By Wentworth S.B. No. 1636
74R8732 JMM-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of the practice of selling real estate.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Sections 1(b)-(e), The Real Estate License Act
1-5 (Article 6573a, Vernon's Texas Civil Statutes), are amended to read
1-6 as follows:
1-7 (b) It is unlawful for a person to act in the capacity of,
1-8 engage in the business of, or advertise or hold that person
1-9 <himself> out as engaging in or conducting the business of a real
1-10 estate broker or a real estate salesperson <salesman> within this
1-11 state without first obtaining a real estate license from the Texas
1-12 Real Estate Commission. It is unlawful for a person licensed as a
1-13 real estate salesperson <salesman> to act or attempt to act as a
1-14 real estate broker or salesperson <salesman> unless that person
1-15 <he> is, at such time, associated with a licensed Texas real estate
1-16 broker and acting for the licensed real estate broker.
1-17 (c) Each real estate broker licensed pursuant to this Act is
1-18 responsible to the commission, members of the public, and the
1-19 broker's <his> clients for all acts and conduct performed under
1-20 this Act by the broker <himself> or by a real estate salesperson
1-21 <salesman> associated with or acting for the broker.
1-22 (d) No real estate salesperson <salesman> shall accept
1-23 compensation for real estate sales and transactions from any person
1-24 other than the broker under whom the salesperson <he> is at the
2-1 time licensed or under whom the salesperson <he> was licensed when
2-2 the salesperson <he> earned the right to compensation.
2-3 (e) No real estate salesperson <salesman> shall pay a
2-4 commission to any person except through the broker under whom the
2-5 salesperson <he> is at the time licensed.
2-6 SECTION 2. Section 2(4), The Real Estate License Act
2-7 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
2-8 as follows:
2-9 (4) "Real estate salesperson <salesman>" means a
2-10 person associated with a Texas licensed real estate broker for the
2-11 purposes of performing acts or transactions comprehended by the
2-12 definition of "real estate broker" as defined in this Act.
2-13 SECTION 3. Section 3, The Real Estate License Act (Article
2-14 6573a, Vernon's Texas Civil Statutes), is amended to read as
2-15 follows:
2-16 Sec. 3. The provisions of this Act shall not apply to any of
2-17 the following persons and transactions, and each and all of the
2-18 following persons and transactions are hereby exempted from the
2-19 provisions of this Act:
2-20 (1) an attorney at law licensed in this state or in
2-21 any other state;
2-22 (2) an attorney in fact under a duly executed power of
2-23 attorney authorizing the consummation of a real estate transaction;
2-24 (3) a public official in the conduct of that person's
2-25 <his> official duties;
2-26 (4) a person calling the sale of real estate by
2-27 auction under the authority of a license issued by this state
3-1 provided the person does not perform any other act of a real estate
3-2 broker or salesperson <salesman> as defined by this Act;
3-3 (5) a person acting under a court order or under the
3-4 authority of a will or a written trust instrument;
3-5 (6) a salesperson employed by an owner in the sale of
3-6 structures and land on which said structures are situated, provided
3-7 such structures are erected by the owner in the due course of the
3-8 owner's <his> business;
3-9 (7) an on-site manager of an apartment complex;
3-10 (8) transactions involving the sale, lease, or
3-11 transfer of any mineral or mining interest in real property;
3-12 (9) an owner or the owner's <his> employees in renting
3-13 or leasing the owner's <his> own real estate whether improved or
3-14 unimproved;
3-15 (10) transactions involving the sale, lease, or
3-16 transfer of cemetery lots; <or>
3-17 (11) transactions involving the renting, leasing, or
3-18 management of hotels or motels; or
3-19 (12) a person performing an appraisal of real estate
3-20 or providing real estate services, regardless of whether in a
3-21 federally related transaction, who is registered, licensed, or
3-22 certified by the Texas Appraiser Licensing and Certification Board.
3-23 SECTION 4. Section 4, The Real Estate License Act (Article
3-24 6573a, Vernon's Texas Civil Statutes), is amended to read as
3-25 follows:
3-26 Sec. 4. A person who, directly or indirectly for another,
3-27 with the intention or on the promise of receiving any valuable
4-1 consideration, offers, attempts, or agrees to perform, or performs,
4-2 a single act defined in Subdivisions 2 and 3, Section 2 of this
4-3 Act, whether as a part of a transaction, or as an entire
4-4 transaction, is deemed to be acting as a real estate broker or
4-5 salesperson <salesman> within the meaning of this Act. The
4-6 commission of a single such act by a person required to be licensed
4-7 under this Act and not so licensed shall constitute a violation of
4-8 this Act.
4-9 SECTION 5. Sections 5(a), (f), (g), (i), and (m), The Real
4-10 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
4-11 are amended to read as follows:
4-12 (a) The administration of the provisions of this Act is
4-13 vested in a commission, to be known as the "Texas Real Estate
4-14 Commission," consisting of nine members to be appointed by the
4-15 governor with the advice and consent of two-thirds of the senate
4-16 present. The commissioners hold office for staggered terms of six
4-17 years with the terms of three members expiring January 31 of each
4-18 odd-numbered year. Each member holds office until the member's
4-19 <his> successor is appointed and has qualified. Within 15 days
4-20 after <his> appointment, each member shall qualify by taking the
4-21 constitutional oath of office and furnishing a bond payable to the
4-22 Governor of Texas in the penal sum of $10,000, conditional on the
4-23 faithful performance of the member's <his> duties as prescribed by
4-24 law. A vacancy for any cause shall be filled by the governor for
4-25 the unexpired term. The governor shall designate as chairperson
4-26 <chairman> of the commission one member of the commission who is a
4-27 licensed real estate broker. The chairperson <chairman> serves in
5-1 that capacity at the pleasure of the governor. At a regular
5-2 meeting in February of each year, the commission shall elect from
5-3 its own membership a vice chairperson <vice-chairman> and
5-4 secretary. A quorum of the commission consists of five members.
5-5 (f) If the administrator has knowledge that a potential
5-6 ground for removal exists, the administrator shall notify the
5-7 chairperson <chairman> of the commission of the ground. The
5-8 chairperson <chairman> shall then notify the governor that a
5-9 potential ground for removal exists.
5-10 (g) Each member of the commission shall receive as
5-11 compensation for each day actually spent on the member's <his>
5-12 official duties the sum of $75 and the <his> actual and necessary
5-13 expenses incurred in the performance of the member's <his> official
5-14 duties.
5-15 (i) The commission is empowered to select and name an
5-16 administrator and to select and employ such other subordinate
5-17 officers and employees as are necessary to administer this Act.
5-18 The salaries of the administrator and the officers and employees
5-19 shall be fixed by the commission not to exceed such amounts as are
5-20 fixed by the applicable general appropriations bill. The
5-21 commission may designate a subordinate officer as assistant
5-22 administrator who shall be authorized to act for the administrator
5-23 in the administrator's <his> absence. The administrator or the
5-24 administrator's designee shall develop a system of annual
5-25 performance evaluations. All merit pay for commission employees
5-26 must be based on the system established under this subsection. The
5-27 administrator or the administrator's designee shall develop an
6-1 intraagency career ladder program. The program shall require
6-2 intraagency postings of all nonentry level positions concurrently
6-3 with any public posting.
6-4 (m) Fifteen dollars received by the commission for a renewal
6-5 of a broker license before the expiration of the license or before
6-6 the first anniversary of the date the license expired and $7.50
6-7 received by the commission for a renewal of a salesperson
6-8 <salesman> license before the expiration of the license or before
6-9 the first anniversary of the date the license expired shall be
6-10 transmitted annually to Texas A&M University for deposit in a
6-11 separate banking account. The money in the separate account shall
6-12 be expended for the support and maintenance of the Texas Real
6-13 Estate Research Center and for carrying out the purposes,
6-14 objectives, and duties of the center. However, all money expended
6-15 from the separate account shall be as determined by legislative
6-16 appropriation.
6-17 SECTION 6. Sections 6(a) and (b), The Real Estate License
6-18 Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
6-19 read as follows:
6-20 (a) A person desiring to act as a real estate broker in this
6-21 state shall file an application for a license with the commission
6-22 on a form prescribed by the commission. A broker desiring to
6-23 engage a person to participate in real estate brokerage activity
6-24 shall join the person in filing an application for a salesperson
6-25 <salesman> license on a form prescribed by the commission. A
6-26 person previously licensed as a broker may apply for inactive
6-27 status. A person previously licensed as a salesperson <salesman>
7-1 may apply for inactive status without the participation of a
7-2 broker. The person must apply for inactive status on a form
7-3 prescribed by the commission not later than the fifth <first>
7-4 anniversary of the date of the expiration of the broker or
7-5 salesperson <salesman> license.
7-6 (b) To be eligible for a license, an individual must be a
7-7 citizen of the United States or a lawfully admitted alien, be at
7-8 least 18 years of age, and be a legal resident of Texas at the time
7-9 of the filing of an application, and must satisfy the commission as
7-10 to the individual's <his> honesty, trustworthiness, integrity, and
7-11 competency. However, the competency of the individual, for the
7-12 purpose of qualifying for the granting of a license, shall be
7-13 judged solely on the basis of the examination referred to in
7-14 Section 7 of this Act.
7-15 SECTION 7. Section 6A(a), The Real Estate License Act
7-16 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
7-17 as follows:
7-18 (a) If, at any time before a person applies for a license
7-19 under this Act, the person requests the commission to determine
7-20 whether the person's <his> moral character complies with the
7-21 commission's moral character requirements for licensing under this
7-22 Act and the person pays a fee set by the commission for the moral
7-23 character determination, the commission shall make its
7-24 determination of the person's moral character.
7-25 SECTION 8. Sections 7(a), (c)-(h), and (k), The Real Estate
7-26 License Act (Article 6573a, Vernon's Texas Civil Statutes), are
7-27 amended to read as follows:
8-1 (a) Competency as referred to in Section 6 of this Act shall
8-2 be established by an examination prepared by or contracted for by
8-3 the commission. The examination shall be given at such times and
8-4 at such places within the state as the commission shall prescribe.
8-5 The examination shall be of scope sufficient in the judgment of the
8-6 commission to determine that a person is competent to act as a real
8-7 estate broker or salesperson <salesman> in a manner to protect the
8-8 interest of the public. The examination for a salesperson
8-9 <salesman> license shall be less exacting and less stringent than
8-10 the examination for a broker license. The commission shall furnish
8-11 each applicant with study material and references on which the
8-12 <his> examination shall be based. When an applicant for a real
8-13 estate license fails a qualifying examination, the applicant <he>
8-14 may apply for reexamination by filing a request therefor together
8-15 with the proper fee. The examination requirement must be satisfied
8-16 not later than six months after the date on which the application
8-17 for a license is filed. Courses of study required for a license
8-18 may include but are not limited to the following, which shall be
8-19 considered core real estate courses for all purposes of this Act:
8-20 (1) Principles of Real Estate (or equivalent) shall
8-21 include but not be limited to an overview of licensing as a real
8-22 estate broker and salesperson <salesman>, ethics of practice,
8-23 titles to and conveyancing of real estate, legal descriptions, law
8-24 of agency, deeds, encumbrances and liens, distinctions between
8-25 personal and real property, contracts, appraisal, finance and
8-26 regulations, closing procedures, real estate mathematics, and at
8-27 least three classroom hours of instruction on federal, state, and
9-1 local laws relating to housing discrimination, housing credit
9-2 discrimination, and community reinvestment.
9-3 (2) Real Estate Appraisal (or equivalent) shall
9-4 include but not be limited to the central purposes and functions of
9-5 an appraisal, social and economic determinant of value, appraisal
9-6 case studies, cost, market data and income approaches to value
9-7 estimates, final correlations, and reporting.
9-8 (3) Real Estate Law (or equivalent) shall include but
9-9 not be limited to legal concepts of real estate, land description,
9-10 real property rights and estates in land, contracts, conveyances,
9-11 encumbrances, foreclosures, recording procedures, and evidence of
9-12 titles.
9-13 (4) Real Estate Finance (or equivalent) shall include
9-14 but not be limited to monetary systems, primary and secondary money
9-15 markets, sources of mortgage loans, federal government programs,
9-16 loan applications, processes and procedures, closing costs,
9-17 alternative financial instruments, equal credit opportunity acts,
9-18 community reinvestment act, and state housing agency.
9-19 (5) Real Estate Marketing (or equivalent) shall
9-20 include but not be limited to real estate professionalism and
9-21 ethics, characteristics of successful salespersons <salesmen>, time
9-22 management, psychology of marketing, listing procedures,
9-23 advertising, negotiating and closing, financing, and the Deceptive
9-24 Trade Practices-Consumer Protection Act, as amended, Section 17.01
9-25 et seq., Business & Commerce Code.
9-26 (6) Real Estate Mathematics (or equivalent) shall
9-27 include but not be limited to basic arithmetic skills and review of
10-1 mathematical logic, percentages, interest, time-valued money,
10-2 depreciation, amortization, proration, and estimation of closing
10-3 statements.
10-4 (7) Real Estate Brokerage (or equivalent) shall
10-5 include but not be limited to law of agency, planning and
10-6 organization, operational policies and procedures, recruiting,
10-7 selection and training of personnel, records and control, and real
10-8 estate firm analysis and expansion criteria.
10-9 (8) Property Management (or equivalent) shall include
10-10 but not be limited to role of property manager, landlord policies,
10-11 operational guidelines, leases, lease negotiations, tenant
10-12 relations, maintenance, reports, habitability laws, and the Fair
10-13 Housing Act.
10-14 (9) Real Estate Investments (or equivalent) shall
10-15 include but not be limited to real estate investment
10-16 characteristics, techniques of investment analysis, time-valued
10-17 money, discounted and nondiscounted investment criteria, leverage,
10-18 tax shelters depreciation, and applications to property tax.
10-19 (10) Law of Agency (or equivalent) shall include but
10-20 not be limited to the principal-agent and master-servant
10-21 relationships, the authority of an agent, the termination of an
10-22 agent's authority, the fiduciary and other duties of an agent,
10-23 employment law, deceptive trade practices, listing or buying
10-24 representation procedures, and the disclosure of agency.
10-25 (c) The commission shall waive the examination of an
10-26 applicant for a broker license who has, within two years <one year>
10-27 previous to the filing of the <his> application, been licensed in
11-1 this state as a broker, and shall waive the examination of an
11-2 applicant for a salesperson <salesman> license who has, within two
11-3 years <one year> previous to the filing of the <his> application,
11-4 been licensed in this state as either a broker or salesperson
11-5 <salesman>. If an application is filed after the second
11-6 anniversary of the expiration date of the applicant's previous
11-7 license, the applicant must satisfy the examination requirement and
11-8 any continuing education required under Section 7A(b) of this Act.
11-9 If an application is filed after the fifth anniversary of the
11-10 expiration date of the applicant's previous license, the applicant
11-11 must satisfy the experience, examination, and education
11-12 requirements for an original license under this Act.
11-13 (d) Each applicant for a broker license shall furnish the
11-14 commission satisfactory evidence that the applicant <he> has had
11-15 not less than two years active experience in this state as a
11-16 licensed real estate salesperson <salesman> or broker during the
11-17 seven-year <36-month> period immediately preceding the filing of
11-18 the application; and, in addition, shall furnish the commission
11-19 satisfactory evidence of having completed successfully 60 semester
11-20 hours, or equivalent classroom hours, of core real estate courses
11-21 or related postsecondary education courses accepted by the
11-22 commission. These qualifications for a broker license may not be
11-23 required of an applicant who, at the time of making the
11-24 application, is duly licensed as a real estate broker by any other
11-25 state in the United States if that state's requirements for
11-26 licensure are comparable to those of Texas. As a prerequisite for
11-27 applying for a broker license, those persons licensed as
12-1 salespersons <salesmen> subject to the annual education
12-2 requirements provided by Subsection (e) of this section shall, as
12-3 part of the hours required by this subsection, furnish the
12-4 commission satisfactory evidence of having completed all the
12-5 requirements of Subsection (e) of this section.
12-6 (e) Each applicant for a salesperson <salesman> license
12-7 shall furnish the commission satisfactory evidence of having
12-8 completed 12 semester hours, or equivalent classroom hours, of
12-9 postsecondary education, six hours of which must be completed in
12-10 core real estate courses, of which a minimum of two hours must be
12-11 completed in Principles of Real Estate as described in Subsection
12-12 (a)(1) of this section and a minimum of two hours must be completed
12-13 in Law of Agency as described in Subsection (a)(10) of this
12-14 section. The remaining six hours shall be completed in core real
12-15 estate courses or related courses. As a condition for the first
12-16 renewal of a salesperson <salesman> license, the applicant shall
12-17 furnish the commission satisfactory evidence of having completed a
12-18 minimum of 14 semester hours, or equivalent classroom hours, eight
12-19 hours of which must be completed in core real estate courses. As a
12-20 condition for the second renewal of a salesperson <salesman>
12-21 license, the applicant shall furnish the commission satisfactory
12-22 evidence of having completed a minimum of 16 semester hours, or
12-23 equivalent classroom hours, 10 hours of which must be completed in
12-24 core real estate courses. As a condition for the third renewal of
12-25 a salesperson <salesman> license, the applicant shall furnish the
12-26 commission satisfactory evidence of having completed a minimum of
12-27 18 semester hours, or equivalent classroom hours, 12 hours of which
13-1 must be completed in core real estate courses.
13-2 (f) Insofar as is necessary for the administration of this
13-3 Act, the commission is authorized to inspect and accredit
13-4 educational programs or courses of study in real estate and real
13-5 estate inspection and to establish standards of accreditation for
13-6 such programs conducted in the State of Texas, other than
13-7 accredited colleges and universities. The commission shall
13-8 determine the acceptability of real estate courses and real estate
13-9 inspection courses offered to satisfy the requirements of this Act,
13-10 and by rule may provide reasonable criteria for the approval of
13-11 those courses. Schools, other than accredited colleges and
13-12 universities, which are authorized to offer real estate educational
13-13 courses pursuant to provisions of this section, shall be required
13-14 to maintain a corporate surety bond, or other security acceptable
13-15 to the commission, in the sum of $10,000, payable to the
13-16 commission, for the benefit of a party who may suffer damages
13-17 resulting from failure of a commission approved school or course to
13-18 fulfill obligations attendant to the approval. The commission by
13-19 rule may provide for the reapplication by and reaccreditation of a
13-20 school accredited by the commission before September 1, 1995, and
13-21 may collect a reasonable filing fee to implement this section. A
13-22 fee collected under this subsection may not exceed $400 for an
13-23 application for the reaccreditation of a school and $100 for an
13-24 application for the approval of a course of study.
13-25 (g) Notwithstanding any other provision of this Act, each
13-26 applicant for a broker license shall furnish the commission with
13-27 satisfactory evidence:
14-1 (1) that the applicant <he> has satisfied the
14-2 requirements of Subsection (d) of this section;
14-3 (2) that the applicant <he> is a licensed real estate
14-4 broker in another state, <that he> has had not less than two years'
14-5 active experience in the other state as a licensed real estate
14-6 salesperson <salesman> or broker during the seven-year <36-month>
14-7 period immediately preceding the filing of the application, and
14-8 <that he> has satisfied the educational requirements for a broker
14-9 license as provided by Subsection (d) of this section; or
14-10 (3) that the applicant <he> has, within five years
14-11 <one year> previous to the filing of the <his> application, been
14-12 licensed in this state as a broker.
14-13 (h) Notwithstanding any other provision of this Act, the
14-14 commission shall waive the requirements of Subsection (e) of this
14-15 section for an applicant for a salesperson <salesman> license who
14-16 has, within five years <one year> previous to the filing of the
14-17 <his> application, been licensed in this state as a broker or
14-18 salesperson <salesman>. However, with respect to an applicant for
14-19 a salesperson <salesman> license who was licensed as a salesperson
14-20 <salesman> within five years <one year> previous to the filing of
14-21 the application but whose original license was issued under the
14-22 provisions that the first, second, and third renewal of the license
14-23 would be conditioned upon furnishing satisfactory evidence of
14-24 successful completion of additional education, the commission shall
14-25 require the applicant to furnish satisfactory evidence of
14-26 successful completion of any additional education that would have
14-27 been required if the license had been maintained without
15-1 interruption <during the previous year>.
15-2 (k) The commission may accept examinations administered by a
15-3 testing service as satisfying the examination requirements imposed
15-4 under this Act. The commission may negotiate agreements with those
15-5 testing services relating to examination development, preparation
15-6 of study materials, collection of filing fees, acceptance and
15-7 processing of license applications, test scheduling, examination
15-8 site arrangements, and test administration, grading, reporting, and
15-9 analysis. The commission may require a testing service to
15-10 correspond directly with the license applicants regarding the
15-11 administration of the examinations and may require that a testing
15-12 service collect fees for providing an applicant with study
15-13 materials, filing an application for a license, processing license
15-14 applications, or administering the examinations directly from the
15-15 applicants. The commission also may require a testing service to
15-16 administer examinations at specific locations and specified
15-17 frequencies. The commission shall retain the authority to
15-18 establish the scope and type of all examinations. The commission
15-19 shall adopt rules and standards as necessary to implement this
15-20 section. In the absence of an agreement with a testing service,
15-21 the commission shall administer any required qualifying examination
15-22 in accordance with this Act.
15-23 SECTION 9. Sections 7A(a)-(d), The Real Estate License Act
15-24 (Article 6573a, Vernon's Texas Civil Statutes), are amended to read
15-25 as follows:
15-26 (a) To renew an active real estate broker license or an
15-27 active real estate salesperson <salesman> license that is not
16-1 subject to the annual education requirements of this Act, the
16-2 licensee must provide the commission proof of attendance at at
16-3 least 15 classroom hours of continuing education courses approved
16-4 by the commission during the term of the current license. The
16-5 commission by rule may provide for the substitution of relevant
16-6 educational experience or correspondence courses approved by the
16-7 commission instead of classroom attendance. In addition,
16-8 supervised video instruction may be approved by the commission as a
16-9 course counting as classroom hours of mandatory continuing
16-10 education. At least six hours of instruction must be devoted to
16-11 the rules of the commission, fair housing laws, agency laws,
16-12 antitrust laws, the Deceptive Trade Practices-Consumer Protection
16-13 Act (Subchapter E, Chapter 17, Business & Commerce Code),
16-14 disclosures to buyers and sellers, current contract and addendum
16-15 forms, the unauthorized practice of law, case studies involving
16-16 violations of laws and regulations, current Federal Housing
16-17 Administration and Veterans Administration regulations, tax laws,
16-18 and other legal topics approved by the commission. The remaining
16-19 hours may be devoted to other real estate-related topics approved
16-20 by the commission. The commission may consider equivalent courses
16-21 for continuing education credit. The commission, on the request of
16-22 a provider of education, shall review a core real estate course
16-23 authorized under Section 7 of this Act and may approve it as a
16-24 mandatory continuing education course. Real estate related courses
16-25 approved by the State Bar of Texas for minimum continuing legal
16-26 education participatory credit and core real estate courses under
16-27 Section 7(a) of this Act shall automatically be approved as
17-1 mandatory continuing education courses under this Act. The
17-2 commission may not require examinations except for correspondence
17-3 courses. Daily course segments must be at least three hours long
17-4 but not more than 10 hours long. <If the license being renewed
17-5 under this section was issued for less than two years, the licensee
17-6 must provide the commission proof of attendance at at least eight
17-7 classroom hours of continuing education within the term of the
17-8 current license, three classroom hours of which must have been
17-9 devoted to the legal topics specified in this section.>
17-10 (b) An applicant for an active real estate broker license or
17-11 an active real estate salesperson <salesman> license who is not
17-12 subject to the education requirements of Section 7 of this Act must
17-13 provide the commission with proof of attendance of the number of
17-14 classroom hours of continuing education that would have been
17-15 required for a timely renewal as specified in Subsection (a) of
17-16 this section during the two-year period preceding the filing of the
17-17 application.
17-18 (c) As a condition of returning to active status, an
17-19 inactive salesperson <salesman> whose license is not subject to the
17-20 annual education requirements of this Act must provide the
17-21 commission with proof of attendance at at least 15 hours of
17-22 continuing education as specified in Subsection (a) of this section
17-23 during the two-year period preceding the filing of the application.
17-24 (d) The commission may adopt rules and set and collect
17-25 reasonable fees to implement this section, including a fee not to
17-26 exceed $400 for an application for approval of a provider of
17-27 continuing education and a fee not to exceed $100 for an
18-1 application for a course of study to be offered for continuing
18-2 education. If the commission determines that an applicant
18-3 satisfies the requirements of this section and any rules adopted by
18-4 the commission under this section, the commission may authorize a
18-5 provider to offer continuing education for a period of four <two>
18-6 years or authorize the offering of a course of study for a period
18-7 of two years.
18-8 SECTION 10. Section 8, The Real Estate License Act (Article
18-9 6573a, Vernon's Texas Civil Statutes), is amended by amending
18-10 Subsections (a)-(f), (h)-(j), (l), (n), and (q) and adding
18-11 Subsection (r) to read as follows:
18-12 (a) The commission shall establish a real estate recovery
18-13 fund which shall be set apart and maintained by the commission as
18-14 provided in this section. The fund shall be used in the manner
18-15 provided in this section for reimbursing aggrieved persons who
18-16 suffer actual damages by reason of certain acts committed by a duly
18-17 licensed real estate broker or salesperson <salesman>, or by an
18-18 unlicensed employee or agent of a broker or salesperson <salesman>,
18-19 provided the broker or salesperson <salesman> was licensed by the
18-20 State of Texas at the time the act was committed and provided
18-21 recovery is ordered by a court of competent jurisdiction against
18-22 the broker or salesperson <salesman>. The use of the fund is
18-23 limited to an act that constitutes a violation of Section 15(a)(3)
18-24 or (6) of this Act.
18-25 (b) On application for an original license pursuant to this
18-26 Act, the applicant shall pay, in addition to the <his> original
18-27 license application fee, a fee of $10 which shall be deposited in
19-1 the real estate recovery fund.
19-2 (c) If on December 31 of any year the balance remaining in
19-3 the real estate recovery fund is less than $1 million, each real
19-4 estate broker and each real estate salesperson <salesman>, on the
19-5 next renewal of the <his> license, shall pay, in addition to the
19-6 <his> license renewal fee, a fee of $10, which shall be deposited
19-7 in the real estate recovery fund, or a pro rata share of the amount
19-8 necessary to bring the fund to $1.7 million, whichever is less. If
19-9 on December 31 of any year the balance remaining in the real estate
19-10 recovery fund is more than $3.5 million or more than the total
19-11 amount of claims paid from the fund during the previous four fiscal
19-12 years, whichever is greater, the amount of money in excess of the
19-13 greater amount shall be transferred to the general revenue fund.
19-14 (d) No action for a judgment which subsequently results in
19-15 an order for collection from the real estate recovery fund shall be
19-16 started later than two years from the accrual of the cause of
19-17 action. When an aggrieved person commences action for a judgment
19-18 which may result in collection from the real estate recovery fund,
19-19 the real estate broker or real estate salesperson <salesman> shall
19-20 notify the commission in writing to this effect at the time of the
19-21 commencement of the action.
19-22 (e) When an aggrieved person recovers a valid judgment in a
19-23 court of competent jurisdiction against a real estate broker or
19-24 real estate salesperson <salesman>, on the grounds described in
19-25 Subsection (a) of this section that occurred on or after May 19,
19-26 1975, the aggrieved person may, after final judgment has been
19-27 entered, execution returned nulla bona, and a judgment lien
20-1 perfected, file a verified claim in the court in which the judgment
20-2 was entered and, on 20 days' written notice to the commission, and
20-3 to the judgment debtor, may apply to the court for an order
20-4 directing payment out of the real estate recovery fund of the
20-5 amount unpaid on the judgment, subject to the limitations stated in
20-6 Subsection (n) of this section.
20-7 (f) The court shall proceed on the application forthwith.
20-8 On the hearing on the application, the aggrieved person is required
20-9 to show that:
20-10 (1) the judgment is based on facts allowing recovery
20-11 under Subsection (a) of this section;
20-12 (2) the person <he> is not a spouse of the debtor, or
20-13 the personal representative of the spouse; and the person <he> is
20-14 not a real estate broker or salesperson <salesman>, as defined by
20-15 this Act, who is seeking to recover a real estate commission in the
20-16 transaction or transactions for which the application for payment
20-17 is made;
20-18 (3) the person <he> has obtained a judgment under
20-19 Subsection (e) of this section that is not subject to a stay or
20-20 discharge in bankruptcy and has been judicially determined to be
20-21 nondischargeable in a pending bankruptcy, stating the amount of the
20-22 judgment and the amount owing on the judgment at the date of the
20-23 application;
20-24 (4) based on the best available information, the
20-25 judgment debtor lacks sufficient attachable assets in this state or
20-26 any other state to satisfy the judgment; and
20-27 (5) the amount that may be realized from the sale of
21-1 real or personal property or other assets liable to be sold or
21-2 applied in satisfaction of the judgment and the balance remaining
21-3 due on the judgment after application of the amount that may be
21-4 realized.
21-5 (h) The court shall make an order directed to the commission
21-6 requiring payment from the real estate recovery fund of whatever
21-7 sum it finds to be payable on the claim, pursuant to and in
21-8 accordance with the limitations contained in this section, if the
21-9 court is satisfied, on the hearing, of the truth of all matters
21-10 required to be shown by the aggrieved person by Subsection (f) of
21-11 this section and that the aggrieved person has satisfied all of the
21-12 requirements of Subsections (e) and (f) of this section. The
21-13 commission may relitigate any issue material and relevant in the
21-14 hearing on the application that was determined in the underlying
21-15 action on which the judgment in favor of the applicant was based.
21-16 If the court finds that the aggregate amount of claims against a
21-17 real estate broker or salesperson <salesman> exceeds the
21-18 limitations contained in this section, the court shall reduce
21-19 proportionately the amount it finds payable on the claim.
21-20 (i) A license granted under the provisions of this Act may
21-21 be revoked by the commission on proof that the commission has made
21-22 a payment from the real estate recovery fund of any amount toward
21-23 satisfaction of a judgment against a licensed real estate broker or
21-24 salesperson <salesman>. The commission may probate an order
21-25 revoking a license. No broker or salesperson <salesman> is
21-26 eligible to receive a new license until the broker or salesperson
21-27 <he> has repaid in full, plus interest at the current legal rate,
22-1 the amount paid from the real estate recovery fund on the broker's
22-2 or salesperson's <his> account.
22-3 (j) The sums received by the real estate commission for
22-4 deposit in the real estate recovery fund shall be held by the
22-5 commission in trust for carrying out the purposes of the real
22-6 estate recovery fund. Subject to legislative appropriation, money
22-7 in the fund may be used by the commission to pay the expenses
22-8 involved in collecting judgments assigned to the commission. These
22-9 funds may be invested and reinvested in the same manner as funds of
22-10 the Texas State Employees Retirement System, and the interest from
22-11 these investments shall be deposited to the credit of the real
22-12 estate recovery fund, provided, however, that no investments shall
22-13 be made which will impair the necessary liquidity required to
22-14 satisfy judgment payments awarded pursuant to this section.
22-15 (l) When, on the order of the court, the commission has paid
22-16 from the real estate recovery fund any sum to the judgment
22-17 creditor, the commission shall be subrogated to all of the rights
22-18 of the judgment creditor to the extent of the amount paid. The
22-19 judgment creditor shall assign all of the creditor's <his> right,
22-20 title, and interest in the judgment up to the amount paid by the
22-21 commission which amount shall have priority for repayment in the
22-22 event of any subsequent recovery on the judgment. Any amount and
22-23 interest recovered by the commission on the judgment shall be
22-24 deposited to the fund.
22-25 (n) Notwithstanding any other provision, payments from the
22-26 real estate recovery fund are subject to the following conditions
22-27 and limitations:
23-1 (1) payments may be made only pursuant to an order of
23-2 a court of competent jurisdiction, as provided in Subsection (e) of
23-3 this section, and in the manner prescribed by this section;
23-4 (2) payments for claims, including attorneys' fees,
23-5 interest, and court costs, arising out of the same transaction
23-6 shall be limited in the aggregate to $50,000 regardless of the
23-7 number of claimants; and
23-8 (3) payments for claims based on judgments against any
23-9 one licensed real estate broker or salesperson <salesman> may not
23-10 exceed in the aggregate $100,000 until the fund has been reimbursed
23-11 by the licensee for all amounts paid.
23-12 (q) A broker or salesperson <salesman> licensed under this
23-13 Act shall notify consumers and service recipients of the
23-14 availability of the real estate recovery fund established under
23-15 this section for reimbursing certain aggrieved persons. The notice
23-16 must include the name, mailing address, and telephone number of the
23-17 commission and any other information required by commission rule.
23-18 The notification may be provided with the notice required by
23-19 Section 5(q) of this Act or:
23-20 (1) on a written contract for the services of a broker
23-21 or salesperson <salesman>;
23-22 (2) on a brochure distributed by a broker or
23-23 salesperson <salesman>;
23-24 (3) on a sign prominently displayed in the place of
23-25 business of a salesperson <salesman> or broker; or
23-26 (4) in a bill or receipt for service provided by a
23-27 broker or salesperson <salesman>.
24-1 (r) If the commission is notified before making a payment
24-2 from the real estate recovery fund that a judgment debtor has
24-3 initiated a bankruptcy proceeding involving a judgment that the
24-4 commission has been ordered to pay, the commission may move for an
24-5 order to withdraw the order directing the commission to make the
24-6 payment, pending a judicial determination in the bankruptcy
24-7 proceeding that the judgment is not dischargeable. A court shall
24-8 grant the commission's motion on presentation by the commission of
24-9 proof that the bankruptcy proceeding involving the judgment debtor
24-10 was initiated by the judgment debtor.
24-11 SECTION 11. Sections 9(a), (b), and (e), The Real Estate
24-12 License Act (Article 6573a, Vernon's Texas Civil Statutes), are
24-13 amended to read as follows:
24-14 (a) When an applicant has satisfactorily met all
24-15 requirements and conditions of this Act, a license shall be issued
24-16 which may remain in force and effect so long as the holder of the
24-17 license remains in compliance with the obligations of this Act,
24-18 which include payment of the renewal fee as provided in Section 11
24-19 of this Act. Each active salesperson <salesman> license issued
24-20 shall be delivered or mailed to the broker with whom the
24-21 salesperson <salesman> is associated and shall be kept under the
24-22 broker's <his> custody and control.
24-23 (b) An applicant is not permitted to engage in the real
24-24 estate business either as a broker or salesperson <salesman> until
24-25 a license evidencing the applicant's <his> authority to engage in
24-26 the real estate business has been received.
24-27 (e) The commission shall require in any application for a
25-1 broker or salesperson <salesman> license or a renewal of a broker
25-2 or salesperson <salesman> license the applicant to disclose whether
25-3 the applicant has entered a plea of guilty or nolo contendere to,
25-4 been found guilty of, or been convicted of a felony and the time
25-5 for appeal has elapsed or the judgment or conviction has been
25-6 affirmed on appeal, irrespective of an order granting probation
25-7 following the conviction or suspending the imposition of sentence.
25-8 SECTION 12. Section 10(a), The Real Estate License Act
25-9 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
25-10 as follows:
25-11 (a) If the commission declines or fails to license an
25-12 applicant, it shall immediately give written notice of the refusal
25-13 to the applicant. Before the applicant may appeal to a district
25-14 court as provided in Section 18 of this Act, the applicant <he>
25-15 must file within 10 days after the receipt of the notice an appeal
25-16 from the ruling, requesting a time and place for a hearing before
25-17 the commission. The commission shall set a time and place for the
25-18 hearing within 30 days from the receipt of the appeal, giving 10
25-19 days' notice of the hearing to the applicant. The time of the
25-20 hearing may be continued from time to time with the consent of the
25-21 applicant. Following the hearing, the commission shall enter an
25-22 order which is, in its opinion, appropriate in the matter
25-23 concerned.
25-24 SECTION 13. Section 11, The Real Estate License Act (Article
25-25 6573a, Vernon's Texas Civil Statutes), is amended to read as
25-26 follows:
25-27 Sec. 11. <(a)> The commission shall charge and collect the
26-1 following fees:
26-2 (1) a fee not to exceed $100 for the filing of an
26-3 original application for a real estate broker license;
26-4 (2) a fee not to exceed $100 for annual renewal of a
26-5 real estate broker license;
26-6 (3) a fee not to exceed $50 for the filing of an
26-7 original application for a real estate salesperson <salesman>
26-8 license;
26-9 (4) a fee not to exceed $50 for annual renewal of a
26-10 real estate salesperson <salesman> license;
26-11 (5) a fee not to exceed $25 for an application for a
26-12 license examination;
26-13 (6) a fee not to exceed $20 for filing a request for a
26-14 license for each additional office or place of business;
26-15 (7) a fee not to exceed $20 for filing a request for a
26-16 license for a change of place of business, change of name, return
26-17 to active status, or change of sponsoring broker;
26-18 (8) a fee not to exceed $20 for filing a request to
26-19 replace a license lost or destroyed;
26-20 (9) a fee not to exceed $400 for filing an application
26-21 for approval of an education program under Section 7(f) of this
26-22 Act;
26-23 (10) a fee not to exceed $200 a year for operation of
26-24 an education program under Section 7(f) of this Act;
26-25 (11) a fee of $15 for transcript evaluation;
26-26 (12) a fee not to exceed $10 for preparing a license
26-27 history; and
27-1 (13) a fee not to exceed $50 for the filing of an
27-2 application for a moral character determination.
27-3 SECTION 14. Sections 12(a), (b), and (d), The Real Estate
27-4 License Act (Article 6573a, Vernon's Texas Civil Statutes), are
27-5 amended to read as follows:
27-6 (a) Each resident broker shall maintain a fixed office
27-7 within this state. The address of the office shall be designated
27-8 on the broker's license. Within 10 days after a move from a
27-9 previously designated address, the broker shall submit an
27-10 application for a new license, designating the new location of the
27-11 broker's <his> office, together with the required fee, whereupon
27-12 the commission shall issue a license, reflecting the new location,
27-13 provided the new location complies with the terms of this section.
27-14 (b) If a broker maintains more than one place of business
27-15 within this state, the broker <he> shall apply for, pay the
27-16 required fee for, and obtain an additional license to be known as a
27-17 branch office license for each additional office the broker <he>
27-18 maintains.
27-19 (d) Each broker shall also prominently display in the
27-20 broker's <his> place or in one of the broker's <his> places of
27-21 business the license of each real estate salesperson <salesman>
27-22 associated with the broker <him>.
27-23 SECTION 15. Section 13, The Real Estate License Act (Article
27-24 6573a, Vernon's Texas Civil Statutes), is amended to read as
27-25 follows:
27-26 Sec. 13. (a) When the association of a salesperson
27-27 <salesman> with the salesperson's <his> sponsoring broker is
28-1 terminated, the broker shall immediately return the salesperson
28-2 <salesman> license to the commission. The salesperson <salesman>
28-3 license then becomes inactive.
28-4 (b) The salesperson <salesman> license may be activated if,
28-5 before the license expires, a request, accompanied by the required
28-6 fee, is filed with the commission by a licensed broker advising
28-7 that the broker <he> assumes sponsorship of the salesperson
28-8 <salesman>.
28-9 SECTION 16. Section 13A(a), The Real Estate License Act
28-10 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
28-11 as follows:
28-12 (a) A real estate broker who holds a license issued under
28-13 this Act and who is not acting as a broker or sponsoring a
28-14 salesperson <salesman> may apply to the commission in writing to be
28-15 placed on the inactive status list maintained by the commission.
28-16 The broker must apply for inactive status before the expiration of
28-17 the broker's license. The broker shall terminate the broker's
28-18 association with any salesperson <salesmen> sponsored by the broker
28-19 by giving written notice to the salesperson <salesmen> before the
28-20 30th day before the date the broker applies for inactive status. A
28-21 person on inactive status under this section is required to pay the
28-22 annual renewal fees.
28-23 SECTION 17. Section 14, The Real Estate License Act (Article
28-24 6573a, Vernon's Texas Civil Statutes), is amended to read as
28-25 follows:
28-26 Sec. 14. (a) It is unlawful for a licensed broker to employ
28-27 or compensate directly or indirectly a person for performing an act
29-1 enumerated in the definition of real estate broker in Section 2 of
29-2 this Act if the person is not a licensed broker or licensed
29-3 salesperson <salesman> in this state. However, a licensed broker
29-4 may pay a commission to a licensed broker of another state if the
29-5 foreign broker does not conduct in this state any of the
29-6 negotiations for which the fee, compensation, or commission is
29-7 paid.
29-8 (b) A resident broker of another state who furnishes the
29-9 evidence required under Section 7(g) of this Act may apply for a
29-10 license as a broker in this state. A resident of another state who
29-11 is not licensed as a broker but who was formerly licensed as a
29-12 salesperson <salesman> or broker in this state may apply for a
29-13 license in this state not later than the fifth <first> anniversary
29-14 of the date of the expiration of the previous license. An
29-15 application by a nonresident is subject to the requirements under
29-16 this Act for the type of license applied for. A nonresident
29-17 licensee need not maintain a place of business in this state. The
29-18 commission may in its discretion refuse to issue a license to an
29-19 applicant who is not a resident of this state for the same reasons
29-20 that it may refuse to license a resident of this state. The
29-21 commission shall judge the competency of a nonresident applicant
29-22 solely on the basis of the examination conducted under Section 7 of
29-23 this Act.
29-24 (c) Each nonresident applicant shall file an irrevocable
29-25 consent that legal actions may be commenced against the applicant
29-26 <him> in the proper court of any county of this state in which a
29-27 cause of action may arise, or in which the plaintiff may reside, by
30-1 service of process or pleading authorized by the laws of this
30-2 state, or by serving the administrator or assistant administrator
30-3 of the commission. The consent shall stipulate that the service of
30-4 process or pleading shall be valid and binding in all courts as if
30-5 personal service had been made on the nonresident in this state.
30-6 The consent shall be duly acknowledged, and if made by a
30-7 corporation, shall be authenticated by its seal. A service of
30-8 process or pleading served on the commission shall be by duplicate
30-9 copies, one of which shall be filed in the office of the commission
30-10 and the other forwarded by registered mail to the last known
30-11 principal address which the commission has for the nonresident
30-12 against whom the process or pleading is directed. No default in an
30-13 action may be taken except on certification by the commission that
30-14 a copy of the process or pleading was mailed to the defendant as
30-15 provided in this section, and no default judgment may be taken in
30-16 an action or proceeding until 20 days after the day of mailing of
30-17 the process or pleading to the defendant.
30-18 Notwithstanding any other provision of this subsection, a
30-19 nonresident of this state who resides in a city whose boundaries
30-20 are contiguous at any point to the boundaries of a city of this
30-21 state, and who has been an actual bona fide resident of that city
30-22 for at least 60 days immediately preceding the filing of his
30-23 application, is eligible to be licensed as a real estate broker or
30-24 salesperson <salesman> under this Act in the same manner as a
30-25 resident of this state. If a person <he> is licensed in this
30-26 manner, the person <he> shall at all times maintain a place of
30-27 business either in the city in which the person <he> resides or in
31-1 the city in this state which is contiguous to the city in which the
31-2 person <he> resides, and the person <he> may not maintain a place
31-3 of business at another location in this state unless the person
31-4 <he> also complies with the requirements of Section 14(b) of this
31-5 Act. The place of business must satisfy the requirements of
31-6 Subsection (a) of Section 12 of this Act, but the place of business
31-7 shall be deemed a definite place of business in this state within
31-8 the meaning of Subsection (a) of Section 12.
31-9 SECTION 18. Sections 15(a) and (d), The Real Estate License
31-10 Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
31-11 read as follows:
31-12 (a) The commission may, on its own motion, and shall, on the
31-13 signed complaint in writing of any person <a consumer or service
31-14 recipient>, provided the complaint, or the complaint together with
31-15 evidence, documentary or otherwise, presented in connection with
31-16 the complaint, provides reasonable cause, investigate the actions
31-17 and records of a real estate broker or real estate salesperson
31-18 <salesman>. The commission may suspend or revoke a license issued
31-19 under the provisions of this Act at any time when it has been
31-20 determined that:
31-21 (1) the licensee has entered a plea of guilty or nolo
31-22 contendere to, or been found guilty of, or been convicted of, a
31-23 felony, in which fraud is an essential element, and the time for
31-24 appeal has elapsed or the judgment or conviction has been affirmed
31-25 on appeal, irrespective of an order granting probation following
31-26 such conviction, suspending the imposition of sentence;
31-27 (2) the licensee has procured, or attempted to
32-1 procure, a real estate license, for the licensee <himself> or
32-2 another person <a salesman>, by fraud, misrepresentation or deceit,
32-3 or by making a material misstatement of fact in an application for
32-4 a real estate license;
32-5 (3) the licensee, when selling, buying, trading, or
32-6 renting real property on the licensee's <in his> own account
32-7 <name>, engaged in misrepresentation or dishonest or fraudulent
32-8 action;
32-9 (4) the licensee has failed within a reasonable time
32-10 to make good a check issued to the commission after the commission
32-11 has mailed a request for payment by certified mail to the
32-12 licensee's last known business address as reflected by the
32-13 commission's records;
32-14 (5) the licensee has disregarded or violated a
32-15 provision of this Act;
32-16 (6) the licensee, while performing an act constituting
32-17 an act of a broker or salesperson <salesman>, as defined by this
32-18 Act, has been guilty of:
32-19 (A) making a material misrepresentation, or
32-20 failing to disclose to a potential purchaser any latent structural
32-21 defect or any other defect known to the broker or salesperson
32-22 <salesman>. Latent structural defects and other defects do not
32-23 refer to trivial or insignificant defects but refer to those
32-24 defects that would be a significant factor to a reasonable and
32-25 prudent purchaser in making a decision to purchase;
32-26 (B) making a false promise of a character likely
32-27 to influence, persuade, or induce any person to enter into a
33-1 contract or agreement when the licensee could not or did not intend
33-2 to keep such promise;
33-3 (C) pursuing a continued and flagrant course of
33-4 misrepresentation or making of false promises through agents,
33-5 salespersons <salesmen>, advertising, or otherwise;
33-6 (D) failing to make clear, to all parties to a
33-7 transaction, which party the licensee <he> is acting for, or
33-8 receiving compensation from more than one party except with the
33-9 full knowledge and consent of all parties;
33-10 (E) failing within a reasonable time properly to
33-11 account for or remit money coming into the licensee's <his>
33-12 possession which belongs to others, or commingling money belonging
33-13 to others with the licensee's <his> own funds;
33-14 (F) paying a commission or fees to or dividing a
33-15 commission or fees with anyone not licensed as a real estate broker
33-16 or salesperson <salesman> in this state or in any other state for
33-17 compensation for services for which <as> a real estate license is
33-18 required by this Act <agent>;
33-19 (G) failing to specify in a listing contract or
33-20 in another contract in which the licensee agrees to perform
33-21 services for which a license is required under this Act a definite
33-22 termination date which is not subject to prior notice;
33-23 (H) accepting, receiving, or charging an
33-24 undisclosed commission, rebate, or direct profit on expenditures
33-25 made for a principal;
33-26 (I) soliciting, selling, or offering for sale
33-27 real property under a scheme or program that constitutes a lottery
34-1 or deceptive practice;
34-2 (J) acting in the dual capacity of broker and
34-3 undisclosed principal in a transaction;
34-4 (K) guaranteeing, authorizing, or permitting a
34-5 person to guarantee that future profits will result from a resale
34-6 of real property;
34-7 (L) placing a sign on real property offering it
34-8 for sale, lease, or rent without the written consent of the owner
34-9 or the owner's <his> authorized agent;
34-10 (M) inducing or attempting to induce a party to
34-11 a contract of sale or lease to break the contract for the purpose
34-12 of substituting in lieu thereof a new contract;
34-13 (N) negotiating or attempting to negotiate the
34-14 sale, exchange, lease, or rental of real property with an owner,
34-15 <or> lessor, buyer, or tenant, knowing that the owner, <or> lessor,
34-16 buyer, or tenant had a written outstanding contract, granting
34-17 exclusive agency in connection with the transaction <property> to
34-18 another real estate broker;
34-19 (O) offering real property for sale or for lease
34-20 without the knowledge and consent of the owner or the owner's <his>
34-21 authorized agent, or on terms other than those authorized by the
34-22 owner or the owner's <his> authorized agent;
34-23 (P) publishing, or causing to be published, an
34-24 advertisement including, but not limited to, advertising by
34-25 newspaper, radio, television, or display which is misleading, or
34-26 which is likely to deceive the public, or which in any manner tends
34-27 to create a misleading impression, or which fails to identify the
35-1 person causing the advertisement to be published as a licensed real
35-2 estate broker or salesperson <agent>;
35-3 (Q) having knowingly withheld from or inserted
35-4 in a statement of account or invoice, a statement that made it
35-5 inaccurate in a material particular;
35-6 (R) publishing or circulating an unjustified or
35-7 unwarranted threat of legal proceedings, or other action;
35-8 (S) establishing an association, by employment
35-9 or otherwise, with an unlicensed person who is expected or required
35-10 to perform an act for which <as> a real estate license is required
35-11 by this Act <licensee>, or aiding or abetting or conspiring with a
35-12 person to circumvent the requirements of this Act;
35-13 (T) failing or refusing on demand to furnish
35-14 copies of a document pertaining to a transaction dealing with real
35-15 estate to a person whose signature is affixed to the document;
35-16 (U) failing to advise a purchaser in writing
35-17 before the closing of a transaction that the purchaser should
35-18 either have the abstract covering the real estate which is the
35-19 subject of the contract examined by an attorney of the purchaser's
35-20 own selection, or be furnished with or obtain a policy of title
35-21 insurance;
35-22 (V) conduct which constitutes dishonest
35-23 dealings, bad faith, or untrustworthiness;
35-24 (W) acting negligently or incompetently in
35-25 performing an act for which a person is required to hold a real
35-26 estate license;
35-27 (X) disregarding or violating a provision of
36-1 this Act;
36-2 (Y) failing within a reasonable time to deposit
36-3 money received as escrow agent in a real estate transaction, either
36-4 in trust with a title company authorized to do business in this
36-5 state, or in a custodial, trust, or escrow account maintained for
36-6 that purpose in a banking institution authorized to do business in
36-7 this state;
36-8 (Z) disbursing money deposited in a custodial,
36-9 trust, or escrow account, as provided in Subsection (Y) before the
36-10 transaction concerned has been consummated or finally otherwise
36-11 terminated; or
36-12 (AA) discriminating against an owner, potential
36-13 purchaser, lessor, or potential lessee on the basis of race, color,
36-14 religion, sex, national origin, <or> ancestry, familial status, or
36-15 disability, including directing prospective home buyers or lessees
36-16 interested in equivalent properties to different areas according to
36-17 the race, color, religion, sex, national origin, <or> ancestry,
36-18 familial status, or disability of the potential owner or lessee;
36-19 (7) the licensee has failed or refused on demand to
36-20 produce a document, book, or record in the licensee's <his>
36-21 possession concerning a real estate transaction conducted by the
36-22 licensee <him> for inspection by the commission or its authorized
36-23 personnel or representative;
36-24 (8) the licensee has failed within a reasonable time
36-25 to provide information requested by the commission in connection
36-26 with an investigation to determine whether the licensee has
36-27 violated a provision of this Act or a rule of the commission <as a
37-1 result of a formal or informal complaint to the commission which
37-2 would indicate a violation of this Act>; or
37-3 (9) the licensee has failed without just cause to
37-4 surrender to the rightful owner, on demand, a document or
37-5 instrument coming into the licensee's <his> possession.
37-6 (d) The commission may not investigate under this section a
37-7 complaint submitted more than four years after the date of the
37-8 incident involving a real estate broker or salesperson <salesman>
37-9 that is the subject of the complaint.
37-10 SECTION 19. Section 15B(a), The Real Estate License Act
37-11 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
37-12 as follows:
37-13 (a) Notwithstanding any other provision of the Act, there
37-14 shall be no undercover or covert investigations of a person
37-15 licensed under this Act conducted by authority of this Act unless
37-16 expressly authorized by the commission after due consideration of
37-17 the circumstances and determination by the commission that such
37-18 measures are necessary to carry out the purposes of this Act. No
37-19 investigations of licensees or any other actions against licensees
37-20 shall be initiated on the basis of anonymous complaints whether in
37-21 writing or otherwise but shall be initiated only upon the
37-22 commission's own motion or a signed written complaint <from a
37-23 consumer or service recipient>. The commission may authorize an
37-24 employee of the commission to file a signed written complaint
37-25 against a licensee relating to a payment from a recovery fund
37-26 established under this Act, a criminal conviction, or an act of the
37-27 licensee that involves obtaining or attempting to obtain a license
38-1 by fraud, engaging in misrepresentation or deceit, or failing to
38-2 make good a check issued to the commission. Upon the adoption of
38-3 such motion by the commission or upon receipt of such complaint,
38-4 the licensee shall be notified promptly and in writing <unless the
38-5 commission itself, after due consideration, determines otherwise>.
38-6 SECTION 20. Section 15D, The Real Estate License Act
38-7 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
38-8 as follows:
38-9 Sec. 15D. No licensed real estate broker, licensed real
38-10 estate salesperson <salesman>, or not for profit real estate board
38-11 or association which provides information about real property sales
38-12 prices or terms of sale for the purpose of facilitating the
38-13 listing, selling, leasing, financing, or appraisal of real property
38-14 shall be liable to any other person as a result of so providing
38-15 such information unless the disclosure of same is otherwise
38-16 specifically prohibited by statute.
38-17 SECTION 21. Sections 16(a), (b), (d), and (e), The Real
38-18 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
38-19 are amended to read as follows:
38-20 (a) A license granted under the provisions of this Act shall
38-21 be suspended or revoked by the commission on proof that the
38-22 licensee, not being licensed and authorized to practice law in this
38-23 state, for a consideration, reward, pecuniary benefit, present or
38-24 anticipated, direct or indirect, or in connection with or as a part
38-25 of the licensee's <his> employment, agency, or fiduciary
38-26 relationship as a licensee, drew a deed, note, deed of trust, will,
38-27 or other written instrument that may transfer or anywise affect the
39-1 title to or an interest in land, except as provided in the
39-2 subsections below, or advised or counseled a person as to the
39-3 validity or legal sufficiency of an instrument or as to the
39-4 validity of title to real estate.
39-5 (b) Notwithstanding the provisions of this Act or any other
39-6 law, the completion of contract forms which bind the sale,
39-7 exchange, option, lease, or rental of any interest in real property
39-8 by a real estate broker or salesperson <salesman> incident to the
39-9 performance of the acts of a broker as defined by this article does
39-10 not constitute the unauthorized or illegal practice of law in this
39-11 state, provided the forms have been promulgated for use by the
39-12 commission for the particular kind of transaction involved, or the
39-13 forms have been prepared by an attorney at law licensed by this
39-14 state and approved by said attorney for the particular kind of
39-15 transaction involved, or the forms have been prepared by the
39-16 property owner or prepared by an attorney and required by the
39-17 property owner.
39-18 (d) The Texas Real Estate Broker-Lawyer Committee shall have
39-19 12 members including six members appointed by the commission and
39-20 six members of the State Bar of Texas appointed by the President of
39-21 the State Bar of Texas. The members of the committee shall hold
39-22 office for staggered terms of six years with the terms of two
39-23 commission appointees and two State Bar appointees expiring every
39-24 two years. Each member shall hold office until the member's <his>
39-25 successor is appointed. A vacancy for any cause shall be filled
39-26 for the expired term by the agency making the original appointment.
39-27 Appointments to the committee shall be made without regard to race,
40-1 creed, sex, religion, or national origin.
40-2 (e) In the best interest of the public the commission may
40-3 adopt rules and regulations requiring real estate brokers and
40-4 salespersons <salesmen> to use contract forms which have been
40-5 prepared by the Texas Real Estate Broker-Lawyer Committee and
40-6 promulgated by the commission; provided, however, that the
40-7 commission shall not prohibit a real estate broker or salesperson
40-8 <salesman> from using a contract form or forms binding the sale,
40-9 exchange, option, lease, or rental of any interest in real property
40-10 which have been prepared by the property owner or prepared by an
40-11 attorney and required by the property owner. For the purpose of
40-12 this section, contract forms prepared by the Texas Real Estate
40-13 Broker-Lawyer Committee appointed by the commission and the State
40-14 Bar of Texas and promulgated by the commission prior to the
40-15 effective date of this Act shall be deemed to have been prepared by
40-16 the Texas Real Estate Broker-Lawyer Committee. The commission may
40-17 suspend or revoke a license issued under the provisions of this
40-18 article when it has determined that the licensee failed to use a
40-19 contract form as required by the commission pursuant to this
40-20 section.
40-21 SECTION 22. Section 17(a), The Real Estate License Act
40-22 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
40-23 as follows:
40-24 (a) If the commission proposes to suspend or revoke a
40-25 person's license or registration, the person is entitled to a
40-26 hearing before the commission or a hearings officer appointed by
40-27 the commission. The commission shall prescribe procedures by which
41-1 all decisions to suspend or revoke are made by or are appealable to
41-2 the commission. The commission shall prescribe the time and place
41-3 of the hearing. However, the hearing shall be held, if the
41-4 licensee so desires, within the county where the licensee has the
41-5 licensee's <his> principal place of business, or if the licensee is
41-6 a nonresident, the hearing may be called for and held in any county
41-7 within this state. The hearing is governed by the procedures for a
41-8 contested case under Chapter 2001, Government Code <the
41-9 Administrative Procedure and Texas Register Act (Article 6252-13a,
41-10 Vernon's Texas Civil Statutes)>.
41-11 SECTION 23. Section 18A(a), The Real Estate License Act
41-12 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
41-13 as follows:
41-14 (a) Any listing contract form adopted by the commission
41-15 relating to the contractual obligations between a seller of real
41-16 estate and a real estate broker or salesperson <salesman> acting as
41-17 an agent for the seller shall include a section that informs the
41-18 parties to the contract that real estate commissions are
41-19 negotiable.
41-20 SECTION 24. Section 18B(a), The Real Estate License Act
41-21 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
41-22 as follows:
41-23 (a) If a person files a complaint with the commission
41-24 relating to a real estate broker or salesperson <salesman>, the
41-25 commission shall furnish to the person an explanation of the
41-26 remedies that are available to the person under this Act and
41-27 information about appropriate state or local agencies or officials
42-1 with which the person may file a complaint. The commission shall
42-2 furnish the same explanation and information to the person against
42-3 whom the complaint is filed.
42-4 SECTION 25. Sections 19(a) and (b), The Real Estate License
42-5 Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
42-6 read as follows:
42-7 (a) A person acting as a real estate broker or real estate
42-8 salesperson <salesman> without first obtaining a license is guilty
42-9 of a misdemeanor and on conviction shall be punishable by a fine of
42-10 not less than $100 nor more than $500, or by imprisonment in the
42-11 county jail for a term not to exceed one year, or both; and if a
42-12 corporation or a limited liability company, shall be punishable by
42-13 a fine of not less than $1,000 nor more than $2,000. A person, on
42-14 conviction of a second or subsequent offense, shall be punishable
42-15 by a fine of not less than $500 nor more than $1,000, or by
42-16 imprisonment for a term not to exceed two years, or both; and if a
42-17 corporation or a limited liability company, shall be punishable by
42-18 a fine of not less than $2,000 nor more than $5,000.
42-19 (b) In case a person received money, or the equivalent
42-20 thereof, as a fee, commission, compensation, or profit by or in
42-21 consequence of a violation of Subsection (a) of this section, the
42-22 person <he> shall, in addition, be liable to a penalty of not less
42-23 than the amount of the sum of money so received and not more than
42-24 three times the sum so received, as may be determined by the court,
42-25 which penalty may be recovered in a court of competent jurisdiction
42-26 by an aggrieved person.
42-27 SECTION 26. Section 19A(o), The Real Estate License Act
43-1 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
43-2 as follows:
43-3 (o) A penalty collected under this section for a violation
43-4 by a person licensed as a real estate broker or salesperson
43-5 <salesman> shall be deposited in the real estate recovery fund. A
43-6 penalty collected under this section for a violation by a person
43-7 licensed or registered as a real estate inspector shall be
43-8 deposited in the real estate inspection recovery fund.
43-9 SECTION 27. Section 20, The Real Estate License Act (Article
43-10 6573a, Vernon's Texas Civil Statutes), is amended to read as
43-11 follows:
43-12 Sec. 20. (a) A person may not bring or maintain an action
43-13 for the collection of compensation for the performance in this
43-14 state of an act set forth in Section 2 of this Act without alleging
43-15 and proving that the person performing the brokerage services was a
43-16 duly licensed real estate broker or salesperson <salesman> at the
43-17 time the alleged services were commenced, or was a duly licensed
43-18 attorney at law in this state or in any other state.
43-19 (b) An action may not be brought in a court in this state
43-20 for the recovery of a commission for the sale or purchase of real
43-21 estate unless the promise or agreement on which the action is
43-22 brought, or some memorandum thereof, is in writing and signed by
43-23 the party to be charged or signed by a person lawfully authorized
43-24 by the party <him> to sign it.
43-25 (c) When an offer to purchase real estate in this state is
43-26 signed, the real estate broker or salesperson <salesman> shall
43-27 advise the purchaser or purchasers, in writing, that the purchaser
44-1 or purchasers should have the abstract covering the real estate
44-2 which is the subject of the contract examined by an attorney of the
44-3 purchaser's own selection, or that the purchaser or purchasers
44-4 should be furnished with or obtain a policy of title insurance.
44-5 Failure to advise the purchaser as provided in this subsection
44-6 precludes the payment of or recovery of any commission agreed to be
44-7 paid on the sale.
44-8 SECTION 28. Sections 23(b)(2), (5), and (9), The Real Estate
44-9 License Act (Article 6573a, Vernon's Texas Civil Statutes), are
44-10 amended to read as follows:
44-11 (2) The committee is composed of nine members
44-12 appointed by the commission. The members of the committee hold
44-13 office for staggered terms of six years, with the terms of three
44-14 members expiring February 1 of each odd-numbered year. Each member
44-15 holds office until the member's successor is appointed.
44-16 Appointments to the committee shall be made without regard to the
44-17 sex, race, color, age, handicap, religion, or national origin of
44-18 the appointees. In the event of a vacancy during a term, the
44-19 commission shall appoint a replacement who meets the qualifications
44-20 for appointment under this subdivision to fill the unexpired part
44-21 of the term. A member of the committee must be a professional
44-22 inspector actively engaged in the practice of real estate
44-23 inspecting at the time of appointment and must have been primarily
44-24 engaged in the practice of real estate inspecting for at least five
44-25 years before the member's appointment. A member of the committee
44-26 may not hold a real estate broker or salesperson <salesman>
44-27 license. Each member of the committee is entitled to a per diem
45-1 allowance and to reimbursement of travel expenses necessarily
45-2 incurred in performing functions as a member of the committee,
45-3 subject to any applicable limitation in the General Appropriations
45-4 Act. The committee shall annually elect from its members a
45-5 chairperson <chairman>, a vice chairperson <vice-chairman>, and
45-6 secretary. A quorum of the committee consists of five members.
45-7 (5) If the administrator of the commission has
45-8 knowledge that a potential ground for removal exists, the
45-9 administrator shall notify the chairperson <chairman> of the
45-10 commission that a potential ground exists.
45-11 (9) The committee shall act in an advisory capacity to
45-12 develop and recommend to the commission rules under this section.
45-13 The committee shall review commission rules relating to this
45-14 section and recommend changes in the rules to the commission. The
45-15 commission shall submit all proposed rules, all proposed rule
45-16 changes and all requests for proposed rules or rule changes that
45-17 relate to the regulation and licensing of inspectors under this
45-18 section to the committee for development or recommendation. The
45-19 commission may modify the rules developed by the committee if the
45-20 commission finds such modifications are in the public interest.
45-21 This section does not prohibit the commission from developing and
45-22 adopting rules relating to the regulation and licensing of
45-23 inspectors under this section if the committee fails to develop or
45-24 recommend rules under this section within a reasonable period of
45-25 time after the commission submits the proposed rules, rule changes
45-26 or requests for proposed rules or rule changes to the committee.
45-27 If the committee determines that a rule requested by the commission
46-1 should not be developed or recommended for adoption by the
46-2 commission, the committee shall submit a report on the matter to
46-3 the commission. The chairperson <chairman> of the commission and
46-4 the chairperson <chairman> of the committee shall then appoint
46-5 three members each from their respective bodies to meet as an ad
46-6 hoc committee to consider the report and recommend possible action
46-7 by the commission. The chairperson <chairman> of the commission or
46-8 a member of the commission designated by the chairperson <chairman>
46-9 shall serve as the seventh member of the ad hoc committee. At
46-10 least one member of the ad hoc committee must be a public member of
46-11 the commission.
46-12 SECTION 29. Section 23(l), The Real Estate License Act
46-13 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
46-14 as follows:
46-15 (l) Prohibited acts. A professional inspector, real estate
46-16 inspector or an apprentice inspector licensed under this section
46-17 may not:
46-18 (1) accept an assignment for real estate inspection if
46-19 the employment or fee is contingent on the reporting of a specific,
46-20 predetermined condition of the improvements to real property or is
46-21 contingent on the reporting of specific findings other than those
46-22 known by the inspector to be facts at the time of accepting the
46-23 assignment;
46-24 (2) act in a manner or engage in a practice that is
46-25 dishonest or fraudulent or that involves deceit or
46-26 misrepresentation;
46-27 (3) perform a real estate inspection in a negligent or
47-1 incompetent manner;
47-2 (4) act in the dual capacity of inspector and
47-3 undisclosed principal in a transaction;
47-4 (5) act in the dual capacity of inspector and real
47-5 estate broker or salesperson <salesman> in a transaction;
47-6 (6) perform or agree to perform any repairs or
47-7 maintenance in connection with a real estate inspection pursuant to
47-8 the provisions of any earnest money contract, lease agreement, or
47-9 exchange of real estate; or
47-10 (7) violate the rules adopted by the commission or any
47-11 provisions of this section.
47-12 SECTION 30. Section 23(o), The Real Estate License Act
47-13 (Article 6573a, Vernon's Texas Civil Statutes), is amended by
47-14 amending Subdivisions (7) and (11) and adding Subdivision (19) to
47-15 read as follows:
47-16 (7) The court shall proceed on the application
47-17 forthwith. On the hearing on the application, the aggrieved person
47-18 is required to show:
47-19 (A) that the judgment is based on facts allowing
47-20 recovery under Subdivision (1) of this subsection;
47-21 (B) that the person is not a spouse of the
47-22 debtor or the personal representative of the spouse and the person
47-23 is not a licensed <an> inspector, as defined by this section;
47-24 (C) that the person has obtained a judgment
47-25 under Subdivision (6) of this subsection that is not subject to a
47-26 stay or discharge in bankruptcy and has been judicially determined
47-27 to be nondischargeable in a pending bankruptcy, stating the amount
48-1 of the judgment and the amount owing on the judgment at the date of
48-2 the application;
48-3 (D) that based on the best information
48-4 available, the judgment debtor lacks sufficient attachable assets
48-5 in this state or any other state to satisfy the judgment; and
48-6 (E) the amount that may be realized from the
48-7 sale of real or personal property or other assets liable to be sold
48-8 or applied in satisfaction of the judgment and the balance
48-9 remaining due on the judgment after application of the amount that
48-10 may be realized.
48-11 (11) The sums received by the commission for deposit
48-12 in the real estate inspection recovery fund shall be held by the
48-13 commission in trust for carrying out the purpose of the real estate
48-14 inspection recovery fund. Subject to legislative appropriation,
48-15 money in the fund may be used by the commission to pay the expenses
48-16 involved in collecting a judgment assigned to the commission.
48-17 These funds may be invested and reinvested in the same manner as
48-18 funds of the Employees Retirement System of Texas, and the interest
48-19 from these investments shall be deposited to the credit of the real
48-20 estate inspection recovery fund. However, investments may not be
48-21 made that will impair the necessary liquidity required to satisfy
48-22 judgment payments awarded pursuant to this subsection.
48-23 (19) If the commission is notified before making a
48-24 payment from the real estate inspection recovery fund that a
48-25 judgment debtor has initiated a bankruptcy proceeding involving a
48-26 judgment that the commission has been ordered to pay, the
48-27 commission may move for an order to withdraw the order directing
49-1 the commission to make the payment pending a judicial determination
49-2 in the bankruptcy proceeding that the judgment is nondischargeable.
49-3 A court shall grant the commission's motion on presentation by the
49-4 commission of proof that the bankruptcy proceeding involving the
49-5 judgment debtor was initiated by the judgment debtor.
49-6 SECTION 31. (a) This Act takes effect September 1, 1995.
49-7 (b) The change made by this Act in the title of a person
49-8 licensed to sell real estate does not affect the validity of a
49-9 license issued or an act performed before the effective date of
49-10 this Act.
49-11 SECTION 32. The importance of this legislation and the
49-12 crowded condition of the calendars in both houses create an
49-13 emergency and an imperative public necessity that the
49-14 constitutional rule requiring bills to be read on three several
49-15 days in each house be suspended, and this rule is hereby suspended.