My client's listing is a home on a 15-acre tract. A buyer's agent submitted an offer for his client on the One to Four Family Residential Contract (Resale). My client is concerned that the residential form won't address the outstanding mineral interests, but the buyer's agent says he often uses this form for situations such as this and his client is OK with using that contract. Does the use of that form instead of the Farm and Ranch Contract make any difference?

Yes. Paragraph 6 of the Farm and Ranch Contract (TAR 1701, TREC 25-10) has specific language that deals with outstanding mineral interests that would be an exception to title in the owner's title policy and in any deed to the property. The Farm and Ranch Contractalso covers outstanding surface leases, and any farm and ranch improvements and accessories that might be involved in this sale.

A buyer interested in purchasing the property even when mineral interests have already been conveyed to or reserved by another person can list the exception documents in the offer. The seller can provide documents that contain or reserve those mineral interests to any prospective buyer to list in Paragraph 6. When listed, those interests would be acknowledged by the parties and not subject to objection by the buyer during title commitment review.

To ensure the buyer and the seller have a meeting of the minds about the nature of the title to the property and the outstanding mineral interests, the seller could provide the appropriate documents to the buyer and require the use of the Farm and Ranch Contractas a condition of accepting any offer by this buyer.

My client bought a vacant lot in a neighborhood years ago and never built on it. Now he wants to sell the lot. Which listing agreement should I use to sell the property?

The listing agreement you choose depends on how the buyer will likely use the property. If a buyer will probably use the lot for residential purposes, like building a home, the Residential Real Estate Listing Agreement, Exclusive Right to Sell (TAR 1101) would be the best choice.

To reduce the likelihood of confusing the seller, the listing broker, as a principal to the agreement, could delete the part of the agreement that applies to improvements, or add a statement in the Special Provisions paragraph indicating that the property is an unimproved lot.

These same considerations apply for selecting a listing agreement if the buyer’s likely intended use of the unimproved property would be for commercial or farm and ranch purposes.

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 has made this requirement and remind him to direct any questions he may have about the contract to his attorney.

Since TREC doesn’t offer a residential lease or commercial contracts, can my brokerage’s in-house attorney draft those forms?

Texas Real Estate Commission rules allow you to use a form drafted by a Texas lawyer—including a brokerage’s in-house counsel—for a particular kind of transaction when no mandatory TREC form exists as long as the form contains:

  • The name of the lawyer who prepared the form
  • The name of the broker for whom the form was prepared
  • The type of transaction for which the lawyer approved the use of the form
  • Any restrictions on the use of the form.

If the form is an addendum that changes the rights, obligations, or remedies of a party under a mandatory TREC contract or addendum, it must have these additional items:

  • A statement about how the addendum changes the rights, obligations, or remedies of a party, with a reference to the relevant paragraph number in the mandatory use form
  • A statement that the form is not a mandatory TREC form
  • A statement that TREC rules prohibit real estate license holders from giving legal advice.

Texas REALTORS® have exclusive access to more than 100 forms for various types of real estate transactions not covered by mandatory TREC forms, including residential and commercial forms. See if there is a form already available for your transaction in the forms section of texasrealestate.com.