BLC Discusses Pending NAR Settlement and Whether it Affects TREC Forms

The Texas Broker-Lawyer Committee (BLC) met April 12 and discussed the National Association of Realtors proposed settlement agreement for a lawsuit it is involved with related to commissions that may affect members of NAR, Texas Realtors, and local boards of Realtors-all voluntary membership organizations. While many TREC license holders are members, not all of them are, nor are they required to be.

TREC is not a party to the litigation. TREC takes its direction from the Texas Legislature, which has given TREC narrow regulatory authority over license holder compensation-specifically, that a broker is the one who gets paid. However, because of possible consumer protection issues and the potential impact of the settlement, the BLC considered whether TREC contract form language may be affected by the proposed settlement.

BLC Discussion

The discussion began with BLC Co-Chair John George providing background on the issue. Texas Realtors General Counsel Lori Levy then explained in greater detail the terms of the settlement, which has not been approved by the courts, and changes NAR plans to make to MLS rules.

Opinions ranged from "wait-and-see" to "act right away" to make changes to TREC's promulgated forms to include language around compensation. BLC members agreed the proposed settlement merited further discussion.

Compensation Subcommittee Created

After much conversation, BLC created a subcommittee composed of broker members Melissa Hailey, Christie Tatum Janszen, Leigh York, BLC Co-Chair Ron Walker, and attorneys Brian Watts and SJ Swanson.

Provide Your Feedback

BLC is seeking stakeholder comments on the following ideas:

• Delete Paragraph 8B or, at a minimum, remove the exclusivity of Paragraph 8B.
• Add a statement under 12A that each party pays the brokerage fees each party has agreed to pay. Exercise caution in drafting agreements to prohibit either party paying more fees than they agreed to pay pursuant to the original representation agreement.
• Delete the disclosure on Page 10 of the contract forms.
• Remove the Ratification of Fee box on Page 10 of the Farm and Ranch Contract form. Leave the agreement for the payment of brokerage fees below the broker's names in that same form.
• Consider adopting a brokerage fee addendum.

You can submit public comment on these potential changes by email or attend the next BLC meeting in person.

Watch Highlights of BLC's Discussion

Next Steps

The BLC's next meeting is July 12 at 9 a.m. CT. BLC will continue to monitor the status of the proposed settlement and discuss any suggestions from the Compensation Subcommittee at its next meeting in July. They will also review comments received about the above ideas.

Where to Find Meeting Materials

Download meeting materials and find the recording of the meeting on the TREC website.

Public link

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