TREC and Texas REALTORS® recently made changes to Paragraph 12, affecting several residential and farm and ranch forms. What do these changes mean for broker compensation agreements?
The latest Legal Briefs video walks you through how to use the updated Paragraph 12, Settlement And Other Expenses, which now allows the parties to include a specific amount for sellers to pay the buyer’s broker’s fees directly. It’s one of a three-video series about Paragraph 12.
Click here to access all the videos in the Legal Briefs series.
There seems to be confusion over the payment of fees within paragraph 12.A. (1).(b) buyer broker fees versus the payment of fees in the TAR Listing Agreement. The question is if paragraph 12.A. (1).(b) has an amount does that automatically deduct what is paid to the listing broker in paragraph 5.A.(1) of the TAR listing agreement? Or, is the listing broker still able to collect the compensation in addition to the seller paying the cooperation broker?
That’s the issue we are seeing. The way it reads to me is, on top of the commission the seller has already agreed to pay now they will pay an additional amount on top of that if you fill out 12A1B
Paragraph 12A1b is used if the seller is contributing to the buyer’s agent compensation directly per Paragraph 5B of the TR Listing Agreement 1101. If it’s a co-broker split per Paragraph 5A of the TR listing agreement, then 0 goes in 12A1b and TR 2402 Compensation Agreement Between Brokers is used.
Is there a written explanation? with examples? I believe you said in the video there was. I coldn’t find it!
I feel like this could’ve been less complicated/confusing.
You’d think a team of attorneys could craft a clear paragraph—especially paragraph 12. But nope, they really outdid themselves this time. I’ve lost count of how many agents have looked at it and gone, ‘What does this even mean?’ Bravo.
If the seller has already signed Txr 2401 agreeing to pay a certain percentage to buyer’s agent, do you enter that amount in 12A1b and include 2401 in paragraph 22 Other?
TXR 2401 is no longer needed now that it’s on 12A1b. Adding it would create a double obligation for the seller.
Any written explanation, please. It would be so helpful.