5.1 Broker-Lawyer Committee & Promulgated Form Rules

5.1 Broker-Lawyer Committee & Promulgated Form Rules

Exam Focus: The Texas Real Estate Broker-Lawyer Committee and TREC's mandatory promulgated form rules form a core testing area on the Texas Real Estate Broker Licensing Examination. Broker candidates must master the exact 13-member statutory composition under TRELA Subchapter G, the clear functional distinction between drafting (Committee) and promulgation (TREC), the four specific statutory exceptions to mandatory form usage under 22 TAC § 537.11, and the strict legal boundaries prohibiting the unauthorized practice of law under TRELA § 1101.654.

1. Statutory Authority & Governance of the Broker-Lawyer Committee

The Texas Real Estate Broker-Lawyer Committee was created by the Texas Legislature to establish standardized, legally sound contract forms that protect consumers, expedite real estate transactions, and prevent the unauthorized practice of law by real estate licensees.

Legislative Origin & Codification

• TRELA Subchapter G: The Broker-Lawyer Committee is statutorily established under Texas Occupations Code §§ 1101.301–1101.305 (Subchapter G of the Texas Real Estate License Act).
• Statutory Mandate: Under § 1101.301, the committee's sole legislative duty is to draft and revise standardized real estate contract forms and addenda that are capable of being standardized to expedite transactions and minimize legal controversies.

┌─────────────────────────────────────────────────────────────────────────────┐
│            TEXAS REAL ESTATE BROKER-LAWYER COMMITTEE (13 MEMBERS)           │
│                       (TRELA Subchapter G, § 1101.301)                      │
├───────────────────────────┬───────────────────────────┬─────────────────────┤
│     6 LICENSED BROKERS    │    6 LICENSED ATTORNEYS   │   1 PUBLIC MEMBER   │
├───────────────────────────┼───────────────────────────┼─────────────────────┤
│ • Appointed by TREC       │ • Appointed by President  │ • Appointed by the  │
│ • Active Texas brokers    │   of State Bar of Texas   │   Governor of Texas │
│ • 6-year staggered terms  │ • Licensed TX attorneys   │ • 6-year term       │
│ • 2 terms expire Dec 31   │ • 6-year staggered terms  │ • No financial ties │
│   of each even year       │ • 2 terms expire Dec 31   │   to real estate    │
│                           │   of each even year       │                     │
└───────────────────────────┴───────────────────────────┴─────────────────────┘

Membership Breakdown & Appointment Structure

Under Texas Occupations Code § 1101.301, the Broker-Lawyer Committee consists of exactly 13 members:

1. 6 Licensed Real Estate Brokers: Appointed directly by the Texas Real Estate Commission (TREC). These members must be licensed Texas brokers actively engaged in real estate brokerage.
2. 6 Licensed Attorneys: Appointed directly by the President of the State Bar of Texas. These members must be licensed attorneys in good standing with the State Bar of Texas.
3. 1 Public Member: Appointed directly by the Governor of Texas. The public member represents the interests of consumers and must have no direct or indirect financial interest in real estate brokerage or legal practice.

Terms of Office & Staggered Expiration

• 6-Year Staggered Terms: Committee members serve 6-year terms. Terms are staggered so that the terms of two broker members and two attorney members expire on December 31 of each even-numbered year (e.g., 2026, 2028, 2030).
• Public Member Term: The single public member serves a 6-year term expiring on December 31 of the designated sixth year.
• Committee Leadership: The committee elects a Chair (Presiding Officer), Vice Chair, and Secretary from among its members at its first regular meeting of each calendar year.

Exam Tip: Do not confuse the appointments! TREC appoints the 6 brokers, the State Bar President appoints the 6 lawyers, and the Governor appoints the 1 public member. All serve 6-year terms.

2. Drafting vs. Promulgation: Division of Rulemaking Authority

A critical distinction tested on the broker examination is the division of power between the Broker-Lawyer Committee and the Texas Real Estate Commission.

The Committee Drafts; The Commission Promulgates

• Broker-Lawyer Committee Role: The Committee drafts, writes, amends, and revises contract forms, addenda, notices, and disclosure documents. The Committee holds public hearings, reviews legislative updates, analyzes case law, and deliberates over proposed language changes. However, the Committee has no statutory authority to mandate or promulgate rules or forms.
• TREC Role: Only TREC (the 9-member governing commission) possesses administrative rulemaking authority under 22 TAC Chapter 537 (Professional Agreements and Standard Contracts) to officially promulgate or approve standard contract forms. When the Broker-Lawyer Committee completes a draft, it submits the proposed form to TREC. TREC publishes the form in the Texas Register for public notice and comment, reviews feedback, and votes on formal adoption.

┌───────────────────────────────────┐
│   Broker-Lawyer Committee (13)    │ ───► Drafts, reviews & recommends standard forms
└─────────────────┬─────────────────┘
                  │ Recommends
                  ▼
┌───────────────────────────────────┐
│  Texas Real Estate Commission (9) │ ───► Publishes in Texas Register & formally votes
└─────────────────┬─────────────────┘
                  │ Promulgates / Mandates
                  ▼
┌───────────────────────────────────┐
│   Texas Real Estate Licensees     │ ───► Mandatory compliance under 22 TAC § 537.11
└───────────────────────────────────┘

Promulgated Forms vs. Approved Forms vs. Voluntary Forms

• Promulgated Forms: Mandatory standard forms adopted by TREC. License holders must use promulgated forms for the specific transactions for which they are designed (e.g., standard residential resale, unimproved property, farm and ranch, condominium resale, and standard addenda).
• Approved Forms: Standard forms published by TREC that are approved for optional or trial use, but are not mandated across all transactions (e.g., Notice of Information from Other Sources, Form OP-K).
• Trade Association Forms (Texas REALTORS® / TXR): Proprietary forms created by the Texas Association of REALTORS® (such as exclusive right-to-sell listing agreements, buyer/tenant representation agreements, and commercial leases/contracts). TREC does not promulgate listing agreements or buyer representation agreements. License holders who are REALTOR® members use TXR forms under copyright license.

3. Mandatory Promulgated Form Rule (22 TAC § 537.11) & The 4 Statutory Exceptions

Under 22 TAC § 537.11(a), when negotiating or closing a transaction involving the sale, exchange, option, or lease of real property in Texas, a license holder must use a standard contract form promulgated by TREC that is current and adopted for that specific type of transaction.

The Four Statutory Exceptions

Under 22 TAC § 537.11(a) and Texas Occupations Code § 1101.655, a license holder is exempt from using a TREC-promulgated form in only four specific operational circumstances:

1. Licensee Acting as Sole Principal:
   • When the license holder is functioning solely as a principal (buyer, seller, landlord, or tenant) in the transaction and is not representing any other party.
   • Example: A broker purchasing residential rental property for their own investment portfolio may draft or negotiate an alternative contract structure without violating § 537.11.
2. U.S. Government Agency Mandate:
   • Transactions in which an agency of the United States Government requires a different contract form to be used (e.g., Department of Housing and Urban Development [HUD], Department of Veterans Affairs [VA], USDA Rural Development, Fannie Mae, Freddie Mac, or General Services Administration [GSA]).
3. Forms Prepared by Property Owner or Property Owner's Attorney:
   • Transactions in which a contract form or addendum has been prepared by the property owner, OR prepared by an attorney licensed in Texas and required by the property owner.
   • Key Standard: The attorney drafting the form must represent the property owner, not the broker or buyer.
4. No Standard Promulgated Form Exists:
   • Transactions for which no standard contract form has been promulgated by TREC (e.g., commercial real estate sales, industrial leases, multi-family apartment complex sales of 5+ units, mobile home park acquisitions), provided the license holder uses a contract form that is:
     • Prepared by an attorney licensed in Texas for the specific transaction; or
     • Prepared by the Broker-Lawyer Committee and made available for trial use by TREC with the consent of the property owner.

Committee Structure & Form Exceptions Reference Table

4. Unauthorized Practice of Law (TRELA § 1101.654 & 22 TAC § 537.11)

Under Texas Occupations Code § 1101.654 and 22 TAC § 537.11(b)–(e), the unauthorized practice of law by a real estate license holder is a severe statutory violation punishable by license suspension, permanent license revocation, civil damages under the Deceptive Trade Practices Act (DTPA), and misdemeanor criminal prosecution under the Texas State Bar Act (Texas Government Code Chapter 81).

Strict Boundaries on Form Completion

Real estate license holders are not licensed attorneys. When handling TREC promulgated forms, the licensee's authority is strictly administrative:

• Filling in Blanks: A license holder may only fill in the blanks provided in a promulgated contract form with factual statements and business details requested by the principals.
• Striking Preprinted Language: A license holder may strike preprinted language on a promulgated form only if the principal specifically directs the strikeout in writing and the strikeout does not create an illegal provision, void the contract, or attempt to practice law.
• Adding Addenda: A license holder must use promulgated addenda to address specific transaction contingencies (e.g., Third Party Financing, Mandatory HOA, Lead-Based Paint, Back-Up Contract, Mineral Reservation) rather than drafting custom clauses into Paragraph 11 (Special Provisions).

Express Prohibitions (What Licensees Cannot Do)

Under TRELA § 1101.654 and 22 TAC § 537.11, a license holder is strictly prohibited from:

1. Drafting Legal Provisions: Drafting any clause, addendum, or contingency that alters the legal remedies, statutory obligations, title warranties, or default rights of the parties.
2. Drafting Conveyance Instruments: Drafting deeds, mortgages, deeds of trust, promissory notes, release liens, or wills.
3. Drafting Executory Contracts: Drafting lease-purchase agreements, lease-options, or contracts for deed (which are strictly regulated under Texas Property Code Chapter 5, Subchapter D).
4. Providing Legal Interpretations: Advising a client on the legal sufficiency of title, interpreting title commitments, predicting court outcomes, or advising on how a buyer should hold title (e.g., joint tenancy vs. tenancy in common vs. community property).
5. Advising on Contract Breach: Advising a client that a contract has been breached or advising a non-defaulting party on whether to sue for specific performance versus terminating the contract.

Mandatory Written Advice to Consult Legal Counsel (22 TAC § 537.11(d))

Pursuant to 22 TAC § 537.11(d) and Paragraph 23 of TREC promulgated contracts, a license holder must advise the parties in writing to consult an attorney of their own selection if they do not understand the legal effect of the contract or if they require specialized legal covenants.

Authorized vs. Prohibited Licensee Actions Matrix