Section 2: Texas Laws, Rules and Regulations

Promulgated Contracts

-Unimproved Property -Farm and Ranch -Residential Condominium

Contract

-Parties agree to the terms -Parties have signed

How many lawyers does the governor appoint to the Broker-Lawyer Committee?

0

Unfortunately, you've been practicing law without a license. What can TREC do with regard to your real estate license?

-Suspend your license -Revoke your license

What is the term length for a member of the Texas Real Estate Commission?

6 years

TREC has promulgated and required the use of a new version of the One to Four Family Residential Contract. You can't seem to locate any of these in the office, but you find a bunch of the older-version forms and decide to use those, even though the effective date for the updated form has passed. Is this allowed?

No

The Sampsons decide that they're going to reject the offer they received, because it's unacceptable. However, they'd like to have these people submit a new offer. What should they do?

Provide a written notice of non-acceptance to the offeror

Real estate professionals have been required to be licensed in Texas for quite some time. What was the name of the first licensing act?

Real Estate Dealers License Act

What was the name of the first licensing act in Texas?

Real Estate Dealers License Act

Identify which profession TRELA regulates.

Real estate

Offer

Terms of the offeror expressed

TREC stands for what entity in Texas?

Texas Real Estate Commission

What has the name of the committee that was formed in 1949 to administer the Real Estate Dealers License Act?

Texas Real Estate Commission

Which entity administers license law in Texas?

Texas Real Estate Commission

TREC is charged with passing rules to enforce, interpret, and explain the provisions of which of the following?

Texas Real Estate License Act

In Texas, a potential consequence for the unauthorized practice of law is ______.

The revocation or suspension of one's real estate license

TREC has voluntary use forms, as well as trial use forms. What is a trial use form?

They're prepared by the Broker-Lawyer Committee and approved by TREC, but they haven't reached the effective date yet.

What's the correct way to use an amendment to a contract?

To change the original contract's terms

As a licensee, you're allowed to include certain types of information within the special provisions section of the contract. What is the purpose of the special provisions section of the contract?

To list terms that aren't otherwise covered in the sales contract

Previously, you learned that the Broker-Lawyer Committee doesn't promulgate forms. What does promulgate mean?

To officially publish

What is the purpose of the Texas Real Estate License Act?

To protect the public

Joan decided to bring a lawsuit against you since you failed to present her with the offer in a timely manner. What type of lawsuit is this?

Tortious interference

Now that you can recognize the different types of promulgated forms, it's important that you know what each type is. Let's start with contracts. What is the correct definition of a contract?

A legally enforceable, binding agreement between two or more parties to do something or not do something in exchange for consideration

How can you avoid making contract mistakes?

-Use promulgated forms. -Be familiar with the forms. -Don't leave anything blank. -Don't offer legal advice.

What Can You Do?

Paul, a licensee, needs a form, but TREC hasn't promulgated one for his specific use. However, there is an approved form available. Paul should ask his broker which form to use.

Which of the following is a responsibility of the Texas Real Estate Commission, as provided in the Texas Real Estate License Act?

Rulemaking authority for real estate licensees that has the full force and effect of the law

Your clients had multiple offers to consider, and they've decided to move forward with one, but reject the others. What should your client do with the offers they are rejecting?

Write "rejected" on the offer

What is the unauthorized practice of law in Texas?

Acting outside the scope of one's license; offering legal advice or drafting legal forms

Which act requires real estate professionals to be licensed?

Texas Real Estate License Act

Before being amended and renamed as the Texas Real Estate License Act, what was the name of the act that regulated licensed real estate activity?

The Real estate Dealers Act

Texas licensee Jarred is helping Jennifer purchase a home on HUD's auction site. He's not sure which form or forms to use. What contract forms should be used?

The forms that HUD requires for that specific transaction

Next, let's say you want to use a form before its effective date—which is also known as using a trial use form. As a licensee, are you allowed to do this?

Yes

6 member group

-Full-time licensed brokers -Currently active in real estate

Under the TREC rules relating to contract forms, what must a licensee do?

Inform the parties to a real estate transaction that the contract they are about to sign is legally binding on them.

The governor

Member of the public

Broker-Lawyer Committee Responsibilities

-Draft contract forms -Revise contract forms -Recommend form adoption

Texas Bar Association

Attorneys

Which of the following actions must you take if you have a buyer client?

-Disclose to your clients all pertinent facts that you know about a property. -Provide written advice to have the abstract examined by an attorney of their choice or to obtain owner's title insurance policy.

Now that you know the purpose of the Broker-Lawyer Committee, let's talk about its make-up. How many members serve on this committee?

13

Members of TREC

9: all appointed by the governor

Definition of an Amendment

A document that changes the original terms of the contract

Definition of an Addendum

An addition to an existing contract

Texas licensee Chip needs a form. TREC hasn't promulgated a form for this specific use, but does have an approved form available. Chip should ______.

Ask his broker which form to use.

Which type of document is provided to the consumer to notify them that a recovery fund is available, should they be unable to collect a judgment against a licensee?

Consumer disclosure

What's providing legal advice to a client considered?

The unauthorized practice of law

Who is responsible for appointing the members of the commission?

The governor of Texas

Previously, you learned what your duties are to the seller when presenting multiple offers. Of course, there are exceptions to every rule. Can you identify the exceptions to this rule

-Your client has given you written instructions that offers should not be submitted to them once they've entered into a contract. -Your client has given you written instructions to only bring specific back-up offers. -Your client has given you writing instructions not to bring offers below a certain amount.

Within TREC, there is a committee—yes, another committee—made up of 13 members. This one is known as the Broker-Lawyer Committee. What is the purpose of this committee?

Draft and revise contract forms

When a real estate transaction involving a governmental agency takes place, the forms used in the transaction will need to be provided by that agency. This is what is known as an ______ to TREC's rule.

Exception

Identify which act you can perform.

Fill in the blanks on a promulgated contract

TREC

Brokers

Unauthorized Practice of Law

Performing any actions for which a law license is required.

On which entity's website can you reference to find promulgated contract forms?

TREC

What is the purpose of the Broker-Lawyer Committee?

To draft contract forms

Committee Make UP

-6 brokers -6 attorneys -1 public member

As a rule, when negotiating a contract that involves real property, you must use contracts that are promulgated by TREC. But of course, there are exceptions to every rule. Identify the statements that explain when TREC-promulgated forms do not have to be used.

-A licensee is acting as a party to the transaction, and not as an agent in the transaction. -A federal government agency requires that you use a different form. -A contract form is prepared by an attorney on behalf of a property owner. -TREC hasn't promulgated a standard contract form.

You've received an answer, and you're ready to present an offer to your clients, the Sampsons. What can they decide to do with the offer?

-Accept -Counter -Reject -Ignore

TREC Rules for Completing Contracts

-Add factual statements and business details that the parties ask you to add -Strike out matter that the parties request that you strike out -Use the promulgated addendum or other form when available

What if you're involved in a transaction and there isn't a promulgated form available for your use? What options do you have?

-Check with your broker to see if the form exists -Use a trial use form that has been approved by TREC -Use a form that's been drafted and approved by a Texas attorney

Identify which types of forms are promulgated by TREC

-Contracts -Addenda -Amendments -Resale certificates -Notices

Identify which acts would be considered the unauthorized practice of law.

-Drafting a written instrument that transfers the interest in or title to real property -Attempting to prevent a party to a real estate transaction from hiring a lawyer

The Texas Real Estate Commission, better known as TREC, was created under TRELA. What is the purpose of TREC?

-Enforces the real estate law in Texas -Interprets and explains TRELA's requirements -Establishes procedures to help licensees avoid committing violations of TRELA -Handles complaints and violations of TRELA

When it comes to handling promulgated forms, there are certain things that real estate licensees can do.

-Fill in the provided blanks. -Add to or strike matter from a contract, as preferred by your client.

According to the "Notice Regarding Contract Forms" on TREC's website, who is able to use the promulgated forms?

-General public -Licensed real estate brokers -Sales agents

Which of these actions would be considered the unauthorized practice of law?

-Giving advice about the legal consequences of the purchase -Offering a client an opinion regarding the legality of the title -Modifying a promulgated contract

Promulgated Addenda

-Loan Assumption -Seller's Temporary Residential Lease -Buyer's Temporary Residential Lease -Non-Realty Items

Identify TREC's rule-making authority when it comes to contracts

-Makes and adopts rules that require Texas license holders to use contract forms prepared by the Broker-Lawyer Committee. -Establishes the dos and don'ts for form completion.

More About the Members

-Members are appointed by the governor. -Members must be qualified voters in the state of Texas. -TREC can hire support staff to administer and enforce TRELA and TREC's rules. -If a member should leave TREC before the expiration of their term, the governor is responsible for appointing someone to take over that vacant seat.

3 member group

-Members of the public -Not licensed by the commission -No financial interest in real estate

This is great news: Your seller has multiple offers to consider! When reviewing these offers, what responsibilities do the sellers have?

-No legal duty to respond to offers -Consider all offers -Decide which offer to accept, if any

TREC is Texas's state regulatory agency. Identify which professions it regulates.

-Real estate brokers and sales agents -Real estate inspectors -Education providers for real estate and inspection courses

Working with multiple offers can be a little tricky, but TREC provides guidance on approaching this situation. What duties do you have to your client when presenting multiple offers? Select all that apply.

-Submit all written offers -Keep your client informed about known information

Let's pretend that you decided to present the offer to Joan, your seller client, two weeks after you received it. What could be the consequences of your actions?

-Suspension of license -Revocation of license -Lawsuit for tortious interference

There are several ways that you can get copies of TREC forms. Identify which three methods of reproduction of these forms are appropriate.

-TREC website -Printed copies from TREC's office in Austin -Legible photocopies

The Sampsons want to send a letter of non-acceptance to the offerors, letting them know they have rejected their offer. What should you be sure is included in the letter of non-acceptance that your client sends?

-Thank you for the offer -A list of terms to make the offer more acceptable -The offer is unacceptableInvitation to submit a new offerClearly state that this isn't a counter-offer

Altering TREC Forms

-The business name or logo of your broker at the top of the form -The broker's name inserted into any blank provided for that purpose

What Can Licensees Do?

-Use contracts promulgated by TREC -Explain the meaning of a form or contract's factual statements -Let the parties to a real estate transaction know that the contract is legally binding on them -Fill in the blanks provided on authorized forms

Purpose of TRELA

Protects the public by regulating the real estate profession

How long is a member of TREC's term?

6 years

What is one of the exceptions to the rules requiring the use of TREC-promulgated forms?

A property owner may prepare an alternate form

You've finally received an offer on a home you listed. When should you present the offer to your seller client, Joan?

Immediately

TREC does NOT have the right to do which of the following?

Prohibit a license holder from using a contract that has been drafted by the property owner's attorney.

When it comes to contracts, what can TREC do under the Texas Real Estate License Act?

Promulgate forms

Which type of document is provided to consumers to notify them a recovery fund is available, should they be unable to collect a judgment against a licensee?

Promulgated Consumer Disclosure

Which type of document is issued by an HOA and is provided by the seller in a transaction?

Promulgated Resale Certificate

Shelby is a new licensee. If he doesn't follow TREC rules relating to contract forms, what penalty might TREC impose?

Revocation or suspension of his license

Which entity was formed for the purpose of enforcing the Real Estate Dealers Act in Texas?

TREC

Which of the following entities promulgates forms for Texas licensees?

TREC

Now that you know you must use the appropriate version of a form, how do you know what version you're using? Which of these forms represents how a version number or form number is listed in a TREC contract.

TREC NO. 20-13

There may be times during a transaction that you wish to use a voluntary use form, such as the Non-Realty Items Addendum. What is a voluntary use form?

TREC does not require that they be used, but they have been reviewed by attorneys.

Considering TREC's authority under the laws of TRELA, which of the following statements is true?

TREC has the authority to suspend or revoke any license holder's license.

Now that you've determined how many members serve on the commission, how many years do they each serve?

TREC members serve six-year terms that are staggered, with three members' terms expiring on January 31 of each odd-numbered year.

Vanessa has had her Texas real estate broker's license for 12 years. What law stipulates the requirements Vanessa must follow to keep her license?

TRELA

A Texas licensee may only strike through a clause or line item if it is not applicable to the transaction and the deletion is at the request of ______.

The client

Paul was having a hard time deciding which promulgated form to use in his transaction. Paul was helping Matt with purchasing a home on HUD's auction site. What contract form should be used?

The form that HUD provides for the transaction

Appropriate Form Usage

When negotiating a contract for the sale of any interest in real property

You're still working with the Sampsons to try to get them an acceptable offer on their home. The good news is that now they have multiple offers to consider. The Sampsons have countered Buyer A's offer, but then they get an even better offer from Buyer B. What should the Sampsons do about Buyer A before accepting Buyer B's offer?

Withdraw the counter-offer from Buyer A

You are working with your seller clients. Before they sign the sales contract, you mention to them that they are about to enter into a legally binding contract. Can you do this?

Yes

Your seller client, Charlie, has asked you not to present offers of less than $150,000. Can you do this?

Yes

The Texas Broker-Lawyer Committee contains different types of members appointed by different parties. How many lawyers does the governor appoint to this committee?

Zero -The lawyers are appointed by the president of the Bar