 Watch how we got here and what's next
Texans now have several proposed form changes to consider, following TREC's August 2024 meeting. The changes were recommended by the Broker-Lawyer Committee (BLC), which is made up of six lawyers, six brokers, and one public member. They draft forms for the Commission to consider. Once the Commission proposes changes, you have the chance to provide public comment before any changes are adopted.
Recommended Proposals Related to Compensation Language
"I have to give credit to this committee on how much time and effort they put into this,? said John G. George, Jr., BLC co-chair (pictured right). ?We had over 11 hours of meetings between the last Commission meeting and now. These people are passionate, they care, and we want to get it right.?
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In light of recent industry changes surrounding broker compensation, Paragraph 8B is changed to add a statement that brokers? fees are not set by law and are negotiable.
Paragraph 12A(1)(a) and 12A(2) adds that each party pays the brokerage fees that they each have agreed to pay. Paragraph 12A(1)(b) is amended to allow for a specific seller contribution to the buyer?s brokerage fees.
A new Paragraph 12A(1)(c) has been added to separately address other seller contributions (that was previously in Paragraph 12A(1)(b)) and the prior language that specified the order in which any contribution was to be paid, as well as a limitation on the type of fee that could be paid, is removed. Conforming changes are also made in the?Amendment to Contract.
The compensation disclosure in the Broker Information section of the contracts (except for the?Farm and Ranch Contract) removes the parenthetical referencing the MLS and to add checkboxes to allow for the fee to be reflected either as a percentage or a dollar amount.
Proposed New Form, Additional Contract Form Change Proposals
Proposed changes have been recommended for the following contracts:
- One to Four Family Residential (Resale) Contract
- Third Party Financing Addendum
- Condominium Resale Certificate
- Unimproved Property Contract
- Addendum for "Back-Up" Contract
- New Home Contract (Incomplete Construction)
- New Home Contract (Completed Construction)
- Farm and Ranch Contract
- Residential Condominium Contract (Resale)
- Amendment to Contract
In addition, a new Addendum for Section 1031 Exchange form is proposed that allows the seller or buyer to disclose an intent to use the subject property as a 1031 exchange and includes a statement that the parties will reasonably cooperate with one another.
TREC adopted a new rule, 535.124, Death of a Designated Broker, to detail agency practice and provide better guidance in the event the designated broker of a licensed business entity which sponsors sales agents dies. Under this rule, neither the business entity license nor any sponsored sales agent?s license will become inactive right away, and the entity and agents will be given 14 days from the broker?s death before their licenses inactivate. This new rule is effective September 11.
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