(a) When negotiating contracts binding the sale, exchange, option, or lease of any interest in real property, a license holder shall use only those contract forms approved for mandatory use by the Commission for that type of transaction with the following exceptions:
  (1) transactions in which the license holder is functioning solely as a principal, not as an agent;
  (2) transactions in which an agency of the United States government requires a different form to be used;
  (3) transactions for which a contract form has been prepared by the property owner or prepared by an attorney and required by a property owner; or
  (4) transactions for which no contract form has been approved for mandatory use by the Commission, and the license holder uses a form:
    (A) prepared by an attorney licensed by this state, or a trade association in consultation with an attorney licensed by this state that contains:
      (i) the name of the attorney or trade association who prepared the form;
      (ii) the name of the broker or trade association for whom the form was prepared;
      (iii) a statement indicating the type of transaction for which the attorney or trade association has approved the use of the form;
      (iv) any restrictions on the use of the form; and
      (v) if applicable, an explanation of how the form changes the rights, obligations, or remedies of a party under a contract form approved for mandatory use by the Commission and a statement that license holders may not practice law or give legal advice; or
    (B) prepared by the Texas Real Estate Broker-Lawyer Committee and approved by the Commission for voluntary use by license holders.
(b) A license holder may not:
  (1) practice law;
  (2) directly or indirectly offer, give or attempt to give legal advice;
  (3) give advice or opinions as to the legal effect of any contract forms or other such instruments which may affect the title to real estate;
  (4) give opinions concerning the status or validity of title to real estate;
  (5) draft or recommend language to be included in a contract form defining or affecting the rights, obligations, or remedies of the principals of a real estate transaction, including escalation, appraisal, or contingency clauses;
  (6) add informational items to a form approved by the Commission if the Commission has approved another form for mandatory use for that purpose;
  (7) attempt to prevent or in any manner whatsoever discourage any principal to a real estate transaction from employing an attorney; or
  (8) obtain legal advice from an attorney, directly or indirectly, for a principal in a real estate transaction in which the license holder is acting as an agent.
(c) This section does not:
  (1) limit a license holder's fiduciary obligation to disclose to the license holder's principals all pertinent facts that are within the knowledge of the license holder, including such facts which might affect the status of or title to real estate;
  (2) prevent the license holder from explaining to the license holder's principals the meaning of informational items or choices in a contract form, as long as the license holder does not practice law or give legal advice;
  (3) limit a license holder from employing and paying for the services of an attorney to represent only the license holder in a real estate transaction; or
  (4) limit a license holder from reimbursing a principal for attorney's fees incurred.
(d) It is not the practice of law for a license holder to:
  (1) add informational items to a contract form authorized for use by this section; or
  (2) if specifically instructed in writing by a principal, add language to or strike language from a contract form, as long as any change is made conspicuous, including underlining additions, striking through deletions, or employing some other method which clearly indicates the change being made.
(e) When a transaction involves unusual matters that should be reviewed by an attorney before an instrument is executed, or if the instrument must be acknowledged and filed of record, the license holder shall advise the license holder's principals to consult an attorney before executing the instrument.
(f) A license holder shall advise the license holder's principals that the instrument they are about to execute is binding on them.
(g) Contract forms approved by the Commission are published by and available from the Commission at www.trec.texas.gov.
(h) Contract forms approved by the Commission may be reproduced, including through use of a software application, provided that the text and format of the form, including the sizing, spacing, and pagination, is identical to the Commission's published version, except that:
  (1) the business name or logo of a broker, trade association, or other organization may appear outside the form's border; and
  (2) a form may be scaled to accommodate viewing on smaller screens, including mobile devices, as long as the final executed copy of the form otherwise complies with this subsection.

Source Note: The provisions of this §537.11 adopted to be effective January 1, 1976; amended to be effective January 4, 1983, 7 TexReg 4462; amended to be effective October 20, 1983, 8 TexReg 3999; amended to be effective May 16, 1985, 10 TexReg 1419; amended to be effective August 1, 1985, 10 TexReg 1075; amended to be effective May 19, 1986, 11 TexReg 2093; amended to be effective February 12, 1987, 12 TexReg 346; amended to be effective October 5, 1990, 15 TexReg 5483; amended to be effective September 1, 1992, 17 TexReg 2394; amended to be effective February 1, 1994, 18 TexReg 8200; amended to be effective September 1, 1994,19 TexReg 3576; amended to be effective March 1, 1995, 19 TexReg 9996; amended to be effective January 3, 1996, 20 TexReg 11016; amended to be effective January 1, 1998, 22 TexReg 10133; amended to be effective September 1, 1998, 23 TexReg 6956; amended to be effective March 1, 1999, 23 TexReg 13075; amended to be effective January 1, 2000, 24 TexReg 9001; amended to be effective April 19, 2000, 25 TexReg 3270; amended to be effective September 1, 2000, 25 TexReg 6700; amended to be effective April 1, 2001, 26 TexReg 978; amended to be effective February 1, 2002, 26 TexReg 9383; amended to be effective April 1, 2003, 28 TexReg 677; amended to be effective April 1, 2004, 29 TexReg 2013; amended to be effective September 1, 2004, 29 TexReg 8301; amended to be effective May 1, 2006, 31 TexReg 1445; amended to be effective December 27, 2006, 31 TexReg 10299; amended to be effectiveSeptember 1, 2010, 35 TexReg 7800; amended to be effective December 10, 2014, 39 TexReg 9530; amended to be effective May 15, 2018, 42 TexReg 6805; amended to be effective June 11, 2023, 48 TexReg 2957