Highlights to changes in the TREC Forms

The noted changes apply to all contract forms unless specified otherwise. Paragraph
numbers referenced are from the One to Four Family Residential Contract
(Resale). The One to Four Family Residential Contract (Resale) and the new Third
Party Financing Addendum will be reviewed in detail later in this chapter.
* Paragraph 3, Sales Price, now references all of the financing addenda previously
contained in paragraph 4 of the old versions.
* The Third Party Financing Addendum is completely rewritten and addresses
both credit approval and property approval by the lender. Reverse mortgage
loans are also addressed in this addendum, so form OP-N, Reverse Mortgage
Financing Addendum is repealed.
* Credit Approval was renamed Buyer Approval.
* The Authorization to Release Information was expanded to include title companies
and escrow agents for closing disclosure.
* A new paragraph 4 is added regarding license holder disclosure. This paragraph
is where a license holder will disclose that he or she is a party to the
transaction or related to a party that requires disclosure under the law.
* A new paragraph 6E(10), Title Notices, Notice of Water Fluctuations, is added
to add new statutory notice requirement regarding the fluctuation of the level
of certain impoundments of water that adjoin a property.
* Paragraph 7A, Property Condition, Access, Inspections and Utilities, is
amended to add a provision that hydrostatic testing must be authorized in
writing by the seller.
* Paragraph 9B(5), Closing, is amended to conform the language with a statutory
change to the property code, noting that the buyer has to acknowledge
to a tenant that the buyer has acquired the property and is responsible for the
return of the security deposit.
* Paragraph 14, Casualty Loss, is amended to make it clear that an insurance
company must permit insurance proceeds to be assigned to the buyer before
the buyer can use this option after a casualty.
* Paragraph 18D, Escrow Damages, is amended to take out the treble damages
provision based on recent case law.
* Paragraph 23, Termination Option is amended to require a 5 p.m. local time
deadline for delivery of all notices under the paragraph.
* License numbers are added to the Broker Information Section to facilitate
compliance with the TILA-RESPA Integrated Disclosure Rule, and the order of
the Associate and the Associate’s Supervisor were reversed.
* Paragraph 13, Prorations and Rollback Taxes, in the Farm and Ranch and
Unimproved Property Contract forms, is amended to provide that assessments
imposed due to the seller’s use or change in use of the property are the seller’s
responsibility.
* A new Paragraph 2D to the Condominium Contract Form is added to address
situations where the condominium documents reveal the existence of a right
of first refusal after the parties enter into a contract.
* The Condominium Resale Certificate is amended to conform to new statutory
disclosure requirements.
* The Seller’s Disclosure of Property Condition (OP-H) is amended to conform to
a new statutory requirement.
* The Amendment form and Seller Financing Addendum were revised to be
consistent with changes to the contract forms and Thirty Party Financing
Addendum.