By:  Stiles                                            H.B. No. 991
       73R3442 JMM-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the regulation of real estate brokers, salesmen, and
    1-3  inspectors.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Section 2(1), The Real Estate License Act
    1-6  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
    1-7  as follows:
    1-8              (1)  "Real estate" means a leasehold, as well as any
    1-9  other interest or estate in land, whether corporeal, incorporeal,
   1-10  freehold, or nonfreehold, and whether the real estate is situated
   1-11  in this state or elsewhere.  The term does not include an interest
   1-12  given as security for the performance of an obligation.
   1-13        SECTION 2.  Section 5(t), The Real Estate License Act
   1-14  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   1-15  as follows:
   1-16        (t)  The commission may authorize specific employees to
   1-17  conduct hearings and render final decisions in contested cases.
   1-18  The commission may employ a general counsel, attorneys,
   1-19  investigators, and support staff to administer and enforce this
   1-20  Act.
   1-21        SECTION 3.  Section 6, The Real Estate License Act (Article
   1-22  6573a, Vernon's Texas Civil Statutes), is amended to read as
   1-23  follows:
   1-24        Sec. 6.  Licenses; Qualification.  (a)  A person desiring to
    2-1  act as a real estate broker in this state shall file an application
    2-2  for a license with the commission on a form prescribed by the
    2-3  commission.  A broker desiring to engage a person to participate in
    2-4  real estate brokerage activity shall join the person in filing an
    2-5  application for a salesman license on a form prescribed by the
    2-6  commission.  A person previously licensed as a broker may apply for
    2-7  inactive status.  A person previously licensed as a salesman may
    2-8  apply for inactive status without the participation of a broker.
    2-9  The person must apply for inactive status on a form prescribed by
   2-10  the commission not later than the first anniversary of the date of
   2-11  the expiration of the broker or salesman license.
   2-12        (b)  To be eligible for a license, an individual must be a
   2-13  citizen of the United States or a lawfully admitted alien, be at
   2-14  least 18 years of age, and be a legal resident of Texas <for> at
   2-15  the time of <least 60 days immediately preceding> the filing of an
   2-16  application, and must satisfy the commission as to his honesty,
   2-17  trustworthiness, integrity, and competency.  However, the
   2-18  competency of the individual, for the purpose of qualifying for the
   2-19  granting of a license, shall be judged solely on the basis of the
   2-20  examination referred to in Section 7 of this Act.
   2-21        (c)  To be eligible for or to renew a license, a corporation
   2-22  must designate one of its officers to act for it.  The designated
   2-23  person must be a <citizen of the United States or a lawfully
   2-24  admitted alien, be at least 18 years of age, and be a resident of
   2-25  Texas for at least 60 days immediately preceding the filing of an
   2-26  application, and must be qualified to be> licensed <individually as
   2-27  a> real estate broker as shown in the records of the commission.  A
    3-1  corporation may not act as a real estate broker unless the
    3-2  designated person is a licensed real estate broker <However, the
    3-3  competency of the person shall be judged solely on the basis of the
    3-4  examination referred to in Section 7 of this Act>.
    3-5        SECTION 4.  Section 6A(a), The Real Estate License Act
    3-6  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
    3-7  as follows:
    3-8        (a)  If, at any time before a person applies for a license
    3-9  under this Act, the person requests the commission to determine
   3-10  whether his moral character complies with the commission's moral
   3-11  character requirements for licensing under this Act and the person
   3-12  pays a <$10> fee set by the commission for the moral character
   3-13  determination, the commission shall make its determination of the
   3-14  person's moral character.
   3-15        SECTION 5.  Sections 7(a), (e), and (f), The Real Estate
   3-16  License Act (Article 6573a, Vernon's Texas Civil Statutes), are
   3-17  amended to read as follows:
   3-18        (a)  Competency as referred to in Section 6 of this Act shall
   3-19  be established by an examination prepared by or contracted for by
   3-20  the commission.  The examination shall be given at such times and
   3-21  at such places within the state as the commission shall prescribe.
   3-22  The examination shall be of scope sufficient in the judgment of the
   3-23  commission to determine that a person is competent to act as a real
   3-24  estate broker or salesman in a manner to protect the interest of
   3-25  the public.  The examination for a salesman license shall be less
   3-26  exacting and less stringent than the examination for a broker
   3-27  license.  The commission shall furnish each applicant with study
    4-1  material and references on which his examination shall be based.
    4-2  When an applicant for a real estate license fails a qualifying
    4-3  examination, he may apply for reexamination by filing a request
    4-4  therefor together with the proper fee.  The examination requirement
    4-5  must be satisfied not later than six months after the date on which
    4-6  the application for a license is filed.  Courses of study required
    4-7  for a license may include but are not limited to the following,
    4-8  which shall be considered core real estate courses for all purposes
    4-9  of this Act:
   4-10              (1)  Principles of Real Estate (or equivalent) shall
   4-11  include but not be limited to an overview of licensing as a real
   4-12  estate broker and salesman, ethics of practice, titles to and
   4-13  conveyancing of real estate, legal descriptions, law of agency,
   4-14  deeds, encumbrances and liens, distinctions between personal and
   4-15  real property, contracts, appraisal, finance and regulations,
   4-16  closing procedures, real estate mathematics, and at least three
   4-17  classroom hours of instruction on federal, state, and local laws
   4-18  relating to housing discrimination, housing credit discrimination,
   4-19  and community reinvestment.
   4-20              (2)  Real Estate Appraisal (or equivalent) shall
   4-21  include but not be limited to the central purposes and functions of
   4-22  an appraisal, social and economic determinant of value, appraisal
   4-23  case studies, cost, market data and income approaches to value
   4-24  estimates, final correlations, and reporting.
   4-25              (3)  Real Estate Law (or equivalent) shall include but
   4-26  not be limited to legal concepts of real estate, land description,
   4-27  real property rights and estates in land, contracts, conveyances,
    5-1  encumbrances, foreclosures, recording procedures, and evidence of
    5-2  titles.
    5-3              (4)  Real Estate Finance (or equivalent) shall include
    5-4  but not be limited to monetary systems, primary and secondary money
    5-5  markets, sources of mortgage loans, federal government programs,
    5-6  loan applications, processes and procedures, closing costs,
    5-7  alternative financial instruments, equal credit opportunity acts,
    5-8  community reinvestment act, and state housing agency.
    5-9              (5)  Real Estate Marketing (or equivalent) shall
   5-10  include but not be limited to real estate professionalism and
   5-11  ethics, characteristics of successful salesmen, time management,
   5-12  psychology of marketing, listing procedures, advertising,
   5-13  negotiating and closing, financing, and the Deceptive Trade
   5-14  Practices-Consumer Protection Act, as amended, Section 17.01 et
   5-15  seq., Business & Commerce Code.
   5-16              (6)  Real Estate Mathematics (or equivalent) shall
   5-17  include but not be limited to basic arithmetic skills and review of
   5-18  mathematical logic, percentages, interest, time-valued money,
   5-19  depreciation, amortization, proration, and estimation of closing
   5-20  statements.
   5-21              (7)  Real Estate Brokerage (or equivalent) shall
   5-22  include but not be limited to law of agency, planning and
   5-23  organization, operational policies and procedures, recruiting,
   5-24  selection and training of personnel, records and control, and real
   5-25  estate firm analysis and expansion criteria.
   5-26              (8)  Property Management (or equivalent) shall include
   5-27  but not be limited to role of property manager, landlord policies,
    6-1  operational guidelines, leases, lease negotiations, tenant
    6-2  relations, maintenance, reports, habitability laws, and the Fair
    6-3  Housing Act.
    6-4              (9)  Real Estate Investments (or equivalent) shall
    6-5  include but not be limited to real estate investment
    6-6  characteristics, techniques of investment analysis, time-valued
    6-7  money, discounted and nondiscounted investment criteria, leverage,
    6-8  tax shelters depreciation, and applications to property tax.
    6-9              (10)  Law of Agency (or equivalent) shall include but
   6-10  not be limited to the principal-agent and master-servant
   6-11  relationships, the authority of an agent, the termination of an
   6-12  agent's authority, the fiduciary and other duties of an agent,
   6-13  employment law, deceptive trade practices, listing or buying
   6-14  representation procedures, and the disclosure of agency.
   6-15        (e)  Each <As a prerequisite for applying for a salesman
   6-16  license, each> applicant for a salesman license shall furnish the
   6-17  commission satisfactory evidence of having completed 12 semester
   6-18  hours, or equivalent classroom hours, of postsecondary education,
   6-19  six hours of which must be completed in core real estate courses,
   6-20  of which a minimum of two hours must be completed in Principles of
   6-21  Real Estate as described in Subsection (a)(1) of this section and a
   6-22  minimum of two hours must be completed in Law of Agency as
   6-23  described in Subsection (a)(10) of this section.  The remaining six
   6-24  hours shall be completed in core real estate courses or related
   6-25  courses.  As a condition for the first renewal of a salesman
   6-26  license, the applicant shall furnish the commission satisfactory
   6-27  evidence of having completed a minimum of 14 semester hours, or
    7-1  equivalent classroom hours, eight hours of which must be completed
    7-2  in core real estate courses.  As a condition for the second renewal
    7-3  of a salesman license, the applicant shall furnish the commission
    7-4  satisfactory evidence of having completed a minimum of 16 semester
    7-5  hours, or equivalent classroom hours, 10 hours of which must be
    7-6  completed in core real estate courses.  As a condition for the
    7-7  third renewal of a salesman license, the applicant shall furnish
    7-8  the commission satisfactory evidence of having completed a minimum
    7-9  of 18 semester hours, or equivalent classroom hours, 12 hours of
   7-10  which must be completed in core real estate courses.
   7-11        (f)  Insofar as is necessary for the administration of this
   7-12  Act, the commission is authorized to inspect and accredit
   7-13  educational programs or courses of study in real estate and real
   7-14  estate inspection and to establish standards of accreditation for
   7-15  such programs conducted in the State of Texas, other than
   7-16  accredited colleges and universities. The commission shall
   7-17  determine the acceptability of real estate courses and real estate
   7-18  inspection courses offered to satisfy the requirements of this Act,
   7-19  and by rule may provide reasonable criteria for the approval of
   7-20  those courses. Schools, other than accredited colleges and
   7-21  universities, which are authorized to offer real estate educational
   7-22  courses pursuant to provisions of this section, shall be required
   7-23  to maintain a corporate surety bond, or other security acceptable
   7-24  to the commission, in the sum of $10,000, payable to the
   7-25  commission, for the benefit of a party who may suffer damages
   7-26  resulting from failure of a commission approved school or course to
   7-27  fulfill obligations attendant to the approval.
    8-1        SECTION 6.  Sections 7A(a) and (b), The Real Estate License
    8-2  Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
    8-3  read as follows:
    8-4        (a)  To renew an active <a> real estate broker license or an
    8-5  active real estate salesman license that is not subject to the
    8-6  annual education requirements of this Act, the licensee must
    8-7  provide the commission proof of attendance at at least 15 classroom
    8-8  hours of continuing education courses approved by the commission
    8-9  during the term of the current license.  The commission by rule may
   8-10  provide for the substitution of relevant educational experience or
   8-11  correspondence courses approved by the commission instead of
   8-12  classroom attendance.  In addition, supervised video instruction
   8-13  may be approved by the commission as a course counting as classroom
   8-14  hours of mandatory continuing education.  At least six hours of
   8-15  instruction must be devoted to the rules of the commission, fair
   8-16  housing laws, agency laws, antitrust laws, the Deceptive Trade
   8-17  Practices-Consumer Protection Act (Subchapter E, Chapter 17,
   8-18  Business & Commerce Code), disclosures to buyers and sellers,
   8-19  current contract and addendum forms, the unauthorized practice of
   8-20  law, case studies involving violations of laws and regulations,
   8-21  current Federal Housing Administration and Veterans Administration
   8-22  regulations, tax laws, and other legal topics approved by the
   8-23  commission.  The remaining hours may be devoted to other real
   8-24  estate-related topics approved by the commission.  The commission
   8-25  may consider equivalent courses for continuing education credit.
   8-26  The commission, on the request of a provider of education, shall
   8-27  review a core real estate course authorized under Section 7 of this
    9-1  Act and may approve it as a mandatory continuing education course.
    9-2  Real estate related courses approved by the State Bar of Texas for
    9-3  minimum continuing legal education participatory credit shall
    9-4  automatically be approved as mandatory continuing education courses
    9-5  under this Act.  The commission may not require examinations except
    9-6  for correspondence courses.  Daily course segments must be at least
    9-7  three hours long but not more than 10 hours long.  If the license
    9-8  being renewed under this section was issued for less than two
    9-9  years, the licensee must provide the commission proof of attendance
   9-10  at at least eight classroom hours of continuing education within
   9-11  the term of the current license, three classroom hours of which
   9-12  must have been devoted to the legal topics specified in this
   9-13  section.
   9-14        (b)  An applicant for an active <a> real estate broker
   9-15  license or an active real estate salesman license who is not
   9-16  subject to the education requirements of Section 7 of this Act must
   9-17  provide the commission with proof of attendance of the number of
   9-18  <at at least 15> classroom hours of continuing education that would
   9-19  have been required for a timely renewal as specified in Subsection
   9-20  (a) of this section during the two-year period preceding the filing
   9-21  of the application.
   9-22        SECTION 7.  Section 11, The Real Estate License Act (Article
   9-23  6573a, Vernon's Texas Civil Statutes), is amended to read as
   9-24  follows:
   9-25        Sec. 11.  Fees.  (a)  The commission shall charge and collect
   9-26  the following fees:
   9-27              (1)  a fee not to exceed $100 for the filing of an
   10-1  original application for a real estate broker license;
   10-2              (2)  a fee not to exceed $100 for annual renewal of a
   10-3  real estate broker license;
   10-4              (3)  a fee not to exceed $50 for the filing of an
   10-5  original application for a real estate salesman license;
   10-6              (4)  a fee not to exceed $50 for annual renewal of a
   10-7  real estate salesman license;
   10-8              (5)  a fee not to exceed $25 for an application for a
   10-9  license examination;
  10-10              (6)  a fee not to exceed $20 <$10> for filing a request
  10-11  for a license for each additional office or place of business;
  10-12              (7)  a fee not to exceed $20 for filing a request for a
  10-13  license for a change of place of business, change of name, return
  10-14  to active status, or change of sponsoring broker;
  10-15              (8)  a fee not to exceed $20 <$10> for filing a request
  10-16  to replace a license lost or destroyed;
  10-17              (9)  a fee not to exceed $400 for filing an application
  10-18  for approval of a real estate education program under Section 7(f)
  10-19  of this Act;
  10-20              (10)  a fee not to exceed $200 a year for operation of
  10-21  a real estate education program under Section 7(f) of this Act;
  10-22  <and>
  10-23              (11)  a fee of $15 for transcript evaluation;
  10-24              (12)  a fee not to exceed $10 for preparing a license
  10-25  history; and
  10-26              (13)  a fee not to exceed $50 for the filing of an
  10-27  application for a moral character determination.
   11-1        (b)  The commission by rule may adopt reduced annual renewal
   11-2  fees for licensees who are 65 years of age or older and who are on
   11-3  inactive status as shown in the records of the commission.
   11-4        SECTION 8.  Section 11A(a), The Real Estate License Act
   11-5  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   11-6  as follows:
   11-7        (a)  Each of the following fees imposed by or under another
   11-8  section of this Act is increased by $200:
   11-9              (1)  fee for filing an original application for an
  11-10  individual <a> real estate broker license; and
  11-11              (2)  fee for annual renewal of an individual <a> real
  11-12  estate broker license.
  11-13        SECTION 9.  Section 13A(c), The Real Estate License Act
  11-14  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
  11-15  as follows:
  11-16        (c)  If the person has been on inactive status <for 36
  11-17  consecutive months or less>, the commission shall remove the person
  11-18  from the list on application, payment of the required fee, and
  11-19  proof of attendance of at least 15 classroom hours of continuing
  11-20  education as specified in Subsection (a) of Section 7A of this Act
  11-21  during the two-year period preceding the filing of the application.
  11-22  <If the person has been on inactive status for more than 36
  11-23  consecutive months, the commission may not remove the person from
  11-24  the inactive status list until the person has complied with the
  11-25  educational and examination requirements specified in Section 7 of
  11-26  this Act.>
  11-27        SECTION 10.  Sections 14(b) and (c), The Real Estate License
   12-1  Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
   12-2  read as follows:
   12-3        (b)  A resident broker of another state who furnishes the
   12-4  evidence required under Section 7(g) of this Act may apply for a
   12-5  license as a broker in this state.  A resident of another state who
   12-6  is not licensed as a broker but who was formerly licensed as a
   12-7  salesman or broker in this state may apply for a license in this
   12-8  state not later than the first anniversary of the date of the
   12-9  expiration of the previous license.  An application by a
  12-10  nonresident is subject to the requirements under this Act for the
  12-11  type of license applied for.  A nonresident licensee need not
  12-12  maintain a place of business in this state.  The commission may in
  12-13  its discretion refuse to issue a license to an applicant who is not
  12-14  a resident of this state for the same reasons that it may refuse to
  12-15  license a resident of this state.  The commission shall judge the
  12-16  competency of a nonresident applicant solely on the basis of the
  12-17  examination conducted under Section 7 of this Act.
  12-18        (c)  Each nonresident applicant shall file an irrevocable
  12-19  consent that legal actions may be commenced against him in the
  12-20  proper court of any county of this state in which a cause of action
  12-21  may arise, or in which the plaintiff may reside, by service of
  12-22  process or pleading authorized by the laws of this state, or by
  12-23  serving the administrator or assistant administrator of the
  12-24  commission.  The consent shall stipulate that the service of
  12-25  process or pleading shall be valid and binding in all courts as if
  12-26  personal service had been made on the nonresident <broker> in this
  12-27  state.  The consent shall be duly acknowledged, and if made by a
   13-1  corporation, shall be authenticated by its seal.  A service of
   13-2  process or pleading served on the commission shall be by duplicate
   13-3  copies, one of which shall be filed in the office of the commission
   13-4  and the other forwarded by registered mail to the last known
   13-5  principal address which the commission has for the nonresident
   13-6  <broker> against whom the process or pleading is directed.  No
   13-7  default in an action may be taken except on certification by the
   13-8  commission that a copy of the process or pleading was mailed to the
   13-9  defendant as provided in this section, and no default judgment may
  13-10  be taken in an action or proceeding until 20 days after the day of
  13-11  mailing of the process or pleading to the defendant.
  13-12        Notwithstanding any other provision of this subsection, a
  13-13  nonresident of this state who resides in a city whose boundaries
  13-14  are contiguous at any point to the boundaries of a city of this
  13-15  state, and who has been an actual bona fide resident of that city
  13-16  for at least 60 days immediately preceding the filing of his
  13-17  application, is eligible to be licensed as a real estate broker or
  13-18  salesman under this Act in the same manner as a resident of this
  13-19  state.  If he is licensed in this manner, he shall at all times
  13-20  maintain a place of business either in the city in which he resides
  13-21  or in the city in this state which is contiguous to the city in
  13-22  which he resides, and he may not maintain a place of business at
  13-23  another location in this state unless he also complies with the
  13-24  requirements of Section 14(b) of this Act.  The place of business
  13-25  must satisfy the requirements of Subsection (a) of Section 12 of
  13-26  this Act, but the place of business shall be deemed a definite
  13-27  place of business in this state within the meaning of Subsection
   14-1  (a) of Section 12.
   14-2        SECTION 11.  Section 15(c), The Real Estate License Act
   14-3  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   14-4  as follows:
   14-5        (c)  Notwithstanding Subsection (b) of this section, a person
   14-6  is not subject to civil liability or criminal prosecution because
   14-7  the person did not inquire about, make a disclosure related to, or
   14-8  release information related to whether a previous or current
   14-9  occupant of real property had, may have had, has, or may have AIDS,
  14-10  HIV-related illnesses, or HIV infection as defined by the Centers
  14-11  for Disease Control of the U.S. Public Health Service.  <A person
  14-12  who has actual knowledge that the previous or current occupant of
  14-13  real property had or has AIDS, HIV-related illnesses, or HIV
  14-14  infection shall provide that information to a potential purchaser
  14-15  or lessee of the real property on receiving a specific request for
  14-16  the information from the potential purchaser or lessee.>
  14-17        SECTION 12.  Sections 16(c) and (e), The Real Estate License
  14-18  Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
  14-19  read as follows:
  14-20        (c)  A Texas Real Estate Broker-Lawyer Committee is hereby
  14-21  created which, in addition to other powers and duties delegated to
  14-22  it by the commission, shall draft and revise contract forms capable
  14-23  of standardization for use by real estate licensees and which will
  14-24  expedite real estate transactions and reduce controversies to a
  14-25  minimum while containing safeguards adequate to protect the
  14-26  interests of the principals to the transaction.
  14-27        (e)  In the best interest of the public the commission may
   15-1  adopt rules and regulations requiring real estate brokers and
   15-2  salesmen to use contract forms which have been prepared by the
   15-3  Texas Real Estate Broker-Lawyer Committee and promulgated by the
   15-4  commission with changes or modifications made by the commission
   15-5  only as the commission finds are in the public interest; provided,
   15-6  however, that the commission shall not prohibit a real estate
   15-7  broker or salesman from using a contract form or forms binding the
   15-8  sale, exchange, option, lease, or rental of any interest in real
   15-9  property which have been prepared by the property owner or prepared
  15-10  by an attorney and required by the property owner.  For the purpose
  15-11  of this section, contract forms prepared by the Texas Real Estate
  15-12  Broker-Lawyer Committee appointed by the commission and the State
  15-13  Bar of Texas and promulgated by the commission prior to the
  15-14  effective date of this Act shall be deemed to have been prepared by
  15-15  the Texas Real Estate Broker-Lawyer Committee.  The commission may
  15-16  suspend or revoke a license issued under the provisions of this
  15-17  article when it has determined that the licensee failed to use a
  15-18  contract form as required by the commission pursuant to this
  15-19  section.
  15-20        SECTION 13.  Section 17(b), The Real Estate License Act
  15-21  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
  15-22  as follows:
  15-23        (b)  The commission may issue subpoenas for the attendance of
  15-24  witnesses and the production of records or documents.  Process
  15-25  issued by the commission may extend to all parts of the state and
  15-26  may be served by any person designated by the commission.
  15-27        SECTION 14.  Section 23(b)(6), The Real Estate License Act
   16-1  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   16-2  as follows:
   16-3              (6)  The committee shall act in an advisory capacity
   16-4  <develop and recommend> to the commission in formulating <for
   16-5  approval the> rules <of the commission> under this section.  The
   16-6  committee periodically shall review commission rules relating to
   16-7  this section and recommend changes in the rules to the commission.
   16-8  <Notwithstanding Subsection (f), Section 5, Administrative
   16-9  Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
  16-10  Civil Statutes), the commission shall submit all proposed rules and
  16-11  all proposed changes and additions to the rules that relate to the
  16-12  regulation and licensing of real estate inspectors under this
  16-13  section to the committee for development.  If the commission does
  16-14  not approve a rule developed by the committee, the commission shall
  16-15  indicate to the committee the reasons that the commission did not
  16-16  approve the rule and return the rule to the committee for further
  16-17  development.>
  16-18        SECTION 15.  (a)  Except as provided by Subsection (b) of
  16-19  this section, this Act takes effect September 1, 1993.
  16-20        (b)  Sections 5, 6, and 8 of this Act take effect September
  16-21  1, 1994.
  16-22        SECTION 16.  The importance of this legislation and the
  16-23  crowded condition of the calendars in both houses create an
  16-24  emergency and an imperative public necessity that the
  16-25  constitutional rule requiring bills to be read on three several
  16-26  days in each house be suspended, and this rule is hereby suspended.