The Texas Promulgated residential real estate contracts are on the mend again. It's been nearly 2 years since their last changes took place in December 2011. The changes aren't finalized as TREC is looking for input from people through October 1. I read through the changes today. They basically take the current contracts and mark them up with red lines throughout, and then write the changes in blue. They are interesting changes, and here are my thoughts.
One HUGE change is that the Option Fee will now be due within 3 days of executing the contract instead of 2 days. Why is this huge, it's only 1 day difference? Because many times a contract is executed on a Friday, and that means people need to run around town on the weekend to show proof of delivery of the money, and some agents don't work the weekends, or the sellers are unavailable to meet with anyone for delivery.
Adding the extra day also allows for the snail mail route to be used for people who are out of town when the contract is executed. If the money is not delivered to the Seller or the Listing Agent/Brokerage, the buyer does not have an "unrestricted right to terminate."
Another change is with Financing terms. By the end of this month (Sept 2013), USDA loans will no longer be prevelant in the Austin market as we've grown so much that the vast majority of the area is no longer considered rural. However, USDA is now going to be added to the form as a type of financing. It might not be prevelant in my area, but there certainly are parts of Texas that still qualify. The change is just a little late to the party with most of the big metro areas no longer being eligible for this financing.
The third change is an interesting one. They're calling it "Mutual Termination of Contract." This will be a form that can be used even if the earnest money is in dispute. Currently, if one or both parties don't agree on who should get the earnest money, the property is tied up as still under contract without the termination. Honestly, I don't see this being a good form to use because even if the parties are released from the contract, the property still can't be sold if there is an earnest money dispute. If a buyer goes so far as to file a suit for the money, that can put a lien on the property. A cloudy title will definitely hold up the sale... not sure how this one is going to play out... I have sent in my feedback that this is a bad form.
If you're a buyer or seller in Texas, make sure you're working with an agent who is up to speed with the current contracts and knows the changes that are being made. It could be to your detriment to not understand what you're signing. Suprisingly, I get offers from agents on old forms more often than you would think! And if you're in the Austin area, contact me today for a consultation.
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Copyright© 2013 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
*Changes are Coming to Texas Real Estate Contracts* was first published on donnahomesblog.com.