Promulgated Contracts, Forms, and Addenda Questions with Correct Answers

The only entity that can promulgate contract forms - Texas Real Estate Commission (TREC) License holders are required to use contract forms prepared by the Texas Real Estate Broker-Lawyer Committee and approved by TREC, unless - 1) The form is prepared by a property owner, 2) government agencies, or 3) by an attorney on behalf of a property owner. Contracts that are created by the broker-lawyer committee are promulgated by - TREC When negotiating real estate transactions, licensees must prepare forms using only - 1) TREC-approved and promulgated forms OR 2) Those otherwise permitted by TREC's rules, such as forms created by the Texas Association of REALTORS® (TAR) What if a form may be required by law, but not promulgated by TREC? - There's often a TREC-approved form available for licensee use, but other legally required forms that contain the same elements may be used instead. Licensees may not add to or cross out items in approved contract forms unless - The licensee is adding any factual statements and business details that the parties ask licensees to add, or strike out only an item or items that the parties request licensees to strike out, as is necessary to conform the contract to reflect the parties' intent. TREC-promulgated forms do NOT have to be used in the following situations: - 1) When a licensee acts as a party to the transaction, and not as an agent in the transaction. 2) When there is a transaction for which a federal government agency (HUD, for example) requires use of a different form. 3) When a contract form is prepared by a property owner or by an attorney on behalf of a property owner. When TREC has not promulgated a standard contract form for the type of transaction the licensee is doing, there are 3 options: - 1) Use a form that's been drafted and approved by a Texas attorney for that type of transaction (licensees should check with their broker for which forms the brokerage uses). 2) Use a form prepared by the broker-lawyer committee and made available with TREC's consent for trial use by licensees. 3) Use one of the many forms prepared by TAR, such as the Residential Real Estate Listing Agreement. Information About Brokerage Services form - Licensees must provide this form to all prospective clients or customers upon the first substantial dialogue about a specific property. This form explains the consumer's agency relationship options. It does not create a relationship. If the licensee has not already provided the Information About Brokerage Services (IABS) form—along with the disclosure regarding which party the licensee represents in the transaction—at the time an offer to purchase has been made, - The licensee must provide the form at the time the sales contract is provided. To insure compliance, the broker should post a link on the business's website homepage in a readily noticeable place and in at least 10-point font. - A completely filled out TREC IABS form labeled "Texas Real Estate Commission Information About Brokerage Service." Texas law requires licensees to provide a copy of the IABS form to both the lessor and lessee when - negotiating any residential lease that is for one year or more. A TREC-adopted listing contract between a real estate seller and a seller's agent must include the following provisions: - 1) A provision informing the parties to the contract that real estate commissions are negotiable. 2) A provision explaining the availability of Texas coastal natural hazards information that's important to coastal residents, if that information is appropriate. Under the TAR Residential Real Estate Listing Agreement Exclusive Right to Sell contract, if the seller breaches the terms of the agreement, - The seller is in default and must pay the broker's fee as specified in the agreement. If the broker's fee was a percentage of the sales price and there was no sale, then the listing price will be used to calculate the fee. Under TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract, the broker is liable for - Injury to persons or property as a result of broker negligence. However, the broker isn't responsible for any injury to a person or loss or damage of personal or real property as long as it wasn't caused by something the broker did or neglected to do. TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract gives brokers the authority to - Market the seller's property, procure a buyer, and negotiate the sale of the property. However, it is the seller who sets the listing price. TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract has a specified - Start and end date. The listing agreement automatically terminates at 11:59 p.m. on the final day. TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell contract must state - The property's legal description, including the lot, block, and street address, as well as its city and county in Texas. The listing agreement identifies - The terms of the listing agent/seller agency relationship. It spells out the scope of the listing agent's responsibility and what the listing agent must do to earn compensation.