The TREC contracts used by brokers and agents in Texas do not contain any language regarding assignments. Since the contracts were silent, a TREC contract was able to be assigned without any notice to the seller. All the original buyer needed to do was enter into an assignment agreement with the new buyer and provide a copy of the executed agreement to the title company.
Then, beginning January 1, 2024, the Texas Property Code was amended, specifically section 5.025. That section of the code always required the original buyer, before they entered into the assignment agreement, notify the new buyer that only an equitable interest was being sold, meaning the buyer did not have title to the property. Starting in January of 2024, an additional requirement was added, requiring the seller to be given notice that the original buyer was going to assign their interest in the contract. Note, it does not state seller must agree to such assignment or be told the terms of the assignment, just be notified. Such notice must be given to the seller prior to an assignment agreement being entered into between the original buyer and the new buyer.
There are three ways the buyer can give notice to the seller:
- Include the wording "and/or assigned" in the buyer's name on page 1 of the TREC contract.
- Add a provision in the contract explicitly allowing for an assignment. (Note, a broker or agent may not add such a provision as this would be defined as practic ... Read More…