Further clarification about TREC’s new “equitable interest” rule

As reported earlier this month, the Texas Real Estate Commission adopted an “equitable interest” rule that’s intended to keep unlicensed people from practicing real estate brokerage. This rule would apply, for example, when a buyer makes an offer for a property that is accepted by the seller, and though the parties haven’t closed yet, the buyer offers to sell his contractual interest in the property to a second buyer.

If you’re representing the original buyer, make sure you disclose to any potential buyers that your client is selling an option or assigning an interest in a contract and does not have the legal title to the property. This disclosure can be verbal or written and must be made every time you market the property on behalf of your client. Additionally, you will need to inform your client that when marketing the property on the client’s behalf, you are obligated to make this disclosure to any potential buyers.

If you’re representing the second buyer, make sure you disclose to your client that the original buyer is selling an option or assigning an interest in a contract and does not have the legal title to the property. This disclosure can be verbal or written. Additionally, you will need to ensure that all parties, including the original buyer, are aware of what each party is buying and selling.

If you are the original buyer and now are offering to sell your contractual interest, make sure you disclose—verbally or in writing—to any potential buyers that you are selling an option or assigning an interest in a contract and that you do not have legal title to the property. This disclosure must be made every time you market the property. This scenario also applies when you are not being compensated for acting on behalf of your spouse, parent, or child; a business entity in which you own an interest of more than 10%; or a trust in which you are the trustee or your spouse, parent, or child is a beneficiary.

If an unlicensed buyer is attempting to sell his contractual interest in a property, that unlicensed buyer must disclose the nature of his interest—verbally or in writing—to any potential buyers. The unlicensed buyer must make this disclosure every time he markets his property.

About Texas Association of REALTORS®

The voice for Texas real estate
This entry was posted in TREC and tagged , , . Bookmark the permalink.

One Response to Further clarification about TREC’s new “equitable interest” rule

  1. J. E. Plumlee says:

    This sounds like a legal entanglement I would never want to be involved in as a Buyer’s Agent. Furthermore, does the Seller and/or Seller’s Agent have any legal liability in this event?

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s