The Texas Real Estate Commission took emergency action on February 14, 2011 to adopt revised standard contract forms including removing sub-paragraph 15B which required sellers or buyers to file an action for specific performance within 45 days of closing. The updated forms are available on the TREC website and should be used for pending and new transactions. Licensees do not need to change pending contracts that used previous versions but may rewrite using the new forms if parties wish.

1. The Texas Real Estate Commission took emergency action at the February 14, 2011 commission meeting to adopt revisions to standard contract forms including the Unimproved Property Contract, the One to Four Family Residential Contract (Resale), the New Home Contract (Incomplete Construction); the New Home Contract (Completed Construction); the Farm and Ranch Contract; and the Residential Condominium Contract. The effective date for the emergency action is March 1, 2011. With this action, the forms were amended to remove new sub-paragraph 15B, which was recently added to the contract forms to require a seller or buyer to file an action for specific performance within 45 days of the Closing Date of the contract. The updated contract forms with a date of February 14, 2011 on the right-hand corner are available for immediate use on the TREC website or the HAR Forms Manager. Licensees should stop using the previous versions of the contract forms which the Commission adopted in November, 2010 (TREC. No. 10-9) and begin using the amended forms (10-10) as soon as possible. Although licensees do not need to change the contract in pending transactions in which the previous forms were used, if the parties to the contract wish to use one of the amended forms, licensees may rewrite the pending contract using an amended form. New TREC Forms Now Required

2. We have received numerous inquiries from members about a “new 3.8% tax on real estate.” Is it real? Yes…and no. Included in the healthcare reform legislation that was passed by Congress last year was a 3.8% Medicare tax on unearned income of “high-income taxpayers.” This applies to single people with an adjusted gross income of $200,000 and married couples with an AGI of $250,000 (or $125,000 if married, filing separately). The tax also does not necessarily apply to the entire amount of unearned income. The taxpayer will determine the LESSER of (1) net investment income OR (2) the excess of AGI over the $200,000/$250,000 AGI thresholds. Thus, if net investment income is the smaller amount, then the 3.8% tax is applied only to the net investment income amount. If the excess over the thresholds is the smaller amount, then the 3.8% tax would apply only to the excess amount above the thresholds. It should also be noted that the current capital gain exclusion on the sale of a principal residence of $250,000 for a single taxpayer and $500,000 for a married couple still applies. This means that the 3.8% tax would only be on that amount over and above the capital gain exclusion. This Medicare tax goes into effect on January 1, 2013. This is a somewhat complicated issue, so we would encourage you and your clients to consult a tax advisor about your (their) particular situation. Is There a New 3.8% Tax on Real Estate?

3. Weekly HAR Market Stat Buyer activity continued to exhibit signs of strengthening relative to last year for the time being. For the week ending February 20, there were 1,171 signed purchase agreements, the highest weekly number seen so far in 2011 and a 13.1 percent increase over the same week in 2010. During the last three months, there has been 5.7 percent more purchase activity than during the same period a year ago. New listings, however, are losing some ground relative to the pace at which new properties entered the market last year. The 1,936 new listings during the most recent reporting week was a 14.6 percent drop from a year ago. During the last three months there has been 3.3 percent less listing activity than during the same period last year.

4. Register Online at www.har.com/edu Open Your Mind to Learning Questions? 713-629-1900 ext. 6 Graduate REALTOR ® Institute GRI-2 Marketing Date: March 10, 11, 14 and 15 Time: 8:15 a.m. – 5 p.m. Location: This class will be held at our main location and viewed by video conference at our Bay Area office. Investment: $295