The Texas Real Estate Commission met August 13. Here are a few actions from the meeting you should know about.
Realty can be used in team names
An adopted amendment to TREC rule 535.155, Advertisements, removes the term realty from the list of prohibited terms in a team name. A team’s name must still end in the words team or group to adhere to TREC rules.
Directional signs get an exception to advertising rules
A directional sign won’t be considered an advertisement if it includes only directional arrows or directional arrows and the broker’s name or logo.
New form adopted: Notice of Seller’s Termination of Contract
This new form is for the seller to notify the buyer the contract is terminated because either:
- The buyer failed to deliver the earnest money within the time required under Paragraph 5 of the contract and before the time the seller provided this notice to Buyer; or
- Another reason identified by the paragraph number of the contract or addendum.
Once the new form is available, it will be added to texasrealestate.com/realtorforms, zipForm, and other forms vendors as quickly as possible.
TREC will not create its own earnest money form
TREC in May proposed creating a new earnest money form, but formally withdrew the form at this meeting after receiving comments from members like you.
TAR continues to offer to members its Release of Earnest Money form, one of the 136 forms available exclusively to Texas REALTORS®.
Proposed form revisions
In addition to the revisions proposed in May, TREC proposed additional revisions recommended by the Broker Lawyer Committee to the Third Party Financing Addendum. If adopted at the November TREC meeting, the revisions would:
- Revise the current language in Paragraph B2, Property Approval, to require that if the buyer wants to terminate the contract under this paragraph, the buyer must give the seller written notice not later than 3 days before the contract’s closing date and must provide the seller written evidence of lender’s determination.
- Reformat the form for consistency with other TREC-promulgated forms.
- Change the last sentence of Paragraph E2 so that it states “ … brokers and sales agents provided under Broker Information.”
Review the redline version of the Third Party Financing Addendum.
TREC also proposed additional revisions to the Notice of Buyer’s Termination of Contract. If adopted at the November TREC meeting, the revisions would:
- Add a statement that a buyer terminating the contract under the Property Approval section of the Third Party Financing Addendum has delivered to the seller a written statement from the lender as to why the property isn’t approved in line with the proposed changes to the Third Party Financing Addendum.
- Add a box to check if the buyer is terminating under Paragraph 3 of the Addendum Concerning Right to Terminate Due to Lender’s Appraisal.
- Add a box to check if the buyer is terminating under Paragraph 6D of the contract because buyer’s or lender’s timely objections were not cured by the end of the cure period.
Review the redline version of the Notice of Buyer’s Termination of Contract form.
Finally, TREC proposed revisions to Addendum Concerning Right to Terminate Due to Lender’s Appraisal recommended by the Broker Lawyer Committee to help make the options clearer. (Learn more about the current version of the addendum in this article.)
Review the redline version of the Addendum Concerning Right to Terminate Due to Lender’s Appraisal form.
Proposed changes to 535.2, Broker Responsibility
TREC proposed changes to this section, which includes the following:
- A broker would have to designate anyone who leads, supervises, or directs a team in the brokerage as a delegated supervisor with TREC. In addition, the proposed changes would reduce the timeframe when a license holder must be delegated as a supervisor to three months. Currently, a broker has to appoint someone as a delegated supervisor if he or she has or will be supervising for more than six months.
- The time frame that a broker or delegated supervisor has to respond to clients, agents, or other brokers would be reduced from 3 to 2 days.
- The time frame that a broker or delegated supervisor has to deliver TREC correspondence to their agents would be reduced from 10 to 3 days.
- In the section covering records retention, the term “work files” would be deleted and replaced with “communications with parties to the transaction” for clarity on what should be retained.
- Brokers would have to add to their brokerage policies and procedures manual:
- That brokers will ensure agents are geographically competent in the market area being served
- That brokers will ensure training or coaching for new agents when they undertake new tasks.
If these proposed changes are adopted at TREC’s November meeting, TAR will update its Model Brokerage Policies and Procedures Manual as necessary, which gives brokerages instant compliance with TREC requirements to maintain written policies and procedures. The manual is $99.99 plus tax, but if you have previously purchased the manual, you will receive the updates for free. Learn more about the guide here.
Other proposed changes
A proposed amendment to TREC rule 535.101, Fees, would reduce the fee from $20 to $10 for an agent establishing or changing sponsorship.
A proposed amendment to TREC rule 535.191, Schedule of Administrative Penalties, moves several violations to a lower tier of penalties and adds several violations from recently adopted rules and those missing from the penalty matrix.
When you can comment on proposed changes
Proposed form and rule changes will be posted in an upcoming Texas Register, after which the public will have 30 days to comment. Once published in the register, you can send comments to email@example.com. The earliest these changes could be adopted is at TREC’s November meeting.
I cannot find a Paragraph 5B on the Third Party Financing Addendendum. What am I missing here?
Paragraph 5B is on the proposed revised version of the Third Party Financing Addendum. Paragraph E2 is the relevant section in the current version of this form.
We added links to the proposed forms in the post for reference. The full packet of TREC meeting materials is available at this link: https://www.trec.texas.gov/apps/meetings/view.php?meeting_id=240.
Thank you, TAR, for keeping us up to date on all these changes. As an Instructor for Legal Update 1 and 2, I so appreciate your timely emails! One comment regarding Addendum Concerning Right to Terminate Due to Lender’s Appraisal. Am not sure what proposed changes are being considered, but would like to suggest a change in Box (3). Instead of Buyer may terminate the contract within ___days after the Effective Date, change to Buyer may terminate the contract within ___days after Buyer has received appraisal. Reference page 29 of Legal Update 1 Box 3. It states to put in… Read more »
Can I be notified when comments are allowed? The right to terminate due to lenders appraisal still seems to be worded in a really confusing . Thank you
Great Information, TAR! Thank you for keeping us updated and abreast of new changes and proposals, you make our job so much easier!!!
Seems like some decisions are good, but the constant changes make this a very hated industry by professionals & consumers alike.
Keep it simple! Use some common sense! Stop making changes so often! Use logic the first time for long term POSITIVE changes!
Hey All! Christine Anderson here from TREC. You can tell us your comments by emailing us at firstname.lastname@example.org. We post all pending rule changes on our website as well as in the register. Here is the link to the page on our website: https://www.trec.texas.gov/rules-and-laws
IT SEEMS THAT WE ARE CONTINUOUSLY CHANGING FORMS AND MAKING THINGS MORE EXPLICIT WHICH IS GOOD. BUT I BELIEVE FORMS CHANGES SHOULD BE PROPOSED ONCE A YEAR PREFERABLY DURING THE SLOW SEASON WITH PROPOSED CHANGES CLEARLY IDENTIFIED IN RED OR SOME COLOR SO WE CAN CLEARLY NOTICE THE CHANGES THAT ARE IMPLEMENTED. ARE WE GETTING TOO EXPLICIT WITH NO ROOM FOR ACCOMMODATING UNIQUE SITUATIONS?
The third party financing addendum should also include an appraisal value to meet for Conventional loans, not just FHA and VA. In my opinion.