1-1  By:  Stiles (Senate Sponsor - Harris of Dallas)        H.B. No. 991
    1-2        (In the Senate - Received from the House April 1, 1993;
    1-3  April 5, 1993, read first time and referred to Committee on State
    1-4  Affairs; April 14, 1993, reported favorably by the following vote:
    1-5  Yeas 9, Nays 0; April 14, 1993, sent to printer.)
    1-6                            COMMITTEE VOTE
    1-7                          Yea     Nay      PNV      Absent 
    1-8        Harris of Dallas   x                               
    1-9        Rosson             x                               
   1-10        Carriker           x                               
   1-11        Henderson                                      x   
   1-12        Leedom             x                               
   1-13        Lucio              x                               
   1-14        Luna               x                               
   1-15        Nelson             x                               
   1-16        Patterson          x                               
   1-17        Shelley            x                               
   1-18        Sibley                                         x   
   1-19        West                                           x   
   1-20        Whitmire                                       x   
   1-21                         A BILL TO BE ENTITLED
   1-22                                AN ACT
   1-23  relating to the regulation of real estate brokers, salesmen, and
   1-24  inspectors.
   1-25        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-26        SECTION 1.  Section 2(1), The Real Estate License Act
   1-27  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   1-28  as follows:
   1-29              (1)  "Real estate" means a leasehold, as well as any
   1-30  other interest or estate in land, whether corporeal, incorporeal,
   1-31  freehold, or nonfreehold, and whether the real estate is situated
   1-32  in this state or elsewhere.  The term does not include an interest
   1-33  given as security for the performance of an obligation.
   1-34        SECTION 2.  Section 2(5), The Real Estate License Act
   1-35  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   1-36  as follows:
   1-37              (5)  "Person" means an individual, a limited liability
   1-38  company, or a corporation,  foreign or domestic.
   1-39        SECTION 3.  Section 5(t), The Real Estate License Act
   1-40  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   1-41  as follows:
   1-42        (t)  The commission may authorize specific employees to
   1-43  conduct hearings and render final decisions in contested cases.
   1-44  The commission may employ a general counsel, attorneys,
   1-45  investigators, and support staff to administer and enforce this
   1-46  Act.
   1-47        SECTION 4.  Section 6, The Real Estate License Act (Article
   1-48  6573a, Vernon's Texas Civil Statutes), is amended to read as
   1-49  follows:
   1-50        Sec. 6.  (a)  A person desiring to act as a real estate
   1-51  broker in this state shall file an application for a license with
   1-52  the commission on a form prescribed by the commission.  A broker
   1-53  desiring to engage a person to participate in real estate brokerage
   1-54  activity shall join the person in filing an application for a
   1-55  salesman license on a form prescribed by the commission.  A person
   1-56  previously licensed as a broker may apply for inactive status.   A
   1-57  person previously licensed as a salesman may apply for inactive
   1-58  status without the participation of a broker.  The person must
   1-59  apply for inactive status on a form prescribed by the commission
   1-60  not later than the first anniversary of the date of the expiration
   1-61  of the broker or salesman license.
   1-62        (b)  To be eligible for a license, an individual must be a
   1-63  citizen of the United States or a lawfully admitted alien, be at
   1-64  least 18 years of age, and be a legal resident of Texas <for> at
   1-65  the time of <least 60 days immediately preceding> the filing of an
   1-66  application, and must satisfy the commission as to his honesty,
   1-67  trustworthiness, integrity, and competency.  However, the
   1-68  competency of the individual, for the purpose of qualifying for the
    2-1  granting of a license, shall be judged solely on the basis of the
    2-2  examination referred to in Section 7 of this Act.
    2-3        (c)  To be eligible for or to renew a license, a corporation
    2-4  must designate one of its officers and a limited liability company
    2-5  must designate one of its managers to act for it.  The designated
    2-6  person must be a <citizen of the United States or a lawfully
    2-7  admitted alien, be at least 18 years of age, and be a resident of
    2-8  Texas for at least 60 days immediately preceding the filing of an
    2-9  application, and must be qualified to be> licensed <individually as
   2-10  a> real estate broker as shown in the records of the commission.  A
   2-11  corporation or limited liability company may not act as a real
   2-12  estate broker unless the designated person is a licensed real
   2-13  estate broker <However, the competency of the person shall be
   2-14  judged solely on the basis of the examination referred to in
   2-15  Section 7 of this Act>.
   2-16        SECTION 5.  Section 6A(a), The Real Estate License Act
   2-17  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   2-18  as follows:
   2-19        (a)  If, at any time before a person applies for a license
   2-20  under this Act, the person requests the commission to determine
   2-21  whether his moral character complies with the commission's moral
   2-22  character requirements for licensing under this Act and the person
   2-23  pays a <$10> fee set by the commission for the moral character
   2-24  determination, the commission shall make its determination of the
   2-25  person's moral character.
   2-26        SECTION 6.  Sections 7(a), (e), and (f), The Real Estate
   2-27  License Act (Article 6573a, Vernon's Texas Civil Statutes), are
   2-28  amended to read as follows:
   2-29        (a)  Competency as referred to in Section 6 of this Act shall
   2-30  be established by an examination prepared by or contracted for by
   2-31  the commission.  The examination shall be given at such times and
   2-32  at such places within the state as the commission shall prescribe.
   2-33  The examination shall be of scope sufficient in the judgment of the
   2-34  commission to determine that a person is competent to act as a real
   2-35  estate broker or salesman in a manner to protect the interest of
   2-36  the public.  The examination for a salesman license shall be less
   2-37  exacting and less stringent than the examination for a broker
   2-38  license.  The commission shall furnish each applicant with study
   2-39  material and references on which his examination shall be based.
   2-40  When an applicant for a real estate license fails a qualifying
   2-41  examination, he may apply for reexamination by filing a request
   2-42  therefor together with the proper fee.  The examination requirement
   2-43  must be satisfied not later than six months after the date on which
   2-44  the application for a license is filed.  Courses of study required
   2-45  for a license may include but are not limited to the following,
   2-46  which shall be considered core real estate courses for all purposes
   2-47  of this Act:
   2-48              (1)  Principles of Real Estate (or equivalent) shall
   2-49  include but not be limited to an overview of licensing as a real
   2-50  estate broker and salesman, ethics of practice, titles to and
   2-51  conveyancing of real estate, legal descriptions, law of agency,
   2-52  deeds, encumbrances and liens, distinctions between personal and
   2-53  real property, contracts, appraisal, finance and regulations,
   2-54  closing procedures, real estate mathematics, and at least three
   2-55  classroom hours of instruction on federal, state, and local laws
   2-56  relating to housing discrimination, housing credit discrimination,
   2-57  and community reinvestment.
   2-58              (2)  Real Estate Appraisal (or equivalent) shall
   2-59  include but not be limited to the central purposes and functions of
   2-60  an appraisal, social and economic determinant of value, appraisal
   2-61  case studies, cost, market data and income approaches to value
   2-62  estimates, final correlations, and reporting.
   2-63              (3)  Real Estate Law (or equivalent) shall include but
   2-64  not be limited to legal concepts of real estate, land description,
   2-65  real property rights and estates in land, contracts, conveyances,
   2-66  encumbrances, foreclosures, recording procedures, and evidence of
   2-67  titles.
   2-68              (4)  Real Estate Finance (or equivalent) shall include
   2-69  but not be limited to monetary systems, primary and secondary money
   2-70  markets, sources of mortgage loans, federal government programs,
    3-1  loan applications, processes and procedures, closing costs,
    3-2  alternative financial instruments, equal credit opportunity acts,
    3-3  community reinvestment act, and state housing agency.
    3-4              (5)  Real Estate Marketing (or equivalent) shall
    3-5  include but not be limited to real estate professionalism and
    3-6  ethics, characteristics of successful salesmen, time management,
    3-7  psychology of marketing, listing procedures, advertising,
    3-8  negotiating and closing, financing, and the Deceptive Trade
    3-9  Practices-Consumer Protection Act, as amended, Section 17.01 et
   3-10  seq., Business & Commerce Code.
   3-11              (6)  Real Estate Mathematics (or equivalent) shall
   3-12  include but not be limited to basic arithmetic skills and review of
   3-13  mathematical logic, percentages, interest, time-valued money,
   3-14  depreciation, amortization, proration, and estimation of closing
   3-15  statements.
   3-16              (7)  Real Estate Brokerage (or equivalent) shall
   3-17  include but not be limited to law of agency, planning and
   3-18  organization, operational policies and procedures, recruiting,
   3-19  selection and training of personnel, records and control, and real
   3-20  estate firm analysis and expansion criteria.
   3-21              (8)  Property Management (or equivalent) shall include
   3-22  but not be limited to role of property manager, landlord policies,
   3-23  operational guidelines, leases, lease negotiations, tenant
   3-24  relations, maintenance, reports, habitability laws, and the Fair
   3-25  Housing Act.
   3-26              (9)  Real Estate Investments (or equivalent) shall
   3-27  include but not be limited to real estate investment
   3-28  characteristics, techniques of investment analysis, time-valued
   3-29  money, discounted and nondiscounted investment criteria, leverage,
   3-30  tax shelters depreciation, and application to property tax.
   3-31              (10)  Law of Agency (or equivalent) shall include but
   3-32  not be limited to the principal-agent and master-servant
   3-33  relationships, the authority of an agent, the termination of an
   3-34  agent's authority, the fiduciary and other duties of an agent,
   3-35  employment law, deceptive trade practices, listing or buying
   3-36  representation procedures, and the disclosure of agency.
   3-37        (e)  Each <As a prerequisite for applying for a salesman
   3-38  license; each> applicant for a salesman license shall furnish the
   3-39  commission satisfactory evidence of having completed 12 semester
   3-40  hours, or equivalent classroom hours, of postsecondary education,
   3-41  six hours of which must be completed in core real estate courses,
   3-42  of which a minimum of two hours must be completed in Principles of
   3-43  Real Estate as described in Subsection (a)(1) of this section and a
   3-44  minimum of two hours must be completed in Law of Agency as
   3-45  described in Subsection (a)(10) of this section.  The remaining six
   3-46  hours shall be completed in core real estate courses or related
   3-47  courses.  As a condition for the first renewal of a salesman
   3-48  license, the applicant shall furnish the commission satisfactory
   3-49  evidence of having completed a minimum of 14 semester hours, or
   3-50  equivalent classroom hours, eight hours of which must be completed
   3-51  in core real estate courses.  As a condition for the second renewal
   3-52  of a salesman license, the applicant shall furnish the commission
   3-53  satisfactory evidence of having completed a minimum of 16 semester
   3-54  hours, or equivalent classroom hours, 10 hours of which must be
   3-55  completed in core real estate courses.  As a condition for the
   3-56  third renewal of a salesman license, the applicant shall furnish
   3-57  the commission satisfactory evidence of having completed a minimum
   3-58  of 18 semester hours, or equivalent classroom hours, 12 hours of
   3-59  which must be completed in core real estate courses.
   3-60        (f)  Insofar as is necessary for the administration of this
   3-61  Act, the commission is authorized to inspect and accredit
   3-62  educational programs or courses of study in real estate and real
   3-63  estate inspection and to establish standards of accreditation for
   3-64  such programs conducted in the State of Texas, other than
   3-65  accredited colleges and universities. The commission shall
   3-66  determine the acceptability of real estate courses and real estate
   3-67  inspection courses offered to satisfy the requirements of this Act,
   3-68  and by rule may provide reasonable criteria for the approval of
   3-69  those courses. Schools, other than accredited colleges and
   3-70  universities, which are authorized to offer real estate educational
    4-1  courses pursuant to provisions of this section, shall be required
    4-2  to maintain a corporate surety bond, or other security acceptable
    4-3  to the commission, in the sum of $10,000, payable to the
    4-4  commission, for the benefit of a party who may suffer damages
    4-5  resulting from failure of a commission approved school or course to
    4-6  fulfill obligations attendant to the approval.
    4-7        SECTION 7.  Sections 7A(a) and (b), The Real Estate License
    4-8  Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
    4-9  read as follows:
   4-10        (a)  To renew an active <a> real estate broker license or an
   4-11  active real estate salesman license that is not subject to the
   4-12  annual education requirements of this Act, the licensee must
   4-13  provide the commission proof of attendance at at least 15 classroom
   4-14  hours of continuing education courses approved by the commission
   4-15  during the term of the current license.  The commission by rule may
   4-16  provide for the substitution of relevant educational experience or
   4-17  correspondence courses approved by the commission instead of
   4-18  classroom attendance.  In addition, supervised video instruction
   4-19  may be approved by the commission as a course counting as classroom
   4-20  hours of mandatory continuing education.  At least six hours of
   4-21  instruction must be devoted to the rules of the commission, fair
   4-22  housing laws, agency laws, antitrust laws, the Deceptive Trade
   4-23  Practices-Consumer Protection Act (Subchapter E, Chapter 17,
   4-24  Business & Commerce Code), disclosures to buyers and sellers,
   4-25  current contract and addendum forms, the unauthorized practice of
   4-26  law, case studies involving violations of laws and regulations,
   4-27  current Federal Housing Administration and Veterans Administration
   4-28  regulations, tax laws, and other legal topics approved by the
   4-29  commission.  The remaining hours may be devoted to other real
   4-30  estate-related topics approved by the commission.  The commission
   4-31  may consider equivalent courses for continuing education credit.
   4-32  The commission, on the request of a provider of education, shall
   4-33  review a core real estate course authorized under Section 7 of this
   4-34  Act and may approve it as a mandatory continuing education course.
   4-35  Real estate related courses approved by the State Bar of Texas for
   4-36  minimum continuing legal education participatory credit shall
   4-37  automatically be approved as mandatory continuing education courses
   4-38  under this Act.  The commission may not require examinations except
   4-39  for correspondence courses.  Daily course segments must be at least
   4-40  three hours long but not more than 10 hours long.  If the license
   4-41  being renewed under this section was issued for less than two
   4-42  years, the licensee must provide the commission proof of attendance
   4-43  at at least eight classroom hours of continuing education within
   4-44  the term of the current license, three classroom hours of which
   4-45  must have been devoted to the legal topics specified in this
   4-46  section.
   4-47        (b)  An applicant for an active <a> real estate broker
   4-48  license or an active real estate salesman license who is not
   4-49  subject to the education requirements of Section 7 of this Act must
   4-50  provide the commission with proof of attendance of the number of
   4-51  <at at least 15> classroom hours of continuing education that would
   4-52  have been required for a timely renewal as specified in Subsection
   4-53  (a) of this section during the two-year period preceding the filing
   4-54  of the application.
   4-55        SECTION 8.  Section 11, The Real Estate License Act (Article
   4-56  6573a, Vernon's Texas Civil Statutes), is amended to read as
   4-57  follows:
   4-58        Sec. 11.  (a)  The commission shall charge and collect the
   4-59  following fees:
   4-60              (1)  a fee not to exceed $100 for the filing of an
   4-61  original application for a real estate broker license;
   4-62              (2)  a fee not to exceed $100 for annual renewal of a
   4-63  real estate broker license;
   4-64              (3)  a fee not to exceed $50 for the filing of an
   4-65  original application for a real estate salesman license;
   4-66              (4)  a fee not to exceed $50 for annual renewal of a
   4-67  real estate salesman license;
   4-68              (5)  a fee not to exceed $25 for an application for a
   4-69  license examination;
   4-70              (6)  a fee not to exceed $20 <$10> for filing a request
    5-1  for a license for each additional office or place of business;
    5-2              (7)  a fee not to exceed $20 for filing a request for a
    5-3  license for a change for a place of business, change of name,
    5-4  return to active status, or change of sponsoring broker;
    5-5              (8)  a fee not to exceed $20 <$10> for filing a request
    5-6  to replace a license lost or destroyed;
    5-7              (9)  a fee not to exceed $400 for filing an application
    5-8  for approval of an <a real estate> education program under Section
    5-9  7(f) of this Act;
   5-10              (10)  a fee not to exceed $200 a year for operation of
   5-11  an <a real estate> education program under Section 7(f) of this
   5-12  Act; <and>
   5-13              (11)  a fee of $15 for transcript evaluation;
   5-14              (12)  a fee not to exceed $10 for preparing a license
   5-15  history; and
   5-16              (13)  a fee not to exceed $50 for the filing of an
   5-17  application for a moral character determination.
   5-18        SECTION 9.  Section 13A(c), The Real Estate License Act
   5-19  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   5-20  as follows:
   5-21        (c)  If the person has been on inactive status <for 36
   5-22  consecutive months or less>, the commission shall remove the person
   5-23  from the list on application, payment of the required fee, and
   5-24  proof of attendance of at least 15 classroom hours of continuing
   5-25  education as specified in Subsection (a) of Section 7A of this Act
   5-26  during the two-year period preceding the filing of the application.
   5-27  <If the person has been on inactive status for more than 36
   5-28  consecutive months, the commission may not remove the person from
   5-29  the inactive status list until the person has complied with the
   5-30  educational and examination requirements specified in Section 7 of
   5-31  this Act.>
   5-32        SECTION 10.  Sections 14(b) and (c), The Real Estate License
   5-33  Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
   5-34  read as follows:
   5-35        (b)  A resident broker of another state who furnishes the
   5-36  evidence required under Section 7(g) of this Act may apply for a
   5-37  license as a broker in this state.  A resident of another state who
   5-38  is not licensed as a broker but who was formerly licensed as a
   5-39  salesman or broker in this state may apply for a license in this
   5-40  state not later than the first anniversary of the date of the
   5-41  expiration of the previous license.  An application by a
   5-42  nonresident is subject to the requirements under this Act for the
   5-43  type of license applied for.  A nonresident licensee need not
   5-44  maintain a place of business in this state.  The commission may in
   5-45  its discretion refuse to issue a license to an applicant who is not
   5-46  a resident of this state for the same reasons that it may refuse to
   5-47  license a resident of this state.  The commission shall judge the
   5-48  competency of a nonresident applicant solely on the basis of the
   5-49  examination conducted under Section 7 of this Act.
   5-50        (c)  Each nonresident applicant shall file an irrevocable
   5-51  consent that legal action may be commenced against him in the
   5-52  proper court of any county of this state in which a cause of action
   5-53  may arise, or in which the plaintiff may reside, by service of
   5-54  process or pleading authorized by the laws of this state, or by
   5-55  serving the administrator or assistant administrator of the
   5-56  commission.  The consent shall stipulate that the service of
   5-57  process or pleading shall be valid and binding in all courts as if
   5-58  personal service had been made on the nonresident <broker> in this
   5-59  state.  The consent shall be duly acknowledged, and if made by a
   5-60  corporation, shall be authenticated by its seal.  A service of
   5-61  process or pleading served on the commission shall be by duplicate
   5-62  copies, one of which shall be filed in the office of the commission
   5-63  and the other forwarded by registered mail to the last known
   5-64  principal address which the commission has for the nonresident
   5-65  <broker> against whom the process or pleading is directed.  No
   5-66  default in an action may be taken except on certification by the
   5-67  commission that a copy of the process or pleading was mailed to the
   5-68  defendant as provided in this section, and no default judgment may
   5-69  be taken in an action or proceeding until 20 days after the day of
   5-70  mailing of the process or pleading to the defendant.
    6-1        Notwithstanding any other provisions of this subsection, a
    6-2  nonresident of this state who resides in a city whose boundaries
    6-3  are contiguous at any point to the boundaries of a city of this
    6-4  state, and who has been an actual bona fide resident of that city
    6-5  for at least 60 days immediately preceding the filing of his
    6-6  application, is eligible to be licensed as a real estate broker or
    6-7  salesman under this Act in the same manner as a resident of this
    6-8  state.  If he is licensed in this manner, he shall at all times
    6-9  maintain a place of business either in the city in which he resides
   6-10  or in the city in this state which is contiguous to the city in
   6-11  which he resides, and he may not maintain a place of business at
   6-12  another location in this state unless he also complies with the
   6-13  requirements of Section 14(b) of this Act.  The place of business
   6-14  must satisfy the requirements of Subsection (a) of Section 12 of
   6-15  this Act, but the place of business shall be deemed a definite
   6-16  place of business in this state within the meaning of Subsection
   6-17  (a) of Section 12.
   6-18        SECTION 11.  Section 15(c), The Real Estate License Act
   6-19  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   6-20  as follows:
   6-21        (c)  Notwithstanding Subsection (b) of this section, a person
   6-22  is not subject to civil liability or criminal prosecution because
   6-23  the person did not inquire about, make a disclosure related to, or
   6-24  release information related to whether a previous or current
   6-25  occupant of real property had, may have had, has, or may have AIDS,
   6-26  HIV-related illnesses, or HIV infection as defined by the Centers
   6-27  for Disease Control of the U.S. Public Health Service.  <A person
   6-28  who has actual knowledge that the previous or current occupant of
   6-29  real property had or has AIDS, HIV-related illnesses, or HIV
   6-30  infection shall provide that information to a potential purchaser
   6-31  or lessee of the real property on receiving a specific request for
   6-32  the information from the potential purchaser or lessee.>
   6-33        SECTION 12.  Section 15D, The Real Estate License Act
   6-34  (Article 6573a, Vernon's Texas Civil Statutes), is amended as
   6-35  follows:
   6-36        Sec. 15D.  No licensed real estate broker, licensed real
   6-37  estate salesman, or not for profit real estate board or association
   6-38  which provides information about real property sales prices or
   6-39  terms of sale for the purpose of facilitating the listing, selling,
   6-40  leasing, financing, or appraisal of real property shall be liable
   6-41  to any other person as a result of so providing such information
   6-42  unless the disclosure of same is otherwise specifically prohibited
   6-43  by statute <or written contract>.
   6-44        SECTION 12A.  Section 15E, The Real Estate License Act
   6-45  (Article 6573a, Vernon's Texas Civil Statutes), is amended as
   6-46  follows:
   6-47        Sec. 15E.  Notwithstanding any other provision of this Act or
   6-48  any other law, a licensee shall have no duty to inquire about, make
   6-49  a disclosure related to, or release information related to whether
   6-50  a:
   6-51              (1)  previous or current occupant of real property had,
   6-52  may have had, has, or may have AIDS, HIV-related illnesses, or HIV
   6-53  infection as defined by the Centers for Disease Control of the U.S.
   6-54  Public Health Service; or
   6-55              (2)  death occurred on a property by natural causes,
   6-56  suicide, or accident unrelated to the condition of the property.
   6-57        SECTION 13.  Section 17(b), The Real Estate License Act
   6-58  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   6-59  as follows:
   6-60        (b)  The commission may issue subpoenas for the attendance of
   6-61  witnesses and the production of records or documents.  Process
   6-62  issued by the commission may extend to all parts of the state and
   6-63  may be served by any person designated by the commission.
   6-64        SECTION 14.  Section 19(a), The Real Estate License Act
   6-65  (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
   6-66  as follows:
   6-67        (a)  A person acting as a real estate broker or real estate
   6-68  salesman without first obtaining a license is guilty of a
   6-69  misdemeanor and on conviction shall be punishable by a fine of not
   6-70  less than $100 nor more than $500, or by imprisonment in the county
    7-1  jail for a term not to exceed one year, or both; and if a
    7-2  corporation or a limited liability company, shall be punishable by
    7-3  a fine not less than $1,000 nor more than $2,000.  A person, on
    7-4  conviction of a second or subsequent offense, shall be punishable
    7-5  by a fine of not less than $500 nor more than $1,000, or by
    7-6  imprisonment for a term not to exceed two years, or both; and if a
    7-7  corporation or a limited liability company, shall be punishable by
    7-8  a fine of not less than $2,000 nor more than $5,000.
    7-9        SECTION 15.  Section 23, The Real Estate License Act (Article
   7-10  6573a, Vernon's Texas Civil Statutes), is amended to read as
   7-11  follows:
   7-12        Sec. 23.  REAL ESTATE INSPECTORS.  (a)  Definitions.  In this
   7-13  section:
   7-14              (1)  "Apprentice inspector" means a person who is in
   7-15  training under the direct supervision of a professional <real
   7-16  estate> inspector or a real estate inspector
   7-17  <inspector-in-training> to become qualified to perform real estate
   7-18  inspections.
   7-19              (2)  "Committee" means the Texas Real Estate Inspector
   7-20  Committee.
   7-21              (3)  "Core real estate inspection courses" means
   7-22  educational courses approved by the commission, including but not
   7-23  limited to structural, electrical, mechanical, plumbing, roofing,
   7-24  business, legal, standards of practice, report writing, appliances
   7-25  or ethics, all of which must relate to a real estate inspection
   7-26  <and ethical courses of study>.
   7-27              (4)  "Direct supervision" means the instruction and
   7-28  control by a professional <real estate> inspector or a real estate
   7-29  inspector <inspector-in-training> licensed under this section who
   7-30  is:
   7-31                    (A)  responsible for the actions of an individual
   7-32  performing a real estate inspection or preparing a report of a real
   7-33  estate inspection;
   7-34                    (B)  available if and when needed to consult with
   7-35  or assist an individual performing a real estate inspection or
   7-36  preparing a report of a real estate inspection; and
   7-37                    (C)  physically present at the time and place of
   7-38  the inspection.
   7-39              (5)  "Indirect supervision" means the instruction and
   7-40  control by a professional <real estate> inspector licensed under
   7-41  this section who is:
   7-42                    (A)  responsible for the actions of an individual
   7-43  performing or preparing a real estate inspection; and
   7-44                    (B)  available if and when needed to consult with
   7-45  or assist an individual performing a real estate inspection or
   7-46  preparing a report of a real estate inspection, but who is not
   7-47  required to be physically present at the time and place of the
   7-48  inspection.
   7-49              (6)  "Inspector" means a person who is licensed as an
   7-50  apprentice inspector, real estate inspector, or professional
   7-51  inspector under this section <"Inspector-in-training" means a
   7-52  person who represents to the public that the person is trained and
   7-53  qualified to perform a real estate inspection under the indirect
   7-54  supervision of a real estate inspector and who accepts employment
   7-55  for the purpose of performing a real estate inspection for a buyer
   7-56  or seller of real property>.
   7-57              (7)  "License" means an apprentice license, a real
   7-58  estate inspector license or a professional inspector <an
   7-59  inspector-in-training> license issued under this section.
   7-60              (8)  "Licensee" means a person holding an apprentice
   7-61  inspector license, a real estate inspector license or a
   7-62  professional inspector <inspector-in-training> license issued under
   7-63  this section.
   7-64              (9)  "Professional inspector" means a person who
   7-65  represents to the public that the person is trained and qualified
   7-66  to perform a real estate inspection and who accepts employment for
   7-67  the purpose of performing a real estate inspection for a buyer or
   7-68  seller of real property.
   7-69              (10) <(9)>  "Real estate inspection" means a written or
   7-70  oral opinion as to the condition of the improvements to real
    8-1  property, including structural items, electrical items, mechanical
    8-2  systems, plumbing systems, or equipment<, and systems>.
    8-3              (11) <(10)>  "Real estate inspector" means a person who
    8-4  represents to the public that the person is trained and qualified
    8-5  to perform real estate inspections under the indirect supervision
    8-6  of a professional inspector and who accepts employment for the
    8-7  purpose of performing a real estate inspection for a buyer or
    8-8  seller of real property.
    8-9              <(11)  "Registered" means a person who holds a
   8-10  registration as an apprentice inspector issued under this section.>
   8-11        (b)  Texas Real Estate Inspector Committee.  (1)  The Texas
   8-12  Real Estate Inspector Committee is created.  In addition to other
   8-13  powers and duties delegated to it by the commission, the committee
   8-14  shall recommend:
   8-15                    (A)  rules for the <registration and> licensing
   8-16  of <apprentice> inspectors<, inspectors-in-training, and real
   8-17  estate inspectors> in this state in accordance with this section;
   8-18                    (B)  rules relating to the education and
   8-19  experience requirements for <registration and> licensing as an
   8-20  <apprentice> inspector<, inspector-in-training, and real estate
   8-21  inspector> under this section;
   8-22                    (C)  rules relating to the qualifying examination
   8-23  required for <registration or> licensing as an inspector under this
   8-24  section;
   8-25                    (D)  rules establishing a code of professional
   8-26  conduct and ethics for an <apprentice> inspector<,
   8-27  inspector-in-training, and real estate inspector> under this
   8-28  section;
   8-29                    (E)  reasonable fees to implement this section,
   8-30  including an application fee for <registration or> licensing, an
   8-31  examination fee, a renewal fee for a <registration or> license, and
   8-32  any other fee required by law;
   8-33                    (F)  rules relating to continuing education
   8-34  requirements for a <registered or> licensed inspector;
   8-35                    (G)  rules relating to the standards of practice
   8-36  for a real estate inspection;
   8-37                    (H)  rules relating to granting or denying an
   8-38  application for the <registration of an apprentice inspector and>
   8-39  licensing of an <inspector-in-training and real estate> inspector;
   8-40                    (I)  the form and format for any applications and
   8-41  forms required under this section; and
   8-42                    (J)  any other action by the commission as may
   8-43  provide a high degree of service and protection to the public when
   8-44  dealing with <registered or> licensed inspectors.
   8-45              (2)  The committee is composed of nine members
   8-46  appointed by the commission.  The members of the committee hold
   8-47  office for staggered terms of six years, with the terms of three
   8-48  members expiring February 1 of each odd-numbered year.  Each member
   8-49  holds office until the member's successor is appointed.
   8-50  Appointments to the committee shall be made without regard to the
   8-51  sex, race, color, age, handicap, religion, or national origin of
   8-52  the appointees.  In the event of a vacancy during a term, the
   8-53  commission shall appoint a replacement who meets the qualifications
   8-54  for appointment under this subdivision to fill the unexpired part
   8-55  of the term.  A member of the committee must be a professional
   8-56  <licensed real estate> inspector actively engaged in the practice
   8-57  of real estate inspecting at the time of appointment and must have
   8-58  been primarily engaged in the practice of real estate inspecting
   8-59  <inspection business> for at least five years before the member's
   8-60  appointment.  A member of the committee may not hold a real estate
   8-61  broker or salesman license.  Each member of the committee is
   8-62  entitled to a per diem allowance and to reimbursement of travel
   8-63  expenses necessarily incurred in performing functions as a member
   8-64  of the committee, subject to any applicable limitation in the
   8-65  General Appropriations Act.  The committee shall annually elect
   8-66  from its members a chairman, a vice-chairman, and secretary.  A
   8-67  quorum of the committee consists of five members.
   8-68              (3)  The commission may remove a committee member if
   8-69  the member:
   8-70                    (A)  does not have at the time of appointment the
    9-1  qualifications required by Subdivision (2) of this subsection;
    9-2                    (B)  cannot discharge the member's duties for a
    9-3  substantial part of the term for which the member is appointed
    9-4  because of illness or disability; or
    9-5                    (C)  is absent from more than half of the
    9-6  regularly scheduled committee meetings that the member is eligible
    9-7  to attend during each year, unless the absence is excused by the
    9-8  committee.
    9-9              (4)  The validity of an action of the committee is not
   9-10  affected by the fact that it was taken when a ground for removal of
   9-11  a committee member exists.
   9-12              (5)  If the administrator of the commission has
   9-13  knowledge that a potential ground for removal exists, the
   9-14  administrator shall notify the chairman of the commission that a
   9-15  potential ground exists.
   9-16              (6) <(3)>  The commission shall adopt procedural rules
   9-17  to be used by the committee in implementing its powers and duties.
   9-18              (7) <(4)>  The committee is subject to the open
   9-19  meetings law, Chapter 271, Acts of the 60th Legislature, Regular
   9-20  Session, 1967 (Article 6252-17, Vernon's Texas Civil Statutes), the
   9-21  open records law, Chapter 424, Acts of the 63rd Legislature,
   9-22  Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil
   9-23  Statutes), and the Administrative Procedure and Texas Register Act
   9-24  (Article 6252-13a, Vernon's Texas Civil Statutes).
   9-25              (8) <(5)>  The committee shall meet semiannually and at
   9-26  the call of the commission.  The committee may also meet at the
   9-27  call of a majority of its members.
   9-28              (9) <(6)>  The committee shall act in an advisory
   9-29  capacity to develop and recommend to the commission <for approval
   9-30  the> rules <of the commission> under this section.  The committee
   9-31  <periodically> shall review commission rules relating to this
   9-32  section and recommend changes in the rules to the commission.  The
   9-33  <Notwithstanding Subsection (f), Section 5, Administrative
   9-34  Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
   9-35  Civil Statutes), the> commission shall submit all proposed rules,
   9-36  <and> all proposed rule changes and all requests for proposed rules
   9-37  or rule changes <additions to the rules> that relate to the
   9-38  regulation and licensing of <real estate> inspectors under this
   9-39  section to the committee for development or recommendation.  The
   9-40  commission may modify the rules developed by the committee if the
   9-41  commission finds such modifications are in the public interest.
   9-42  This section does not prohibit the commission from developing and
   9-43  adopting rules relating to the regulation and licensing of
   9-44  inspectors under this section if the committee fails to develop or
   9-45  recommend rules under this section within a reasonable period of
   9-46  time after the commission submits the proposed rules, rule changes
   9-47  or requests for proposed rules or rule changes to the committee.
   9-48  If the committee determines that a rule requested by the commission
   9-49  should not be developed or recommended for adoption by the
   9-50  commission, the committee shall submit a report on the matter to
   9-51  the commission.  The chairman of the commission and the chairman of
   9-52  the committee shall then appoint three members each from their
   9-53  respective bodies to meet as an ad hoc committee to consider the
   9-54  report and recommend possible action by the commission.  The
   9-55  chairman of the commission or a member of the commission designated
   9-56  by the chairman shall serve as the seventh member of the ad hoc
   9-57  committee.  At least one member of the ad hoc committee must be a
   9-58  public member of the commission <If the commission does not approve
   9-59  a rule developed by the committee, the commission shall indicate to
   9-60  the committee the reasons that the commission did not approve the
   9-61  rule and return the rule to the committee for further development>.
   9-62        (c)  License <or registration> required.  (1)  A person may
   9-63  not act <or attempt to act> as a professional <real estate>
   9-64  inspector in this state for a buyer or seller of real property
   9-65  unless the person possesses a professional <real estate> inspector
   9-66  license issued under this section.
   9-67              (2)  A person may not act or attempt to act as a real
   9-68  estate inspector <an inspector-in-training> in this state for a
   9-69  buyer or seller of real property unless the person possesses a real
   9-70  estate inspector <an inspector-in-training> license issued under
   10-1  this section and is under the indirect supervision of a
   10-2  professional <real estate> inspector.
   10-3              (3)  A person may not act or attempt to act as an
   10-4  apprentice inspector in this state for a buyer or seller of real
   10-5  property unless the person is licensed <registered> under this
   10-6  section and is under the direct supervision of a real estate
   10-7  inspector or professional inspector <inspector-in-training>.
   10-8        (d)  Eligibility; application.  (1)  To be eligible for a
   10-9  license <registration> as an apprentice inspector, an applicant
  10-10  must be an individual, a citizen of the United States or a lawfully
  10-11  admitted alien, and a resident of this state at the time of the
  10-12  <for at least 60 days immediately before the date of> filing of the
  10-13  application.  The applicant must be sponsored by a professional
  10-14  <real estate> inspector licensed under this section.  The applicant
  10-15  must be at least 18 years old.   The applicant must satisfy the
  10-16  commission as to the applicant's honesty, trustworthiness, and
  10-17  integrity.
  10-18              (2)  To be eligible for a license as a real estate
  10-19  inspector <an inspector-in-training>, an applicant must have met
  10-20  the requirements and been licensed <be registered> as an apprentice
  10-21  inspector for at least three months and have performed at least 25
  10-22  real estate inspections under direct supervision before filing an
  10-23  application.  The applicant must satisfy the commission as to the
  10-24  applicant's honesty, trustworthiness, integrity, and competency.
  10-25  An applicant for an original real estate inspector
  10-26  <inspector-in-training> license must submit satisfactory evidence
  10-27  to the commission of successful completion of not less than 90
  10-28  classroom hours of core real estate inspection courses.  The
  10-29  commission by rule may specify the length and content of the core
  10-30  real estate inspection courses required by this subdivision.  The
  10-31  commission shall determine the competency of an applicant on the
  10-32  basis of an examination required by Subsection (i) of this section.
  10-33  The applicant must be sponsored by a professional <real estate>
  10-34  inspector licensed under this section.  Notwithstanding this
  10-35  subdivision of this subsection, an applicant is eligible for and
  10-36  has satisfied all requirements for a license as a real estate
  10-37  inspector if the applicant was previously licensed as a real estate
  10-38  inspector during the preceding 24-month period immediately
  10-39  preceding the filing of the application, the applicant is sponsored
  10-40  by a professional inspector, and the applicant satisfies the
  10-41  commission as to the applicant's honesty, trustworthiness, and
  10-42  integrity.
  10-43              (3)  To be eligible for a license as a professional
  10-44  <real estate> inspector, an applicant must have met the
  10-45  requirements and have been licensed <registered> as an apprentice
  10-46  inspector for at least three months and licensed as a real estate
  10-47  inspector <an inspector-in-training> for at least 12 months had
  10-48  have performed at least 175 real estate inspections under indirect
  10-49  supervision before filing an application.  An applicant for an
  10-50  original professional <real estate> inspector license must submit
  10-51  satisfactory evidence to the commission of successful completion of
  10-52  not less than 30 classroom hours of core real estate inspection
  10-53  courses and eight classroom hours related to the study of standards
  10-54  of <professional> practice, legal issues, or <and> ethics related
  10-55  to the profession of real estate inspections.  These classroom
  10-56  hours are in addition to those required for <registration as> an
  10-57  apprentice inspector license or a real estate inspector license
  10-58  <licensing as an inspector-in-training>.  The commission shall
  10-59  determine the competency of an applicant on the basis of an
  10-60  examination required by Subsection (i) of this section.
  10-61  Notwithstanding this subsection, an applicant is eligible for and
  10-62  has satisfied all requirements for a license as a professional
  10-63  inspector if the applicant was previously licensed as a
  10-64  professional inspector during the preceding 24-month period
  10-65  immediately preceding the filing of the application and the
  10-66  applicant satisfies the commission as to the applicant's honesty,
  10-67  trustworthiness, and integrity.
  10-68              (4)  The commission by rule may provide for the
  10-69  substitution of relevant experience or education in lieu of the
  10-70  number of real estate inspections required by this section.
   11-1              (5) <(4)>  An applicant must file an application for
   11-2  <registration or> a license with the commission on forms prescribed
   11-3  by the commission.
   11-4        (e)  Issuance of <registration or> license.  The commission
   11-5  shall issue an apprentice license <registration>, <an
   11-6  inspector-in-training license, or> a real estate inspector license,
   11-7  or a professional inspector license to an applicant who possesses
   11-8  the required qualifications, passes the appropriate examination if
   11-9  required, and pays the fee required by Subdivision (2) of
  11-10  Subsection (o) of this section.
  11-11        (f)  Expiration of <registration or> license; renewal.  (1)
  11-12  A <registration or> license issued under this section expires one
  11-13  year after the date it is issued.
  11-14              (2)  A person may renew an unexpired <registration or>
  11-15  license by paying to the commission before the expiration date of
  11-16  the <registration or> license the required renewal fee.
  11-17              (3)  If a person's <registration or> license has been
  11-18  expired for 90 days or less, the person may renew the <registration
  11-19  or> license by paying to the commission the required renewal fee
  11-20  and a fee that is one-half of the examination fee, if any, for the
  11-21  registration or license.
  11-22              (4)  If a person's <registration or> license has been
  11-23  expired for longer than 90 days but less than one year, the person
  11-24  may renew the <registration or> license by paying to the commission
  11-25  all unpaid renewal fees and a fee that is equal to the examination
  11-26  fee, if any, for the <registration or> license.
  11-27              (5)  If a person's <registration or> license has been
  11-28  expired for one year or longer, the person may not renew the
  11-29  <registration or> license.  The person may obtain a new
  11-30  <registration or> license by submitting to reexamination, if
  11-31  <originally> required, and complying with the requirements and
  11-32  procedures for obtaining an original <registration or> license.
  11-33  However, the commission may renew without reexamination an expired
  11-34  license of a person who was licensed in this state, moved to
  11-35  another state, and is currently licensed and has been in practice
  11-36  in the other state for the one year preceding application.  The
  11-37  person must pay to the commission a fee that is equal to the
  11-38  examination fee for the license.
  11-39              (6)  At least 30 days before the expiration of a
  11-40  person's <registration or> license, the commission shall send
  11-41  written notice of the impending <registration or> license
  11-42  expiration to the person at the person's last known address
  11-43  according to the records of the commission.
  11-44        (g)  Change of address.  A licensee <or person registered>
  11-45  under this section shall notify the commission and pay the required
  11-46  fee within 30 days after the date a change of place of business
  11-47  occurs.
  11-48        (h)  Fees. (1) The commission shall charge and collect
  11-49  reasonable and necessary fees to recover the cost of administering
  11-50  this section as follows:
  11-51                    (A)  a fee not to exceed $75 for the filing of an
  11-52  original application for a license <registration> as an apprentice
  11-53  inspector;
  11-54                    (B)  a fee not to exceed $125 for the filing of
  11-55  an original application for a license as a real estate inspector
  11-56  <an inspector-in-training>;
  11-57                    (C)  a fee not to exceed $150 for the filing of
  11-58  an original application for a license as a professional <real
  11-59  estate> inspector;
  11-60                    (D)  a fee not to exceed $125 for the annual
  11-61  license <registration> renewal of an apprentice inspector;
  11-62                    (E)  a fee not to exceed $175 for the annual
  11-63  license renewal of a real estate inspector <an
  11-64  inspector-in-training>;
  11-65                    (F)  a fee not to exceed $200 for the annual
  11-66  license renewal of a professional <real estate> inspector;
  11-67                    (G)  a fee not to exceed $100 for taking a
  11-68  license examination; and
  11-69                    (H)  a fee not to exceed $20 for a request for a
  11-70  change of place of business or to replace a lost or destroyed
   12-1  license <or registration>.
   12-2              (2)  All fees may be paid by cash, check, cashier's
   12-3  check, or money order.
   12-4              (3)  The fees shall be reviewed annually and reduced to
   12-5  the extent that the costs of administering this section are funded
   12-6  by the real estate inspector regulation account established under
   12-7  Subdivision (4) of Subsection (o) of this section.
   12-8        (i)  Examination.  (1)  The commission shall prescribe the
   12-9  licensing examinations, which shall be prepared by or contracted
  12-10  for by the commission.  A licensing examination shall evaluate
  12-11  competency in the subject matter of all required core real estate
  12-12  inspection courses.  The licensing examination shall be offered not
  12-13  less often than once every two months in Austin.  If a license
  12-14  applicant fails the examination, the applicant may apply for
  12-15  reexamination by filing a request with the commission and paying
  12-16  the examination fee.  Each license applicant must satisfy the
  12-17  examination requirement not later than six months after the date on
  12-18  which the license application is filed.  A license applicant who
  12-19  fails to satisfy the examination requirement within six months
  12-20  after the date on which the license application is filed must
  12-21  submit a new license application with the commission and pay the
  12-22  examination fee to be eligible for examination.  If a license
  12-23  applicant fails the examination three consecutive times in
  12-24  connection with the same application, the applicant may not apply
  12-25  for reexamination or submit a new license application with the
  12-26  commission for six months from the date he failed the last
  12-27  examination.
  12-28              (2)  Not later than the 30th day after the date on
  12-29  which a licensing examination is administered under this section,
  12-30  the commission shall notify each examinee of the results of the
  12-31  examination.  However, if an examination is graded or reviewed by a
  12-32  national testing service, the commission shall notify examinees of
  12-33  the results of the examination not later than the 14th day after
  12-34  the date on which the commission receives the results from the
  12-35  testing service.   If the notice of examination results graded or
  12-36  reviewed by a national testing service will be delayed for longer
  12-37  than 90 days after the examination date, the commission shall
  12-38  notify the examinee of the reason for the delay before the 90th
  12-39  day.
  12-40              (3)  If requested in writing by a person who fails a
  12-41  licensing examination administered under this section, the
  12-42  commission shall furnish the person with an analysis of the
  12-43  person's performance on the examination.
  12-44        (j)  Waiver of out-of-state applicants.  The commission may
  12-45  waive any license requirement for an applicant with a valid license
  12-46  from another state having license requirements substantially
  12-47  equivalent to those of this state.
  12-48        (k)  Continuing education programs. The commission shall
  12-49  recognize, prepare, or administer continuing education programs for
  12-50  inspectors.  Participation in the programs is mandatory.  A real
  12-51  estate inspector <An inspector-in-training> must submit
  12-52  satisfactory evidence to the commission of successful completion of
  12-53  at least four classroom hours of core real estate inspection
  12-54  courses annually before a licensed renewal is issued.  A
  12-55  professional <real estate> inspector must submit satisfactory
  12-56  evidence to the commission of successful completion of at least
  12-57  eight classroom hours of core related real estate inspection
  12-58  courses annually before a license renewal is issued.
  12-59        (l)  Prohibited acts.  A professional <real estate>
  12-60  inspector, real estate inspector <or inspector-in-training licensed
  12-61  under this section> or an apprentice inspector licensed
  12-62  <registered> under this section may not:
  12-63              (1)  accept an assignment for real estate inspection if
  12-64  the employment or fee is contingent on the reporting of a specific,
  12-65  predetermined condition of the improvements to real property or is
  12-66  contingent on the reporting of specific findings other than those
  12-67  known by the inspector to be facts at the time of accepting the
  12-68  assignment;
  12-69              (2)  act in a manner or engage in a practice that is
  12-70  dishonest or fraudulent or that involves deceit or
   13-1  misrepresentation;
   13-2              (3)  perform a real estate inspection in a negligent or
   13-3  incompetent manner;
   13-4              (4)  act in the dual capacity of <real estate>
   13-5  inspector and undisclosed principal in a transaction;
   13-6              (5)  act in the dual capacity of <real estate>
   13-7  inspector and real estate broker or salesman in a transaction;
   13-8              (6)  perform or agree to perform any repairs or
   13-9  maintenance in connection with a real estate inspection pursuant to
  13-10  the provisions of any earnest money contract, lease agreement, or
  13-11  exchange of real estate; or
  13-12              (7)  violate the rules adopted by the commission or any
  13-13  provisions of this section.
  13-14        (m)  Offenses.  (1)  A person commits an offense if the
  13-15  person knowingly or intentionally engages in the business of real
  13-16  estate inspecting without a license <or registration> under this
  13-17  section or performs an inspection during a period in which the
  13-18  inspector's license <or registration> is revoked or suspended.
  13-19              (2)  An offense under this subsection is a Class B
  13-20  misdemeanor.
  13-21              (3)  The commission may <shall> authorize the committee
  13-22  to conduct administrative hearings or <and> recommend the entry of
  13-23  final orders, or both, in contested cases regarding a <registered
  13-24  or> licensed <real estate> inspector.  The commission may authorize
  13-25  specific employees to conduct hearings and render final decisions
  13-26  in contested cases regarding a licensed inspector.
  13-27              (4)  The commission may investigate the actions of a
  13-28  <registered or> licensed <real estate> inspector and may, after
  13-29  notice and hearing in accordance with the provisions of Section 17
  13-30  of this Act, reprimand, place on probation, suspend or revoke a
  13-31  <registration or> license for a violation of this Act or a rule by
  13-32  the commission.  If the commission revokes a <registration or>
  13-33  license of a person, the person may not apply to the commission for
  13-34  one year after the revocation.
  13-35        (n)  Exemptions. This section does not apply to any
  13-36  electrician, plumber, carpenter, any person engaged in the business
  13-37  of structural pest control in compliance with the Texas Structural
  13-38  Pest Control Act (Article 135b-6, Vernon's Texas Civil Statutes),
  13-39  or any other person who repairs, maintains, or inspects
  13-40  improvements to real property and who does not represent to the
  13-41  public through personal solicitation or public advertising that the
  13-42  person is in the business of inspecting such improvements.  The
  13-43  provisions of this section shall not be construed so as to prevent
  13-44  any person from performing any and all acts which the person is
  13-45  authorized to perform pursuant to a license or registration issued
  13-46  by this state or any governmental subdivision of this state.
  13-47        (o)  Real estate inspection recovery fund.  (1)  The
  13-48  commission shall establish a real estate inspection recovery fund
  13-49  which shall be set apart and maintained by the commission as
  13-50  provided by this subsection.  The fund shall be used in the manner
  13-51  provided by this subsection for reimbursing aggrieved persons who
  13-52  suffer actual damages by reason of certain acts committed by a duly
  13-53  licensed <or registered real estate> inspector, provided the <real
  13-54  estate> inspector was licensed <or registered> by the State of
  13-55  Texas at the time the act was committed and provided recovery is
  13-56  ordered by a court of competent jurisdiction against the <real
  13-57  estate> inspector.  The use of the fund is limited to an act that
  13-58  is a violation of Subsection (l) of this section.
  13-59              (2)  When a person receives notice that the person has
  13-60  successfully completed the licensing examination provided by
  13-61  Subsection (i) of this section, the person shall pay, in addition
  13-62  to any other fees required by this section, a fee not to exceed
  13-63  $200, which shall be deposited in the real estate inspection
  13-64  recovery fund prior to the commission's issuing the person an <a
  13-65  real estate> inspector license.
  13-66              (3)  If on December 31 of any year the balance
  13-67  remaining in the real estate inspection recovery fund is less than
  13-68  $300,000, each <real estate> inspector, on the next renewal of the
  13-69  person's license, shall pay, in addition to the license renewal
  13-70  fee, a fee of $75, or a pro rata share of the amount necessary to
   14-1  bring the fund to $450,000, whichever is less, which shall be
   14-2  deposited in the real estate inspection recovery fund.
   14-3              (4)  If on December 31 of any year the balance
   14-4  remaining in the real estate inspection recovery fund is greater
   14-5  than $600,000, the amount of money in excess of $600,000 shall be
   14-6  transferred to a separate account in the general revenue fund to be
   14-7  known as the real estate inspector regulation account.  The money
   14-8  in the real estate inspector regulation account may be used only
   14-9  for the payment of costs incurred by the commission in the
  14-10  regulation of <real estate> inspectors.
  14-11              (5)  No action for a judgment that results in an order
  14-12  for collection from the real estate inspection recovery fund shall
  14-13  be started later than two years from the accrual of the cause of
  14-14  action.  When an aggrieved person commences action for a judgment
  14-15  that may result in collection from the real estate inspection
  14-16  recovery fund, the <real estate> inspector shall notify the
  14-17  commission in writing to this effect at the time of the
  14-18  commencement of the action.
  14-19              (6)  When an aggrieved person recovers a valid judgment
  14-20  in a court of competent jurisdiction against an <a real estate>
  14-21  inspector on the grounds described in Subdivision (1) of this
  14-22  subsection, the aggrieved person may, after final judgment has been
  14-23  entered, execution returned nulla bona, and a judgment lien
  14-24  perfected, file a verified claim in the court in which the judgment
  14-25  was entered and, on 20 days' written notice to the commission and
  14-26  to the judgment debtor, may apply to the court where the judgment
  14-27  was rendered for an order directing payment out of the real estate
  14-28  inspection recovery fund of the amount unpaid on the judgment,
  14-29  subject to the limitations stated in Subdivision (15) of this
  14-30  subsection.
  14-31              (7)  The court shall proceed on the application
  14-32  forthwith.  On the hearing on the application, the aggrieved person
  14-33  is required to show:
  14-34                    (A)  that the judgment is based on facts allowing
  14-35  recovery under Subdivision (1) of this subsection;
  14-36                    (B)  that the person is not a spouse of the
  14-37  debtor or the personal representative of the spouse and the person
  14-38  is not an <a real estate> inspector, as defined by this section;
  14-39                    (C)  that the person has obtained a judgment
  14-40  under Subdivision (6) of this subsection that is not subject to a
  14-41  stay or discharge in bankruptcy, stating the amount of the judgment
  14-42  and the amount owing on the judgment at the date of the
  14-43  application;
  14-44                    (D)  that based on the best information
  14-45  available, the judgment debtor lacks sufficient attachable assets
  14-46  in this state or any other state to satisfy the judgment; and
  14-47                    (E)  the amount that may be realized from the
  14-48  sale of real or personal property or other assets liable to be sold
  14-49  or applied in satisfaction of the judgment and the balance
  14-50  remaining due on the judgment after application of the amount that
  14-51  may be realized.
  14-52              (8)  The court shall make an order directed to the
  14-53  commission requiring payment out of the real estate inspection
  14-54  recovery fund of whatever sum it finds to be payable on the claim,
  14-55  pursuant to and in accordance with the limitations contained in
  14-56  this subdivision, if the court is satisfied, on the hearing, of the
  14-57  truth of all matters required to be shown by the aggrieved person
  14-58  by Subdivision (7) of this subsection and that the aggrieved person
  14-59  has satisfied all the requirements of Subdivisions (6) and (7) of
  14-60  this subsection.  The commission may relitigate any issue material
  14-61  and relevant in the hearing on the application that was determined
  14-62  in the underlying action on which the judgment in favor of the
  14-63  applicant was based.  If the court finds that the aggregate of
  14-64  claims against an <a real estate> inspector exceeds the limitations
  14-65  contained in this section, the court shall reduce proportionately
  14-66  the amount it finds payable on the claim.
  14-67              (9)  A recovery on the judgment against a single
  14-68  defendant made before payment from the real estate inspection
  14-69  recovery fund must be applied by the creditor first to actual
  14-70  damages.
   15-1              (10)  A license <or registration> granted under the
   15-2  provisions of this section may be revoked by the commission on
   15-3  proof that the commission has made a payment from the real estate
   15-4  inspection recovery fund of any amount toward satisfaction of a
   15-5  judgment against a licensed <or registered real estate> inspector.
   15-6  The commission may probate an order revoking a license <or
   15-7  registration>.  No <real estate> inspector is eligible to receive a
   15-8  new license <or registration> until the person has repaid in full,
   15-9  plus interest, at the current legal rate, the amount paid from the
  15-10  real estate inspection recovery fund on the person's account.
  15-11              (11)  The sums received by the commission for deposit
  15-12  in the real estate inspection recovery fund shall be held by the
  15-13  commission in trust for carrying out the purpose of the real estate
  15-14  inspection recovery fund.  These funds may be invested and
  15-15  reinvested in the same manner as funds of the Employees Retirement
  15-16  System of Texas, and the interest from these investments shall be
  15-17  deposited to the credit of the real estate inspection recovery
  15-18  fund.  However, investments may not be made that will impair the
  15-19  necessary liquidity required to satisfy judgment payments awarded
  15-20  pursuant to this subsection.
  15-21              (12)  When the commission receives notice of entry of a
  15-22  final judgment and a hearing is conducted under Subdivision (8) of
  15-23  this subsection, the commission may notify the Attorney General of
  15-24  Texas of the commission's desire to enter an appearance, file a
  15-25  response, appear at the court hearing, defend the action, or take
  15-26  whatever other action it deems appropriate.  In taking such action,
  15-27  the commission and the attorney general shall act only to protect
  15-28  the fund from spurious or unjust claims or to ensure compliance
  15-29  with the requirements for recovery under this subsection.
  15-30              (13)  When, on the order of the court, the commission
  15-31  has paid from the real estate inspection recovery fund any sum to
  15-32  the judgment creditor, the commission shall be subrogated to all of
  15-33  the rights of the judgment creditor to the extent of the amount
  15-34  paid.  The judgment creditor shall assign all his right, title, and
  15-35  interest in the judgment up to the amount paid by the commission.
  15-36  The amount paid by the commission shall have priority for repayment
  15-37  in the event of any subsequent recovery on the judgment.  Any
  15-38  amount in interest recovered by the commission on the judgment
  15-39  shall be deposited to the fund.
  15-40              (14)  The failure of an aggrieved person to comply with
  15-41  the provisions of this subsection relating to the real estate
  15-42  inspection recovery fund shall constitute a waiver of any rights
  15-43  under this subsection.
  15-44              (15)  Notwithstanding any other provision, payments
  15-45  from the real estate inspection recovery fund are subject to the
  15-46  following conditions and limitations:
  15-47                    (A)  payments may be made only pursuant to an
  15-48  order of a court of competent jurisdiction, as provided by
  15-49  Subdivision (6) of this subsection, and in the manner prescribed by
  15-50  this subsection;
  15-51                    (B)  payments for claims, including attorney
  15-52  fees, interest, and court costs, arising out of the same
  15-53  transaction shall be limited in the aggregate to $7,500 regardless
  15-54  of the number of claimants; and
  15-55                    (C)  payments for claims based on judgments
  15-56  against a licensed <or registered real estate> inspector may not
  15-57  exceed in the aggregate $15,000 until the fund has been reimbursed
  15-58  by the licensee for all amounts paid.
  15-59              (16)  Nothing contained in this subsection shall limit
  15-60  the authority of the commission to take disciplinary action against
  15-61  a person licensed <or registered> under this section for a
  15-62  violation of this section or the rules of the commission, nor shall
  15-63  the repayment in full of all obligations to the real estate
  15-64  inspection recovery fund by a person nullify or modify the effect
  15-65  of any other disciplinary proceeding brought pursuant to this
  15-66  section.
  15-67              (17)  A person receiving payment out of the real estate
  15-68  inspection recovery fund under Subdivision (15) of this subsection
  15-69  shall be entitled to receive reasonable attorney fees as determined
  15-70  by the court, subject to the limitations stated in that
   16-1  subdivision.
   16-2              (18)  An <A real estate> inspector licensed <or
   16-3  registered> under this section shall notify consumers and service
   16-4  recipients of the availability of the real estate inspection
   16-5  recovery fund established under this section for reimbursing
   16-6  certain aggrieved persons.  The notice must include the name,
   16-7  mailing address, and telephone number of the commission and any
   16-8  other information required by commission rule.  The notification
   16-9  may be provided:
  16-10                    (A)  on a written contract for the services of an
  16-11  <a real estate> inspector;
  16-12                    (B)  on a brochure distributed by an <a real
  16-13  estate> inspector;
  16-14                    (C)  on a sign prominently displayed in the place
  16-15  of business of an <a real estate> inspector; or
  16-16                    (D)  in a bill or receipt for service provided by
  16-17  an <a real estate> inspector.
  16-18        (p)  Inactive licenses.  The commission by rule may adopt
  16-19  terms and conditions by which an inspector may apply for, renew, or
  16-20  place a license on inactive status and rules by which an inactive
  16-21  inspector may return to active status.
  16-22        (q)  The commission shall consider the recommendations of the
  16-23  Texas Real Estate Inspector Committee relating to the
  16-24  qualifications and licensure of inspectors to assure the public of
  16-25  a quality professional inspection system in real estate
  16-26  transactions in Texas.
  16-27        SECTION 16.  Persons licensed as real estate inspectors on
  16-28  the effective date of this Act are deemed to be professional
  16-29  inspectors for the purposes of this Act.  Persons licensed as
  16-30  inspectors-in-training on the effective date of this Act are deemed
  16-31  to be real estate inspectors for the purposes of this Act.  Persons
  16-32  registered as apprentice inspectors on the effective date of this
  16-33  Act are deemed to be licensed apprentice inspectors for the
  16-34  purposes of this Act.
  16-35        SECTION 17.  For the sole purpose of satisfying eligibility
  16-36  requirements under Subdivision (2) of Subsection (d) of Section 23
  16-37  of The Real Estate License Act (Article 6573a, Vernon's Texas Civil
  16-38  Statutes), a person who was previously licensed as an
  16-39  inspector-in-training or a real estate inspector at any time during
  16-40  the  24-month period before the effective date of this Act is
  16-41  deemed to have been previously licensed as a real estate inspector.
  16-42        SECTION 18.  (a)  Except as provided by Subsection (b) of
  16-43  this section, this Act takes effect September 1, 1993.
  16-44        (b)  The provision of Section 6 of this Act amending the
  16-45  minimum number of hours required to be completed in a course in the
  16-46  Law of Agency by an applicant for a salesman license takes effect
  16-47  for all applications filed on or after September 1, 1994.
  16-48        SECTION 19.  The importance of this legislation and the
  16-49  crowded condition of the calendars in both houses create an
  16-50  emergency and an imperative public necessity that the
  16-51  constitutional rule requiring bills to be read on three several
  16-52  days in each house be suspended, and this rule is hereby suspended.
  16-53                               * * * * *
  16-54                                                         Austin,
  16-55  Texas
  16-56                                                         April 14, 1993
  16-57  Hon. Bob Bullock
  16-58  President of the Senate
  16-59  Sir:
  16-60  We, your Committee on State Affairs to which was referred H.B.
  16-61  No. 991, have had the same under consideration, and I am instructed
  16-62  to report it back to the Senate with the recommendation that it do
  16-63  pass and be printed.
  16-64                                                         Harris of
  16-65  Dallas, Chairman
  16-66                               * * * * *
  16-67                               WITNESSES
  16-68                                                  FOR   AGAINST  ON
  16-69  ___________________________________________________________________
  16-70  Name:  Parker McCollough                         x
   17-1  Representing:  Tx Assn Realtors
   17-2  City:  Austin
   17-3  -------------------------------------------------------------------
   17-4  Name:  Mark Moseley                                            x
   17-5  Representing:  Tx Real Estate Commission
   17-6  City:  Austin
   17-7  -------------------------------------------------------------------
   17-8  Name:  Eden Box                                  x
   17-9  Representing:  Tx Real Estate Commission
  17-10  City:  Austin
  17-11  -------------------------------------------------------------------
  17-12  Name:  Ronald Walker                             x
  17-13  Representing:  Tx Assn of Realtors
  17-14  City:  Austin
  17-15  -------------------------------------------------------------------