not ever sold a builder’s new house?  Builders use their own contract forms all the time.

David—- Check your use of “weather” vs. “whether.”

David Davis on 09/09/2016

Rose,
You have to understand the difference in “licensed” and “certified” when it comes to attorneys.  One can be licensed, and not be certified.  License comes from the Supreme Court, and Certification comes from the Board Of Legal Specialization (at least in Texas).  Just like you & I the attorney must be licensed to practice in Texas.

John,
Yes, any principal can draw their own contract regardless of weather or not they are an attorney.  But, as Theresa points out in her comments, why would they want to?  The promulgated forms are written by attorneys in Texas for TREC to allow us to use.  These promulgated forms are the result of many years experience and deliberation by the Broker-Lawyer Committee before they go on to TREC for approval.  It is highly unlikely that a principal could draw their own contract that better suits their wishes than the ones that are already promulgated.

John Griffin on 09/08/2016

Can a principal write a contract if he is not an attorney?

THERESA AKIN on 09/08/2016

I had a client who was very adamant on having his attorney write up an offer. I said I didn’t have a problem but let him look over the offer on our forms.  We would let his attorney decide since the forms were written by attorneys in our state.  We both took the paperwork to his attorney and had him go over it.  The attorney said to just use our promulgated forms because they were more in depth than he could think of writing and we had been in the property not the attorney.  His attorney was more enthusiastic for me to pull the forms. He stated and I concurred that even in the forms if he had a problem it states to contact his attorney. The attorney also stated for him to handle the transaction was probably going to cost more on top of the broker’s compensation and this client was all about saving every dime.  As it turned out his attorney passed away due to a heart attack just a few days later.  As far as International deals, I’m interested in seeing the response.

Rose Abiakam on 09/08/2016

It is good to know that ,but will this exception apply to international sellers whose Attorney that drew up the contract is not certified or licensed US .
If within US , does the attorney has to be Texas certified .or licensed ?Can it be out of state Attorney or a non certified but Texas licensed lawyer? Let me know if you know the answer.


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