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Additional Updates to Buyer Rep Agreement & Amendment

Texas REALTORS® this week modified provisions related to bonuses and other compensation in the Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501) and the Amendment to Buyer/Tenant Representation Agreement (TXR 1505). These changes are new and were not included in the original update last week.

These newly updated forms are available on texasrealestate.com.

After discussions with NAR legal staff, Texas REALTORS® determined that the provisions related to bonuses and other compensation in the association’s buyer/tenant agreement did not satisfy the “objectively ascertainable” requirement in the NAR settlement. Texas REALTORS® would not have made this change at this time if the association didn’t feel it was necessary to protect members and the association. Here is a summary of the changes:

Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501)

  • Paragraphs 7E(3) dealing with bonuses and 7E(4) dealing with other compensation have been deleted.
  • A note regarding bonuses and other compensation has been added. The broker must disclose the specific amount of the bonus, and the client must authorize the additional compensation after the specific amount is known. Authorization can be done by amending the agreement.
  • Rationale: Having blank lines to insert amounts for bonuses and other compensation would potentially lead to compensation that was not “objectively ascertainable” as required by the NAR settlement. Any compensation amount in the agreement must be a definite number or a rate that can be calculated to reach a definite number, such as percent of sales price. Therefore, the blank lines to insert compensation for bonuses or other compensation were removed from the buyer/tenant agreement. If a buyer or tenant is submitting an offer on a specific property that has a bonus or other compensation available to broker, members can use the amendment to get their clients authorization once a definite amount is known. Brokers should have a conversation about potential bonuses at the time the buyer/tenant agreement is signed.

Amendment to Buyer/Tenant Representation Agreement (TXR 1505)

  • Paragraph E was added as a place where the broker and client can amend the Buyer/Tenant Representation Agreement to get the client’s authorization for the broker to receive a definite amount of a bonus or other compensation. The association included a line to insert the property address where the bonus is being offered since the bonus would only apply to specific properties.

See information about all the changes.

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