TREC Rules Changes to be Adopted November 13th

Representatives from both TAR and TREC met recently to review areas of concern in the proposed rules slated for adoption at the November 13, 2017, TREC meeting. The issues and agreed consensus of the two parties are outlined below.

Proposed §537.11(a)(4)A) adds requirements that Association (or attorney-drafted) forms must contain specific items:

  • the name of the lawyer or trade association who prepared the form;
  • the name of the broker or trade association for whom the form was prepared;
  • the type of transaction for which the lawyer has approved the use of the form;
  • any restrictions on the use of the form;
  • a statement that the form has not been approved by the Commission; and
  • a statement that Commission rules prohibit real estate license holders from giving legal advice.

TREC and TAR agreed:

  1. These requirements do not apply to notices, disclosures or representation agreements;
  2. Change “v” to require:  a more positive statement that the form is not a mandatory Texas Real Estate Commission form; and
  3. Have until May 1 to implement.

Proposed §537.11 (b): Adds that “Subsection (a)(4)(A),” which allows for an association or lawyer to draft a form “does not permit a license holder to use a form that changes the rights, remedies or responsibilities of a principal contained in a mandatory contract form or addendum.” This proposal would prohibit TAR from offering forms such as the Release of Earnest Money form.

TREC and TAR agreed:

  • Amend this language to require a form that changes the rights, remedies or responsibilities of a principal to include a statement that the parties’ rights, remedies or responsibilities will be affected by use of the form. Under this language, TAR would continue to be able to offer forms such as the TAR Relocation Addendum.
  • The Release of Earnest Money form is not affected by the proposed rule.

Proposed §535.155(d)(4) adds that an advertisement is deceptive or misleading if the advertisement uses a title, such as owner, president, CEO, COO, or other similar title, email or website address that implies a license holder is responsible for the operations of a brokerage unless the license holder is the designated broker. This proposed language would limit the ability of a broker who has responsibility for the firm but who is not the “designated broker” to use such titles in his or her advertising.

TREC and TAR agreed:

  • Change license holder to sales agent to be in line with 1101.652(b)(23)(C) which refers only to a sales agent. A broker associate could still be found in violation of 1101.652(b)(23)(A) and (B) if his or her advertising misleads or is likely to deceive the public or tends to create a misleading impression.

Proposed §535.155(d)(7) adds that an advertisement is deceptive or misleading if the advertisement:  “(ii) contains the name of a sales agent whose name is, in whole or in part, the same as the broker’s name and does not contain a disclosure that the sales agent is not responsible for the operation of the brokerage.”

TREC and TAR agreed:

  • This language will be removed from the proposal.
  • Kerri will better define “team name” to be a “name used by a group of one or more license holders sponsored by or associated with the same broker that performs real estate brokerage activities under a collective name that is not registered as a DBA of the broker” in order to clarify team names from brokerage names.

Proposed changes to Consumer Information (§531.18) and Information About Brokerage Services (§531.20) require the link on the license holder’s business website to be in 12 point font (currently 10 point) and prohibits a license holder from locating the link in a website’s footer.


  • Remove the proposed prohibition on placement of the IABS or Consumer Notice links in the footer of a website.
  • Will replace proposed language with an option: if a license holder wants to use “TREC Consumer Protection Notice” or “TREC Information About Brokerage Services” as the link, license holder is required to use 12 point font. If a license holder still spells out “Texas Real Estate Commission” in the link, can still use 10 point font.

Proposed changes to Paragraph 5 of the TREC Contracts (Earnest Money) requiring Buyer to deposit earnest within three days and giving Seller a right to terminate the contract or exercise Paragraph 15 remedied, or both, if Buyer does not comply.


  • Consensus that 3 days is not enough time because it does not take into account weekends and holidays.
  • TAR would take the TAR commercial contract language (which addresses those issues) to TREC’s Broker-Lawyer Committee meeting on Friday, Oct. 6th.

The Broker-Lawyer Committee approved the following changes to Paragraph 5:

  • Buyer will have 3 days after the effective date of the contract to deposit earnest money. If the last day to deposit the earnest money falls on a Saturday, Sunday, or legal holiday, the time for performance is extended until the end of the next day which is not a Saturday, Sunday, or legal holiday.
  • If Buyer fails to deposit the earnest money within the time required, Seller may terminate the contract or exercise Seller’s remedies under Paragraph 15, or both, by providing notice to Buyer before Buyer deposits earnest money.

These changes will be submitted to TREC for potential re-proposal on November 13, 2017, and public comment for possible adoption on February 12, 2018. TAR agrees with these changes.