By: Kaema Roberson, Associate Director of Education for Independence Title
Wondering if the rumors are true? Will the title company accept and receipt the option fee?
On November 10th, 2020 the Texas Real Estate Commission voted to adopt the Broker Lawyer Committee’s proposed contract changes. The buzz in the real estate community is around the changes to the termination option in paragraph 23. Here’s the summary of those changes TREC provided in their meeting materials. “Paragraph 5 is amended to authorize payment of option fee to escrow agent separately or combined with earnest money in a single payment. Clarifies order application of funds to be credited first to option fee and then earnest money. Authorizes the release of option money without further consent from the buyer. Paragraph 5 also now incorporates language previously found in paragraph 23 relating to remedy for failure to timely deliver option fee and earnest money.”
While there might be mixed reviews about this change, the general consensus agrees this is a much-needed edit to our contracts. Our industry has changed drastically in the last decade. Rare are the days that buyers’ agents have option checks in hand and deliver them to the listing agent or seller for receipt. Shifting to a digital world to conduct our transactions has changed the way we do business. Transitioning to the title company accepting and receiving the option fee makes good business sense.
The keyword here is transition! Rome wasn’t built in a day. Several things still need to happen before this business practice can be set into action. First, the Commission plans to hold an emergency meeting in December to approve changes to other addenda that include option fee-wording. Title companies will be working to create processes and procedures to accommodate this change and make the transition go smoothly. Finally, there’s the matter of when the forms will be out for the required use. At this time the Commission has not issued an exact date when the new forms will be required but they have stated there will be a specific day (most likely in March or April of 2021) that all license holders will switch over to the new forms. The new forms will not be available for optional use before this time. This will allow license holders and title companies to make a clean transition on the same day.
In addition to the option fee changes, the Commission voted to adopt some other contract changes and more information can be found on their website. Don’t forget Independence Title has everything you need to make this transition painless! We have partnered with Zoccam, the app that allows you and your clients to deliver earnest money to Independence Title electronically. The developers of Zoccam are working to incorporate these changes for option fees into their software and make life easier for all of us!
If you would like to learn more about how to use Zoccam, the upcoming contract changes, and how they will affect your business in 2021, please connect with your Independence Title business development rep for more details and training opportunities.