In November, the Texas Real Estate Commission adopted changes to Section 537.11 of its rules, Use of Standard Contract Forms, which takes effect May 15. Here’s what the changes mean for you.
When a license holder is negotiating contracts for the sale, exchange, option, lease, or rental of any interest in real property, he or she must use a mandatory Texas Real Estate Commission form if one is available for the transaction. But there are exceptions, and TREC adopted changes to two of those exceptions:
Forms created by a property owner or an attorney. Previously, a license holder could use other forms in transactions for which a contract form has been prepared by a principal to the transaction or prepared by an attorney and required by a principal to the transaction. The updated rule changes “principal” to “property owner,” which reflects the language in the Real Estate License Act.
Transactions without mandatory TREC forms or addenda. Prior to the rule change, a license holder could use other forms in transactions for which no standard contract form had been promulgated by TREC if the form was prepared by a licensed Texas attorney and approved by the attorney for that kind of transaction. Approximately 50 TAR forms, like the Commercial Contract – Improved Property (TAR 1801) or the Residential Lease (TAR 2001), exist because of this exception. The updated rule requires forms like these to include certain information, such as who prepared the form and any restrictions on its use. All TAR forms that exist under this exception already contain the required information.
An addendum that changes the rights, obligations, or remedies of a party under a mandatory TREC contract or addendum form must include additional information. TAR offers one such form, the Relocation Addendum (TAR 1941). This form will be updated to include the newly required information.