TREC Legal Update 1 Supplement

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1 TREC Legal Update 1 Supplement Knowledge is the Vehicle Service is the Goal Serving Texas real estate licensees since 1987 with a dedication to quality real estate education. Lloyd Hampton Real Estate Education TREC Provider # Lloyd@LHREE.com Phone:

2 Senate Bill No.A2212 AN ACT relating to certain real estate sales, brokerage, and advertising activities, certain functions of the Texas Real Estate Commission. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTIONA1.AASubchapter A, Chapter 1101, Occupations Code, is amended by adding Section to read as follows: Sec.A AAEQUITABLE INTERESTS IN REAL PROPERTY. (a)aaa person may acquire an option or an interest in a contract to purchase real property and then sell or offer to sell the option or assign or offer to assign the contract without holding a license issued under this chapter if the person: (1)AAdoes not use the option or contract to purchase to engage in real estate brokerage; and (2)AAdiscloses the nature of the equitable interest to any potential buyer. (b)aaa person selling or offering to sell an option or assigning or offering to assign an interest in a contract to purchase real property without disclosing the nature of that interest to a potential buyer is engaging in real estate brokerage. Sec.A5.086.AAEQUITABLE INTEREST DISCLOSURE. Before entering into a contract, a person selling an option or assigning an interest in a contract to purchase real property must disclose to any potential buyer that the person is selling only an option or assigning an interest in a contract and that the person does not have legal title to the real property. SECTIONA2.AASection (b), Occupations Code, is amended to read as follows: (a)aathe commission may not include in rules to prohibit false, misleading, or deceptive practices by a person regulated by the commission a rule that: (5)AArequires the term "broker," "agent," or a similar designation or term, a reference to the commission, or the person s license number to be included in the person s advertisement. SECTIONA3.AASection (b), Occupations Code, is amended to read as follows: (b)aathe commission may suspend or revoke a license issued under this chapter or take other disciplinary action authorized by this chapter if the license holder, while engaged in real estate brokerage: (23)AApublishes or causes to be published an advertisement, including an advertisement by newspaper, radio, television, the Internet, or display, that: (C)AAimplies that a sales agent is responsible for the operation of the broker s real estate brokerage business; or (D)AAfails to include the name of the broker for whom the license holder acts, which name may be the licensed name, assumed name, or trade name of the broker as authorized by a law of this state and registered with the commission; 535.4(c) A person must be licensed as a broker or sales agent to show a property. For purposes of this section, show a property includes permitting the property to be seen by a prospective buyer or tenant, unlocking or providing access onto or into a property, or hosting an open house. Unescorted viewing of a vacant property available for lease is permitted. This permission can be granted as long as certain methods, like technology, are used to control access and verify identity of the potential tenant and the property owner consents in writing. The consent must be in bold print, in at least 12-point font, and must specify whether the broker or the owner will be responsible for any damage that results. 1

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Let s Talk Team Names Broker is ABC Agent is John Smith What you can t use: John Smith Properties John Smith and Associates John Smith Company John Smith Realty John Smith Real Estate John Smith

4 Let s Talk Team Names Broker is ABC Agent is John Smith What you can t use: John Smith Properties John Smith and Associates John Smith Company John Smith Realty John Smith Real Estate John Smith Homes John Smith Services John Smith, Realtor John Smith, Owner John Smith, CEO John Smith, President John Smith, Partner What you may use: John Smith Team John Smith Group John Smith Properties Team John Smith Realty Team John Smith Real Estate Team John Smith Homes Team John Smith Services Team John Smith, Realtor Team Remember that Properties, Homes, and Real Estate do not identify you as a license holder! 3

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(a) We must use TREC forms unless: 1. functioning solely as a principal, not an agent; 2. an agency of the U.S. government requires a different form; 3. a form is required by the property owner; or 4.

6 (a) We must use TREC forms unless: 1. functioning solely as a principal, not an agent; 2. an agency of the U.S. government requires a different form; 3. a form is required by the property owner; or 4. there is no TREC form for that purpose and we use a form: A. prepared by a lawyer or trade association for that type of transaction & contains: (i) the name of the lawyer or trade association; (ii) the name of the broker or association for which it was prepared; (iii) the type of transaction the form is designed for; (iv) any restrictions on the use of the form; and (v) if it is an addendum that changes rights, remedies, or obligations, it includes: (I) an explaination of the changes w/reference to the paragraph number; (II) a statement that it is not a TREC form; and (III) that Commission rules prohibit agents from giving legal advice; or B. Prepared by the Broker-Lawyer Committee & approved by TREC for voluntary use (b) A license holder may not: 1. practice law; 2. directly or indirectly give legal advice; 3. give advise or opinions on the legal effect of contracts or forms that affect title; 5

7 4. give opinions on status or validity of title; 5. draft language concerning rights, remedies, or obligations of the parties; 6. add statements or details for something that TREC has already issued a form; 7. discourage the use of a lawyer; or 8. hire or pay a lawyer to represent a principal. (c) We must still disclose material facts including facts affecting title. (d) It is not practicing law to fill in blanks on TREC forms or strike as directed by the parties We may add factual statements and business details We may strike wording as directed by the principals in writing (e) We may explain the alternative choices, meaning of factual statements, & business details We may not offer or give legal advice (f) We must advise the parties to seek legal advice before signing the contract (g) We can hire a lawyer only to represent us in a transaction (h) We must advise principals that the instruments they sign are binding upon them Texas Real Estate License Act : (b) The commission may suspend or revoke a license issued under this chapter or take other disciplinary action authorized by this chapter if the license holder, while engaged in real estate brokerage: (22) negotiates or attempts to negotiate the sale, exchange, or lease of real property with an owner, landlord, buyer, or tenant with knowledge that that person is a party to an outstanding written contract that grants exclusive agency to another broker in connection with the transaction; Federal laws defines disability as "A physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such an impairment." 6

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Broker Responsibility Supplement

Broker Responsibility Supplement Knowledge is the Vehicle Service is the Goal Serving Texas real estate licensees since 1987 with a dedication to quality real estate education. Lloyd Hampton Real Estate