TREC "Don't Do These Things" List
I’m not professing or holding myself out to be a police of TREC violations. I am offering some friendly reminders to my colleagues and customers whom I know always want to do the right thing but sometimes we need a refresher on the basic “do not do” list.
When negotiating contracts that bind a sale, option, lease or rental of any real property, a licensee shall use only the promulgated TREC contract forms with the exceptions of an agent representing herself as a principal, not as an agent or prepared by an attorney.
A licensee cannot offer or give legal advice which also includes giving advice or opinions as to the legalities of any contract or any form that affects the title to property. We don’t give opinions about the validity or status of the title to real estate. In fact, we can violate our rules and regulations if we discourage a principal from using an attorney.
We are obligated to disclose to our principals all pertinent facts which are within the agent’s knowledge. When in doubt as to whether it is a pertinent fact, just disclose anyway.
Real estate agents cannot prepare documents defining legal rights of principals to a real estate transaction. You can have the principal put in writing their statement of clarification on an item. When filling in the blanks of a form a licensee can only fill in the blanks provided and may not add to or strike matter from the form but their principal can. Agents can add factual statements. Agents can add business details required or recommended by their principals.
If there is an addendum addressing the business detail or factual statement, then the agent is required to use the addendum, not strike out on the promulgated contract form.
All of this does not prevent an agent from explaining the factual statements and business details on the forms to a principal. Just be careful to not give your opinion which could come across as legal advice.
Another surprise to some agents is the fact that a real estate licensee may not pay for the use of an attorney’s expertise to represent any principal in a real estate transaction in which the agent is involved. The agent certainly can retain and pay for an attorney to represent them in a transaction including preparation of the contract, or other legal instruments to be executed by the principals.
In fact, an agent should always let their principal know the document or contract they are ready to sign is binding on them. An explanation of the option period is a good suggestion. Principals always have questions as to what it is for and what it means to them. An agent is allowed to give their principals the benefit of the agent’s expertise.
Champions School of Real Estate® is owned by Rita Santamaria and has been providing the highest quality education for Texas real estate agents since 1983 with online courses and campuses in Austin/Round Rock, Dallas, Forth Worth, Houston, San Antonio and satellite campuses across the state. Champions also provides Loan Originator, Home Inspector and Appraiser Licensing and Continuing Education courses.