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.