The Texas Real Estate Commission held its May meeting in Irving, attracting over 300 audience members. No new rules were adopted, but important items were discussed. Below are relevant highlights. The agenda and materials for the full meeting are available on TREC’s website.
Broker Succession
Current rules state that a sales agent’s, broker’s, or business entity broker’s license becomes immediately inactive upon the death of the designated broker. The commission proposed a rule to allow for a 14-day grace period for individuals or entities to name a new sponsoring broker upon the death of a designated broker.
This and other proposed rules will be published for public comment on the Texas Register, and the full text of the changes can be found in the meeting materials.
Possible Forms Changes
Texas REALTORS® General Counsel and Vice President of Legal Affairs Lori Levy gave an update on the NAR settlement and how it will affect members. She reiterated that Texas REALTORS® is excited to collaborate with the Texas Broker Lawyer Committee’s newly formed compensation subcommittee to look at potential changes to TREC’s promulgated forms.
The compensation subcommittee is currently seeking feedback on the following:
- Remove all references to the multiple listing services in the contract forms.
- Include a simple statement that any and all fees to the brokers in the transaction will be paid pursuant to separate agreements between the parties and their brokers or between the brokers.
- Identify the fees to be paid to each broker in a manner similar to the model found in TREC’s Farm and Ranch Contract (TREC 25-15) or the Texas REALTORS® commercial contract form.
- Remove all references to brokerage fees in the contract forms, and publish an addendum for the payment of brokerage fees using either model found in the Farm and Ranch Contract or in the Texas REALTORS® commercial contract form.
- Insert a new subparagraph in Paragraph 12A in which the seller may agree to pay a specific concession for fees payable to the buyer’s broker.
- In Paragraph 12A, include in the definition of Buyer’s Expenses a statement similar to “broker fees Buyer has agreed to pay” and in the definition of Seller’s Expenses a statement similar to “broker fees Seller has agreed to pay.”
All feedback will be reviewed and considered by the subcommittee and can be sent to TREC.
I think removing it all together from the contract would be a mistake. For continuity between the real estate industry and the public, commission needs to stay in the contract some way.
The wording regarding commissions in the commercial sale or lease contracts works well.
Disclosure is a good thing! Structure is a good thing? The approach used to address real estate fees in the commercial forms does both and should be in the contracts.
For TR – when you update the Residential Buyer/Tenant Representation Agreement, please make them separate documents. The residential tenant should be very short and allow for a one time fee.
Sure thing
Regardless of how or where compensation is disclosed or negotiated, it is most critical to distinguish a difference in cooperating broker offers of compensation and seller offers of compensation, which seemed largely lost in all of the legal dialogue during the lawsuits and negotiations with DOJ. If forms changes provide such options, they must include a clear distinction between a listing broker opting to share some of ITS contracted fee with a cooperating broker as part of the proposed marketing package, and a Seller offering either the Buyer or Buyer’s agent some level of separate, direct compensation. Those two scenarios… Read more »
I think mimicking the Farm and Ranch/Commercial verbiage is a good option.
What is wrong with going back to the way compensation payments were supposed to be paid. All commissions were to be paid to the listing broker and the listing broker writes a separate check to the cooperating broker. End of the year listing brokers were to send 1099’s for commission paid to cooperating brokers. Title companies are pass-through entities and not required to send 1099’s. It was totally wrong for settlement statements to show cooperating broker commission being paid from sellers proceeds. Settlement statements done that way is what caused NAR to have to settle. They couldn’t prove listing brokers… Read more »
I totally agree with you, You are rightl