Texas REALTORS® 2018 Winter Meeting | Feb. 9-13 | Austin, Texas

Legal FAQs for REALTORS® — Contracts and Forms
One-to-Four Family Residential Contract

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My buyer client asked me to explain the Mediation Paragraph in the One to Four Family Residential Contract (Resale) before she submits an offer on the form. Does agreeing to this paragraph mean she can’t sue the seller if he breaches the contract? (Updated July 18, 2014)

If a contract-related issue arises that can’t be resolved through informal discussion, the parties must submit to a mutually acceptable mediation service or provider and pay the cost for mediation equally.

TREC recently revised its contracts to change the requirement to mediate from optional to mandatory. Buyers and sellers must now attempt to resolve any contract-related dispute through mediation before going through the court system.

Can you explain the language in Paragraph 7D of the One To Four Family Residential Contract (Resale) (TAR 1601, TREC 20-8)? (updated Nov. 11, 2009)

Editor's note: New language in Paragraph 7D of the One To Four Family Residential Contract (Resale) (TAR 1601, TREC 20-8) became mandatory Sept. 1, 2008. TREC Broker-Lawyer Committee member Dawn Moore offered the following explanation of the change. To prevent a potentially fatal contract-drafting error, TREC approved a change to Paragraph 7D of the One To Four Family Residential Contract (Resale). Paragraph 7D establishes the agreement between seller and buyer as to one of the material terms of the contract: acceptance of property condition. In order to bind the seller to the buyer, the buyer must make a firm offer complete with all material terms to which the seller can agree. If the buyer has no repairs in mind when making the original offer, the buyer checks Paragraph 7D(1). If the buyer knows of a specific item that needs repairing (either because it's visible, shows up on the seller's disclosure, or is otherwise disclosed to the buyer prior to inspections), the buyer checks Paragraph 7D(2) and inserts the specific repair. During the option period, the buyer may submit an amendment to either provision. If the seller does not accept the buyer's amendment, the buyer may terminate the contract. Note: Paragraph 7D(2) calls for specific repairs. If the agent fills in anything other than a specific repair, TREC sees it as the agent practicing law without a license. This contract is an "as is" contract with an option. This answer would apply to identical language in Paragraph 7 of all of the other TREC contracts except for the New Home Contract (Incomplete Construction).

Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on TexasRealEstate.com. Any legal or other information found here, on TexasRealEstate.com, or at other sites to which we link, should be verified before it is relied upon.

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