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?

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)?

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).