TREC Adopted Contract Changes- Good morning, Mike, and Shana Acquisto your real estate brokers and call owners with Acquisto Real Estate. We’re going to talk about the TREC new changes that are mandatory, that have been recently adopted and go into effect on four one of 2021. So, Shana, go ahead and tell us about these changes that we have going on.
Well, first, we want to talk about the one to four family, which is our main contract that we use on a regular basis. So we flesh that. Yes, I would like to get it up just so they can follow. And I know that these have been like proposed out there and maybe you’ve seen them, but they’re currently they’ve been adopted and they will go into effect. Actually, you’re going to be able to use these forms as of May, but they’re mandatory. I mean, I’m sorry, I think March, but April 1st is when they’re going to become mandatory. Perfect. OK, all right. So our wonderful family.
So a lot of these changes that they you know, that they do some of them are just very minor and they’re just for just clarifying things that were maybe misunderstood from the previous contract. So sometimes it creates more confusion. But so I’m not going to go into every little typographical error change, but we’re going to talk about the big ones.
So first, we’re going to talk about and to see the accessories. So these are going to include sellers, transferable rights to any softwares or apps or hardwares that are used to access some of those improvements.
OK. And that’s that’s been an issue. So I’m glad that they’re making this change. So you may have, you know, some type of app. You know, you have to control everything from your phone or from an app. And then people move in and they’re like, well, now what do I do? Right. So it’s just clarifying that and making sure that they’re aware of what these are.
So the same way in which you might transfer like your garage door opener or the front door key, is a transfer changing the username and password and giving it to the next person. Yeah, OK, very good.
Ok, so that’s the first one. The next one is going to be number four. And this is a whole new section that they’ve added in for Lease’s. So it’s dedicated to the seller’s disclosure of leases to include fixture leases. So this would be your solar panels, water softeners, things like that. And there is a separate addendum now if there are fixture leases that you must include in your contract.
So you just know that. But they’re all going to be in your zip form. So you’re going to be able you don’t have to worry about ever updating these forms will have the most updated forms for you and have those in there as well.
So does that also include maybe like the security system? Sometimes it’s like ADT comes in and says we’re putting in this equipment for you and you have to pay it off over this period of time?
Like I would say that’s kind of goes back to like security leases, but that that is a fixture.
It is, yeah. So it’s going to include that because it’s attached. So the definition of a fixture is something that is actually attached with a with a screw or something to the wall, to the property and stays with it and transfers with. So yes, your security system would definitely fall into that. Fall into that.
OK, very good. Now what we’ll also do is take this link and we’ll chat it into you guys and we’ll have it below in the description. So just scroll on by the like button and you’ll be able to pick that link up and we’ll have the items in there for you scrolling by. I believe there’s two attachments, right, that are going to be anything we’ve done today.
We’ve done the one for family and then we’ve done the homeowners association, mandatory homeowner’s association. So, OK, very good. So we’ll continue on with the wonderful family. And so the next big change is number five and it is ah.
The title company will now be reseating the earnest money and the option money. So this is a huge change that takes that off of our responsibility, which I feel is great. It’s always a hassle to run around and collect the option and and handle that. So, you know, there’s been some questions if they can provide, do they still need to provide two checks, you know, one for Earnest’s and one for option. And you can you can give them your buyer can give them one check.
They can they can receive one check and then they split it out. That’s way better, any time that you can make something easier for the client, which is what we’re trying to do. That’s really amazing because right now it’s like, well, where does this check go? Where does this go? How do I get it there? I coordinate. There’s all those problems and that one will truly, truly help. I know I’ve run into a couple of cases recently that would definitely have helped out and I’m super appreciative. Me too. Nice job. Good change.
Good change. OK, and then moving on, we’re going to see this one. No. So number eight and this is just your disclosure. If you’re a party to the transaction, you know, we have to disclose that in Texas. But basically, it just adds an express statement that if your broker’s fees are if you have a separate written agreement for compensation, you know, you have to disclose that as well.
Ok, yeah, no. So that kind of should be stated there because, I mean, you can’t be doing outside deals.
They just want everything actually on the kind of want to know that if you know, however they just transparency I think is the big one. So all obligations of the parties for payment broker’s fees are contained in a separate written agreement.
Ok, I’m trying to think through that. Does this apply anywhere to I don’t know, this is actually a time for questions, but I was wondering about that. The builders sometimes try to do some type of like gift cards or some incentive or a trip. And so you’re afterwards kind of weird contractor compensation, which we all have.
All right. Next is number 10 position. So Tinsy, they’ve added this that defines smart devices.
So we actually came up with a form I think it was earlier in the year. Last year, this year has been crazy because we’ve seen so many people have smart devices in their homes. So this just outlines that the smart devices and it’s included, you know, it’s what you have to convey.
So if you look and see one, it says deliver by or written information containing all access codes, usernames, passwords and applications buyers will need to access operate. So it kind of goes back to the other change we just we just talked about.
So it kind of well, so the one was about the software and application. Sometimes there’s a piece that functions with it. It would to me it would be like a hub is what that would be. So your application might connect through this. So we use Sonus Sonos for our speaker system here, and there’s a hub in which it goes through and it connects to the computer. But then there’s a username and password to the app so you can control it and utilize it on your computer. But you have to have this the physical hub to make the things kind of enabling work.
But basically what this does is it just puts it back as a responsibility of the seller that they’ve got to provide all this and now it’s in writing.
So there’s no question. All right. That’s what I could see, that there’s maybe some forms that we can make internally to help make this easier for sellers going forward to collect this information, to ensure that we get it out there.
You have it as part of our seller homework. We kind of have a checklist. So it’ll remind that they, you know, that they need it. But it also in here says terminate and remove all access and connections to the improvements and accessories from any sellers, personal devices.
So it’s just, you know, you know, there’s been issues with this and that’s why they’ve had to put it in the contract.
It’s kind of like that. You need to get it rickitt right. It’s like that.
No, you can’t use this username and password anymore to access it. So the Good Housekeeping thing would be like, hey, here’s your username and password for this item. Yeah, right. And I have it. I just gave you my username. Password is the seller when you get it as a buyer, I changed that information and have a new username and password.
It’s just kind of funny that at closing you would always tell people, don’t forget to call your homeowner’s insurance company and let them know that you’re moving. And now it’s like now that we’ve moved into this digital world and it’s just this is funny, but I’ve enjoyed this topic already.
Ok, so next eighteen, there’s going to be new protections for the title company, disbursing the funds of the earnest money.
So how they’re able to disperse the earnest money is going to be outlined here. So there’s a couple of changes for that.
So, yeah, so, you know, I think that sometimes we’ve seen in the past where, you know, a survey gets ordered and then it doesn’t close and then what happens with that? So I think this is going to give them more authorization to deduct these expenses. And I think we’re going to see that happen more because, you know, we know the title companies that we work with are really good about going ahead and incurring those expenses for us. Yes. So they should be paid back, right.
You know, one of these things here that gets into that feels really weird to me. And every time it comes up, I’m always like, wow, I can’t believe that happens, is when you get into a situation where the contract kind of terminates and there’s money at the title company and earnest money is there and you can’t relist the property until this money is dealt with and it gives this buyer an extreme kind of control over it.
It’s a weird, weird thing. And they’re like, no, I won’t release it and then they can’t relist it. So anyways, that have to deal with that. And I’m sure they deal with all these problems in litigation. So they want to eliminate that and find a way to actually release the monies.
So this is a small change that I like because I sometimes feel like these contracts are so. Outdated, our practice sometimes angry. So if you go to the notice section in 2001, it’s actually got email, fax, so they still get that fax and they they just added another email because we normally have to borrowers or to buyers.
So, you know, we normally have to copy and do different things in here. So at least it gives us a feel to hopefully that will transfer over to our DocuSign.
We’ll see. And then, of course, in 20 to you have the addendum regarding those fixed releases that we talked about. So if there are fixed releases, then you need to have an addendum with them. There’s also one regarding residential leases. So if there is a lease in place and your buyer is purchasing a home with a lease in place, that conveys there’s an addendum for that as well.
So that’s it on the one for family. And, you know, we’ll keep talking through these things in different situations. So you guys get really familiar with this and know how to handle them and so forth when it comes up. But we just want to kind of break this down a little bit more for you today. So the next one is going to be the addendum for the mandatory homeowner’s association.
So if the property is located in a in a mandatory homeowner’s association, you obviously have to disclose that. And there’s a an addendum for that.
And while you pull that up, let me get an aside and interact with everybody real quick for just a moment and let me ask a question here. So my question for everybody, is Chad in right now the last time that you got a fax just just chedid it in whenever that is the year, whatever it was actually. No, that’s it. That’s all I want to do. I’m ready to move on after they moved to like the online fax.
So that’s a little different. It comes in as a PDF, so it’s a little bit different.
And that’s why I was asking, last but not least, mandatory homeowner’s association. The change here is in in see for the fees. So if you see fees they’ve added and deposit’s for reserves.
So there’s this extra little, you know, amount of money that we’ve seen that are for reserves. So sometimes they have capital improvement fees and different things like that. So they’ve just added deposits for reserves in here as well.
So that’s it. So those are the two, you know, two forms that they’ve made the greatest updates to. And I’m excited about the Ernestina option and I’m excited that they’re just putting out there the, you know, the things for all of these leases, fixture leases and, you know, remotes and passwords and all that’s all in here.
So takes that off of you and us. Is that responsibility to make sure that we take care of that? Because before what happened, it’s just like a free for all.
And who handles what? Shauna, this has been amazing. Thank you very much. I know you’re super happy to have been able to share all that stuff I did.
And it is about that change. And I think it’ll save us a lot of time not having to deal with option.
I agree. And my commentary on this, if you want, is there’s all these utility companies and what they do is this third party connection to connect, whether it’s water, to connect your electricity to all these different items. Right. And I won’t mention any specific names, but they connect these items up for you. And that saved a lot of time.
I can really see this in a matter of a couple of years going to a problem where here’s my username, passwords and everything else and I’m a tech guy or I’m not a tech guy. And then somebody else buys the house in May have similar things as well. And everyone has different abilities. And that’s going to be a tough thing to line up. So I would see the need for a utility connection company to connect those items. So I look for somebody to eventually come into that space and find a way to digitally make that connection for them.
Oh, I see. That is a real business opportunity. So if there’s anybody out there who is looking for. Yeah, no way to connect the those those items and have it updated and validated before it’s transferred and change the username password, kind of like a password intermediary for everything home related upon the.
Transfer of a thing, so I don’t know if that’s a title company, who should come up with that to have an advantage in the marketplace or if it should be a utility connection company or both doing that. So I don’t know, free, great business.
It’s funny. And this happens often when someone moves in and they’ve given on the codes. Right. Even we’ve done such a great job. We’ve give codes and everything and then they call, they’re like the alarms going off. That’s not the code other than, you know, the security company calls them. They’re like, what’s the master password like that password? That’s great. That’ll turn it off. But now what’s the master password?
And it’s like, come on, you know, there’s a lot of stuff there. So chat in right now and give me some feedback. If you thought that business idea is a good one or if you even understood it that way, I’m not sure if I made that clear, but it is an interesting thing. Sometimes I like to get feedback on it.
People understand what I’m even saying. Sometimes I speak and it seems like it makes sense to me and I formulate it in my mind. And then it goes through my mind to my mouth, and then it comes out. And sometimes I wonder. Does the recipient are the intended audience here at times and do they interpret hours here?
But there there are times and we’ve been together for a long time that I have to stop and think.
Oh, so did you did you get that idea that, yeah, you think I should go to Republic, is that something that we should Cheri Groom? I don’t know that they would. Yeah. That gives them a total advantage in the marketplace over another title company that they take care of all this because it’s going to become a real big problem. All of a sudden, I feel like I need to log this stuff. And I do not remember how much time the utilities used to take to reconnect.
Right. I don’t know, Stacy. Due process. Yeah, we had a client that bought a lot of investment homes one year and poor Stacy had to deal with all of her utility turn on.
And I understand and that’s why I see that same thing, just headlights coming right at us to get tunnel.
And I see that going on right now with this, except even crazier because people don’t know how to deal with these things. And I can understand I can see somebody like a parent or grandparent. Right. Imagine this age person doing this in this age person and not matching up. Right. Yeah. Or this person to Apple in this person’s android or whatever that connection it or Apollinaire. Yeah, I know. So there’s there’s problems, right.