Have Your Say on Proposed TREC Contract Changes

The Broker-Lawyer Committee (BLC) has proposed updates to TREC contract forms, reflecting two years of work and recent shifts in broker compensation. These changes, introduced at the August TREC meeting, are now open for public comment until October 6.

Key Changes to Broker Compensation Language

• Paragraphs 12A(1)(a) and 12A(2): Each party pays the brokerage fees they agreed to.
• Paragraph 12A(1)(b): Sellers can contribute a set amount to the buyer’s brokerage fees.
• New Paragraph 12A(1)(c): Separates seller contributions related to brokerage fees from other contributions. Removes previous limitations on how contributions are applied. These changes also appear in the Amendment to Contract form.
• Broker Information Section: Removes the MLS reference and adds checkboxes to show fees as a percentage or a dollar amount.

Updates to the One to Four Family Residential Contract (Resale)

• Paragraph 4: Adds “geothermal” to Natural Resource Leases, aligning with new laws on geothermal energy rights.
• Paragraph 6C(1): Allows sellers to submit a T-47.1 Declaration instead of a T-47 Affidavit when providing an existing survey.
• Paragraph 6C(2): Buyers may get a new survey, but they can’t terminate the contract if they don’t.
• Paragraph 6E(11): Requires sellers to provide mold remediation certificates from the last five years.
• Paragraph 6E(12): Lists required seller disclosures and warns that missing disclosures may let buyers terminate the contract. Removes related references in Paragraphs 6E(4), (7), and (9).
• Paragraph 8B: Confirms that broker fees are negotiable and not set by law.
• Paragraph 20: Renames this section to “Federal Requirements” and adds obligations under the federal Agriculture Foreign Investment Disclosure Act (Farm and Ranch Contract).

Changes to the Third Party Financing Addendum

• Paragraph 2A: Requires both a termination notice and a written statement from the lender to cancel the contract.
• Paragraph 2B: Syncs the timing of termination notices with other contract provisions.
• Paragraph 4: Simplifies language and updates a paragraph reference.

Updates to the Condominium Resale Certificate

• Aligns the Condominium Resale Certificate with Section 82.157 of the Texas Property Code.

Changes to the Unimproved Property Contract and Addendum for “Back-Up” Contract

• Unimproved Property Contract, Paragraph 3D: Aligns sales price adjustment wording with the Farm and Ranch Contract. Adds a dollar sign for clarity.
• Addendum for “Back-Up” Contract: Clarifies the timing and payment of earnest money and option fees, using similar language from Paragraph 5 of the main contract.

New Addendum for Section 1031 Exchange

The new addendum allows parties to disclose their intent to use the property in a Section 1031 exchange. This form ensures both parties cooperate without affecting the main contract.

Have Your Say

Share your feedback by October 6! The BLC will review all comments and then decide whether to revise or recommend the changes at the November TREC meeting.

For more information, head over to TREC’s website.