Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Changes are Coming to Texas Real Estate Contracts

Changes are Coming to Texas Real Estate Contracts

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.

red line changes to Texas TREC contractsOne 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.

*Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
Regent Property Group
www.DonnaHomes.com
Donna@DonnaHomes.com
austin-texas-homes-for-sale.com

Austin TX Real Estate and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way. 

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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.

Comment balloon 6 commentsDonna Harris • September 04 2013 12:24PM

Comments

Donna, I didn't see (unless I missed it) how may pages your standard sales contract is.  Ours is 8 pages.  It has been 8 pages for some time now, which tells me we are due for a couple more pages.  lol

Posted by Jean Hanley, Specializing in Folks Who Want To Buy/Sell Homes (Coldwell Banker Kivett Teeters) almost 4 years ago

Interesting.  We also have a Release of Earnest Money Form that determines to whom the earnest money is sent.  It can be buyer, seller or both.

However, that has nothing to do with the seller changing the status for a listing to ACTIVE and marketing the property for sale.  Once the buyer officially NOTICES the seller that they are voiding the contract because of the sellers refusal to make repairs, the property goes back to ACTIVE and the earnest money is negotiated without any interest of the listing status. 

Also, if a buyer fails to meet a contingency such as loan commitment, the seller can NOTICE the buyer that the contract is void and can activly market the listings as ACTIVE.  Again, negotion about the earnest money is not involved.

I have to say that many agents for seller believe that they need a releast of earnest money before the seller can Activate the listing.  Not so.  Sellers are often uncooperative when releasing earnest money.  We just had one that took about 8 days to get the form signed by the seller. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) almost 4 years ago

Jean, Our main contract is 9 pages. The finance addendum is 2 pages. The HOA addendum is 1 page. The non-realty items addendum is 1 page and the Seller's Temp lease is 2 pages. These forms are typical in one transaction. There are many other forms that can be included, but these are the basics.

Lenn, We also currently have a Release of Earnest Money form. It states where the earnest money is to go. However, this form also states that the earnest money is released and that all parties to the contract are released from liabilities of the contract. If parties don't sign this form, the contract is still in force because no one has been released yet.  Granted, this form can be signed by one party, and if not signed by the other party, our contracts state that a second notice must be sent and then the title company can release the earnest money automatically to the party claiming it. This leaves open that the other party can then sue for up to 3 times the amount if they think that is their damages to the claim.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, a PLR affiliate - TexasRealEstateMediationServices.com) almost 4 years ago

I began to read these intricacies, I love the intricacies of our industry.  It is so important to be the expert when it comes to the law, then be guessing, and then I started to glaze over.  The point is a deep understanding of the local and state laws is essential and primary knowledge for any qualified agent or Realtor®.

Posted by Larry Lawfer, "I listen for a living." It's all about you. (YourStories Realty Group) almost 4 years ago

I wonder if the intent of the MToC change is to free up the property for active status again, regardless of the ability of the seller to provide clear title at closing.

Posted by Brad MacKenzie, Turning Houses into Homes on the South Shore (Brad MacKenzie) almost 4 years ago

Larry, There is a lot of glossy-eyed stuff within contracts, and each state has different laws and different contracts.

Brad, That's possible, but then the seller would have to amend the disclosure notice stating that their might be a cloud to the title. That would hurt potential offers.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, a PLR affiliate - TexasRealEstateMediationServices.com) almost 4 years ago

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