08/22/2024 | Press release | Distributed by Public on 08/22/2024 16:25
The Texas Real Estate Commission met August 19 in Austin for its third meeting of the year. The Commission adopted a new rule addressing broker succession. In addition, several form changes were recommended by the Broker-Lawyer Committee (BLC) and proposed by the Commission, which means you can provide your public comment on these changes now. Read on for more updates.
Under TREC rules, the death of a sponsoring or designated broker will cause any sponsored sales agent's license to become inactive, meaning the sales agent cannot perform any real estate services that require a license-even if the agent is in the middle of a transaction. This is true regardless of whether the agents are sponsored by an individual broker or a business entity broker.
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 dies. Under this rule, neither the business entity license nor any sponsored sales agent's license will become inactive right away. Rather, the entity and agents will be given 14 days from the broker's death before their licenses inactivate. This will hopefully give the entity and agents time to designate a new broker that satisfies the requirements without having to go inactive and disrupting business.
The Commission adopted changes to the course approval forms for Principles of Real Estate I, Principles of Real Estate II, and Law of Agency courses. These changes reorder and remove content from the course approval forms to ensure relevancy and that course objectives are being met. These course approval form revisions were recommended by the Education Standards Advisory Committee (ESAC). Providers will receive more information on implementing the new course forms soon.
As recommended by the Texas Real Estate Inspector Committee (TREIC), the Commission adopted rule amendments to TREC Rules 535.209, Examinations; 535.213, Qualifying Real Estate Inspector Instructors and Courses; and 535.214, Education and Experience Requirements for a License.
These changes primarily rearrange existing inspector licensure requirements to clarify that the Texas Practicum is an experience requirement separate from an educational course.
Education providers may still offer the Texas Practicum but no longer need to submit a course application for it to TREC or issue completion certificates to students. Instead, students will submit the credit request form to the agency to obtain credit.
The Broker-Lawyer Committee (BLC) recommended several changes to the TREC contract forms. Most of these changes are the culmination of two years' worth of work on the part of the committee, with other changes recommended in response to industry practice changes around broker compensation affecting many license holders. You can provide public comment on proposed changes.
In light of recent industry changes surrounding broker compensation, 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.
In the Third Party Financing Addendum, to ensure the buyer is terminating appropriately, Paragraph 2A, Buyer Approval, has been changed to require both a notice of termination and a copy of a written statement of the lender's determination like in Paragraph 2B, Property Approval. The language in Paragraph 2B is modified because the language related to notice of termination timing was different than in other contract provisions and was causing confusing. "Requirements" in Paragraph 4 is made singular and a conforming change is made to a paragraph citation.
The Condominium Resale Certificate is amended to conform the language in Paragraphs K and L with section 82.157, Texas Property Code.
In the Unimproved Property contract, Paragraph 3D is amended to include the same sales price adjustment language as in the Farm and Ranch contract. A dollar sign is also added to Paragraph 3D in the Farm and Ranch Contract.
Out of concern about confusion and improper use of Paragraph 11, Special Provisions, by license holders, the Addendum for "Back-Up" Contract is modified to provide more clarity on the timing and payment of the earnest money and option fee by incorporating similar language from Paragraph 5 of the contract and by addressing timing and payment of additional fees.
The committee drafted a new Addendum for Section 1031 Exchange form 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. Providing this as an addendum, rather than in the contract, allows the parties to use it when applicable without causing unnecessary confusion. A reference to the new Addendum for Section 1031 Exchange is also added to Paragraph 22 of the contract.
The Broker-Lawyer Committee will review the public comments it receives to determine whether it should make changes to their proposals or recommend the Commission adopt the changes as proposed at the November TREC Meeting.
TREC is in its early stages of considering fee increases for renewals. TREC is a self-directed semi-independent (SDSI) state agency, which means it is responsible for its costs of operation and removed from the legislative budgeting process. Therefore, TREC's sole source of revenue is through collecting fees, which are utilized to conduct agency operations.
Fee changes must be made in rule, so once a fee change is proposed by the Commission, the public will have an opportunity to provide feedback prior to adoption.
Download the meeting materials and watch a recording of the meeting.
The next TREC Meeting is November 4 at 10 a.m. CT in Austin. Broker license holders and sales agent license holders may earn up to four hours of continuing education (CE) elective credit per two-year renewal cycle by attending any single Commission meeting in person. A license holder cannot earn partial credit across multiple meetings.