BILL ANALYSIS


                                                         S.B. 489
                                                   By: Armbrister
                                                    State Affairs
                                                          2-28-95
                                       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

As proposed, 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 grant any
additional rulemaking authority to a state officer, institution, or
agency.

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.