BILL ANALYSIS
S.B. 489
By: Armbrister (Seidlits)
4-21-95
Committee Report (Amended)
BACKGROUND
Disclosure of a real estate agent's role in a transaction avoids
confusion about whom a real estate agent represents in a
transaction. Most states now require by statute that real estate
agents provide written agency disclosure early in the transaction.
Real estate agents face potential conflicts of interest primarily
when a real estate agent sells or leases a property listed by the
agent or the agent's firm to a buyer or tenant who the agent or the
agent's firm previously agreed to represent. Real estate agents
may represent both parties in a transaction with the parties'
knowledge and consent. The agent's role in such a situation is in
effect equivalent to the role of an intermediary.
PURPOSE
S.B. 489 requires a licensed real estate broker to disclose the
broker's representation of a party to a real estate transaction and
authorizes the broker to act as an intermediary between the parties
under certain circumstances.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 15C, Article 6573a, V.T.C.S. (The Real
Estate License Act), as follows:
Sec. 15C. (a) Requires a licensee who represents a party in
a proposed real estate transaction (transaction) to disclose
that representation at the time of the licensee's first
contact with another party to the transaction or another
licensee who represents another party to the transaction.
(b) Authorizes the disclosure to be made orally or in
writing.
(c) Provides that a licensee who represents a party in a
transaction acts as that party's agent.
(d) Requires a licensee to furnish to a party in a
transaction at the first face-to-face meeting with the party
a written statement. Sets forth the required language for
the statement.
(e) Provides that a licensee is not required to provide the
written information under certain circumstances, with an
exception.
(f) Authorizes the licensee to substitute the word "buyer"
with "tenant" as appropriate in the written statement.
(g) Authorizes the required written statement to be printed
in any format that uses at least 10 point type print.
(h) Authorizes a real estate broker (broker) to act as an
intermediary between the parties if the broker obtains
consent from each party for the broker to act as an
intermediary and the written consent states the source of
any expected compensation to the broker. Deletes a
provision authorizing the broker to act as an agent for more
than one party to a transaction under certain circumstances.
(i) Provides that a written listing agreement to represent
a seller or landlord or a written agreement to represent a
buyer or tenant which also authorizes a broker to act as an
intermediary in a transaction is sufficient to establish
written consent of the party to the transaction if the
written agreement provides that the broker does not
represent either party in the transaction. Makes conforming
changes.
(j) Requires a broker who acts as an intermediary between
parties in a transaction to comply with this Act. Makes
conforming changes.
(k) Authorizes the broker to appoint, if the broker obtains
consent to act as an intermediary, one or more licensees
associated with the broker to communicate with and carry out
instructions for each party. Authorizes a broker to appoint
a licensee only if the written consent of the parties
authorizes the broker to make the appointment. Requires the
broker and the appointed licensees to comply with Subsection
(j). Authorizes an appointed licensee to provide advice
during negotiations to the party for whom the licensee is
appointed.
(l) Provides that the duties of a licensee or party
supersede and are in lieu of duties under any other law.
(m) Defines "face-to-face meeting," "licensee," "party" and
"subagent."
SECTION 2. Amends Article 6573a, V.T.C.S., by adding Section 15F,
as follows:
Sec. 15F. (a) Provides that a party is not liable for a
misrepresentation or a concealment of a material fact
(misrepresentation) made by a licensee in a transaction unless
the party knew of the falsity of the misrepresentation and
failed to disclose the party's knowledge of the falsity
(withheld knowledge of the falsity).
(b) Provides that a licensee is not liable for a
misrepresentation made by a party in a transaction unless
the licensee withheld knowledge of the falsity.
(c) Provides that a party or a licensee is not liable for a
misrepresentation made by a subagent in a transaction unless
the party or licensee withheld knowledge of the falsity.
(d) Provides that the duties of a licensee or party
supersede and are in lieu of duties under any other law.
(e) Defines "licensee" and "party."
SECTION 3. Effective date: January 1, 1996.
SECTION 4. Emergency clause.
EXPLANATION OF AMENDMENTS
Committee Amendment #1 makes the following changes to SB 489: On
page 2, line 7 and 8, and page 3, lines 13 and 14, it strikes "not
represent both an owner and a buyer in the same transaction but
may". The amendment also in a number of places strikes "for", and
substitutes, "of", and it also strikes "for" and substitutes "to"
in places. On page 3, line 22, after "honestly" it adds the word
"fairly". Page 5, line 17 and 18 is amended by striking "may not
act as an agent for more than one party to a transaction but".
Page 8, line 21 strikes "impartially", and adds "fairly". Also the
bill was amended in SECTION 3, page 10, line 16, by adding, "This
act applies prospectively to transactions for the sale or lease of
real estate negotiated and effective on or after January 1, 1996
and does not affect binding agreements for the sale or lease of
real estate negotiated and effective, but not closed, prior to the
effective date of this Act.
SUMMARY OF COMMITTEE ACTION
SB 489 was heard in a Public Hearing on April 5, 1995. The Chair
recognized the following persons to testify in favor of the bill:
Mr. Ronald J. Walker, Texas Assoc. of Realtors;
Mr. Bob Wertheimer, Texas Assoc. of Realtors;
Mr. Joe Atnip, Real Estate;
The Chair recognized the following persons to testify against the
bill:
Ms. Fran Shultz, Realtor;
Ms. Hazel Edwards, Realtor;
Mr. Erle Rawlins, III, Real Estate;
Mr. Thomas C. Terrell, Real Estate Educator;
SB 489 was referred to the following subcommittee:
Rep. Pickett, Chair; Rep. Jones, D.; Rep. Brimer.
SB 489 was heard by the subcommittee in a Formal Meeting, on April
10, 1995. Rep. Jones offered a committee amendment to SB 489 and
moved adoption of the amendment. There was no objection. Rep.
Jones moved that the subcommittee adopt SB 489 as amended, and that
it be reported favorably to the full committee with the
recommendation that it do pass and be printed. The motion
prevailed by the following vote: AYES: 3, NAYS: 0, ABSENT: 0. SB
489 was considered in a Formal Meeting on April 21, 1995. Rep.
Pickett moved to call up SB 489 on eligible subcommittee report.
There was no objection. The Chair laid out SB 489 on Subcommittee
report. Rep. Pickett moved that the full committee adopt the
subcommittee report on SB 489. There was no objection. Rep.
Pickett moved that the full committee adopt SB 489 as amended, and
that it be reported favorably to the full House with the
recommendation that it do pass and be printed. The motion
prevailed by the following vote: AYES: 7, NAYS: 0, ABSENT: 2.