With a list of proposed TREC contract changes up for discussion, have you ever wondered how TREC decides when to change the promulgated forms? Typically, the forms are revised every other year following the Texas Legislative Session. TREC’s Broker Lawyer Committee meets first, and their proposed changes are discussed at the August TREC Commission meeting. If the commission approves the proposed changes, they are posted to the Texas Register and open for public comment – this is where we stand now.
If you are a Texas Realtor, now is your opportunity to have a voice in the process. The Broker-Lawyer Committee depends on your comments to assist them in their decisions regarding form additions and changes. This year there are several important changes to the contract forms and some new addendums for you to consider.
One of the most significant changes to the contract forms, including the One to Four Family Contract, is a requirement by TREC that the earnest money is deposited with the escrow agent within three days. Currently, the rule reads “The earnest money must be deposited by the close of business of the second working day after execution of the contract by the principals.” At the meeting on August 7th, one of TREC’s commissioners expressed concern that this change could be problematic since the new language refers to calendar days, not business days. Title companies are closed on weekends and national holidays. If you have a contract that is executed on a Thursday evening, the deadline for the earnest money deposit will be Sunday at midnight. That gives the Realtor one day on Friday to get the earnest money to the title company. This scenario is compounded when there’s a holiday adjacent to a weekend (e.g. Labor Day Monday) when title companies are likely to be closed for three calendar days in a row. This provision will likely require the most significant adjustments in day-to-day business practices of all the changes being considered.
Other notable changes under consideration include: creating separate receipt sections for the contract, earnest money and any additional earnest money; changes to the language regarding termination in paragraph 6D (One to Four Family); and changes to paragraph 20 (One to Four Family) regarding FIRPTA. The supporting documents for the August 7th TREC Commission meeting included marked-up versions of the contract forms, and they can be viewed HERE.
TREC is also considering adding two new addendums to its library of available forms. Realtors will probably be most excited about the Addendum Concerning the Right to Terminate due to Lender’s Appraisal. The other new addendum that may be added is the Addendum for Authorizing Hydrostatic Testing.
Independence Title offers a solution, should the 3-day rule earnest money deadline be approved. We are able to accept earnest money electronically through the Zoccam app using the camera on your or your buyer’s smart phone. If you need instructions on how to download and use Zoccam, you can find a step-by-step guide on our website. If you need further assistance, please do not hesitate to contact your Independence Title business development representative.
The Broker Lawyer Committee would like your feedback about these or other changes and additions under consideration. You may submit your comments and/or concerns via email to firstname.lastname@example.org on or before Monday, September 25, 2017.