PART 23. TEXAS REAL ESTATE COMMISSION
CHAPTER 537. PROFESSIONAL AGREEMENTS AND STANDARD CONTRACTS
The Texas Real Estate Commission (TREC) adopts new 22 TAC §537.66, Standard Contract Form TREC No. 59-0, Notice to Purchaser of Special Taxing or Assessment District, in Chapter 537, Professional Agreements and Standard Contracts, without changes to the rule text, but with non-substantive changes to the form adopted by reference, as published in the November 24, 2023, issue of the Texas Register (48 TexReg 6870). The rule text will not be republished. The revised form adopted by reference is available through the Commission’s website at www.trec.texas.gov.
Texas real estate license holders are generally required to use forms promulgated by TREC when negotiating contracts for the sale of real property, although some forms are adopted by the Commission for voluntary use by license holders. Contract forms are drafted and recommended for proposal by the Texas Real Estate Broker-Lawyer Committee, an advisory body consisting of six attorneys appointed by the President of the State Bar of Texas, six brokers appointed by TREC, and one public member appointed by the governor. The Texas Real Estate Broker-Lawyer Committee recommended the new rule, and the form adopted by reference, in Chapter 537 as a result of statutory changes enacted by the 88th Legislature in HB 2815 and HB 2816.
HB 2815 and 2816 replace the several different disclosure notices related to tax assessments made by water districts with a single notice and provides the language required for the notice. The bills also require the water districts to make their own notice publicly available.
37 comments were received, including from one real estate trade association. Three commenters desired a specific change to the language on the notice itself. Because the contents of the notice are dictated by statute, the committee did not believe such changes could be made and declined to do so.
25 commenters felt the notice was confusing, could be simplified, and/or had general questions or concerns about how the form would be completed, including concerns about license holders completing the form. The committee agreed that this was a confusing area, but that this is a statutory requirement. The committee also reiterated that water districts are required to make the information in this form available to the public. However, if the district has not made the notice available, this form can be used as a backup, so that a seller can obtain the information from the district and then could use that information to complete the form. Additionally, the committee stated that this form is a seller's disclosure and agents themselves should not be completing the form on behalf of their clients.
Two commenters felt that water districts needed to make the notice available online. The committee noted that many districts are already required to post the notice online.
One commenter suggested the information be added to the Commission's Seller's Disclosure Notice, but was appreciative of the form. The committee noted that this language comes from a different statute than the Seller's Disclosure Notice, but appointed a working group to review the various disclosures offered by the Commission to see if improvements should be made.
Two comments were related to whether this form would apply to public improvement districts or PIDs. The form does not, however, in light of these comments, the committee did decide to add a notice to the top of the form that states it is not to be used for a public improvement district. Similarly, one commenter requested a list of the type of districts this form applied to. The committee agreed that this is a confusing area, but ultimately declined to include such a list because the definition of "district" itself in the statute was complicated and would likely cause more, rather than less, confusion.
Two commenters were generally in favor of the form.
Finally, the MetroTex Association of Realtors had general concerns about the form and the difficulty of obtaining such information. The Association also recommended that the committee add a URL to the Texas Commission on Environmental Quality's website (the agency that regulates water districts in the state) at the top of the form to provide more information regarding water districts. The committee agreed that the process is confusing. The committee discussed adding the link as requested, but had concerns that the information on TCEQ's website might be incomplete or outdated, and ultimately, not helpful and as a result declined to make such a change.
In addition to the changes described above, the committee made the following additional non-substantive changes:
- Reworded the paragraph below the title of the form to further emphasize the seller should use the district's form, if available;
- Added a checkbox to Paragraph 7 and note to complete only if applicable; and
- Revised the form's standard disclaimer.
The committee recommended the Commission adopt the form as modified.
The new rule is adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102. The new rule is also adopted under Texas Occupations Code §1101.155, which allows the Commission to adopt rules in the public's best interest that require license holders to use contract forms prepared by the Broker-Lawyer Committee and adopted by the Commission.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on February 13, 2024.
TRD-202400577
Vanessa E. Burgess
General Counsel
Texas Real Estate Commission
Effective date: March 4, 2024
Proposal publication date: November 24, 2023
For further information, please call: (512) 936-3284