TREC - Texas Real Estate Commission Practice Test

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If you are preparing for the Texas real estate license exam, one of the most commonly tested concepts is understanding which of the following is a TREC promulgated form. The Texas Real Estate Commission (TREC) mandates that licensed agents use specific, state-approved contract forms in most residential transactions. Knowing exactly which forms are promulgated โ€” meaning required by law โ€” versus those that are merely approved or entirely prohibited is essential both for passing your exam and for practicing real estate legally in Texas.

If you are preparing for the Texas real estate license exam, one of the most commonly tested concepts is understanding which of the following is a TREC promulgated form. The Texas Real Estate Commission (TREC) mandates that licensed agents use specific, state-approved contract forms in most residential transactions. Knowing exactly which forms are promulgated โ€” meaning required by law โ€” versus those that are merely approved or entirely prohibited is essential both for passing your exam and for practicing real estate legally in Texas.

TREC promulgated forms are contract documents that the Texas Real Estate Commission has officially adopted and requires licensees to use when applicable. The word "promulgated" has a specific legal meaning: these forms carry the force of TREC rules, and using a different form when a promulgated one exists can result in license suspension, fines, or other disciplinary action. As a prospective agent, you need to memorize not just the names of these forms but also when each one applies and what distinguishes it from a merely "approved" form.

The distinction between promulgated and approved forms trips up many exam candidates. TREC-approved forms are those the commission has reviewed and authorized for use, but they are not mandatory. Agents may choose to use them or not. TREC-promulgated forms, on the other hand, are required in specific transaction types. If a promulgated form exists for your transaction, Texas law says you must use it. Understanding this distinction is worth several points on any TREC licensing exam.

The primary promulgated contracts cover residential sales, including single-family homes, condominiums, and farm and ranch properties. There are also promulgated addenda โ€” additional form pages that attach to a primary contract to address specific contingencies like financing, property condition, or lead-based paint disclosures. Each addendum has a TREC form number, and exam questions often test whether candidates know the correct form number or the correct use case for each addendum.

One important nuance exam candidates often overlook is the role of attorneys and principals in creating contract language. Only a licensed Texas attorney can draft a custom contract form for a real estate transaction. A real estate licensee who drafts custom contract language โ€” even with good intentions โ€” is engaging in the unauthorized practice of law, which is a serious violation. Licensees may only fill in the blanks on promulgated forms, not create new contractual language. This rule is heavily tested on the exam.

To fully understand the trec promulgated form system, it helps to know TREC's organizational structure. TREC is the state agency responsible for licensing and regulating real estate agents, brokers, inspectors, and appraisers in Texas. The commission adopts rules through a formal rulemaking process, and promulgated forms are part of that regulatory framework. They are updated periodically, so staying current with form revisions is an ongoing professional responsibility for every Texas licensee.

This guide covers every major promulgated and approved form you need to know for the Texas real estate exam, explains the key differences between form categories, and provides study strategies to help you answer exam questions confidently. Whether you are taking the exam for the first time or reviewing for a retake, understanding promulgated forms in depth will give you a significant advantage on test day and in your real estate career.

TREC Promulgated Forms by the Numbers

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9+
Promulgated Contract Forms
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20+
Promulgated Addenda
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180
Exam Questions Total
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150 min
State Exam Time Limit
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~30%
Contracts & Forms Weight
Test Your Knowledge: Which of the Following Is a TREC Promulgated Form?

Types of TREC Promulgated Forms You Must Know

๐Ÿ  One to Four Family Residential Contract

The most commonly tested promulgated form. Used for residential sales of one to four family properties, including single-family homes. This is the form most Texas buyers and sellers encounter, and exam questions frequently test its specific provisions and fill-in requirements.

๐Ÿข Condominium Contract

A separate promulgated form used specifically for condominium unit sales. It addresses unique condo issues like HOA fees, assessments, common areas, and the right to review condo documents. Exam candidates must distinguish it from the residential contract by its specific condo-related addenda.

๐ŸŒพ Farm and Ranch Contract

Used for sales of rural properties, farms, ranches, and land with agricultural use. This form includes provisions for mineral rights, water rights, and agricultural leases that do not appear in residential contracts. Knowing when to use this form versus the residential contract is a frequent exam topic.

๐Ÿ“ Unimproved Property Contract

Covers the sale of land without any improvements or structures. Used for vacant lots and undeveloped land transactions. Exam questions test whether candidates know to use this form rather than the residential contract when no home or structure exists on the property being sold.

๐Ÿ”จ New Home Contracts (Completed and Incomplete)

Two separate promulgated forms cover new home construction: one for completed new homes and one for homes not yet built or still under construction. Understanding the difference and when each applies is important for exam purposes, particularly regarding builder responsibilities and timelines.

Understanding the difference between promulgated, approved, and prohibited forms is one of the most important distinctions you must master for the Texas real estate exam. Many first-time exam takers assume that any TREC-reviewed form is automatically required. That is not accurate. TREC maintains three distinct categories of forms, and each category carries different legal implications for licensees who use or fail to use them correctly in actual transactions.

TREC-promulgated forms are mandatory. When a promulgated form exists for a specific type of transaction, a Texas real estate licensee must use that form. Failure to use the appropriate promulgated form is a violation of TREC rules and can lead to serious disciplinary consequences, including suspension or revocation of a license. The most common promulgated forms are the residential purchase contracts, the promulgated addenda, and the Seller's Disclosure Notice, which became required under Texas Property Code for most residential transactions.

TREC-approved forms occupy a middle ground. These are forms that TREC has reviewed and found acceptable for use, but they are not required. Licensees may use them at their discretion. Examples include certain lease agreements and buyer's representation agreements that TREC has approved but not mandated. The key exam point is that approval does not equal obligation. A licensee who uses an approved form is acting within the rules; a licensee who skips an approved form in favor of a different one is also acting within the rules, as long as the substitute form was created by an attorney.

Prohibited forms are those that TREC has specifically banned or that were never authorized for licensee use. Using a prohibited form โ€” or drafting custom contract language outside of the authorized blank-filling process โ€” exposes a licensee to disciplinary action and potential civil liability. The most important prohibited practice is a licensee creating original contractual language, which constitutes the unauthorized practice of law in Texas. Even a minor change to promulgated language, if it goes beyond filling in a blank, can cross this line.

Attorneys and principals (the actual buyers and sellers themselves) have different rights regarding contract language. A licensed Texas attorney can draft entirely custom contracts for real estate transactions. A principal โ€” meaning the actual party to the transaction, not the agent โ€” can also draft their own contract language without committing the unauthorized practice of law, because they are acting in their own interest rather than providing legal services to others. Licensees, however, must stick strictly to the promulgated and approved forms and fill in only the designated blanks.

One nuance that exam questions explore is the exception for transactions involving new construction. In many builder contracts, the builder's attorney drafts the purchase agreement, and the builder requires buyers to use that builder-prepared contract rather than the TREC residential contract. This is legally permissible because the builder's attorney has prepared the contract. However, the buyer's agent must inform the buyer that they are not using the standard TREC promulgated form and what rights the buyer may be giving up under the builder's contract versus the TREC form.

Another important area involves leases. TREC promulgates certain residential lease forms, but the lease market has historically been served by forms from the Texas Association of Realtors (TAR) as well. TAR forms are approved by legal counsel but are not TREC-promulgated. Licensees who are members of TAR may use TAR forms; non-members may not. This creates a practical situation where different licensees may use different lease forms, all within the rules, depending on their association membership and the specific type of lease involved.

Exam questions on this topic often present a scenario and ask which form is appropriate. The best strategy is to memorize the transaction types covered by each promulgated contract, understand when addenda are required versus optional, and know the key rule that only attorneys and principals can draft custom contract language. Practicing with scenario-based questions โ€” rather than just memorizing definitions โ€” will help you apply these rules quickly and confidently under exam conditions.

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TREC Promulgated Contracts: Key Forms Explained in Depth

๐Ÿ“‹ Residential Contract

The One to Four Family Residential Contract (TREC Form 20-16 or current version) is the workhorse of Texas real estate. It covers sales of detached single-family homes, duplexes, triplexes, and four-plexes. The form addresses the sales price, earnest money, financing terms, title policy, survey requirements, property condition disclosures, closing date, and possession terms. Exam questions frequently focus on the default provisions โ€” for example, who pays for the title policy (typically the seller in most Texas counties) and how the survey requirement works.

Key blanks in the residential contract include the legal description of the property, the sales price, the earnest money amount and the escrow agent holding it, the option period duration and fee, the closing date, and any special provisions the parties negotiate. Licensees are authorized to fill in these blanks but cannot add new contractual language outside of the special provisions paragraph. The option period โ€” a defined number of days during which the buyer can terminate for any reason by paying a small fee โ€” is a uniquely Texas concept that exam candidates must understand thoroughly.

๐Ÿ“‹ Promulgated Addenda

TREC promulgates more than twenty addenda that attach to primary contracts to address specific situations. Common promulgated addenda include the Third Party Financing Addendum (covering conventional, FHA, and VA loans), the Seller Financing Addendum, the Addendum for Sale of Other Property by Buyer (contingency addendum), the Addendum for Property Subject to Mandatory HOA Membership, and the Lead-Based Paint Addendum required by federal law for homes built before 1978. Each addendum has its own TREC form number, and knowing which addendum applies to which situation is a core exam skill.

The Third Party Financing Addendum is particularly important because most residential transactions involve mortgage financing. This addendum specifies the loan type, the maximum interest rate the buyer will accept, the loan amount, and the deadline for loan approval. If the buyer cannot obtain financing on the specified terms within the deadline, the contract terminates and the buyer receives the earnest money back. Understanding these financing contingency mechanics โ€” and how they differ between FHA, VA, and conventional loans โ€” prepares you for several categories of exam questions on TREC promulgated forms.

๐Ÿ“‹ Specialized Contracts

Beyond the standard residential contract, TREC promulgates several specialized contracts for unique property types. The Farm and Ranch Contract covers rural properties and includes provisions for mineral rights, surface use agreements, water rights, and existing agricultural leases โ€” issues that never appear in a suburban home sale. The Unimproved Property Contract covers vacant land. Two New Home Contracts โ€” one for completed new construction and one for homes not yet begun or still under construction โ€” address builder timelines, specification changes, and warranty issues. Knowing which contract applies to which property type is a reliable exam question category.

The Condominium Contract deserves special attention because condominiums involve common interest ownership structures that single-family homes do not. The condo contract includes provisions for the buyer to receive and review condominium documents โ€” including the declaration, bylaws, rules, and financial statements โ€” within a specified number of days. The buyer has the right to terminate if they object to any condo document. HOA transfer fees, assessment histories, and pending litigation involving the association are all addressed in the condo contract in ways that the standard residential contract does not cover, making this a fertile area for exam questions.

Promulgated Forms: Advantages and Limitations for Texas Agents

Pros

  • Provide legal protection for both parties by using language reviewed and approved by TREC
  • Reduce liability risk for licensees who must stay within the bounds of filling in blanks
  • Create consistency across Texas real estate transactions, making deals more predictable
  • Educate consumers by including required disclosures and standardized rights in every transaction
  • Simplify training for new agents by providing a clear framework of required documents
  • Regularly updated by TREC to reflect changes in Texas law and market practices

Cons

  • One-size-fits-all language may not perfectly address unique or complex transaction structures
  • Agents cannot modify promulgated language, limiting flexibility in unusual deal situations
  • Frequent form revisions require agents to stay current or risk using an outdated version
  • Builder contracts often replace promulgated forms, creating confusion for buyers about their rights
  • The prohibition on drafting custom language means attorneys must be involved for any non-standard terms
  • Complex addenda interactions โ€” multiple addenda on one contract โ€” can be difficult to manage for new agents
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TREC Promulgated Form Exam Prep Checklist

Memorize all nine primary TREC promulgated contracts and the property type each covers
Know the TREC form numbers for the five most commonly tested contracts on the state exam
Understand the difference between promulgated (required), approved (optional), and prohibited forms
Learn which situations require the Third Party Financing Addendum and how financing contingencies work
Study the Lead-Based Paint Addendum requirements for homes built before 1978 under federal law
Know that only attorneys and principals โ€” not licensees โ€” may draft custom contract language in Texas
Understand the option period concept: how it works, who pays the fee, and what rights it creates
Review the Seller's Disclosure Notice requirements under Texas Property Code Section 5.008
Practice identifying which promulgated addendum applies to each common transaction scenario
Understand the builder contract exception and what disclosures agents owe buyers in new construction deals
The Unauthorized Practice of Law Rule Is Heavily Tested

One of the most reliable exam topics is the rule that real estate licensees may only fill in the blanks on TREC promulgated forms โ€” they cannot draft new contractual language. Even a well-intentioned clause added to the special provisions paragraph that creates new legal obligations can constitute the unauthorized practice of law. When in doubt, advise your client to consult an attorney. Expect at least two to four questions on this exact topic on the Texas state exam.

Many exam candidates struggle with the specific rules governing how licensees interact with promulgated forms during an actual transaction. The rules are detailed, and TREC enforces them strictly. Understanding not just what the forms say but how agents are supposed to handle them โ€” who signs, when, in what order, and what happens if something goes wrong โ€” prepares you for the most challenging exam questions and for real-world practice as a Texas agent.

The first critical rule is that the promulgated form must be current. TREC updates its forms periodically, sometimes annually, and using an outdated version of a promulgated form is a violation even if the outdated version is substantively similar. Responsible agents subscribe to TREC's update notifications, check the current version numbers on the TREC website before each transaction, and never rely on old templates saved on their computers without verifying the version against the current official form. Form version numbers appear in the lower left corner of each TREC promulgated document.

When a licensee presents a promulgated contract to a client, they must explain the form's provisions in plain language. This is part of a licensee's fiduciary duty to their client. However, there is a critical limit: explaining what a provision means is acceptable, but telling a client that a particular provision creates a specific legal right or outcome in a contested situation may cross into legal advice territory. Agents routinely navigate this line by explaining the mechanics of a provision while recommending the client consult an attorney for legal interpretations.

The earnest money process under promulgated forms has its own procedural requirements. Earnest money must be delivered to the escrow agent within a specified number of days after the effective date of the contract. The effective date is defined as the date when the last party signs and communicates acceptance of the contract โ€” not the date when the offer is made. The escrow agent, typically a title company in Texas, must deposit earnest money into an escrow account and cannot release it without written authorization from both parties or a court order in the event of a dispute.

The option period is a promulgated concept unique to Texas real estate that exam candidates must master. During the option period, the buyer pays a small, non-refundable fee directly to the seller in exchange for the unrestricted right to terminate the contract for any reason. If the buyer terminates during the option period, they lose the option fee but recover the earnest money.

If the buyer proceeds past the option period deadline without terminating, they lose their right to walk away except under specific contingency provisions. The option fee amount and option period duration are negotiable blanks that parties fill in on the contract.

Special provisions paragraphs in promulgated contracts allow for some customization, but licensees must be extremely careful about how they use this section. The special provisions paragraph is designed for factual statements specific to the property or transaction, such as noting that a particular appliance is excluded from the sale or that the closing date may be extended if a specific event occurs.

Licensees may not use the special provisions paragraph to create new legal obligations, grant additional rights, or modify the legal effect of other provisions in the contract. If parties need language beyond what the form accommodates, an attorney must draft a custom addendum.

Understanding the timeline mechanics of a promulgated contract is essential for exam questions that present scenario-based problems. The effective date triggers multiple deadlines: the option period countdown, the financing approval deadline in the Third Party Financing Addendum, the survey delivery deadline, the title commitment delivery period, and the closing date itself. Missing any of these deadlines can have significant legal consequences, including contract termination or loss of earnest money. Exam questions often test whether candidates can identify the correct deadline given a specific effective date and the contract terms.

Finally, the Seller's Disclosure Notice deserves special attention. Under Texas Property Code Section 5.008, sellers of residential properties must provide buyers with a written disclosure notice about known material defects. TREC provides a promulgated version of this notice, though the statute itself mandates the disclosure rather than a specific form. The notice covers structural defects, roof condition, foundation issues, plumbing and electrical problems, flooding history, presence of hazardous materials, and many other conditions. Agents representing sellers must ensure this disclosure is completed accurately and delivered to buyers within the required timeframe under the purchase contract.

One of the most frequently tested areas related to TREC promulgated forms on the Texas real estate exam involves the specific scenarios where an agent is NOT required to use a promulgated form. Understanding these exceptions is just as important as knowing the rule itself, because exam questions are often designed to test whether candidates can identify the exception rather than the general requirement. Knowing when a promulgated form is not required โ€” and why โ€” demonstrates a deeper level of comprehension than simple memorization.

The most significant exception involves transactions handled by attorneys. When a buyer or seller is represented by their own attorney who drafts the purchase contract, the parties are not required to use a TREC promulgated form. The attorney takes legal responsibility for the contract's adequacy.

This exception recognizes that attorneys have the legal training and professional license to create customized contract language that a real estate licensee cannot. If both parties have attorneys and those attorneys draft a custom contract, the real estate agent involved must still comply with all other TREC rules but is not required to substitute a promulgated form for the attorney-drafted document.

Another important exception applies to transactions where a licensee is the principal โ€” meaning the agent is personally buying or selling the property for their own account. In this situation, the licensee is acting as a principal rather than as an agent, and they have the same rights as any other private individual. They may negotiate custom contract terms directly without using a promulgated form, though most experienced agents use the promulgated forms anyway because of their familiarity and the consumer protection they provide. This exception is narrowly interpreted; an agent cannot use it to draft custom forms for clients.

New construction transactions with builder contracts represent a third area of exception. When a home builder โ€” through their attorney โ€” provides a buyer with a builder's purchase contract, that contract governs the transaction even though it is not a TREC promulgated form. The buyer's real estate agent must notify the buyer that they are using a builder's contract rather than the standard TREC form and explain any material differences.

Buyers have the right to have an attorney review the builder's contract before signing, and agents should actively encourage this review because builder contracts typically contain provisions more favorable to the builder than the TREC residential contract is to buyers.

Commercial transactions are generally exempt from the requirement to use TREC promulgated residential forms, simply because those forms are designed specifically for residential property. Commercial real estate transactions typically use forms drafted by attorneys or industry organizations and are not subject to the residential promulgated form requirements. However, if a commercial property includes residential units โ€” such as a mixed-use building with apartments above retail space โ€” the residential portions may still trigger promulgated form requirements depending on the nature of the transaction.

Farm and ranch transactions in Texas often involve mineral rights, water rights, surface use agreements, and other issues not addressed in the standard residential contract. TREC does promulgate a Farm and Ranch Contract specifically for these transactions, but when a transaction involves purely commercial agricultural operations or significant complexity beyond what the form addresses, an attorney-drafted contract may be appropriate. Agents working in rural Texas markets should be particularly careful to use the correct promulgated form for each transaction type and to recognize when the complexity of mineral or water rights issues warrants legal counsel for their clients.

Lease transactions in Texas involve a different regulatory framework than purchase contracts. TREC promulgates certain residential lease forms, including the Residential Lease (TREC Form 15-5 or current version) and addenda for lease transactions. However, the Texas Association of Realtors (TAR) also provides comprehensive lease forms that are widely used in the market.

Licensees who are TAR members may use TAR lease forms; non-members may use only TREC promulgated or attorney-drafted forms. Understanding this distinction is important for exam questions that ask about the proper form for a residential lease transaction. For further information on TREC contact and resources, visit the official commission website or review related guidance from the trec promulgated form resources page.

The bottom line for exam preparation is to approach TREC promulgated form questions with a clear framework: identify the transaction type, determine whether a promulgated form exists for that type, check whether an exception applies (attorney-drafted, principal acting for themselves, or builder contract), and then apply the correct form. This three-step analysis will help you work through even the most complex scenario-based exam questions efficiently and accurately, minimizing second-guessing under time pressure.

Practice TREC Education and Forms Questions Now

Effective preparation for TREC promulgated form questions requires more than reading definitions โ€” it requires active recall, scenario practice, and a systematic approach to identifying which form applies in any given situation. The exam will present you with realistic transaction scenarios and ask you to identify the correct form, the correct procedure, or the consequence of using an incorrect form. Candidates who practice with scenario-based questions consistently outperform those who rely only on passive review of definitions and lists.

Start your study of promulgated forms by creating a master reference chart. List every promulgated contract in one column, the property type it covers in the second column, and two or three unique features of that contract in the third column. For example, the Farm and Ranch Contract column should include mineral rights, water rights, and surface use agreements as distinguishing features.

The Condominium Contract column should include the right to review condo documents and the HOA assessment provisions. This chart becomes your core memorization tool, and reviewing it daily for two weeks will cement the associations you need for exam day.

Next, focus on the promulgated addenda by grouping them by function. Financing addenda (Third Party Financing, Seller Financing, Loan Assumption) form one group. Contingency addenda (Sale of Other Property, Back-Up Contract) form another. Disclosure addenda required by law (Lead-Based Paint, Addendum for Coastal Area Property, Addendum for Property Located Seaward of Gulf Intracoastal Waterway) form a third group. Mandatory HOA and property condition addenda form a fourth. Organizing addenda this way makes it easier to remember which addendum is required in which situation without having to memorize an unstructured list of twenty-plus forms.

Practice problems should be scenario-based from the start. Given a transaction involving a three-bedroom home with a conventional mortgage, which addendum is required? Answer: Third Party Financing Addendum. Given a 1975 home sale, which federal addendum is required? Answer: Lead-Based Paint Addendum. Given a vacant lot sale, which promulgated contract applies? Answer: Unimproved Property Contract. Running through fifty to one hundred such scenarios in the week before your exam will build the pattern recognition that allows you to identify correct answers quickly, leaving more time for difficult questions.

Time management during the exam is a critical factor for promulgated form questions. Many of these questions are straightforward recall or simple application questions that should take thirty to forty-five seconds to answer. If you know your forms well, you should be able to complete the forms-related portion of the exam efficiently. Reserve your extra time for the complex agency, contracts, or math questions that require multi-step reasoning. A strong performance on promulgated form questions โ€” which are predictable and well-defined โ€” can provide the cushion you need to work more carefully through harder questions.

Reading the TREC rulebook โ€” specifically the TREC Rules found in the Texas Administrative Code, Title 22, Part 23 โ€” is useful for advanced exam preparation. The rules governing promulgated forms are found in Subchapter R (Rules Governing Use of Standard Contract Forms). While you do not need to memorize the rule numbers, reading the actual regulatory language gives you a more precise understanding of what is required and what exceptions exist. Many exam answers become obvious once you have read the actual rule rather than a study guide's summary of it.

Finally, use official TREC resources as part of your preparation. The TREC website publishes all current promulgated forms as free PDF downloads. Download and read each major promulgated contract at least once in full. Pay attention to the defined terms, the default provisions (what happens if the parties leave a blank unfilled), and the provisions that require the parties to initial rather than just sign. Understanding the structure and content of actual promulgated forms gives you a significant advantage over candidates who study only abstract descriptions of what the forms cover.

Combining these strategies โ€” reference charts, grouped addenda study, scenario practice, time management, rule reading, and direct engagement with the actual forms โ€” creates a comprehensive preparation approach that addresses every angle from which the exam might test your knowledge of TREC promulgated forms. Candidates who invest this level of preparation consistently report that promulgated form questions feel manageable on exam day, freeing their cognitive resources for the portions of the exam that require more complex reasoning and calculation.

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TREC Questions and Answers

Which of the following is a TREC promulgated form in Texas?

The One to Four Family Residential Contract is one of the most well-known TREC promulgated forms. Other promulgated contracts include the Condominium Contract, Farm and Ranch Contract, Unimproved Property Contract, and New Home Contracts for completed and incomplete construction. Each is required by TREC rule when it applies to a specific transaction type. Promulgated addenda such as the Third Party Financing Addendum and Lead-Based Paint Addendum are also promulgated forms that agents must use in the appropriate circumstances.

What is the difference between a TREC promulgated form and a TREC approved form?

A TREC promulgated form is mandatory โ€” licensees must use it when a promulgated form exists for their transaction type. A TREC approved form has been reviewed and authorized by TREC but is not required; agents may choose to use it or a different attorney-drafted document instead. Using an approved form is optional. Using a promulgated form when one exists for your transaction type is required under TREC rules, and failure to do so can result in disciplinary action including license suspension.

Can a real estate agent add language to a TREC promulgated contract?

Real estate licensees may only fill in the designated blank spaces on TREC promulgated contracts. They cannot draft new contractual language, modify existing promulgated provisions, or use the special provisions paragraph to create new legal obligations. Adding custom language beyond filling in blanks constitutes the unauthorized practice of law in Texas. If a transaction requires terms not accommodated by the promulgated form, an attorney must draft a separate addendum containing the necessary language to avoid this violation.

Which TREC addendum is required when a buyer is obtaining a conventional mortgage?

The Third Party Financing Addendum is required whenever a buyer is obtaining financing from a lender โ€” including conventional, FHA, and VA loans. This addendum specifies the loan type, loan amount, maximum acceptable interest rate, and the deadline by which the buyer must obtain loan approval. If the buyer cannot secure financing on the specified terms by the deadline, the contract terminates and the buyer is entitled to recover the earnest money. This addendum is one of the most frequently tested promulgated forms on the Texas state exam.

Is the Lead-Based Paint Addendum a TREC promulgated form?

Yes, the Lead-Based Paint Addendum is a TREC promulgated addendum that is required by federal law โ€” specifically the Residential Lead-Based Paint Hazard Reduction Act โ€” for all residential properties built before 1978. Sellers of pre-1978 homes must disclose known lead-based paint hazards and provide buyers with the EPA's lead hazard information pamphlet. Buyers also receive a ten-day opportunity to conduct lead-based paint inspections. Both parties must sign and date the addendum before the transaction can close.

What is the option period in a Texas real estate contract?

The option period is a provision unique to Texas real estate that gives the buyer an unrestricted right to terminate the contract for any reason within a negotiated number of days after the effective date. The buyer pays a small, non-refundable option fee directly to the seller in exchange for this right. If the buyer terminates during the option period, they forfeit the option fee but receive the earnest money back. The option fee amount and duration are negotiable blanks in the promulgated residential contract.

When is the Farm and Ranch Contract used instead of the residential contract?

The Farm and Ranch Contract is used for sales of rural properties, farms, ranches, and land with agricultural characteristics. It is appropriate when the transaction involves mineral rights, water rights, surface use agreements, agricultural leases, or grazing rights โ€” issues that the standard residential contract does not address. If a property has a home on it but also significant agricultural features like mineral interests or farming operations, the Farm and Ranch Contract is typically the correct choice over the One to Four Family Residential Contract.

Can a builder require buyers to use the builder's contract instead of the TREC promulgated form?

Yes, a builder may require buyers to use a builder-prepared contract drafted by the builder's attorney rather than the TREC promulgated residential contract. This is legally permissible because an attorney has prepared the document. However, the buyer's real estate agent has a duty to inform the buyer that they are not using the standard TREC form, explain material differences between the forms, and strongly encourage the buyer to have their own attorney review the builder's contract before signing, since builder contracts typically favor the builder over the buyer.

What is the effective date of a TREC contract and why does it matter?

The effective date is the date when the last party signs the contract and communicates their acceptance to the other party. It is critical because it triggers all the contract's time-sensitive deadlines, including the option period, the financing approval deadline under the Third Party Financing Addendum, the survey delivery deadline, the title commitment period, and ultimately the closing date. Real estate agents must accurately identify and record the effective date, as miscalculating it can cause parties to miss deadlines with serious legal and financial consequences.

What happens to earnest money if a buyer terminates during the option period?

If a buyer properly terminates the contract during the option period by providing written notice to the seller before the option period expires, the buyer is entitled to receive their earnest money back in full. The buyer forfeits only the option fee, which is non-refundable and was paid directly to the seller at the start of the transaction. The earnest money, held in escrow by the title company, is returned to the buyer. If the buyer fails to terminate properly before the option period expires, different rules apply and the earnest money may be at risk.
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