The Texas Real Estate Commission met on August 7 and adopted amendments to existing rules and proposed several more. View the meeting materials packet, which provides more details about all the changes, on TREC’s website. Here’s a breakdown of a proposal related to forms. Find a list of other rule changes proposed by TREC here.
TREC proposed two new forms. The earliest these proposed forms could be adopted for use is during the next TREC meeting, scheduled for November 13.
Addendum Concerning Right to Terminate Due to Lender’s Appraisal
In transactions where the contract includes the Third Party Financing Addendum and does not involve FHA or VA financing, this form would allow a buyer to terminate the contract within a certain amount of time if the appraisal is less than a certain dollar amount.
This addresses the current situation where, despite a low appraisal, the lender approves the property for financing (often because the buyer is putting a large amount down) and the buyer has no way to terminate. This form also allows a buyer to waive his right to terminate under the Third Party Financing Addendum if, due to the appraisal, the property does not satisfy the lender’s underwriting requirements. If the lender reduces the amount of the loan because of the appraisal, the cash portion of the sales price will be increased by the loan reduction.
Addendum for Authorizing Hydrostatic Testing
Currently, a buyer has a right to have the property inspected, but this does not include hydrostatic testing. In order to perform hydrostatic testing on the property, the seller must provide written permission. This addendum would provide a written agreement for the seller to authorize the buyer, at buyer’s expense, to conduct a hydrostatic test and includes checkboxes to identify who will be liable for any damages.
Share your feedback on proposed rule changes with TREC
The earliest these proposed rule amendments could be adopted is during the next TREC meeting, scheduled for November 13.
You can provide comments about these proposed rule changes for at least 30 days after they are published in the Texas Register by emailing firstname.lastname@example.org. The proposals from the August 7 meeting will likely go live August 25; you can enter “Texas Real Estate Commission” in the Agency Name field on this page to read the rules when they’re published in the Texas Register.
Comments made on this blog post will not be read by TREC and do not count as official feedback on proposed rule changes.
Other adopted or proposed rule changes from TREC: