TREC 20-18 One to Four Family Residential Contract Tutorial Video

This video introduces the TREC 20-18 One to Four Family Residential Contract, also known as TXR 1601, which became mandatory on January 3, 2025.

Paragraph 1 covers identifying the seller and buyer. The seller's name always comes first. While not mandatory, TREC prefers including marital status to differentiate parties. Ensure correct spelling and placement of names.

Paragraph 2 details the legal and informal property descriptions, emphasizing double-checking accuracy against tax rolls and MLS. It also outlines what is conveyed with the property (fixtures) versus personal property, offering examples like stoves and dishwashers as fixtures and refrigerators as personal property. The exclusion list (2D) allows sellers to specify items they intend to take, like a Ring doorbell.

Paragraph 3 explains the financial components: cash portion (3A), financed amount (3B), and total sales price (3C). It highlights the 'A + B = C' rule and the importance of checking the third-party financing addendum box if a loan is involved.

Paragraph 4 addresses various types of leases, including residential, fixture, and natural resource leases. It clarifies that existing residential leases transfer with the property, and fixture leases (like solar panels) must be disclosed. Emphasizes initials from all parties at the bottom of each page to prevent issues.

Paragraph 5 covers earnest money and the option fee, both due within three days of contract execution. It warns about potential scams when sending money and advises caution. The option period is typically 7-10 days, allowing time for inspections and buyer decisions. Failure to deliver these funds constitutes a breach of contract.

Paragraph 6 discusses title insurance, typically paid by the seller in Texas, and survey options. These include using an existing survey (with a T47 affidavit), the buyer obtaining a new one, or the seller obtaining a new one. A survey is generally required for properties with loans, and buyers' objections to title matters must be addressed. It also covers HOA/POA disclosures and other property-specific disclosures.

Paragraph 7 addresses property condition, including the seller's responsibility to keep utilities on for inspections. It explains the seller's disclosure notice, advising agents to include it with the MLS listing. It details the 'as is' clause (7D), clarifying that it still allows for inspections, repair requests, and termination during the option period. It also covers lender-required repairs and home warranties (7H).

Paragraph 8 requires disclosure if an agent or broker is a principal in the transaction or is an immediate family member of either the buyer or seller.

Paragraph 9 sets the closing date, noting it can occur 'on or before' the specified date. Agents are advised to check calendars to avoid weekend or holiday closing dates. Typical closing is 30 days out.

Paragraph 10 discusses possession, with the most common scenario being possession upon closing and funding. It outlines the use of temporary leases if the seller remains or the buyer moves in early. It also addresses smart devices (10B), requiring sellers to transfer access to the buyer.

Paragraph 11 advises against using the 'Special Provisions' section unless absolutely necessary and after consulting with a broker, as most needs are covered elsewhere in the contract or via addenda.

Paragraph 12 is new to the TREC 20-18 contract, detailing how buyer agent commissions and buyer closing costs paid by the seller are to be listed (12A1B and 12A1C). It clarifies the difference between the seller paying the buyer agent commission and the listing broker paying it.

Paragraphs 14-17 cover statutory disclosures, emphasizing issues of default, mediation, and attorney fees, reminding parties that in Texas, the losing party in a lawsuit may pay the winner's fees.

Paragraphs 18-20 address the role of the title company as a neutral escrow agent and mention federal requirements for foreign sellers.

Paragraph 21 requires complete contact information for buyers, sellers, and agents to facilitate communication, especially from the title company.

Paragraph 22 lists applicable addenda for the transaction, such as third-party financing, HOA membership, and lender appraisal. Agents should only check boxes for relevant forms.

Paragraph 23 allows for attorney involvement but notes its rarity, advising caution as attorneys may try to alter standard contract terms.

The final contract page requires buyer and seller signatures, with the execution date filled in by the agent (usually the listing agent) after the last signature to mark the official start of all contract timelines.

Page 10 is for filling in complete agent and broker information for both sides. It also clarifies where to list the commission offered by the listing broker to the buyer's agent, distinguishing it from seller-paid commissions in Paragraph 12.

The final page is the receipt page, completed by the title company, confirming receipt of the contract, earnest money, and option fee. The video concludes with reminders to proofread, avoid blanks, ensure initials, and properly document commission payments.