The Texas REALTORS® since the 1990s has offered members the Release of Earnest Money form. The Texas Real Estate Commission this month proposed its own version of such a form, and TAR opposes the adoption of the TREC form.
Below are details of why TAR does not support TREC’s proposed form. If you agree, send your comments to general.counsel@trec.texas.gov.
What the TAR form does
The Texas REALTORS® Release of Earnest Money form allows the parties to agree to release the earnest money and to release each other, any broker, title company, or escrow agent from liability under the contract. The association form also includes a notice explaining the effect of the form and encourages the parties to consult with an attorney.
How TREC’s form is different
The commission’s form doesn’t contain a clear release of liability of the buyer, seller, brokers, and the title company. Instead, it releases claims to the earnest money and then states: “Paragraph 15 of the contract provides that if the parties terminate the contract and release the earnest money, the parties release each other from the contract.”
The proposed form also contains instructions stating the form should not be used to unilaterally terminate the contract, and that the “parties confirm the contract is terminated.”
Why TAR opposes the proposed TREC form
The form is confusing and will lead to more uncertainty. The Texas REALTORS® form, which has been used successfully in Texas real estate transactions for over 20 years, is clear and consumers are better informed because of it.
- There is no reason for TREC to adopt a form with different, less clear language.
- There was no public comment received by TREC requesting a release of earnest money form.
- There was no court decision or TREC enforcement action that raised any concern about the TAR form.
- Other states have similar forms, which contain language releasing all liability under the contract.
- If the TREC form is adopted, TAR will no longer be able to offer the association’s release of earnest money form.
The association doesn’t oppose a TREC release of earnest money form. However, if the commission wants to adopt such a form, it should adopt the TAR form’s language.
Another case of Geeks v Users!
I agree we need to be able to continue to use the TAR Release of contract and earnest money form. I am concerned that TREC seems to be getting a little overbearing in changing forms without considering Texas Association of Realtors and their members input. We do not need any more confusing or ambiguous forms.
I couldn’t agree more. TREC’s proposal is a solution in search of a problem.
Great description! That’s basically government in a nutshell.
wholeheartedly agree with M. Kernan.
Keep TAR and continue to protect all parties.
how can we get a response to TAR’s concerns from TREC?… i would be very interested in hearing their response to these concerns
Not sure what, if anything, we should do to let TREC know of our displeasure on this but the TAR form should definitely prevail.
So why has TREC proposed such a form? After 20 yrs? SMH
The brokers are sometimes entitled to receipt of all/some of the earnest money, per the Listing Agreement. The TAR form does not provide for the signatures of the Brokers waiving that right and/or acknowledging that the earnest money is being distributed to other parties. I feel the form should be amended to include the Broker’s signatures.
Keep the TAR form. If it ain’t broke, don’t fix it!
I totally agree with several of those posting in favor of keeping the TAR form and Paul’s sentiments are exactly mine!! I think some of the TREC folk must have nothing else to do except look for trouble where there is none. Are we “top heavy'” there???
They should have the same language if they are going to make a form. Just like all the others, keep the TAR for an give it a TREC form number.
I feel the title of this posting is misleading. At first glance, it seems to advocate that we should all choose to use the TAR form and not the TREC form. ~I’m sorry, but aren’t all TREC-promulgated forms required for all Texas Brokers…?
One wonders why TREC thought it necessary to propose this form…?
Are the attorneys at TREC not talking to the attorneys at TAR…?
What problems have been encountered during the use of the TAR form that we have had for so many years…?
I seem to be in the minority, but I like TREC’s new form. It seems clearer and more straightforward.
I have been inspecting for 33 years. TREC continuously exceeds basic occupational licensing objectives by regulating commerce itself. Occupational licensing is about qualifying the initial licensee then leaving commerce alone. That is not the case in Texas. TREC regulates commerce so significantly they should just take a percentage of the deal. TREC’s continued expansion into commerce is probably hand in hand with ARELLO, a trade association comprised of regulatory agencies whose objective is to unify real estate commerce nationally with more laws and rules. Tell the Sunset Commission to roll back TREC regulation and let Realtors and Inspectors manage commerce.
I agree with you John Cahill! I thought TREC’s main duty was to regulate state licensing of real estate agents, this is what happens when a government agency tries to expand their authority. I say leave well enough alone unless there have been issues or lawsuits that mandate a change.
Join the discussion
Amen brother Cahill
If its not broken don’t try to fix it. Sounds like yet another new form that will only confuse everybody.
I support a clear, understandable release of liability so I support continued use of the TAR form.
TAR verbiage should be used by TREC if there are liability concerns.
“If it ain’t broke, don’t fix it!” TREC is always looking for ways to take more control from agents and brokers AND TAR.
Keep the TAR form. No need to change.
Once again TREC is trying to reinvent the wheel that isn’t broken. There form is poorly written, ” did they have a second grader write it”. Please don’t let this be adopted for use!!
Nothing wrong with the form we have been using so don’t see the need for TREC to step in with another version. TAR’s form as worked fine in the past and have not had any issues getting money released with this form.
I agree with TAR’s position. No complaints, no action regarding release of earnest money, already have a TAR form that’s worked for many years; why do we need a TREC form? If it ain’t broke…
Could something like this be added (since the buyer executes and same form could have a box to check if needed to make it a “demand” letter per Pgh 18?
/_/ This is intended to be a DEMAND LETTER per Pgh 18 of the 1-4 Family contract form.
I disagree with the statement in TAR’s article that “The commission’s form doesn’t contain a clear release of liability of the buyer, seller, brokers, and the title company.” The TREC form’s Notice paragraph ends by stating that “the parties release each other from the contract” – to me, that says it releases the parties from obligations and liability from that terminated contract – but it doesn’t say it as well as the TAR form. I love TREC’s Paragraph A confirming that the contract is Terminated – the TAR form really needs that! I share the concern that TREC and TAR… Read more »
I like your response.
I just read through all of the comments.. 99.9% were supporting the TAR form. I must agree. If TREC wants to have a form, make it an form that is not promulgated and let the Broker decide what form they want their agent to use.
The TREC form could include the language contained in the TAR form.
I seem to be the majority here but I think we need to leave the form as it is. Why would TREC want to do away with the language to release liability if a contract is terminated. This allows all parties to move forward without worry. Either party has the choice to not sign.
I believe that the TAR form is the one to keep. I have been using it for as long as its been created and have had no problems with consumers signing the form.
Completely agree, Too many unnecessary changes
Keep TAR it works!
Keep TAR form, it works.
TREC needs to leave the forms alone. They work fine. It would be nice if they would answer the phone and return calls and emails promptly instead of changing what works.
Why does TREC make the form so ambiguous?? So more lawyers will have a job!!! The TAR form is perfect and TREC should not enforce the use or even have a new form for one that has been working for so many years without any PROBLEMS!
Keep in mind that TAR is a realtor association and TREC exists solely to protect the public from real estate agents. Their interests are not always aligned. The TAR form is very clear in its release of all parties. The TREC form leaves open the possibility of further remedies, which they likely think is in the interest of the public.
Keep the Tar Form
Keep the Tar Form
If one of the parties does not agree to the release of the earnest money, in essence it is tied up forever. Even if the buyer has terminated the contract and the seller goes on to sell their house, the earnest money is tied up if the seller won’t release it.
I do not agree with the TAR verbage
I agree that the TAR form is the better form. We definitely need to keep it the form of choice as Realtors…. BUUUT….., TREC exists to look out for the general public. Private parties make real estate deals without Realtors by taking a TREC contract to the title company. If that deal is terminated, and the private parties don’t have the TAR release of earnest money form because they aren’t using a Realtor, then TREC SHOULD have a form that the general public uses to release the funds. TREC SHOULD NOT require that Realtors use a lessor form made for… Read more »
My understanding is anyone can use the TREC forms from their website not just realtors so maybe they are releasing this form for public use. I disagree with the whole idea that they release these forms to the public for use, especially, since many non real estate people don’t understand fully the forms and their verbiage. They are advocating the whole for sale by owner concept in my opinion.
If it ain’t broke don’t fix it.. The TAR form seems to be much more straight forward. Why is TREC proposing the change?
I agree with TAR, release of liability and earnest money should remain as is without the adoption of the less effective proposed TREC form.
I agree. TAR form is very well written. While all parties should work to resolve transactional deal between buyer and sellers a amicable solution to any negotiation should always be attempted and when using the Release of EM it clearly states all parties are released of any liability once the form is signed and it is clear cut. All parties who signed therefore do not have to worry about possible future liability and if any suit is brought then the form would serve its purpose. Since all parties mutually agreed as to the release. On the same subject I would… Read more »
Do not try to fix what is not broke. The TAR form works just fine.
Keep the TAR form. Change is only needed when there is a problem, there is no problem with this form.
Trec – don’t try to fix something that isn’t broke!
Keep the TAR form, it protects all parties and that is very important to all of us. My vote is to continue using the TAR Release of Earnest Money form.
I agree that the TAR form still works and there really isn’t any justifiable reason to change it and it is senseless to do so. TREC’s form muddies the water, doesn’t clear it. Reference to Paragraph 15 is unnecessary. Paragraph 15, Default, outlines the relief available to the parties should a party default. Fine. What about termination under the terms of the contract, option period, financing failure, underwriting issues, etc.? No default there, and we use the same Release of Earnest Money form. Also, the TREC form seems to direct/order the parties to consult an attorney. Really? When did that… Read more »
TAR form is clear; TREC’s is not.
KEEP TAR FORM
Why would the legal gurus at TREC want a form that is more vague and brings more litigation? If TREC wants to insist on a promulgated RELEASE OF EM form, use the language from our TAR form that helps keep everyone out of court. Let’s be wise.
Lets adopt the TAR form unless TREC can come with a better one. We need to have as little
confusion as possible in this ever growing fear of liability that we realtors are faced with.
Let’s keep the TAR form. The release of liability is an important element.