Plus proposed TREC rules changes under consideration.

The Texas Real Estate Commission met November 7 and approved changes to several forms, effective February 1, 2023. The commission also proposed changes to two sections of TREC rules. Visit for all meeting materials.

Approved Forms Changes

One to Four Family Residential Contract (Resale) (TXR 1601, TREC 20-17)

  • Paragraph 3 is amended to add a definition of “cash portion of the sales price.”
  • A new “required notices” section is added to Paragraph 6, which provides one location where MUD, PID, or other similar notices that have been given or are attached to the contract can be listed.
  • Paragraph 7F is revised to require that the seller provide the buyer with copies of documentation from the repair person that show the scope of work and payment for the work completed. The paragraph also requires the transfer, at the seller’s expense, of any transferable warranties at closing.
  • Paragraph 9B(3) is amended to add the transfer of any warranties to correspond with the change in Paragraph 7F.
  • New paragraph 9B(5) provides that private transfer fees will be the obligation of the seller, unless otherwise provided in this contract and that transfer fees assessed by a property owners association are governed by the Addendum for Property Subject to Mandatory Membership in a Property Owners Association. A similar sentence is added to the Residential Condominium Contract (Resale).
  • Paragraph 11 is amended to further clarify the intent of the paragraph by replacing the terms “factual statements” and “business details” with “informational items,” which is now defined. Also added is language explaining that real estate brokers cannot practice law and are prohibited from adding to, deleting from, or modifying the contract unless drafted by a party to the contract or a party’s attorney.
  • Paragraph 13 is amended to clarify what amounts will be prorated through the closing date.
  • Paragraph 18B is amended to add that if no closing occurs, the escrow agent may require a written release of liability before releasing the earnest money.
  • Paragraph 21 is amended to add a line for a copy to the buyer’s and seller’s agent respectively.

Unimproved Property Contract (TXR 1607, TREC 9-16), New Home Contract (Incomplete Construction) (TXR 1603, TREC 23-18), New Home Contract (Completed Construction) (TXR 1604, TREC 24-18)

  • The Seller’s Disclosures paragraph has been amended to add checkboxes to each disclosure item to indicate whether the seller is or is not aware and add two additional disclosures relating to whether the property is located in a floodplain or if any tree located on the property has oak wilt.

Farm and Ranch Contract (TXR 1701, TREC 25-15)

  • A notice is added that states the form is designed for use in sales of existing farms or ranches of any size and is not for use in complex transactions.
  • Paragraph 2A adds the term “counties” to reflect the fact that farm and ranch properties could be located across two or more counties. Additionally, the phrase “including but not limited to: water rights, claims, permits, strips and gores, easements, and cooperative or association memberships” is deleted from the paragraph.
  • Paragraph 3D is amended to alter the calculation of the sales price adjustment should the survey reveal a difference in acreage.
  • New Paragraph 4D addresses surface leases and includes options regarding whether the seller has delivered copies of written leases or provided notice of oral leases to the buyer, similar to the existing natural resource lease paragraph. The corresponding language in Paragraph 6F is also amended.

Seller Financing Addendum (TXR 1914, TREC 26-8)

  • A notice is added to the top of the form encouraging consultation with an attorney and a financial professional. The notice also informs parties of the complicated nature of these transactions.
  • Paragraph B is amended to modify the time period within which the seller may terminate.

Residential Condominium Contract (Resale) (TXR 1605, TREC 30-16)

  • Paragraphs 2B(2) and 2C(2) are amended to clarify the timing related to termination and to add a reference to the applicable Property Code provision.
  • Paragraph 12A(3) is amended to exclude regular periodic maintenance fees, assessments, or dues (including prepaid items) that are prorated under Paragraph 13 from the parties’ obligation to pay under this section, as well as costs and fees provided by Paragraph 2.
  • Paragraph D2(a) and (b) are amended to clarify the casualty insurance requirements and new Paragraph D2(c) is added to address casualty insurance.
  • Paragraph D2(b) is further amended to add a requirement that the seller provide the buyer with an annual accounting of the escrow account, use escrow deposits to pay taxes and insurance premiums in a timely manner in certain circumstances, and hold the escrow deposit in a separate account. Language is also added to specify whether the escrow account will or will not be serviced by a third party at either the buyer’s or seller’s expense.

Addendum for Property Subject to Mandatory Membership in a Property Owners Association (TXR 1922, TREC 36-10)

  • Amended to exclude regular periodic maintenance fees, assessments, or dues (including prepaid items) that are prorated under Paragraph 13 from the parties’ obligation to pay under this section, as well as costs and fees provided by Paragraphs A and D.

Amendment to Contract (TXR 1903, TREC 39-9)

  • A notice is added to consult an attorney, and a reference is added in Paragraph 2 dealing with repairs. The form is also amended to replace the parenthetical following Paragraph 9, Other Modifications, with a statement that real estate brokers and sales agents are prohibited from practicing law.

Third Party Financing Addendum (TXR 1901, TREC 40-10)

  • Amended to add an “Other Financing” box in Paragraph 1.
  • Paragraph 3 is amended to add that a note must be secured by the vendor’s and deed of trust liens only if required by the buyer’s lender.

Loan Assumption Addendum (TXR 1919, TREC 41-3)

  • Paragraph A is amended to add that the noteholder of the loan being assumed is authorized to receive a copy of the buyer’s credit reports.
  • Paragraph B is amended to modify the time period within which the seller may terminate.
  • Paragraph C is amended to clarify that the buyer will assume in writing the following notes at closing, to remove the reference to $500 and instead insert a blank, and to add the following sentence: “Within 7 days after the Effective Date, Seller will deliver to Buyer copies of the note(s) to be assumed, the deed(s) of trust, and the most recent loan statement(s) from the lender.”
  • New Paragraph H is added related to authorization to release information.
  • A new due on sale notice is added.

Addendum Regarding Residential Leases (TXR 1953, TREC 51-1)

  • Amended to add a checkbox in Paragraph B1 related to notice of oral leases.

Addendum Regarding Fixture Leases (TXR 1954, TREC 52-1)

  • Amended to add a checkbox in Paragraph B1 related to notice of oral leases.
  • Paragraph A1 is modified to include checkboxes, in lieu of a blank line, so that the parties can specifically indicate what types of fixture leases will be assumed and assigned.

Notice to Prospective Buyer (TXR 2505, TREC 57-0)

  • This form is amended to add a reference to the notice requirements regarding public improvement districts.

TREC’s Proposed Rule Changes

Two changes were proposed to Section 537 of TREC rules:

  1. The proposed change to Section 537.1 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.
  2. The proposed changes to Section 537.11, Use of Standard Contract Forms, reorganize and consolidate the rule for clarity. They also 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.
    • Proposed changes to 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.
    • The exception found in subsection (a)(4) is amended 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.
    • 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.
    • Proposed changes to subsection (h) update the language regarding reproduction of Commission-approved contract forms to better account for changes in technology.

    What’s Next?

    After the proposals are published in the Texas Register, a public comment period will open. Look for more information from Texas REALTORS®. The earliest these proposed rule changes could be adopted is at the February 2023 commission meeting.