Texas Promulgated Forms

Bottom Line Up Front (BLUF)

In Texas, real estate license holders must use contract forms promulgated (published and legally mandated) by the Texas Real Estate Commission (TREC). These standard forms ensure contractual clarity and protect consumers by standardizing the transfer of real property. Sponsoring brokers and sales agents are strictly prohibited from drafting custom contracts, modifying standard terms, or offering legal advice, which constitutes the unauthorized practice of law under TRELA §1101.654.

Promulgated vs. Approved Forms

Students must understand the strict distinction between forms that are promulgated and those that are only approved.

Classification:

• Promulgated Forms: Legally MANDATORY for license holders. Unless an exception applies, a license holder must use these forms for their designated transaction types.
• Approved Forms: Legally OPTIONAL. TREC publishes these forms (such as notices, disclosures, and letters) for voluntary convenience, but they are not required.

Comparison: Mandatory vs. Approved Forms

The Joint Broker-Lawyer Committee

TREC contract forms are drafted by the Joint Broker-Lawyer Committee under TRELA §1101.251. The committee consists of 13 members:

• 6 Broker Members: Appointed by TREC.
• 6 Lawyer Members: Appointed by the President of the State Bar of Texas.
• 1 Public Member: Appointed by the Governor.

The committee drafts, revises, and proposes contract forms to the Commission. TREC itself does not draft contract forms; it only holds the legislative power to officially adopt (promulgate) or approve them.

Exceptions to Mandatory Use

Under TREC Rule §537.11, a license holder is NOT required to use a promulgated contract form in only four specific circumstances:

1. Owner-Prepared: The transaction is handled by a principal who has prepared their own contract form.
2. Government-Mandated: An agency of the United States government or the State of Texas requires a different form to be used.
3. Attorney-Drafted: The contract is drafted by a licensed Texas attorney specifically for this unique transaction.
4. No Promulgated Form Exists: There is no promulgated TREC contract form for the specific type of transaction (e.g., commercial sales, mobile homes, multi-family complexes over 4 units).

Worked Texas Scenario: Unauthorized Practice of Law

An active sales agent, Robert, is representing buyer Marcus in the purchase of a residential property. Marcus wants to make his purchase contingent on selling his current home, but he also wants to add a clause stating: “If the buyer’s current home does not sell by October 15th, the seller shall reimburse the buyer 50% of the earnest money and pay a $500 delay fee.”

Instead of using the promulgated Addendum for Sale of Other Property by Buyer, Robert opens Paragraph 11 (“Special Provisions”) of the standard One to Four Family Residential Contract and types Marcus’s custom clause word-for-word.

The Violations & Consequences:

• Unauthorized Practice of Law (TRELA §1101.654): Real estate agents are not licensed to draft legal covenants, create new financial liabilities, or define legal remedies. By drafting this custom clawback clause, Robert has engaged in the unauthorized practice of law.
• Failure to Use Promulgated Addenda: Robert should have used the official Addendum for Sale of Other Property by Buyer to handle the sale contingency and advised Marcus to consult a real estate attorney if he wanted custom earnest money penalty adjustments.
• Consequences: Robert faces severe penalties from TREC, including the immediate suspension or revocation of his license and potential civil lawsuits for malpractice.