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.