By Dutton H.B. No. 2320 74R3111 CAG-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of the Texas Real Estate Inspector Board 1-3 and the regulation of real estate inspectors; providing a criminal 1-4 penalty. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Title 113A, Revised Statutes, is amended by 1-7 adding Article 6573a.3 to read as follows: 1-8 Art. 6573a.3. TEXAS REAL ESTATE INSPECTOR BOARD 1-9 Sec. 1. DEFINITIONS. In this article: 1-10 (1) "Board" means the Texas Real Estate Inspector 1-11 Board. 1-12 (2) "Core real estate inspection course" means an 1-13 educational course approved by the board relating to the profession 1-14 of real estate inspection, including a course on structural 1-15 principles, electrical, mechanical, plumbing, or roofing systems, 1-16 appliances or other improvements, the standards of practice, 1-17 conduct, or ethics of inspectors, inspection report writing, and 1-18 legal or business principles. 1-19 (3) "Direct supervision" means the instruction and 1-20 control by a professional inspector or a real estate inspector 1-21 license holder who is: 1-22 (A) responsible for the actions of a person 1-23 performing a real estate inspection or preparing a report of a real 1-24 estate inspection; 2-1 (B) available to consult with or assist a person 2-2 performing a real estate inspection or preparing a report of a real 2-3 estate inspection; and 2-4 (C) physically present at the inspection. 2-5 (4) "Indirect supervision" means the instruction and 2-6 control by a professional inspector license holder who is: 2-7 (A) responsible for the actions of a person 2-8 performing or preparing a real estate inspection; 2-9 (B) available to consult with or assist a person 2-10 performing a real estate inspection or preparing a report of a real 2-11 estate inspection; and 2-12 (C) not required to be physically present at the 2-13 inspection. 2-14 (5) "Inspector" means a person licensed by the board. 2-15 (6) "Real estate inspection" means a written or oral 2-16 opinion concerning the condition of an improvement to real 2-17 property, including an opinion on the condition of a structure, the 2-18 structure's electrical, mechanical, plumbing, roofing, or other 2-19 system, or other equipment on the property. 2-20 Sec. 2. POWERS AND DUTIES OF BOARD. (a) The Texas Real 2-21 Estate Inspector Board is an independent subdivision of the Texas 2-22 Real Estate Commission. 2-23 (b) The board may adopt: 2-24 (1) general rules for the licensing of inspectors; 2-25 (2) rules relating to the education and experience 2-26 requirements for licensing as an inspector; 2-27 (3) rules relating to the qualifying examination 3-1 required for licensing as an inspector; 3-2 (4) rules establishing a code of professional conduct 3-3 and ethics for an inspector; 3-4 (5) reasonable fees in amounts necessary to implement 3-5 this article, including a license application fee, an examination 3-6 fee, a license renewal fee, or any other fee required by law; 3-7 (6) rules relating to the length and content of core 3-8 real estate courses and continuing education requirements for an 3-9 inspector; 3-10 (7) rules relating to the standards of practice for 3-11 conducting a real estate inspection; 3-12 (8) rules relating to grounds for granting or denying 3-13 an application for the license; and 3-14 (9) rules prescribing the form and content of an 3-15 application or form required under this article. 3-16 (c) The board may employ personnel necessary to carry out 3-17 this article. The board may contract with another agency or board 3-18 for the provision of goods or services necessary to carry out this 3-19 article. 3-20 Sec. 3. TEXAS REAL ESTATE INSPECTOR BOARD. (a) The Texas 3-21 Real Estate Inspector Board consists of nine members appointed by 3-22 the governor with the advice and consent of the senate. 3-23 (b) Six members of the board shall be inspectors. Three 3-24 members of the board must be public members. 3-25 (c) The members of the board hold office for staggered terms 3-26 of six years, with the terms of three members expiring February 1 3-27 of each odd-numbered year. Each member holds office until the 4-1 member's successor is appointed. 4-2 (d) An appointment to the board shall be made without regard 4-3 to the sex, race, color, age, disability, religion, or national 4-4 origin of the appointee. 4-5 (e) A member of the board may not hold a real estate broker 4-6 or salesman license. 4-7 (f) A member of the board is entitled to compensation and 4-8 reimbursement of the member's travel expenses as provided by the 4-9 General Appropriations Act. 4-10 (g) The board shall elect annually from its membership a 4-11 presiding officer, assistant presiding officer, and secretary. 4-12 (h) Five members of the committee are necessary for a 4-13 quorum. 4-14 (i) The board shall adopt procedural rules to be used by the 4-15 board in implementing its powers and duties. 4-16 (j) The board is subject to Chapters 551 and 2001, 4-17 Government Code. 4-18 (k) The board shall meet semiannually. The board may also 4-19 meet at the call of a majority of its members. 4-20 Sec. 4. REMOVAL OF MEMBER. (a) It is a ground for removal 4-21 from the board if the member: 4-22 (1) does not have at the time of appointment or does 4-23 not maintain during service on the board the qualifications 4-24 required by Section 3; 4-25 (2) cannot discharge the member's duties for a 4-26 substantial part of the term for which the member is appointed 4-27 because of illness or disability; 5-1 (3) violates a prohibition established by Section 5; 5-2 or 5-3 (4) is absent from more than half of the regularly 5-4 scheduled board meetings that the member is eligible to attend 5-5 during each year, unless the absence is excused by the board. 5-6 (b) The validity of an action of the board is not affected 5-7 by the fact that it was taken when a ground for removal of a board 5-8 member existed. 5-9 (c) If a board member has knowledge that a potential ground 5-10 for removal exists, the member shall notify the presiding officer 5-11 of the board of the potential ground. The presiding officer shall 5-12 then notify the governor and the attorney general that a potential 5-13 ground for removal exists. If the potential ground for removal 5-14 involves the presiding officer, the member shall notify the next 5-15 highest officer of the board, who shall notify the governor and the 5-16 attorney general that a potential ground for removal exists. 5-17 Sec. 5. CONFLICTS OF INTEREST. (a) An officer, employee, 5-18 or paid consultant of a Texas trade association in the field of 5-19 real estate may not be a member of the board or employee of the 5-20 board who is exempt from the state's position classification plan 5-21 or is compensated at or above the amount prescribed by the General 5-22 Appropriations Act for step 1, salary group 17, of the position 5-23 classification salary schedule. 5-24 (b) A person who is the spouse of an officer, manager, or 5-25 paid consultant of a Texas trade association in the field of real 5-26 estate may not be a member of the board and may not be an employee 5-27 of the board who is exempt from the state's position classification 6-1 plan or is compensated at or above the amount prescribed by the 6-2 General Appropriations Act for step 1, salary group 17, of the 6-3 position classification salary schedule. 6-4 (c) For the purposes of this section, a Texas trade 6-5 association is a nonprofit, cooperative, and voluntarily joined 6-6 association of business or professional competitors in this state 6-7 designed to assist its members and its industry or profession in 6-8 dealing with mutual business or professional problems and in 6-9 promoting their common interest. 6-10 Sec. 6. LOBBYIST RESTRICTION. A person may not serve as a 6-11 member of the board or act as the general counsel to the board if 6-12 the person is required to register as a lobbyist under Chapter 305, 6-13 Government Code, because of the person's activities for 6-14 compensation on behalf of a profession related to the operation of 6-15 the board. 6-16 Sec. 7. PUBLIC PARTICIPATION. The board shall develop and 6-17 implement policies that provide the public with a reasonable 6-18 opportunity to appear before the board and to speak on any issue 6-19 under the jurisdiction of the board. 6-20 Sec. 8. MEMBER TRAINING. (a) Before a member of the board 6-21 may assume the member's duties and before the member may be 6-22 confirmed by the senate, the member must complete at least one 6-23 course of the training program established under this section. 6-24 (b) A training program established under this section shall 6-25 provide information to the member regarding: 6-26 (1) the enabling legislation that created the board to 6-27 which the member is appointed to serve; 7-1 (2) the programs operated by the board; 7-2 (3) the role and functions of the board; 7-3 (4) the rules of the board, with an emphasis on the 7-4 rules that relate to disciplinary and investigatory authority; 7-5 (5) the current budget for the board; 7-6 (6) the results of the most recent formal audit of the 7-7 board; 7-8 (7) the requirements of the: 7-9 (A) open meetings law, Chapter 551, Government 7-10 Code; 7-11 (B) open records law, Chapter 552, Government 7-12 Code; and 7-13 (C) administrative procedure law, Chapter 2001, 7-14 Government Code; 7-15 (8) the requirements of the conflict of interest laws 7-16 and other laws relating to public officials; and 7-17 (9) any applicable ethics policies adopted by the 7-18 agency or the Texas Ethics Commission. 7-19 Sec. 9. RESPONSIBILITIES OF BOARD AND STAFF. The board 7-20 shall develop and implement policies that clearly separate the 7-21 policy-making responsibilities of the board and the management 7-22 responsibilities of the board and the staff of the board. 7-23 Sec. 10. CAREER LADDER. The board or the board's designee 7-24 shall develop an intra-agency career ladder program that addresses 7-25 opportunities for mobility and advancement for employees within the 7-26 board. The program shall require intra-agency posting of all 7-27 positions concurrently with any public posting. 8-1 Sec. 11. PERFORMANCE REVIEW. The board or the board's 8-2 designee shall develop a system of annual performance evaluations 8-3 that are based on documented employee performance. All merit pay 8-4 for board employees must be based on the system established under 8-5 this section. 8-6 Sec. 12. PUBLIC INFORMATION. The board or the board's 8-7 designee shall provide to members of the board and to agency 8-8 employees, as often as necessary, information regarding their 8-9 qualifications for office or employment under this article and 8-10 their responsibilities under applicable laws relating to standards 8-11 of conduct for state officers or employees. 8-12 Sec. 13. EQUAL EMPLOYMENT OPPORTUNITY. (a) The board or 8-13 the board's designee shall prepare and maintain a written policy 8-14 statement to assure implementation of a program of equal employment 8-15 opportunity under which all personnel transactions are made without 8-16 regard to race, color, disability, sex, religion, age, or national 8-17 origin. The policy statement must include: 8-18 (1) personnel policies, including policies relating to 8-19 recruitment, evaluation, selection, appointment, training, and 8-20 promotion of personnel that are in compliance with requirements of 8-21 Chapter 21, Labor Code, and its subsequent amendments; 8-22 (2) a comprehensive analysis of the board workforce 8-23 that meets federal and state guidelines; 8-24 (3) procedures by which a determination can be made 8-25 about the extent of underuse in the board workforce of all persons 8-26 for whom federal or state guidelines encourage a more equitable 8-27 balance; and 9-1 (4) reasonable methods to appropriately address those 9-2 areas of underuse. 9-3 (b) A policy statement prepared under Subsection (a) must 9-4 cover an annual period, be updated annually and reviewed by the 9-5 Texas Commission on Human Rights for compliance with Subsection 9-6 (a)(1), and be filed with the governor's office. 9-7 (c) The governor's office shall deliver a biennial report to 9-8 the legislature based on the information received under Subsection 9-9 (b). The report may be made separately or as a part of other 9-10 biennial reports made to the legislature. 9-11 Sec. 14. PUBLIC INTEREST INFORMATION. (a) The board shall 9-12 prepare information of public interest describing the functions of 9-13 the board and the procedures by which complaints are filed with and 9-14 resolved by the board. The board shall make the information 9-15 available to the public and appropriate state agencies. 9-16 (b) The board by rule shall establish methods by which 9-17 consumers and service recipients are notified of the name, mailing 9-18 address, and telephone number of the board for the purpose of 9-19 directing complaints to the board. The board may provide for that 9-20 notification: 9-21 (1) on each registration form, application, or written 9-22 contract for services of an individual licensed under this article; 9-23 (2) on a sign prominently displayed in the place of 9-24 business of each individual licensed under this article; or 9-25 (3) in a bill for service provided by an individual 9-26 licensed under this article. 9-27 Sec. 15. INFORMATION ON COMPLAINTS. The board shall keep 10-1 information about each complaint filed with the board. The 10-2 information shall include: 10-3 (1) the date the complaint is received; 10-4 (2) the name of the complainant; 10-5 (3) the subject matter of the complaint; 10-6 (4) a record of all persons contacted in relation to 10-7 the complaint; 10-8 (5) a summary of the results of the review or 10-9 investigation of the complaint; and 10-10 (6) for complaints for which the board took no action, 10-11 an explanation of the reason the complaint was closed without 10-12 action. 10-13 Sec. 16. NOTIFICATION OF COMPLAINTS. The board shall keep 10-14 a file about each written complaint filed with the board that the 10-15 board has authority to resolve. The board shall provide to the 10-16 person filing the complaint and the persons or entities complained 10-17 about the board's policies and procedures pertaining to complaint 10-18 investigation and resolution. The board, at least quarterly and 10-19 until final disposition of the complaint, shall notify the person 10-20 filing the complaint and the persons or entities complained about 10-21 of the status of the complaint unless the notice would jeopardize 10-22 an undercover investigation. 10-23 Sec. 17. ACCESSIBILITY. The board shall comply with federal 10-24 and state laws related to program and facility accessibility. The 10-25 board shall also prepare and maintain a written plan that describes 10-26 how a person who does not speak English can be provided reasonable 10-27 access to the board's programs and services. 11-1 Sec. 18. LICENSE REQUIRED. A person may not act as a 11-2 professional inspector, real estate inspector, or apprentice 11-3 inspector license holder for a buyer or seller of real property 11-4 unless the person possesses the appropriate license issued by the 11-5 board. 11-6 Sec. 19. POWER AND DUTIES OF LICENSE HOLDER. (a) A 11-7 professional inspector license holder may represent to the public 11-8 that the person is trained and qualified to perform a real estate 11-9 inspection and may accept employment to perform a real estate 11-10 inspection for a buyer or seller of real property. 11-11 (b) A real estate inspector license holder may represent to 11-12 the public that the person is trained and qualified to perform real 11-13 estate inspections under the indirect supervision of a professional 11-14 inspector and may accept employment to perform a real estate 11-15 inspection for a buyer or seller of real property. 11-16 (c) An apprentice inspector license holder may perform 11-17 activities under the direct supervision of a professional inspector 11-18 or a real estate inspector license holder that are necessary to 11-19 become qualified to perform a real estate inspection. 11-20 Sec. 20. ELIGIBILITY; APPLICATION. (a) To receive a 11-21 license as an apprentice inspector, an applicant must: 11-22 (1) be a citizen of the United States or a lawfully 11-23 admitted alien; 11-24 (2) be a resident of this state at the time of the 11-25 filing of the application; 11-26 (3) be sponsored by a professional inspector license 11-27 holder; 12-1 (4) be 18 years of age or older; and 12-2 (5) satisfy the board as to the applicant's honesty, 12-3 trustworthiness, and integrity. 12-4 (b) To receive a license as a real estate inspector, an 12-5 applicant must: 12-6 (1) have been licensed as an apprentice inspector for 12-7 three months or more; 12-8 (2) have performed 25 or more real estate inspections 12-9 under direct supervision before the date of the filing of an 12-10 application for the license; 12-11 (3) satisfy the board as to the applicant's honesty, 12-12 trustworthiness, integrity, and competency; 12-13 (4) present satisfactory evidence to the board of 12-14 completion by the applicant of 90 or more classroom hours in core 12-15 real estate inspection courses; 12-16 (5) satisfy the examination requirements under Section 12-17 21 of this article; and 12-18 (6) be sponsored by a professional inspector license 12-19 holder. 12-20 (c) To receive a license as a professional inspector, an 12-21 applicant must: 12-22 (1) have been licensed as a real estate inspector for 12-23 at least one year; 12-24 (2) have performed 175 or more real estate inspections 12-25 under indirect supervision before filing an application for the 12-26 license; 12-27 (3) submit satisfactory evidence to the board of the 13-1 completion by the applicant, since the issuance of a real estate 13-2 inspector license, of 30 or more classroom hours of core real 13-3 estate inspection courses and eight classroom hours related to the 13-4 study of standards of practice or ethics of real estate inspection 13-5 or legal issues related to the profession of real estate 13-6 inspections; and 13-7 (4) satisfy the examination requirements under Section 13-8 21 of this article. 13-9 (d) The board by rule may provide for the substitution of 13-10 relevant experience or education for the number of real estate 13-11 inspections required by this section. 13-12 (e) An applicant shall file an application for a license on 13-13 a form prescribed by the board. 13-14 Sec. 21. EXAMINATION. (a) The board shall prescribe and 13-15 prepare or contract for the preparation of a licensing examination. 13-16 (b) A licensing examination shall evaluate competency in the 13-17 subject matter of any core real estate inspection courses. 13-18 (c) The licensing examination shall be offered at least once 13-19 every two months in Austin. 13-20 (d) If an applicant fails the examination, the applicant may 13-21 apply for reexamination by filing a request with the board and 13-22 paying the examination fee. 13-23 (e) An applicant must satisfy the examination requirement 13-24 during the six-month period after the date the license application 13-25 is filed. A license applicant who fails to satisfy the examination 13-26 requirement within that time must submit a new license application 13-27 to the board and pay the examination fee to be eligible for 14-1 examination. 14-2 (f) If a license applicant fails the examination three 14-3 consecutive times in connection with an application for the same 14-4 license, the applicant may not apply for reexamination or submit a 14-5 new license application with the board until the expiration of six 14-6 months after the date the applicant failed the last examination. 14-7 (g) Not later than the 30th day after the date on which a 14-8 licensing examination is administered under this section, the board 14-9 shall notify each examinee of the results of the examination. 14-10 However, if an examination is graded or reviewed by a national 14-11 testing service, the board shall notify examinees of the results of 14-12 the examination not later than the 14th day after the date on which 14-13 the board receives the results from the testing service. If the 14-14 notice of examination results graded or reviewed by a national 14-15 testing service will be delayed for longer than 90 days after the 14-16 examination date, the board shall notify the examinee of the reason 14-17 for the delay before the 90th day after the examination date. 14-18 (h) If requested in writing by a person who fails a 14-19 licensing examination administered under this section, the board 14-20 shall furnish the person with an analysis of the person's 14-21 performance on the examination. 14-22 Sec. 22. ISSUANCE OF LICENSE. (a) The board shall issue an 14-23 apprentice license, a real estate inspector license, or a 14-24 professional inspector license to an applicant who possesses the 14-25 required qualifications, passes the appropriate examination, if 14-26 required, and pays the fee required by Section 28 of this article. 14-27 (b) The board may waive a license requirement for an 15-1 applicant with a valid license from another state having license 15-2 requirements substantially equivalent to those of this state. 15-3 (c) On receipt of notice that the person has successfully 15-4 completed the licensing examination under Section 21 of this 15-5 article, the person must pay, in addition to any other fees, a fee 15-6 not to exceed $200, to be deposited in the real estate inspection 15-7 recovery fund before the board issues the person a license. 15-8 Sec. 23. RECIPROCAL LICENSES. The board may waive any 15-9 prerequisite to obtaining a license for an applicant with a valid 15-10 license from another state with which the State of Texas has a 15-11 reciprocity agreement. The board may enter into reciprocal 15-12 agreements with other states to allow for licensing by reciprocity. 15-13 Sec. 24. EXPIRATION OF LICENSE; RENEWAL. (a) A license 15-14 issued under this article expires on the first anniversary of the 15-15 date on which it is issued. 15-16 (b) A person may renew an unexpired license by paying to the 15-17 board before the expiration date of the license the required 15-18 renewal fee. 15-19 (c) If a person's license has been expired for 90 days or 15-20 less, the person may renew the license by paying to the board the 15-21 required renewal fee and a fee that is one-half of the examination 15-22 fee for the license. 15-23 (d) If a person's license has been expired for longer than 15-24 90 days but for less than one year, the person may renew the 15-25 license by paying to the board the unpaid renewal fees and a fee 15-26 that is equal to the examination fee for the license. 15-27 (e) Except as provided by Section 25 of this article, if a 16-1 person's license has been expired for one year or longer, the 16-2 person may not renew the license and may only obtain a new license 16-3 by submitting to reexamination, if required, and complying with the 16-4 requirements and procedures for obtaining an original license. 16-5 Sec. 25. LAPSED LICENSE. (a) The board may renew without 16-6 reexamination an expired license of a person who was licensed in 16-7 this state, moved to another state, and is currently licensed and 16-8 has been in practice in the other state for at least one year 16-9 before the date of the application. The person shall pay to the 16-10 board a fee that is equal to the examination fee for the license. 16-11 (b) The board may issue a license to an applicant under this 16-12 section who has satisfied all requirements for a license as a 16-13 professional inspector or real estate inspector if: 16-14 (1) the applicant was previously licensed as a 16-15 professional inspector or real estate inspector during the 24 16-16 months before the date of filing the application; 16-17 (2) the applicant is sponsored by a professional 16-18 inspector if the applicant is applying for a real estate inspector 16-19 license; and 16-20 (3) the applicant satisfies the board as to the 16-21 applicant's honesty, trustworthiness, and integrity. 16-22 Sec. 26. NOTIFICATION; CHANGE OF ADDRESS. (a) Before the 16-23 30th day preceding the expiration date of a person's license, the 16-24 board shall send written notice of the impending license expiration 16-25 to the person at the person's last known address according to the 16-26 records of the board. 16-27 (b) An inspector shall notify the board and pay the required 17-1 fee, if any, not later than the 30th day after the date a change of 17-2 place of business occurs. 17-3 Sec. 27. INACTIVE LICENSE. The board by rule may adopt 17-4 terms and conditions by which an inspector may apply for, renew, or 17-5 place a license on inactive status and rules by which an inactive 17-6 inspector may return to active status. 17-7 Sec. 28. FEES. (a) The board shall charge and collect 17-8 reasonable and necessary fees to recover the cost of administering 17-9 this article. 17-10 (b) A fee may be paid by cash, check, cashier's check, or 17-11 money order. 17-12 (c) A fee set by the board shall be reviewed annually and 17-13 reduced to the extent that the costs of administering this article 17-14 are funded by the real estate inspector regulation account 17-15 established under Section 41 of this article. 17-16 Sec. 29. CONTINUING EDUCATION STANDARDS. (a) The board 17-17 shall recognize, prepare, or administer continuing education 17-18 programs for inspectors. 17-19 (b) Before a real estate inspector license holder may renew 17-20 a license, the holder must submit satisfactory evidence to the 17-21 board of successful completion of at least four classroom hours of 17-22 core real estate inspection courses in the year preceding the date 17-23 of renewal. 17-24 (c) Before a professional inspector license holder may renew 17-25 a license, the holder must submit satisfactory evidence to the 17-26 board of successful completion of at least eight classroom hours of 17-27 core related real estate inspection courses in the year preceding 18-1 the date of renewal. 18-2 Sec. 30. PROHIBITED ACTS. An inspector may not: 18-3 (1) accept an assignment for real estate inspection if 18-4 the employment or fee is contingent on the reporting of a specific, 18-5 predetermined condition of the improvements to real property or is 18-6 contingent on the reporting of specific findings other than those 18-7 known by the inspector to be facts at the time of accepting the 18-8 assignment; 18-9 (2) act in a manner or engage in a practice that is 18-10 dishonest or fraudulent or that involves deceit or 18-11 misrepresentation; 18-12 (3) perform a real estate inspection in a negligent or 18-13 incompetent manner; 18-14 (4) act in the dual capacity of inspector and 18-15 undisclosed principal in a transaction; 18-16 (5) act in the dual capacity of inspector and real 18-17 estate broker or salesman in a transaction; 18-18 (6) perform or agree to perform any repair or 18-19 maintenance in connection with a real estate inspection under the 18-20 terms of the provisions of an earnest money contract, lease 18-21 agreement, or exchange of real estate; or 18-22 (7) violate a rule adopted by the board or this 18-23 article. 18-24 Sec. 31. OFFENSE. (a) A person commits an offense if the 18-25 person knowingly engages in the business of real estate inspection 18-26 and does not hold a license issued under this article. 18-27 (b) An offense under this section is a Class B misdemeanor. 19-1 Sec. 32. DISCIPLINARY ACTIONS. (a) The board may conduct 19-2 an administrative hearing and may recommend disciplinary actions in 19-3 contested cases regarding an inspector. 19-4 (b) The board may authorize specific persons to conduct 19-5 hearings and render final decisions in contested cases regarding a 19-6 licensed inspector. 19-7 (c) The board may investigate the actions of a licensed 19-8 inspector and may, after notice and hearing, reprimand, place on 19-9 probation, or suspend or revoke the license of a person for a 19-10 violation of this article or a rule of the board. 19-11 (d) If the board revokes a person's license, the person may 19-12 not apply to the board before the first anniversary of the date of 19-13 revocation. 19-14 (e) A license granted under this article may be revoked by 19-15 the board on proof that the board has made a payment from the real 19-16 estate inspection recovery fund of any amount toward satisfaction 19-17 of a judgment against the inspector. The board may probate an 19-18 order revoking a license. An inspector is not eligible to receive 19-19 a new license until the person has repaid in full, including 19-20 interest at the current legal rate, the amount paid from the real 19-21 estate inspection recovery fund on the person's account. 19-22 (f) This section does not limit the authority of the board 19-23 to take disciplinary action against an inspector for a violation of 19-24 this article or a rule of the board. The repayment in full of an 19-25 obligation to the real estate inspection recovery fund by a person 19-26 does not nullify or modify the effect of any other disciplinary 19-27 proceeding of the board. 20-1 Sec. 33. PENALTIES. The board shall revoke, suspend, or 20-2 refuse to renew a license, place on probation a person whose 20-3 license has been suspended, or reprimand a license holder for a 20-4 violation of this article or a rule of the board. If a license 20-5 suspension is probated, the board may require the practitioner: 20-6 (1) to report regularly to the board on matters that 20-7 are the basis of the probation; 20-8 (2) to limit practice to the areas prescribed by the 20-9 board; or 20-10 (3) to continue or review professional education until 20-11 the practitioner attains a degree of skill satisfactory to the 20-12 board in those areas that are the basis of the probation. 20-13 Sec. 34. EXEMPTIONS. (a) This article does not apply to an 20-14 electrician, plumber, carpenter, any person engaged in the business 20-15 of structural pest control under the Texas Structural Pest Control 20-16 Act (Article 135b-6, Vernon's Texas Civil Statutes), or any other 20-17 person who repairs, maintains, or inspects improvements to real 20-18 property and who does not represent to the public through a 20-19 solicitation or public advertising that the person is in the 20-20 business of inspecting the improvements. 20-21 (b) This article does not prevent a person from performing 20-22 an act that the person is authorized to perform under a license, 20-23 permit, or registration issued by this state or a political 20-24 subdivision. 20-25 Sec. 35. REAL ESTATE INSPECTION RECOVERY FUND. (a) The 20-26 board shall establish a real estate inspection recovery fund. 20-27 (b) The fund shall be used to reimburse a person who suffers 21-1 actual damages by reason of an act committed by an inspector, if: 21-2 (1) the inspector was licensed at the time the act was 21-3 committed; and 21-4 (2) recovery of damages is ordered by a court of 21-5 competent jurisdiction against the inspector. 21-6 (c) The use of the fund is limited to an act that is a 21-7 violation of Section 30 of this article. 21-8 Sec. 36. FUND OPERATION. (a) The amounts received by the 21-9 board for deposit in the real estate inspection recovery fund shall 21-10 be held by the board in trust for carrying out the purpose of the 21-11 real estate inspection recovery fund. 21-12 (b) Sums received under Subsection (a) of this section may 21-13 be invested and reinvested in the same manner as the funds of the 21-14 Employees Retirement System of Texas and the interest from these 21-15 investments shall be deposited to the credit of the real estate 21-16 inspection recovery fund. 21-17 (c) An investment made under Subsection (b) of this section 21-18 may not impair the necessary liquidity required to satisfy a 21-19 judgment payment awarded under Section 35 of this article. 21-20 Sec. 37. LIMITATIONS ON CLAIMS AGAINST FUND. (a) An action 21-21 for a judgment that results in an order for collection from the 21-22 real estate inspection recovery fund must be commenced not later 21-23 than the second anniversary of the date of the accrual of the cause 21-24 of action. 21-25 (b) If an aggrieved person commences an action for a 21-26 judgment that may result in collection from the real estate 21-27 inspection recovery fund, the inspector who is the subject of the 22-1 lawsuit shall promptly notify the board in writing. 22-2 (c) The failure by an aggrieved person to comply with this 22-3 section constitutes a waiver of any right to recover from the real 22-4 estate inspection recovery fund. 22-5 Sec. 38. PREREQUISITES FOR CLAIMS AGAINST FUND. (a) If an 22-6 aggrieved person recovers a valid judgment in a court of competent 22-7 jurisdiction against an inspector on the grounds described in 22-8 Section 35 of this article, the aggrieved person may, after final 22-9 judgment has been entered, execution returned nulla bona, and a 22-10 judgment lien perfected, file a verified claim in the court in 22-11 which the judgment was entered. After the 20th day after the date 22-12 that written notice was given to the board and the judgment debtor, 22-13 the aggrieved person may apply to the court in which the judgment 22-14 was rendered for an order directing payment out of the real estate 22-15 inspection recovery fund in the amount unpaid on the judgment, 22-16 subject to the limitations stated in Section 39 of this article. 22-17 (b) The court shall promptly proceed on the aggrieved 22-18 person's application. On hearing the application, the aggrieved 22-19 person is required to show: 22-20 (1) that the judgment is based on facts allowing 22-21 recovery under Section 35 of this article; 22-22 (2) that the person is not a spouse of the debtor or 22-23 the personal representative of the spouse and the person is not an 22-24 inspector; 22-25 (3) that the person has obtained a judgment under 22-26 Section 35 of this article that is not subject to a stay or 22-27 discharge in bankruptcy, stating the amount of the judgment and the 23-1 amount owing on the judgment at the date of the application; 23-2 (4) that based on the best information available, the 23-3 judgment debtor lacks sufficient attachable assets in this state or 23-4 any other state to satisfy the judgment; and 23-5 (5) the amount that may be realized from the sale of 23-6 real or personal property or other assets liable to be sold or 23-7 applied in satisfaction of the judgment and the balance remaining 23-8 due on the judgment after application of the amount that may be 23-9 realized. 23-10 (c) The court shall order the board to pay from the real 23-11 estate inspection recovery fund the amount the court finds to be 23-12 payable on the claim, consistent with the limitations contained in 23-13 Section 39 of this article, if the court is satisfied after 23-14 hearing: 23-15 (1) of the truth of all matters required to be shown 23-16 by the aggrieved person under Subsection (b) of this section; and 23-17 (2) that the aggrieved person has satisfied all the 23-18 requirements of Subsections (b)(4) and (5) of this section. 23-19 (d) On receipt of notice of entry of a final judgment and 23-20 that a hearing is to be conducted under Subsection (b), the board 23-21 may notify the attorney general of the board's desire to enter an 23-22 appearance, file a response, appear at the court hearing, defend 23-23 the action, or take whatever other appropriate action. In taking 23-24 action, the board and the attorney general shall act only to 23-25 protect the fund from spurious or unjust claims or to ensure 23-26 compliance with the requirements for recovery under this 23-27 subsection. 24-1 (e) In hearing the application, the board may relitigate any 24-2 material and relevant issue that was determined in the underlying 24-3 action on which the judgment in favor of the applicant was based. 24-4 (f) A recovery on the judgment against a single defendant 24-5 made before payment from the real estate inspection recovery fund 24-6 must be applied by the creditor first to actual damages. 24-7 (g) If, on the order of the court, the board pays from the 24-8 real estate inspection recovery fund an amount to the judgment 24-9 creditor, the board is subrogated to all of the rights of the 24-10 judgment creditor to the extent of the amount paid. The judgment 24-11 creditor shall assign all the creditor's right, title, and interest 24-12 in the judgment up to the amount paid by the board. The amount 24-13 paid by the board has priority for repayment on a subsequent 24-14 recovery on the judgment. Any amount in interest recovered by the 24-15 board on the judgment shall be deposited to the credit of the fund. 24-16 Sec. 39. LIMITATIONS ON PAYMENT FROM FUND. (a) 24-17 Notwithstanding any other provision, payments from the real estate 24-18 inspection recovery fund are subject to the following conditions 24-19 and limitations: 24-20 (1) payments may be made only under an order by a 24-21 court of competent jurisdiction, as provided by Section 38 of this 24-22 article, and in the manner prescribed by this section; 24-23 (2) payments for claims, including attorney's fees, 24-24 interest, and court costs, arising out of the same transaction are 24-25 limited in the aggregate to $7,500 regardless of the number of 24-26 claimants; and 24-27 (3) payments for claims based on judgments against an 25-1 inspector may not exceed in the aggregate $15,000 until the fund 25-2 has been reimbursed by the inspector for all amounts paid. 25-3 (b) A person receiving payment from the real estate 25-4 inspection recovery fund under Subsection (a) of this section is 25-5 entitled to receive reasonable attorney's fees as determined by the 25-6 court, subject to the limitations stated in that subsection. 25-7 Sec. 40. CONSUMER NOTIFICATION. An inspector licensed under 25-8 this article shall notify consumers and service recipients of the 25-9 availability of the real estate inspection recovery fund for 25-10 reimbursing certain aggrieved persons. The notice must include the 25-11 name, mailing address, and telephone number of the board and any 25-12 other information required by board rule. The notification may be 25-13 provided: 25-14 (1) on a written contract for the services of an 25-15 inspector; 25-16 (2) on a brochure distributed by an inspector; 25-17 (3) on a sign prominently displayed in the place of 25-18 business of an inspector; or 25-19 (4) in a bill or receipt for service provided by an 25-20 inspector. 25-21 Sec. 41. OPERATION OF FUND; NECESSARY BALANCES. (a) 25-22 Sections 403.904 and 403.905, Government Code, do not apply to the 25-23 real estate inspection recovery fund or the real estate inspector 25-24 regulation account. 25-25 (b) If on December 31 of any year the balance remaining in 25-26 the real estate inspection recovery fund is less than $300,000, 25-27 each inspector, on the next renewal of the person's license, shall 26-1 pay, in addition to the license renewal fee, a fee of $75, or a pro 26-2 rata share of the amount necessary to bring the fund to $450,000, 26-3 whichever is less, to be deposited in the real estate inspection 26-4 recovery fund. 26-5 (c) If on December 31 of any year the balance remaining in 26-6 the real estate inspection recovery fund is greater than $600,000, 26-7 the amount of money in excess of $600,000 shall be transferred to a 26-8 separate account in the general revenue fund to be known as the 26-9 real estate inspector regulation account. The money in the real 26-10 estate inspector regulation account may be used only for the 26-11 payment of costs incurred by the board in the regulation of 26-12 inspectors. 26-13 Sec. 42. RECOMMENDATIONS BY REAL ESTATE COMMISSION. The 26-14 board shall consider the recommendations of the Texas Real Estate 26-15 Commission relating to the qualifications and licensure of 26-16 inspectors to assure the public of a quality professional 26-17 inspection system in real estate transactions in this state. 26-18 Sec. 43. ADVERTISING. (a) The board may not adopt rules 26-19 restricting competitive bidding or advertising by a license holder 26-20 except to prohibit false, misleading, or deceptive practices. 26-21 (b) In its rules to prohibit false, misleading, or deceptive 26-22 practices, the board may not include a rule that: 26-23 (1) restricts the use of any medium for advertising; 26-24 (2) restricts the use of a license holder's personal 26-25 appearance or voice in an advertisement; 26-26 (3) relates to the size or duration of an 26-27 advertisement by the license holder; or 27-1 (4) restricts the license holder's advertisement under 27-2 a trade name. 27-3 SECTION 2. Section 23, The Real Estate License Act (Article 27-4 6573a, Vernon's Texas Civil Statutes), is repealed. 27-5 SECTION 3. (a) The initial members appointed to the Texas 27-6 Real Estate Inspector Board under this Act shall be appointed as 27-7 follows: 27-8 (1) for public members: 27-9 (A) one member for a term expiring February 1, 27-10 1997; 27-11 (B) one member for a term expiring February 1, 27-12 1999; and 27-13 (C) one member for a term expiring February 1, 27-14 2001; and 27-15 (2) for inspector members: 27-16 (A) two members for terms expiring February 1, 27-17 1997; 27-18 (B) two members for terms expiring February 1, 27-19 1999; and 27-20 (C) two members for terms expiring February 1, 27-21 2001. 27-22 (b) The initial members of the Texas Real Estate Inspector 27-23 Board appointed under this section shall be required to have been 27-24 issued an inspectors license from the Texas Real Estate Commission. 27-25 SECTION 4. (a) The unobligated and unexpended balance of 27-26 the appropriation made to the Texas Real Estate Commission for the 27-27 regulation of real estate inspectors for the fiscal year ending 28-1 August 31, 1995, is transferred to the Texas Real Estate Inspector 28-2 Board, an independent subdivision of the Texas Real Estate 28-3 Commission, for the purposes of implementing this Act. 28-4 (b) The administrator of the Texas Real Estate Commission 28-5 shall identify the records and property in the custody of the 28-6 commission relating to the certification of real estate inspectors 28-7 under Section 23, The Real Estate License Act (Article 6573a, 28-8 Vernon's Texas Civil Statutes), as that section existed on the day 28-9 before the effective date of this Act, and those records and 28-10 property, including the real estate inspector regulation account 28-11 and the real estate inspection recovery fund, shall be transferred 28-12 to the Texas Real Estate Inspector Board. 28-13 (c) The Texas Real Estate Inspector Committee is abolished 28-14 on the effective date of this Act. 28-15 (d) A person licensed as a real estate inspector, 28-16 professional inspector, or apprentice inspector under Section 23, 28-17 The Real Estate License Act (Article 6573a, Vernon's Texas Civil 28-18 Statutes), on the day before the effective date of this Act shall 28-19 be issued an appropriate license under Article 6573a.3, Revised 28-20 Statutes, as added by this Act. 28-21 (e) The Texas Real Estate Inspector Board may adopt 28-22 emergency rules under Chapter 2001, Government Code, as necessary 28-23 to provide a smooth transition between the former law and this Act. 28-24 SECTION 5. (a) The change in law made by this Act applies 28-25 only to an offense committed on or after the effective date of this 28-26 Act. For purposes of this section, an offense is committed before 28-27 the effective date of this Act if any element of the offense occurs 29-1 before that date. 29-2 (b) An offense committed before the effective date of this 29-3 Act is covered by the law in effect when the offense was committed, 29-4 and the former law is continued in effect for that purpose. 29-5 SECTION 6. (a) An investigation or disciplinary action by 29-6 the Texas Real Estate Inspector Committee pending on the effective 29-7 date of this Act shall be continued under this Act by the Texas 29-8 Real Estate Inspector Board. 29-9 (b) A claim against the real estate inspection recovery fund 29-10 pending on the effective date of this Act is governed by the law in 29-11 effect on the date the claim arose, and the former law is continued 29-12 in effect for that purpose. 29-13 SECTION 7. This Act takes effect July 1, 1995. 29-14 SECTION 8. The importance of this legislation and the 29-15 crowded condition of the calendars in both houses create an 29-16 emergency and an imperative public necessity that the 29-17 constitutional rule requiring bills to be read on three several 29-18 days in each house be suspended, and this rule is hereby suspended, 29-19 and that this Act take effect and be in force according to its 29-20 terms, and it is so enacted.