The Texas Real Estate Commission met on November 15. Here are rule changes relevant to your business.
Adopted changes to 535.2, Broker Responsibility
- Brokers must designate anyone who leads, supervises, or directs a team in their brokerage as a delegated supervisor with TREC if he or she has or will be supervising for more than three months. This will require that person to take the six-hour broker responsibility course at each license renewal.
- The time frame that a broker or delegated supervisor has to respond to clients, agents, or other brokers is now two days.
- The time frame that a broker or delegated supervisor has to deliver TREC correspondence to their agents is now three days.
- In the section covering records retention, the term “work files” is deleted and replaced with “substantive communications with parties to the transaction” to clarify what should be retained. Offers should also be retained.
- Brokers must ensure—through their brokerage policies and procedures manual—that agents are geographically competent in the market area being served; and that brokers will ensure training or coaching for new agents when they undertake new tasks.
The members-only Model Brokerage Policies and Procedures Manual, which gives brokerages instant compliance with TREC requirements to maintain written policies and procedures, will be updated with these changes.
Adopted form revisions
The revised forms will be mandatory for use March 1, 2019, but you can use them voluntarily as soon as they become available. The association will work with all forms vendors to post the forms as quickly as possible.
Third Party Financing Addendum
- The language in the Property Approval section will change 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 three days before the contract’s closing date and must provide the seller written evidence of the lender’s determination.
- The form was reformatted and other non-substantive changes were made for consistency with other TREC-promulgated forms.
Notice of Buyer’s Termination of Contract
- Statement added 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 changes to the Third Party Financing Addendum.
- Box added to check if the buyer is terminating under Paragraph 3 of the Addendum Concerning Right to Terminate Due to Lender’s Appraisal.
- Box added to check if the buyer is terminating under Paragraph 6D of the contract because timely objections were not cured by the end of the cure period.
Addendum Concerning Right to Terminate Due to Lender’s Appraisal
- Statement added clarifying that this form is to be used only if the Third Party Financing Addendum is part of the contract (and the transaction still cannot involve FHA or VA financing).
- Non-substantive changes were adopted to make the form clearer.
Other adopted changes
TREC Rule 535.101, Fees, is amended to reduce the fee from $20 to $10 for an agent establishing or changing sponsorship. In addition, TREC has developed a free online license history certificate, so the $40 fee has been removed from the rule.
TREC Rule 535.191, Schedule of Administrative Penalties, is amended to move several violations to a lower tier of penalties and adds several violations from recently adopted rules and those missing from the penalty matrix.
Unless otherwise stated, the adopted changes become effective 20 days after the date they are filed with the Secretary of State.
Find the materials from the meeting on TREC’s website.
You note that you will update the P&P manual which we purchased from you. Will we get an updated copy? Or do we have to repurchase? Either way, will you notify us when to do this? Thank you kindly.
Hi Sam,
If you have already purchased the Model Brokerage Policies & Procedures Manual, you will receive the updates for free. You will also be notified when the updated manual is available.
Hope this helps!
Thank you very much! You guys at TAR rock . . . you’re always looking out for our best interests out here in the field, and I appreciate you! Happy Thanksgiving, and I appreciate your prompt reply.
I love when we make changes that make our jobs easier. I would love to see two changes to the contract. 1st. There should be a box under the survey that states the buyer does not require a survey. The current language does not clearly indicate that. Secondly, It would be great if we added an area that defines Occupancy and indicate if the contract is intended for Owner Occupant or Investor.
I do not feel that anyone should be concerned whether it is owner or investor.
I had a transaction this year where the buyer applied for a owner occupied loan and was intending to use the property as rental property. I as the listing agent had no way of knowing what kind of loan to look for.
The buyer can claim only one house as his Homestead, so any other property buyer applies for a loan to purchase should be considered an investment property. I think it would be wise to check with your client and find out if he/she has a homestead property already or is this going to be their first house to purchase.
I also would love to see a box to check indicating that buyer does not require a survey.
I, too would love to see that.
If the terms of the offer are acceptable to the seller, I’m not sure why he would need to know the intentions of the buyer after the transaction is closed. Nor does he really need to know what type of loan is being used, as long as the buyer can show that he is pre-qualified. ~Such a suggestion could open up the door for a seller to make decisions based on prejudice or emotions.
I closed on a house a few months ago and the only way our (the buyer) offer was accepted out of many was The buyer intended to live in the property. She was not an investor and had to sign a form stating she was going to live in the property. The reason for this was the seller was Foreign and wanted to buy another property with the proceeds so by the buyer signing the form the seller would not have the 30% withheld from the proceeds that the title company legally has to do.
~I am not a tax attorney, but I think you should consult with one. The IRS Law says that the BUYER, not the title company, has to withhold taxes on a foreign seller. (The title company may facilitate this requirement, but they are not mentioned in the Law.) For a Buyer to sign such a form could put them in serious legal liability with the IRS. The Seller has to pay the capital gain tax, and how do you (and your buyer) know what they are going to do with the funds after closing…?? Suggest you consult with your favorite… Read more »
I agree with you. I dont see why the seller should be concerned if the buyer is an investor or owner occupant as long as he/she is qualified for the loan. The only issue I may see arising is if the buyer claims in the contract it will be an investment property , yet me as the seller’s agent see that the down payment is NOT 20% of sale price. I would then question it.
Be careful what you assume…
I have just worked with a lender who requires only 15% down for investors.
(In your example, it would seem to be the other way around. But some buyers in both categories will want to use different amounts for the down payment.)
Great Suggestions Rochelle! I concur!
Had Both Issues Come up in the last two weeks!!!
Yea kind of vague but if your buyer does not need a survey no boxes are checked.
Regarding an Occupancy Check box, I don’t care either way, but the lender (if there is one) is entitled to know the borrower’s intent.
To have any contract changes considered by TREC, you need to send you comments to generalcounsel@trec.texas.gov
I sent an email to that address and it’s not working….it was returned.
Hi Angela,
Try general.counsel@trec.texas.gov. Hope this helps!
Need an opinion. Can a contract be amended after the closing date has expired?