1-1 By: Wentworth S.B. No. 1636
1-2 (In the Senate - Filed April 4, 1995; April 6, 1995, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 21, 1995, reported favorably by the following vote: Yeas 11,
1-5 Nays 0; April 21, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the regulation of the practice of selling real estate.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Subsections (b), (c), (d), and (e), Section 1,
1-11 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
1-12 Statutes), are amended to read as follows:
1-13 (b) It is unlawful for a person to act in the capacity of,
1-14 engage in the business of, or advertise or hold that person
1-15 <himself> out as engaging in or conducting the business of a real
1-16 estate broker or a real estate salesperson <salesman> within this
1-17 state without first obtaining a real estate license from the Texas
1-18 Real Estate Commission. It is unlawful for a person licensed as a
1-19 real estate salesperson <salesman> to act or attempt to act as a
1-20 real estate broker or salesperson <salesman> unless that person
1-21 <he> is, at such time, associated with a licensed Texas real estate
1-22 broker and acting for the licensed real estate broker.
1-23 (c) Each real estate broker licensed pursuant to this Act is
1-24 responsible to the commission, members of the public, and the
1-25 broker's <his> clients for all acts and conduct performed under
1-26 this Act by the broker <himself> or by a real estate salesperson
1-27 <salesman> associated with or acting for the broker.
1-28 (d) No real estate salesperson <salesman> shall accept
1-29 compensation for real estate sales and transactions from any person
1-30 other than the broker under whom the salesperson <he> is at the
1-31 time licensed or under whom the salesperson <he> was licensed when
1-32 the salesperson <he> earned the right to compensation.
1-33 (e) No real estate salesperson <salesman> shall pay a
1-34 commission to any person except through the broker under whom the
1-35 salesperson <he> is at the time licensed.
1-36 SECTION 2. Subdivision (4), Section 2, The Real Estate
1-37 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
1-38 amended to read as follows:
1-39 (4) "Real estate salesperson <salesman>" means a
1-40 person associated with a Texas licensed real estate broker for the
1-41 purposes of performing acts or transactions comprehended by the
1-42 definition of "real estate broker" as defined in this Act.
1-43 SECTION 3. Section 3, The Real Estate License Act (Article
1-44 6573a, Vernon's Texas Civil Statutes), is amended to read as
1-45 follows:
1-46 Sec. 3. The provisions of this Act shall not apply to any of
1-47 the following persons and transactions, and each and all of the
1-48 following persons and transactions are hereby exempted from the
1-49 provisions of this Act:
1-50 (1) an attorney at law licensed in this state or in
1-51 any other state;
1-52 (2) an attorney in fact under a duly executed power of
1-53 attorney authorizing the consummation of a real estate transaction;
1-54 (3) a public official in the conduct of that person's
1-55 <his> official duties;
1-56 (4) a person calling the sale of real estate by
1-57 auction under the authority of a license issued by this state
1-58 provided the person does not perform any other act of a real estate
1-59 broker or salesperson <salesman> as defined by this Act;
1-60 (5) a person acting under a court order or under the
1-61 authority of a will or a written trust instrument;
1-62 (6) a salesperson employed by an owner in the sale of
1-63 structures and land on which said structures are situated, provided
1-64 such structures are erected by the owner in the due course of the
1-65 owner's <his> business;
1-66 (7) an on-site manager of an apartment complex;
1-67 (8) transactions involving the sale, lease, or
1-68 transfer of any mineral or mining interest in real property;
2-1 (9) an owner or the owner's <his> employees in renting
2-2 or leasing the owner's <his> own real estate whether improved or
2-3 unimproved;
2-4 (10) transactions involving the sale, lease, or
2-5 transfer of cemetery lots; <or>
2-6 (11) transactions involving the renting, leasing, or
2-7 management of hotels or motels; or
2-8 (12) a person performing an appraisal of real estate
2-9 or providing real estate services, regardless of whether in a
2-10 federally related transaction, who is registered, licensed, or
2-11 certified by the Texas Appraiser Licensing and Certification Board.
2-12 SECTION 4. Section 4, The Real Estate License Act (Article
2-13 6573a, Vernon's Texas Civil Statutes), is amended to read as
2-14 follows:
2-15 Sec. 4. A person who, directly or indirectly for another,
2-16 with the intention or on the promise of receiving any valuable
2-17 consideration, offers, attempts, or agrees to perform, or performs,
2-18 a single act defined in Subdivisions 2 and 3, Section 2 of this
2-19 Act, whether as a part of a transaction, or as an entire
2-20 transaction, is deemed to be acting as a real estate broker or
2-21 salesperson <salesman> within the meaning of this Act. The
2-22 commission of a single such act by a person required to be licensed
2-23 under this Act and not so licensed shall constitute a violation of
2-24 this Act.
2-25 SECTION 5. Subsections (a), (f), (g), (i), and (m), Section
2-26 5, The Real Estate License Act (Article 6573a, Vernon's Texas Civil
2-27 Statutes), are amended to read as follows:
2-28 (a) The administration of the provisions of this Act is
2-29 vested in a commission, to be known as the "Texas Real Estate
2-30 Commission," consisting of nine members to be appointed by the
2-31 governor with the advice and consent of two-thirds of the senate
2-32 present. The commissioners hold office for staggered terms of six
2-33 years with the terms of three members expiring January 31 of each
2-34 odd-numbered year. Each member holds office until the member's
2-35 <his> successor is appointed and has qualified. Within 15 days
2-36 after <his> appointment, each member shall qualify by taking the
2-37 constitutional oath of office and furnishing a bond payable to the
2-38 Governor of Texas in the penal sum of $10,000, conditional on the
2-39 faithful performance of the member's <his> duties as prescribed by
2-40 law. A vacancy for any cause shall be filled by the governor for
2-41 the unexpired term. The governor shall designate as chairperson
2-42 <chairman> of the commission one member of the commission who is a
2-43 licensed real estate broker. The chairperson <chairman> serves in
2-44 that capacity at the pleasure of the governor. At a regular
2-45 meeting in February of each year, the commission shall elect from
2-46 its own membership a vice chairperson <vice-chairman> and
2-47 secretary. A quorum of the commission consists of five members.
2-48 (f) If the administrator has knowledge that a potential
2-49 ground for removal exists, the administrator shall notify the
2-50 chairperson <chairman> of the commission of the ground. The
2-51 chairperson <chairman> shall then notify the governor that a
2-52 potential ground for removal exists.
2-53 (g) Each member of the commission shall receive as
2-54 compensation for each day actually spent on the member's <his>
2-55 official duties the sum of $75 and the <his> actual and necessary
2-56 expenses incurred in the performance of the member's <his> official
2-57 duties.
2-58 (i) The commission is empowered to select and name an
2-59 administrator and to select and employ such other subordinate
2-60 officers and employees as are necessary to administer this Act.
2-61 The salaries of the administrator and the officers and employees
2-62 shall be fixed by the commission not to exceed such amounts as are
2-63 fixed by the applicable general appropriations bill. The
2-64 commission may designate a subordinate officer as assistant
2-65 administrator who shall be authorized to act for the administrator
2-66 in the administrator's <his> absence. The administrator or the
2-67 administrator's designee shall develop a system of annual
2-68 performance evaluations. All merit pay for commission employees
2-69 must be based on the system established under this subsection. The
2-70 administrator or the administrator's designee shall develop an
3-1 intraagency career ladder program. The program shall require
3-2 intraagency postings of all nonentry level positions concurrently
3-3 with any public posting.
3-4 (m) Fifteen dollars received by the commission for a renewal
3-5 of a broker license before the expiration of the license or before
3-6 the first anniversary of the date the license expired and $7.50
3-7 received by the commission for a renewal of a salesperson
3-8 <salesman> license before the expiration of the license or before
3-9 the first anniversary of the date the license expired shall be
3-10 transmitted annually to Texas A&M University for deposit in a
3-11 separate banking account. The money in the separate account shall
3-12 be expended for the support and maintenance of the Texas Real
3-13 Estate Research Center and for carrying out the purposes,
3-14 objectives, and duties of the center. However, all money expended
3-15 from the separate account shall be as determined by legislative
3-16 appropriation.
3-17 SECTION 6. Subsections (a) and (b), Section 6, The Real
3-18 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
3-19 are amended to read as follows:
3-20 (a) A person desiring to act as a real estate broker in this
3-21 state shall file an application for a license with the commission
3-22 on a form prescribed by the commission. A broker desiring to
3-23 engage a person to participate in real estate brokerage activity
3-24 shall join the person in filing an application for a salesperson
3-25 <salesman> license on a form prescribed by the commission. A
3-26 person previously licensed as a broker may apply for inactive
3-27 status. A person previously licensed as a salesperson <salesman>
3-28 may apply for inactive status without the participation of a
3-29 broker. The person must apply for inactive status on a form
3-30 prescribed by the commission not later than the fifth <first>
3-31 anniversary of the date of the expiration of the broker or
3-32 salesperson <salesman> license.
3-33 (b) To be eligible for a license, an individual must be a
3-34 citizen of the United States or a lawfully admitted alien, be at
3-35 least 18 years of age, and be a legal resident of Texas at the time
3-36 of the filing of an application, and must satisfy the commission as
3-37 to the individual's <his> honesty, trustworthiness, integrity, and
3-38 competency. However, the competency of the individual, for the
3-39 purpose of qualifying for the granting of a license, shall be
3-40 judged solely on the basis of the examination referred to in
3-41 Section 7 of this Act.
3-42 SECTION 7. Subsection (a), Section 6A, The Real Estate
3-43 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
3-44 amended to read as follows:
3-45 (a) If, at any time before a person applies for a license
3-46 under this Act, the person requests the commission to determine
3-47 whether the person's <his> moral character complies with the
3-48 commission's moral character requirements for licensing under this
3-49 Act and the person pays a fee set by the commission for the moral
3-50 character determination, the commission shall make its
3-51 determination of the person's moral character.
3-52 SECTION 8. Subsections (a), (c), (d), (e), (f), (g), (h),
3-53 and (k), Section 7, The Real Estate License Act (Article 6573a,
3-54 Vernon's Texas Civil Statutes), are amended to read as follows:
3-55 (a) Competency as referred to in Section 6 of this Act shall
3-56 be established by an examination prepared by or contracted for by
3-57 the commission. The examination shall be given at such times and
3-58 at such places within the state as the commission shall prescribe.
3-59 The examination shall be of scope sufficient in the judgment of the
3-60 commission to determine that a person is competent to act as a real
3-61 estate broker or salesperson <salesman> in a manner to protect the
3-62 interest of the public. The examination for a salesperson
3-63 <salesman> license shall be less exacting and less stringent than
3-64 the examination for a broker license. The commission shall furnish
3-65 each applicant with study material and references on which the
3-66 <his> examination shall be based. When an applicant for a real
3-67 estate license fails a qualifying examination, the applicant <he>
3-68 may apply for reexamination by filing a request therefor together
3-69 with the proper fee. The examination requirement must be satisfied
3-70 not later than six months after the date on which the application
4-1 for a license is filed. Courses of study required for a license
4-2 may include but are not limited to the following, which shall be
4-3 considered core real estate courses for all purposes of this Act:
4-4 (1) Principles of Real Estate (or equivalent) shall
4-5 include but not be limited to an overview of licensing as a real
4-6 estate broker and salesperson <salesman>, ethics of practice,
4-7 titles to and conveyancing of real estate, legal descriptions, law
4-8 of agency, deeds, encumbrances and liens, distinctions between
4-9 personal and real property, contracts, appraisal, finance and
4-10 regulations, closing procedures, real estate mathematics, and at
4-11 least three classroom hours of instruction on federal, state, and
4-12 local laws relating to housing discrimination, housing credit
4-13 discrimination, and community reinvestment.
4-14 (2) Real Estate Appraisal (or equivalent) shall
4-15 include but not be limited to the central purposes and functions of
4-16 an appraisal, social and economic determinant of value, appraisal
4-17 case studies, cost, market data and income approaches to value
4-18 estimates, final correlations, and reporting.
4-19 (3) Real Estate Law (or equivalent) shall include but
4-20 not be limited to legal concepts of real estate, land description,
4-21 real property rights and estates in land, contracts, conveyances,
4-22 encumbrances, foreclosures, recording procedures, and evidence of
4-23 titles.
4-24 (4) Real Estate Finance (or equivalent) shall include
4-25 but not be limited to monetary systems, primary and secondary money
4-26 markets, sources of mortgage loans, federal government programs,
4-27 loan applications, processes and procedures, closing costs,
4-28 alternative financial instruments, equal credit opportunity acts,
4-29 community reinvestment act, and state housing agency.
4-30 (5) Real Estate Marketing (or equivalent) shall
4-31 include but not be limited to real estate professionalism and
4-32 ethics, characteristics of successful salespersons <salesmen>, time
4-33 management, psychology of marketing, listing procedures,
4-34 advertising, negotiating and closing, financing, and the Deceptive
4-35 Trade Practices-Consumer Protection Act, as amended, Section 17.01
4-36 et seq., Business & Commerce Code.
4-37 (6) Real Estate Mathematics (or equivalent) shall
4-38 include but not be limited to basic arithmetic skills and review of
4-39 mathematical logic, percentages, interest, time-valued money,
4-40 depreciation, amortization, proration, and estimation of closing
4-41 statements.
4-42 (7) Real Estate Brokerage (or equivalent) shall
4-43 include but not be limited to law of agency, planning and
4-44 organization, operational policies and procedures, recruiting,
4-45 selection and training of personnel, records and control, and real
4-46 estate firm analysis and expansion criteria.
4-47 (8) Property Management (or equivalent) shall include
4-48 but not be limited to role of property manager, landlord policies,
4-49 operational guidelines, leases, lease negotiations, tenant
4-50 relations, maintenance, reports, habitability laws, and the Fair
4-51 Housing Act.
4-52 (9) Real Estate Investments (or equivalent) shall
4-53 include but not be limited to real estate investment
4-54 characteristics, techniques of investment analysis, time-valued
4-55 money, discounted and nondiscounted investment criteria, leverage,
4-56 tax shelters depreciation, and applications to property tax.
4-57 (10) Law of Agency (or equivalent) shall include but
4-58 not be limited to the principal-agent and master-servant
4-59 relationships, the authority of an agent, the termination of an
4-60 agent's authority, the fiduciary and other duties of an agent,
4-61 employment law, deceptive trade practices, listing or buying
4-62 representation procedures, and the disclosure of agency.
4-63 (c) The commission shall waive the examination of an
4-64 applicant for a broker license who has, within two years <one year>
4-65 previous to the filing of the <his> application, been licensed in
4-66 this state as a broker, and shall waive the examination of an
4-67 applicant for a salesperson <salesman> license who has, within two
4-68 years <one year> previous to the filing of the <his> application,
4-69 been licensed in this state as either a broker or salesperson
4-70 <salesman>. If an application is filed after the second
5-1 anniversary of the expiration date of the applicant's previous
5-2 license, the applicant must satisfy the examination requirement and
5-3 any continuing education required under Section 7A(b) of this Act.
5-4 If an application is filed after the fifth anniversary of the
5-5 expiration date of the applicant's previous license, the applicant
5-6 must satisfy the experience, examination, and education
5-7 requirements for an original license under this Act.
5-8 (d) Each applicant for a broker license shall furnish the
5-9 commission satisfactory evidence that the applicant <he> has had
5-10 not less than two years active experience in this state as a
5-11 licensed real estate salesperson <salesman> or broker during the
5-12 seven-year <36-month> period immediately preceding the filing of
5-13 the application; and, in addition, shall furnish the commission
5-14 satisfactory evidence of having completed successfully 60 semester
5-15 hours, or equivalent classroom hours, of core real estate courses
5-16 or related postsecondary education courses accepted by the
5-17 commission. These qualifications for a broker license may not be
5-18 required of an applicant who, at the time of making the
5-19 application, is duly licensed as a real estate broker by any other
5-20 state in the United States if that state's requirements for
5-21 licensure are comparable to those of Texas. As a prerequisite for
5-22 applying for a broker license, those persons licensed as
5-23 salespersons <salesmen> subject to the annual education
5-24 requirements provided by Subsection (e) of this section shall, as
5-25 part of the hours required by this subsection, furnish the
5-26 commission satisfactory evidence of having completed all the
5-27 requirements of Subsection (e) of this section.
5-28 (e) Each applicant for a salesperson <salesman> license
5-29 shall furnish the commission satisfactory evidence of having
5-30 completed 12 semester hours, or equivalent classroom hours, of
5-31 postsecondary education, six hours of which must be completed in
5-32 core real estate courses, of which a minimum of two hours must be
5-33 completed in Principles of Real Estate as described in Subsection
5-34 (a)(1) of this section and a minimum of two hours must be completed
5-35 in Law of Agency as described in Subsection (a)(10) of this
5-36 section. The remaining six hours shall be completed in core real
5-37 estate courses or related courses. As a condition for the first
5-38 renewal of a salesperson <salesman> license, the applicant shall
5-39 furnish the commission satisfactory evidence of having completed a
5-40 minimum of 14 semester hours, or equivalent classroom hours, eight
5-41 hours of which must be completed in core real estate courses. As a
5-42 condition for the second renewal of a salesperson <salesman>
5-43 license, the applicant shall furnish the commission satisfactory
5-44 evidence of having completed a minimum of 16 semester hours, or
5-45 equivalent classroom hours, 10 hours of which must be completed in
5-46 core real estate courses. As a condition for the third renewal of
5-47 a salesperson <salesman> license, the applicant shall furnish the
5-48 commission satisfactory evidence of having completed a minimum of
5-49 18 semester hours, or equivalent classroom hours, 12 hours of which
5-50 must be completed in core real estate courses.
5-51 (f) Insofar as is necessary for the administration of this
5-52 Act, the commission is authorized to inspect and accredit
5-53 educational programs or courses of study in real estate and real
5-54 estate inspection and to establish standards of accreditation for
5-55 such programs conducted in the State of Texas, other than
5-56 accredited colleges and universities. The commission shall
5-57 determine the acceptability of real estate courses and real estate
5-58 inspection courses offered to satisfy the requirements of this Act,
5-59 and by rule may provide reasonable criteria for the approval of
5-60 those courses. Schools, other than accredited colleges and
5-61 universities, which are authorized to offer real estate educational
5-62 courses pursuant to provisions of this section, shall be required
5-63 to maintain a corporate surety bond, or other security acceptable
5-64 to the commission, in the sum of $10,000, payable to the
5-65 commission, for the benefit of a party who may suffer damages
5-66 resulting from failure of a commission approved school or course to
5-67 fulfill obligations attendant to the approval. The commission by
5-68 rule may provide for the reapplication by and reaccreditation of a
5-69 school accredited by the commission before September 1, 1995, and
5-70 may collect a reasonable filing fee to implement this section. A
6-1 fee collected under this subsection may not exceed $400 for an
6-2 application for the reaccreditation of a school and $100 for an
6-3 application for the approval of a course of study.
6-4 (g) Notwithstanding any other provision of this Act, each
6-5 applicant for a broker license shall furnish the commission with
6-6 satisfactory evidence:
6-7 (1) that the applicant <he> has satisfied the
6-8 requirements of Subsection (d) of this section;
6-9 (2) that the applicant <he> is a licensed real estate
6-10 broker in another state, <that he> has had not less than two years'
6-11 active experience in the other state as a licensed real estate
6-12 salesperson <salesman> or broker during the seven-year <36-month>
6-13 period immediately preceding the filing of the application, and
6-14 <that he> has satisfied the educational requirements for a broker
6-15 license as provided by Subsection (d) of this section; or
6-16 (3) that the applicant <he> has, within five years
6-17 <one year> previous to the filing of the <his> application, been
6-18 licensed in this state as a broker.
6-19 (h) Notwithstanding any other provision of this Act, the
6-20 commission shall waive the requirements of Subsection (e) of this
6-21 section for an applicant for a salesperson <salesman> license who
6-22 has, within five years <one year> previous to the filing of the
6-23 <his> application, been licensed in this state as a broker or
6-24 salesperson <salesman>. However, with respect to an applicant for
6-25 a salesperson <salesman> license who was licensed as a salesperson
6-26 <salesman> within five years <one year> previous to the filing of
6-27 the application but whose original license was issued under the
6-28 provisions that the first, second, and third renewal of the license
6-29 would be conditioned upon furnishing satisfactory evidence of
6-30 successful completion of additional education, the commission shall
6-31 require the applicant to furnish satisfactory evidence of
6-32 successful completion of any additional education that would have
6-33 been required if the license had been maintained without
6-34 interruption <during the previous year>.
6-35 (k) The commission may accept examinations administered by a
6-36 testing service as satisfying the examination requirements imposed
6-37 under this Act. The commission may negotiate agreements with those
6-38 testing services relating to examination development, preparation
6-39 of study materials, collection of filing fees, acceptance and
6-40 processing of license applications, test scheduling, examination
6-41 site arrangements, and test administration, grading, reporting, and
6-42 analysis. The commission may require a testing service to
6-43 correspond directly with the license applicants regarding the
6-44 administration of the examinations and may require that a testing
6-45 service collect fees for providing an applicant with study
6-46 materials, filing an application for a license, processing license
6-47 applications, or administering the examinations directly from the
6-48 applicants. The commission also may require a testing service to
6-49 administer examinations at specific locations and specified
6-50 frequencies. The commission shall retain the authority to
6-51 establish the scope and type of all examinations. The commission
6-52 shall adopt rules and standards as necessary to implement this
6-53 section. In the absence of an agreement with a testing service,
6-54 the commission shall administer any required qualifying examination
6-55 in accordance with this Act.
6-56 SECTION 9. Subsections (a), (b), (c), and (d), Section 7A,
6-57 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
6-58 Statutes), are amended to read as follows:
6-59 (a) To renew an active real estate broker license or an
6-60 active real estate salesperson <salesman> license that is not
6-61 subject to the annual education requirements of this Act, the
6-62 licensee must provide the commission proof of attendance at at
6-63 least 15 classroom hours of continuing education courses approved
6-64 by the commission during the term of the current license. The
6-65 commission by rule may provide for the substitution of relevant
6-66 educational experience or correspondence courses approved by the
6-67 commission instead of classroom attendance. In addition,
6-68 supervised video instruction may be approved by the commission as a
6-69 course counting as classroom hours of mandatory continuing
6-70 education. At least six hours of instruction must be devoted to
7-1 the rules of the commission, fair housing laws, agency laws,
7-2 antitrust laws, the Deceptive Trade Practices-Consumer Protection
7-3 Act (Subchapter E, Chapter 17, Business & Commerce Code),
7-4 disclosures to buyers and sellers, current contract and addendum
7-5 forms, the unauthorized practice of law, case studies involving
7-6 violations of laws and regulations, current Federal Housing
7-7 Administration and Veterans Administration regulations, tax laws,
7-8 and other legal topics approved by the commission. The remaining
7-9 hours may be devoted to other real estate-related topics approved
7-10 by the commission. The commission may consider equivalent courses
7-11 for continuing education credit. The commission, on the request of
7-12 a provider of education, shall review a core real estate course
7-13 authorized under Section 7 of this Act and may approve it as a
7-14 mandatory continuing education course. Real estate related courses
7-15 approved by the State Bar of Texas for minimum continuing legal
7-16 education participatory credit and core real estate courses under
7-17 Section 7(a) of this Act shall automatically be approved as
7-18 mandatory continuing education courses under this Act. The
7-19 commission may not require examinations except for correspondence
7-20 courses. Daily course segments must be at least three hours long
7-21 but not more than 10 hours long. <If the license being renewed
7-22 under this section was issued for less than two years, the licensee
7-23 must provide the commission proof of attendance at at least eight
7-24 classroom hours of continuing education within the term of the
7-25 current license, three classroom hours of which must have been
7-26 devoted to the legal topics specified in this section.>
7-27 (b) An applicant for an active real estate broker license or
7-28 an active real estate salesperson <salesman> license who is not
7-29 subject to the education requirements of Section 7 of this Act must
7-30 provide the commission with proof of attendance of the number of
7-31 classroom hours of continuing education that would have been
7-32 required for a timely renewal as specified in Subsection (a) of
7-33 this section during the two-year period preceding the filing of the
7-34 application.
7-35 (c) As a condition of returning to active status, an
7-36 inactive salesperson <salesman> whose license is not subject to the
7-37 annual education requirements of this Act must provide the
7-38 commission with proof of attendance at at least 15 hours of
7-39 continuing education as specified in Subsection (a) of this section
7-40 during the two-year period preceding the filing of the application.
7-41 (d) The commission may adopt rules and set and collect
7-42 reasonable fees to implement this section, including a fee not to
7-43 exceed $400 for an application for approval of a provider of
7-44 continuing education and a fee not to exceed $100 for an
7-45 application for a course of study to be offered for continuing
7-46 education. If the commission determines that an applicant
7-47 satisfies the requirements of this section and any rules adopted by
7-48 the commission under this section, the commission may authorize a
7-49 provider to offer continuing education for a period of four <two>
7-50 years or authorize the offering of a course of study for a period
7-51 of two years.
7-52 SECTION 10. Section 8, The Real Estate License Act (Article
7-53 6573a, Vernon's Texas Civil Statutes), is amended by amending
7-54 Subsections (a), (b), (c), (d), (e), (f), (h), (i), (j), (l), (n),
7-55 and (q) and by adding Subsection (r) to read as follows:
7-56 (a) The commission shall establish a real estate recovery
7-57 fund which shall be set apart and maintained by the commission as
7-58 provided in this section. The fund shall be used in the manner
7-59 provided in this section for reimbursing aggrieved persons who
7-60 suffer actual damages by reason of certain acts committed by a duly
7-61 licensed real estate broker or salesperson <salesman>, or by an
7-62 unlicensed employee or agent of a broker or salesperson <salesman>,
7-63 provided the broker or salesperson <salesman> was licensed by the
7-64 State of Texas at the time the act was committed and provided
7-65 recovery is ordered by a court of competent jurisdiction against
7-66 the broker or salesperson <salesman>. The use of the fund is
7-67 limited to an act that constitutes a violation of Section 15(a)(3)
7-68 or (6) of this Act.
7-69 (b) On application for an original license pursuant to this
7-70 Act, the applicant shall pay, in addition to the <his> original
8-1 license application fee, a fee of $10 which shall be deposited in
8-2 the real estate recovery fund.
8-3 (c) If on December 31 of any year the balance remaining in
8-4 the real estate recovery fund is less than $1 million, each real
8-5 estate broker and each real estate salesperson <salesman>, on the
8-6 next renewal of the <his> license, shall pay, in addition to the
8-7 <his> license renewal fee, a fee of $10, which shall be deposited
8-8 in the real estate recovery fund, or a pro rata share of the amount
8-9 necessary to bring the fund to $1.7 million, whichever is less. If
8-10 on December 31 of any year the balance remaining in the real estate
8-11 recovery fund is more than $3.5 million or more than the total
8-12 amount of claims paid from the fund during the previous four fiscal
8-13 years, whichever is greater, the amount of money in excess of the
8-14 greater amount shall be transferred to the general revenue fund.
8-15 (d) No action for a judgment which subsequently results in
8-16 an order for collection from the real estate recovery fund shall be
8-17 started later than two years from the accrual of the cause of
8-18 action. When an aggrieved person commences action for a judgment
8-19 which may result in collection from the real estate recovery fund,
8-20 the real estate broker or real estate salesperson <salesman> shall
8-21 notify the commission in writing to this effect at the time of the
8-22 commencement of the action.
8-23 (e) When an aggrieved person recovers a valid judgment in a
8-24 court of competent jurisdiction against a real estate broker or
8-25 real estate salesperson <salesman>, on the grounds described in
8-26 Subsection (a) of this section that occurred on or after May 19,
8-27 1975, the aggrieved person may, after final judgment has been
8-28 entered, execution returned nulla bona, and a judgment lien
8-29 perfected, file a verified claim in the court in which the judgment
8-30 was entered and, on 20 days' written notice to the commission, and
8-31 to the judgment debtor, may apply to the court for an order
8-32 directing payment out of the real estate recovery fund of the
8-33 amount unpaid on the judgment, subject to the limitations stated in
8-34 Subsection (n) of this section.
8-35 (f) The court shall proceed on the application forthwith.
8-36 On the hearing on the application, the aggrieved person is required
8-37 to show that:
8-38 (1) the judgment is based on facts allowing recovery
8-39 under Subsection (a) of this section;
8-40 (2) the person <he> is not a spouse of the debtor, or
8-41 the personal representative of the spouse; and the person <he> is
8-42 not a real estate broker or salesperson <salesman>, as defined by
8-43 this Act, who is seeking to recover a real estate commission in the
8-44 transaction or transactions for which the application for payment
8-45 is made;
8-46 (3) the person <he> has obtained a judgment under
8-47 Subsection (e) of this section that is not subject to a stay or
8-48 discharge in bankruptcy and has been judicially determined to be
8-49 nondischargeable in a pending bankruptcy, stating the amount of the
8-50 judgment and the amount owing on the judgment at the date of the
8-51 application;
8-52 (4) based on the best available information, the
8-53 judgment debtor lacks sufficient attachable assets in this state or
8-54 any other state to satisfy the judgment; and
8-55 (5) the amount that may be realized from the sale of
8-56 real or personal property or other assets liable to be sold or
8-57 applied in satisfaction of the judgment and the balance remaining
8-58 due on the judgment after application of the amount that may be
8-59 realized.
8-60 (h) The court shall make an order directed to the commission
8-61 requiring payment from the real estate recovery fund of whatever
8-62 sum it finds to be payable on the claim, pursuant to and in
8-63 accordance with the limitations contained in this section, if the
8-64 court is satisfied, on the hearing, of the truth of all matters
8-65 required to be shown by the aggrieved person by Subsection (f) of
8-66 this section and that the aggrieved person has satisfied all of the
8-67 requirements of Subsections (e) and (f) of this section. The
8-68 commission may relitigate any issue material and relevant in the
8-69 hearing on the application that was determined in the underlying
8-70 action on which the judgment in favor of the applicant was based.
9-1 If the court finds that the aggregate amount of claims against a
9-2 real estate broker or salesperson <salesman> exceeds the
9-3 limitations contained in this section, the court shall reduce
9-4 proportionately the amount it finds payable on the claim.
9-5 (i) A license granted under the provisions of this Act may
9-6 be revoked by the commission on proof that the commission has made
9-7 a payment from the real estate recovery fund of any amount toward
9-8 satisfaction of a judgment against a licensed real estate broker or
9-9 salesperson <salesman>. The commission may probate an order
9-10 revoking a license. No broker or salesperson <salesman> is
9-11 eligible to receive a new license until the broker or salesperson
9-12 <he> has repaid in full, plus interest at the current legal rate,
9-13 the amount paid from the real estate recovery fund on the broker's
9-14 or salesperson's <his> account.
9-15 (j) The sums received by the real estate commission for
9-16 deposit in the real estate recovery fund shall be held by the
9-17 commission in trust for carrying out the purposes of the real
9-18 estate recovery fund. Subject to legislative appropriation, money
9-19 in the fund may be used by the commission to pay the expenses
9-20 involved in collecting judgments assigned to the commission. These
9-21 funds may be invested and reinvested in the same manner as funds of
9-22 the Texas State Employees Retirement System, and the interest from
9-23 these investments shall be deposited to the credit of the real
9-24 estate recovery fund, provided, however, that no investments shall
9-25 be made which will impair the necessary liquidity required to
9-26 satisfy judgment payments awarded pursuant to this section.
9-27 (l) When, on the order of the court, the commission has paid
9-28 from the real estate recovery fund any sum to the judgment
9-29 creditor, the commission shall be subrogated to all of the rights
9-30 of the judgment creditor to the extent of the amount paid. The
9-31 judgment creditor shall assign all of the creditor's <his> right,
9-32 title, and interest in the judgment up to the amount paid by the
9-33 commission which amount shall have priority for repayment in the
9-34 event of any subsequent recovery on the judgment. Any amount and
9-35 interest recovered by the commission on the judgment shall be
9-36 deposited to the fund.
9-37 (n) Notwithstanding any other provision, payments from the
9-38 real estate recovery fund are subject to the following conditions
9-39 and limitations:
9-40 (1) payments may be made only pursuant to an order of
9-41 a court of competent jurisdiction, as provided in Subsection (e) of
9-42 this section, and in the manner prescribed by this section;
9-43 (2) payments for claims, including attorneys' fees,
9-44 interest, and court costs, arising out of the same transaction
9-45 shall be limited in the aggregate to $50,000 regardless of the
9-46 number of claimants; and
9-47 (3) payments for claims based on judgments against any
9-48 one licensed real estate broker or salesperson <salesman> may not
9-49 exceed in the aggregate $100,000 until the fund has been reimbursed
9-50 by the licensee for all amounts paid.
9-51 (q) A broker or salesperson <salesman> licensed under this
9-52 Act shall notify consumers and service recipients of the
9-53 availability of the real estate recovery fund established under
9-54 this section for reimbursing certain aggrieved persons. The notice
9-55 must include the name, mailing address, and telephone number of the
9-56 commission and any other information required by commission rule.
9-57 The notification may be provided with the notice required by
9-58 Section 5(q) of this Act or:
9-59 (1) on a written contract for the services of a broker
9-60 or salesperson <salesman>;
9-61 (2) on a brochure distributed by a broker or
9-62 salesperson <salesman>;
9-63 (3) on a sign prominently displayed in the place of
9-64 business of a salesperson <salesman> or broker; or
9-65 (4) in a bill or receipt for service provided by a
9-66 broker or salesperson <salesman>.
9-67 (r) If the commission is notified before making a payment
9-68 from the real estate recovery fund that a judgment debtor has
9-69 initiated a bankruptcy proceeding involving a judgment that the
9-70 commission has been ordered to pay, the commission may move for an
10-1 order to withdraw the order directing the commission to make the
10-2 payment pending a judicial determination in the bankruptcy
10-3 proceeding that the judgment is not dischargeable. A court shall
10-4 grant the commission's motion on presentation by the commission of
10-5 proof that the bankruptcy proceeding involving the judgment debtor
10-6 was initiated by the judgment debtor.
10-7 SECTION 11. Subsections (a), (b), and (e), Section 9, The
10-8 Real Estate License Act (Article 6573a, Vernon's Texas Civil
10-9 Statutes), are amended to read as follows:
10-10 (a) When an applicant has satisfactorily met all
10-11 requirements and conditions of this Act, a license shall be issued
10-12 which may remain in force and effect so long as the holder of the
10-13 license remains in compliance with the obligations of this Act,
10-14 which include payment of the renewal fee as provided in Section 11
10-15 of this Act. Each active salesperson <salesman> license issued
10-16 shall be delivered or mailed to the broker with whom the
10-17 salesperson <salesman> is associated and shall be kept under the
10-18 broker's <his> custody and control.
10-19 (b) An applicant is not permitted to engage in the real
10-20 estate business either as a broker or salesperson <salesman> until
10-21 a license evidencing the applicant's <his> authority to engage in
10-22 the real estate business has been received.
10-23 (e) The commission shall require in any application for a
10-24 broker or salesperson <salesman> license or a renewal of a broker
10-25 or salesperson <salesman> license the applicant to disclose whether
10-26 the applicant has entered a plea of guilty or nolo contendere to,
10-27 been found guilty of, or been convicted of a felony and the time
10-28 for appeal has elapsed or the judgment or conviction has been
10-29 affirmed on appeal, irrespective of an order granting probation
10-30 following the conviction or suspending the imposition of sentence.
10-31 SECTION 12. Subsection (a), Section 10, The Real Estate
10-32 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
10-33 amended to read as follows:
10-34 (a) If the commission declines or fails to license an
10-35 applicant, it shall immediately give written notice of the refusal
10-36 to the applicant. Before the applicant may appeal to a district
10-37 court as provided in Section 18 of this Act, the applicant <he>
10-38 must file within 10 days after the receipt of the notice an appeal
10-39 from the ruling, requesting a time and place for a hearing before
10-40 the commission. The commission shall set a time and place for the
10-41 hearing within 30 days from the receipt of the appeal, giving 10
10-42 days' notice of the hearing to the applicant. The time of the
10-43 hearing may be continued from time to time with the consent of the
10-44 applicant. Following the hearing, the commission shall enter an
10-45 order which is, in its opinion, appropriate in the matter
10-46 concerned.
10-47 SECTION 13. Section 11, The Real Estate License Act (Article
10-48 6573a, Vernon's Texas Civil Statutes), is amended to read as
10-49 follows:
10-50 Sec. 11. <(a)> The commission shall charge and collect the
10-51 following fees:
10-52 (1) a fee not to exceed $100 for the filing of an
10-53 original application for a real estate broker license;
10-54 (2) a fee not to exceed $100 for annual renewal of a
10-55 real estate broker license;
10-56 (3) a fee not to exceed $50 for the filing of an
10-57 original application for a real estate salesperson <salesman>
10-58 license;
10-59 (4) a fee not to exceed $50 for annual renewal of a
10-60 real estate salesperson <salesman> license;
10-61 (5) a fee not to exceed $25 for an application for a
10-62 license examination;
10-63 (6) a fee not to exceed $20 for filing a request for a
10-64 license for each additional office or place of business;
10-65 (7) a fee not to exceed $20 for filing a request for a
10-66 license for a change of place of business, change of name, return
10-67 to active status, or change of sponsoring broker;
10-68 (8) a fee not to exceed $20 for filing a request to
10-69 replace a license lost or destroyed;
10-70 (9) a fee not to exceed $400 for filing an application
11-1 for approval of an education program under Section 7(f) of this
11-2 Act;
11-3 (10) a fee not to exceed $200 a year for operation of
11-4 an education program under Section 7(f) of this Act;
11-5 (11) a fee of $15 for transcript evaluation;
11-6 (12) a fee not to exceed $10 for preparing a license
11-7 history; and
11-8 (13) a fee not to exceed $50 for the filing of an
11-9 application for a moral character determination.
11-10 SECTION 14. Subsections (a), (b), and (d), Section 12, The
11-11 Real Estate License Act (Article 6573a, Vernon's Texas Civil
11-12 Statutes), are amended to read as follows:
11-13 (a) Each resident broker shall maintain a fixed office
11-14 within this state. The address of the office shall be designated
11-15 on the broker's license. Within 10 days after a move from a
11-16 previously designated address, the broker shall submit an
11-17 application for a new license, designating the new location of the
11-18 broker's <his> office, together with the required fee, whereupon
11-19 the commission shall issue a license, reflecting the new location,
11-20 provided the new location complies with the terms of this section.
11-21 (b) If a broker maintains more than one place of business
11-22 within this state, the broker <he> shall apply for, pay the
11-23 required fee for, and obtain an additional license to be known as a
11-24 branch office license for each additional office the broker <he>
11-25 maintains.
11-26 (d) Each broker shall also prominently display in the
11-27 broker's <his> place or in one of the broker's <his> places of
11-28 business the license of each real estate salesperson <salesman>
11-29 associated with the broker <him>.
11-30 SECTION 15. Section 13, The Real Estate License Act (Article
11-31 6573a, Vernon's Texas Civil Statutes), is amended to read as
11-32 follows:
11-33 Sec. 13. (a) When the association of a salesperson
11-34 <salesman> with the salesperson's <his> sponsoring broker is
11-35 terminated, the broker shall immediately return the salesperson
11-36 <salesman> license to the commission. The salesperson <salesman>
11-37 license then becomes inactive.
11-38 (b) The salesperson <salesman> license may be activated if,
11-39 before the license expires, a request, accompanied by the required
11-40 fee, is filed with the commission by a licensed broker advising
11-41 that the broker <he> assumes sponsorship of the salesperson
11-42 <salesman>.
11-43 SECTION 16. Subsection (a), Section 13A, The Real Estate
11-44 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
11-45 amended to read as follows:
11-46 (a) A real estate broker who holds a license issued under
11-47 this Act and who is not acting as a broker or sponsoring a
11-48 salesperson <salesman> may apply to the commission in writing to be
11-49 placed on the inactive status list maintained by the commission.
11-50 The broker must apply for inactive status before the expiration of
11-51 the broker's license. The broker shall terminate the broker's
11-52 association with any salesperson <salesmen> sponsored by the broker
11-53 by giving written notice to the salesperson <salesmen> before the
11-54 30th day before the date the broker applies for inactive status. A
11-55 person on inactive status under this section is required to pay the
11-56 annual renewal fees.
11-57 SECTION 17. Section 14, The Real Estate License Act (Article
11-58 6573a, Vernon's Texas Civil Statutes), is amended to read as
11-59 follows:
11-60 Sec. 14. (a) It is unlawful for a licensed broker to employ
11-61 or compensate directly or indirectly a person for performing an act
11-62 enumerated in the definition of real estate broker in Section 2 of
11-63 this Act if the person is not a licensed broker or licensed
11-64 salesperson <salesman> in this state. However, a licensed broker
11-65 may pay a commission to a licensed broker of another state if the
11-66 foreign broker does not conduct in this state any of the
11-67 negotiations for which the fee, compensation, or commission is
11-68 paid.
11-69 (b) A resident broker of another state who furnishes the
11-70 evidence required under Section 7(g) of this Act may apply for a
12-1 license as a broker in this state. A resident of another state who
12-2 is not licensed as a broker but who was formerly licensed as a
12-3 salesperson <salesman> or broker in this state may apply for a
12-4 license in this state not later than the fifth <first> anniversary
12-5 of the date of the expiration of the previous license. An
12-6 application by a nonresident is subject to the requirements under
12-7 this Act for the type of license applied for. A nonresident
12-8 licensee need not maintain a place of business in this state. The
12-9 commission may in its discretion refuse to issue a license to an
12-10 applicant who is not a resident of this state for the same reasons
12-11 that it may refuse to license a resident of this state. The
12-12 commission shall judge the competency of a nonresident applicant
12-13 solely on the basis of the examination conducted under Section 7 of
12-14 this Act.
12-15 (c) Each nonresident applicant shall file an irrevocable
12-16 consent that legal actions may be commenced against the applicant
12-17 <him> in the proper court of any county of this state in which a
12-18 cause of action may arise, or in which the plaintiff may reside, by
12-19 service of process or pleading authorized by the laws of this
12-20 state, or by serving the administrator or assistant administrator
12-21 of the commission. The consent shall stipulate that the service of
12-22 process or pleading shall be valid and binding in all courts as if
12-23 personal service had been made on the nonresident in this state.
12-24 The consent shall be duly acknowledged, and if made by a
12-25 corporation, shall be authenticated by its seal. A service of
12-26 process or pleading served on the commission shall be by duplicate
12-27 copies, one of which shall be filed in the office of the commission
12-28 and the other forwarded by registered mail to the last known
12-29 principal address which the commission has for the nonresident
12-30 against whom the process or pleading is directed. No default in an
12-31 action may be taken except on certification by the commission that
12-32 a copy of the process or pleading was mailed to the defendant as
12-33 provided in this section, and no default judgment may be taken in
12-34 an action or proceeding until 20 days after the day of mailing of
12-35 the process or pleading to the defendant.
12-36 Notwithstanding any other provision of this subsection, a
12-37 nonresident of this state who resides in a city whose boundaries
12-38 are contiguous at any point to the boundaries of a city of this
12-39 state, and who has been an actual bona fide resident of that city
12-40 for at least 60 days immediately preceding the filing of the
12-41 person's <his> application, is eligible to be licensed as a real
12-42 estate broker or salesperson <salesman> under this Act in the same
12-43 manner as a resident of this state. If a person <he> is licensed
12-44 in this manner, the person <he> shall at all times maintain a place
12-45 of business either in the city in which the person <he> resides or
12-46 in the city in this state which is contiguous to the city in which
12-47 the person <he> resides, and the person <he> may not maintain a
12-48 place of business at another location in this state unless the
12-49 person <he> also complies with the requirements of Section 14(b) of
12-50 this Act. The place of business must satisfy the requirements of
12-51 Subsection (a) of Section 12 of this Act, but the place of business
12-52 shall be deemed a definite place of business in this state within
12-53 the meaning of Subsection (a) of Section 12.
12-54 SECTION 18. Subsections (a) and (d), Section 15, The Real
12-55 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
12-56 are amended to read as follows:
12-57 (a) The commission may, on its own motion, and shall, on the
12-58 signed complaint in writing of any person <a consumer or service
12-59 recipient>, provided the complaint, or the complaint together with
12-60 evidence, documentary or otherwise, presented in connection with
12-61 the complaint, provides reasonable cause, investigate the actions
12-62 and records of a real estate broker or real estate salesperson
12-63 <salesman>. The commission may suspend or revoke a license issued
12-64 under the provisions of this Act at any time when it has been
12-65 determined that:
12-66 (1) the licensee has entered a plea of guilty or nolo
12-67 contendere to, or been found guilty of, or been convicted of, a
12-68 felony, in which fraud is an essential element, and the time for
12-69 appeal has elapsed or the judgment or conviction has been affirmed
12-70 on appeal, irrespective of an order granting probation following
13-1 such conviction, suspending the imposition of sentence;
13-2 (2) the licensee has procured, or attempted to
13-3 procure, a real estate license, for the licensee <himself> or
13-4 another person <a salesman>, by fraud, misrepresentation or deceit,
13-5 or by making a material misstatement of fact in an application for
13-6 a real estate license;
13-7 (3) the licensee, when selling, buying, trading, or
13-8 renting real property on the licensee's <in his> own account
13-9 <name>, engaged in misrepresentation or dishonest or fraudulent
13-10 action;
13-11 (4) the licensee has failed within a reasonable time
13-12 to make good a check issued to the commission after the commission
13-13 has mailed a request for payment by certified mail to the
13-14 licensee's last known business address as reflected by the
13-15 commission's records;
13-16 (5) the licensee has disregarded or violated a
13-17 provision of this Act;
13-18 (6) the licensee, while performing an act constituting
13-19 an act of a broker or salesperson <salesman>, as defined by this
13-20 Act, has been guilty of:
13-21 (A) making a material misrepresentation, or
13-22 failing to disclose to a potential purchaser any latent structural
13-23 defect or any other defect known to the broker or salesperson
13-24 <salesman>. Latent structural defects and other defects do not
13-25 refer to trivial or insignificant defects but refer to those
13-26 defects that would be a significant factor to a reasonable and
13-27 prudent purchaser in making a decision to purchase;
13-28 (B) making a false promise of a character likely
13-29 to influence, persuade, or induce any person to enter into a
13-30 contract or agreement when the licensee could not or did not intend
13-31 to keep such promise;
13-32 (C) pursuing a continued and flagrant course of
13-33 misrepresentation or making of false promises through agents,
13-34 salespersons <salesmen>, advertising, or otherwise;
13-35 (D) failing to make clear, to all parties to a
13-36 transaction, which party the licensee <he> is acting for, or
13-37 receiving compensation from more than one party except with the
13-38 full knowledge and consent of all parties;
13-39 (E) failing within a reasonable time properly to
13-40 account for or remit money coming into the licensee's <his>
13-41 possession which belongs to others, or commingling money belonging
13-42 to others with the licensee's <his> own funds;
13-43 (F) paying a commission or fees to or dividing a
13-44 commission or fees with anyone not licensed as a real estate broker
13-45 or salesperson <salesman> in this state or in any other state for
13-46 compensation for services for which <as> a real estate license is
13-47 required by this Act <agent>;
13-48 (G) failing to specify in a listing contract or
13-49 in another contract in which the licensee agrees to perform
13-50 services for which a license is required under this Act a definite
13-51 termination date which is not subject to prior notice;
13-52 (H) accepting, receiving, or charging an
13-53 undisclosed commission, rebate, or direct profit on expenditures
13-54 made for a principal;
13-55 (I) soliciting, selling, or offering for sale
13-56 real property under a scheme or program that constitutes a lottery
13-57 or deceptive practice;
13-58 (J) acting in the dual capacity of broker and
13-59 undisclosed principal in a transaction;
13-60 (K) guaranteeing, authorizing, or permitting a
13-61 person to guarantee that future profits will result from a resale
13-62 of real property;
13-63 (L) placing a sign on real property offering it
13-64 for sale, lease, or rent without the written consent of the owner
13-65 or the owner's <his> authorized agent;
13-66 (M) inducing or attempting to induce a party to
13-67 a contract of sale or lease to break the contract for the purpose
13-68 of substituting in lieu thereof a new contract;
13-69 (N) negotiating or attempting to negotiate the
13-70 sale, exchange, lease, or rental of real property with an owner,
14-1 <or> lessor, buyer, or tenant, knowing that the owner, <or> lessor,
14-2 buyer, or tenant had a written outstanding contract, granting
14-3 exclusive agency in connection with the transaction <property> to
14-4 another real estate broker;
14-5 (O) offering real property for sale or for lease
14-6 without the knowledge and consent of the owner or the owner's <his>
14-7 authorized agent, or on terms other than those authorized by the
14-8 owner or the owner's <his> authorized agent;
14-9 (P) publishing, or causing to be published, an
14-10 advertisement including, but not limited to, advertising by
14-11 newspaper, radio, television, or display which is misleading, or
14-12 which is likely to deceive the public, or which in any manner tends
14-13 to create a misleading impression, or which fails to identify the
14-14 person causing the advertisement to be published as a licensed real
14-15 estate broker or salesperson <agent>;
14-16 (Q) having knowingly withheld from or inserted
14-17 in a statement of account or invoice, a statement that made it
14-18 inaccurate in a material particular;
14-19 (R) publishing or circulating an unjustified or
14-20 unwarranted threat of legal proceedings, or other action;
14-21 (S) establishing an association, by employment
14-22 or otherwise, with an unlicensed person who is expected or required
14-23 to perform an act for which <as> a real estate license is required
14-24 by this Act <licensee>, or aiding or abetting or conspiring with a
14-25 person to circumvent the requirements of this Act;
14-26 (T) failing or refusing on demand to furnish
14-27 copies of a document pertaining to a transaction dealing with real
14-28 estate to a person whose signature is affixed to the document;
14-29 (U) failing to advise a purchaser in writing
14-30 before the closing of a transaction that the purchaser should
14-31 either have the abstract covering the real estate which is the
14-32 subject of the contract examined by an attorney of the purchaser's
14-33 own selection, or be furnished with or obtain a policy of title
14-34 insurance;
14-35 (V) conduct which constitutes dishonest
14-36 dealings, bad faith, or untrustworthiness;
14-37 (W) acting negligently or incompetently in
14-38 performing an act for which a person is required to hold a real
14-39 estate license;
14-40 (X) disregarding or violating a provision of
14-41 this Act;
14-42 (Y) failing within a reasonable time to deposit
14-43 money received as escrow agent in a real estate transaction, either
14-44 in trust with a title company authorized to do business in this
14-45 state, or in a custodial, trust, or escrow account maintained for
14-46 that purpose in a banking institution authorized to do business in
14-47 this state;
14-48 (Z) disbursing money deposited in a custodial,
14-49 trust, or escrow account, as provided in Subsection (Y) before the
14-50 transaction concerned has been consummated or finally otherwise
14-51 terminated; or
14-52 (AA) discriminating against an owner, potential
14-53 purchaser, lessor, or potential lessee on the basis of race, color,
14-54 religion, sex, national origin, <or> ancestry, familial status, or
14-55 disability, including directing prospective home buyers or lessees
14-56 interested in equivalent properties to different areas according to
14-57 the race, color, religion, sex, national origin, <or> ancestry,
14-58 familial status, or disability of the potential owner or lessee;
14-59 (7) the licensee has failed or refused on demand to
14-60 produce a document, book, or record in the licensee's <his>
14-61 possession concerning a real estate transaction conducted by the
14-62 licensee <him> for inspection by the commission or its authorized
14-63 personnel or representative;
14-64 (8) the licensee has failed within a reasonable time
14-65 to provide information requested by the commission in connection
14-66 with an investigation to determine whether the licensee has
14-67 violated a provision of this Act or a rule of the commission <as a
14-68 result of a formal or informal complaint to the commission which
14-69 would indicate a violation of this Act>; or
14-70 (9) the licensee has failed without just cause to
15-1 surrender to the rightful owner, on demand, a document or
15-2 instrument coming into the licensee's <his> possession.
15-3 (d) The commission may not investigate under this section a
15-4 complaint submitted more than four years after the date of the
15-5 incident involving a real estate broker or salesperson <salesman>
15-6 that is the subject of the complaint.
15-7 SECTION 19. Subsection (a), Section 15B, The Real Estate
15-8 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
15-9 amended to read as follows:
15-10 (a) Notwithstanding any other provision of the Act, there
15-11 shall be no undercover or covert investigations of a person
15-12 licensed under this Act conducted by authority of this Act unless
15-13 expressly authorized by the commission after due consideration of
15-14 the circumstances and determination by the commission that such
15-15 measures are necessary to carry out the purposes of this Act. No
15-16 investigations of licensees or any other actions against licensees
15-17 shall be initiated on the basis of anonymous complaints whether in
15-18 writing or otherwise but shall be initiated only upon the
15-19 commission's own motion or a signed written complaint <from a
15-20 consumer or service recipient>. The commission may authorize an
15-21 employee of the commission to file a signed written complaint
15-22 against a licensee relating to a payment from a recovery fund
15-23 established under this Act, a criminal conviction, or an act of the
15-24 licensee that involves obtaining or attempting to obtain a license
15-25 by fraud, engaging in misrepresentation or deceit, or failing to
15-26 make good a check issued to the commission. Upon the adoption of
15-27 such motion by the commission or upon receipt of such complaint,
15-28 the licensee shall be notified promptly and in writing <unless the
15-29 commission itself, after due consideration, determines otherwise>.
15-30 SECTION 20. Section 15D, The Real Estate License Act
15-31 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
15-32 as follows:
15-33 Sec. 15D. No licensed real estate broker, licensed real
15-34 estate salesperson <salesman>, or not for profit real estate board
15-35 or association which provides information about real property sales
15-36 prices or terms of sale for the purpose of facilitating the
15-37 listing, selling, leasing, financing, or appraisal of real property
15-38 shall be liable to any other person as a result of so providing
15-39 such information unless the disclosure of same is otherwise
15-40 specifically prohibited by statute.
15-41 SECTION 21. Subsections (a), (b), (d), and (e), Section 16,
15-42 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
15-43 Statutes), are amended to read as follows:
15-44 (a) A license granted under the provisions of this Act shall
15-45 be suspended or revoked by the commission on proof that the
15-46 licensee, not being licensed and authorized to practice law in this
15-47 state, for a consideration, reward, pecuniary benefit, present or
15-48 anticipated, direct or indirect, or in connection with or as a part
15-49 of the licensee's <his> employment, agency, or fiduciary
15-50 relationship as a licensee, drew a deed, note, deed of trust, will,
15-51 or other written instrument that may transfer or anywise affect the
15-52 title to or an interest in land, except as provided in the
15-53 subsections below, or advised or counseled a person as to the
15-54 validity or legal sufficiency of an instrument or as to the
15-55 validity of title to real estate.
15-56 (b) Notwithstanding the provisions of this Act or any other
15-57 law, the completion of contract forms which bind the sale,
15-58 exchange, option, lease, or rental of any interest in real property
15-59 by a real estate broker or salesperson <salesman> incident to the
15-60 performance of the acts of a broker as defined by this article does
15-61 not constitute the unauthorized or illegal practice of law in this
15-62 state, provided the forms have been promulgated for use by the
15-63 commission for the particular kind of transaction involved, or the
15-64 forms have been prepared by an attorney at law licensed by this
15-65 state and approved by said attorney for the particular kind of
15-66 transaction involved, or the forms have been prepared by the
15-67 property owner or prepared by an attorney and required by the
15-68 property owner.
15-69 (d) The Texas Real Estate Broker-Lawyer Committee shall have
15-70 12 members including six members appointed by the commission and
16-1 six members of the State Bar of Texas appointed by the President of
16-2 the State Bar of Texas. The members of the committee shall hold
16-3 office for staggered terms of six years with the terms of two
16-4 commission appointees and two State Bar appointees expiring every
16-5 two years. Each member shall hold office until the member's <his>
16-6 successor is appointed. A vacancy for any cause shall be filled
16-7 for the expired term by the agency making the original appointment.
16-8 Appointments to the committee shall be made without regard to race,
16-9 creed, sex, religion, or national origin.
16-10 (e) In the best interest of the public the commission may
16-11 adopt rules and regulations requiring real estate brokers and
16-12 salespersons <salesmen> to use contract forms which have been
16-13 prepared by the Texas Real Estate Broker-Lawyer Committee and
16-14 promulgated by the commission; provided, however, that the
16-15 commission shall not prohibit a real estate broker or salesperson
16-16 <salesman> from using a contract form or forms binding the sale,
16-17 exchange, option, lease, or rental of any interest in real property
16-18 which have been prepared by the property owner or prepared by an
16-19 attorney and required by the property owner. For the purpose of
16-20 this section, contract forms prepared by the Texas Real Estate
16-21 Broker-Lawyer Committee appointed by the commission and the State
16-22 Bar of Texas and promulgated by the commission prior to the
16-23 effective date of this Act shall be deemed to have been prepared by
16-24 the Texas Real Estate Broker-Lawyer Committee. The commission may
16-25 suspend or revoke a license issued under the provisions of this
16-26 article when it has determined that the licensee failed to use a
16-27 contract form as required by the commission pursuant to this
16-28 section.
16-29 SECTION 22. Subsection (a), Section 17, The Real Estate
16-30 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
16-31 amended to read as follows:
16-32 (a) If the commission proposes to suspend or revoke a
16-33 person's license or registration, the person is entitled to a
16-34 hearing before the commission or a hearings officer appointed by
16-35 the commission. The commission shall prescribe procedures by which
16-36 all decisions to suspend or revoke are made by or are appealable to
16-37 the commission. The commission shall prescribe the time and place
16-38 of the hearing. However, the hearing shall be held, if the
16-39 licensee so desires, within the county where the licensee has the
16-40 licensee's <his> principal place of business, or if the licensee is
16-41 a nonresident, the hearing may be called for and held in any county
16-42 within this state. The hearing is governed by the procedures for a
16-43 contested case under Chapter 2001, Government Code <the
16-44 Administrative Procedure and Texas Register Act (Article 6252-13a,
16-45 Vernon's Texas Civil Statutes)>.
16-46 SECTION 23. Subsection (a), Section 18A, The Real Estate
16-47 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
16-48 amended to read as follows:
16-49 (a) Any listing contract form adopted by the commission
16-50 relating to the contractual obligations between a seller of real
16-51 estate and a real estate broker or salesperson <salesman> acting as
16-52 an agent for the seller shall include a section that informs the
16-53 parties to the contract that real estate commissions are
16-54 negotiable.
16-55 SECTION 24. Subsection (a), Section 18B, The Real Estate
16-56 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
16-57 amended to read as follows:
16-58 (a) If a person files a complaint with the commission
16-59 relating to a real estate broker or salesperson <salesman>, the
16-60 commission shall furnish to the person an explanation of the
16-61 remedies that are available to the person under this Act and
16-62 information about appropriate state or local agencies or officials
16-63 with which the person may file a complaint. The commission shall
16-64 furnish the same explanation and information to the person against
16-65 whom the complaint is filed.
16-66 SECTION 25. Subsections (a) and (b), Section 19, The Real
16-67 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
16-68 are amended to read as follows:
16-69 (a) A person acting as a real estate broker or real estate
16-70 salesperson <salesman> without first obtaining a license is guilty
17-1 of a misdemeanor and on conviction shall be punishable by a fine of
17-2 not less than $100 nor more than $500, or by imprisonment in the
17-3 county jail for a term not to exceed one year, or both; and if a
17-4 corporation or a limited liability company, shall be punishable by
17-5 a fine of not less than $1,000 nor more than $2,000. A person, on
17-6 conviction of a second or subsequent offense, shall be punishable
17-7 by a fine of not less than $500 nor more than $1,000, or by
17-8 imprisonment for a term not to exceed two years, or both; and if a
17-9 corporation or a limited liability company, shall be punishable by
17-10 a fine of not less than $2,000 nor more than $5,000.
17-11 (b) In case a person received money, or the equivalent
17-12 thereof, as a fee, commission, compensation, or profit by or in
17-13 consequence of a violation of Subsection (a) of this section, the
17-14 person <he> shall, in addition, be liable to a penalty of not less
17-15 than the amount of the sum of money so received and not more than
17-16 three times the sum so received, as may be determined by the court,
17-17 which penalty may be recovered in a court of competent jurisdiction
17-18 by an aggrieved person.
17-19 SECTION 26. Subsection (o), Section 19A, The Real Estate
17-20 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
17-21 amended to read as follows:
17-22 (o) A penalty collected under this section for a violation
17-23 by a person licensed as a real estate broker or salesperson
17-24 <salesman> shall be deposited in the real estate recovery fund. A
17-25 penalty collected under this section for a violation by a person
17-26 licensed or registered as a real estate inspector shall be
17-27 deposited in the real estate inspection recovery fund.
17-28 SECTION 27. Section 20, The Real Estate License Act (Article
17-29 6573a, Vernon's Texas Civil Statutes), is amended to read as
17-30 follows:
17-31 Sec. 20. (a) A person may not bring or maintain an action
17-32 for the collection of compensation for the performance in this
17-33 state of an act set forth in Section 2 of this Act without alleging
17-34 and proving that the person performing the brokerage services was a
17-35 duly licensed real estate broker or salesperson <salesman> at the
17-36 time the alleged services were commenced, or was a duly licensed
17-37 attorney at law in this state or in any other state.
17-38 (b) An action may not be brought in a court in this state
17-39 for the recovery of a commission for the sale or purchase of real
17-40 estate unless the promise or agreement on which the action is
17-41 brought, or some memorandum thereof, is in writing and signed by
17-42 the party to be charged or signed by a person lawfully authorized
17-43 by the party <him> to sign it.
17-44 (c) When an offer to purchase real estate in this state is
17-45 signed, the real estate broker or salesperson <salesman> shall
17-46 advise the purchaser or purchasers, in writing, that the purchaser
17-47 or purchasers should have the abstract covering the real estate
17-48 which is the subject of the contract examined by an attorney of the
17-49 purchaser's own selection, or that the purchaser or purchasers
17-50 should be furnished with or obtain a policy of title insurance.
17-51 Failure to advise the purchaser as provided in this subsection
17-52 precludes the payment of or recovery of any commission agreed to be
17-53 paid on the sale.
17-54 SECTION 28. Subdivisions (2), (5), and (9), Subsection (b),
17-55 Section 23, The Real Estate License Act (Article 6573a, Vernon's
17-56 Texas Civil Statutes), are amended to read as follows:
17-57 (2) The committee is composed of nine members
17-58 appointed by the commission. The members of the committee hold
17-59 office for staggered terms of six years, with the terms of three
17-60 members expiring February 1 of each odd-numbered year. Each member
17-61 holds office until the member's successor is appointed.
17-62 Appointments to the committee shall be made without regard to the
17-63 sex, race, color, age, handicap, religion, or national origin of
17-64 the appointees. In the event of a vacancy during a term, the
17-65 commission shall appoint a replacement who meets the qualifications
17-66 for appointment under this subdivision to fill the unexpired part
17-67 of the term. A member of the committee must be a professional
17-68 inspector actively engaged in the practice of real estate
17-69 inspecting at the time of appointment and must have been primarily
17-70 engaged in the practice of real estate inspecting for at least five
18-1 years before the member's appointment. A member of the committee
18-2 may not hold a real estate broker or salesperson <salesman>
18-3 license. Each member of the committee is entitled to a per diem
18-4 allowance and to reimbursement of travel expenses necessarily
18-5 incurred in performing functions as a member of the committee,
18-6 subject to any applicable limitation in the General Appropriations
18-7 Act. The committee shall annually elect from its members a
18-8 chairperson <chairman>, a vice chairperson <vice-chairman>, and
18-9 secretary. A quorum of the committee consists of five members.
18-10 (5) If the administrator of the commission has
18-11 knowledge that a potential ground for removal exists, the
18-12 administrator shall notify the chairperson <chairman> of the
18-13 commission that a potential ground exists.
18-14 (9) The committee shall act in an advisory capacity to
18-15 develop and recommend to the commission rules under this section.
18-16 The committee shall review commission rules relating to this
18-17 section and recommend changes in the rules to the commission. The
18-18 commission shall submit all proposed rules, all proposed rule
18-19 changes and all requests for proposed rules or rule changes that
18-20 relate to the regulation and licensing of inspectors under this
18-21 section to the committee for development or recommendation. The
18-22 commission may modify the rules developed by the committee if the
18-23 commission finds such modifications are in the public interest.
18-24 This section does not prohibit the commission from developing and
18-25 adopting rules relating to the regulation and licensing of
18-26 inspectors under this section if the committee fails to develop or
18-27 recommend rules under this section within a reasonable period of
18-28 time after the commission submits the proposed rules, rule changes
18-29 or requests for proposed rules or rule changes to the committee.
18-30 If the committee determines that a rule requested by the commission
18-31 should not be developed or recommended for adoption by the
18-32 commission, the committee shall submit a report on the matter to
18-33 the commission. The chairperson <chairman> of the commission and
18-34 the chairperson <chairman> of the committee shall then appoint
18-35 three members each from their respective bodies to meet as an ad
18-36 hoc committee to consider the report and recommend possible action
18-37 by the commission. The chairperson <chairman> of the commission or
18-38 a member of the commission designated by the chairperson <chairman>
18-39 shall serve as the seventh member of the ad hoc committee. At
18-40 least one member of the ad hoc committee must be a public member of
18-41 the commission.
18-42 SECTION 29. Subsection (l), Section 23, The Real Estate
18-43 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
18-44 amended to read as follows:
18-45 (l) Prohibited acts. A professional inspector, real estate
18-46 inspector or an apprentice inspector licensed under this section
18-47 may not:
18-48 (1) accept an assignment for real estate inspection if
18-49 the employment or fee is contingent on the reporting of a specific,
18-50 predetermined condition of the improvements to real property or is
18-51 contingent on the reporting of specific findings other than those
18-52 known by the inspector to be facts at the time of accepting the
18-53 assignment;
18-54 (2) act in a manner or engage in a practice that is
18-55 dishonest or fraudulent or that involves deceit or
18-56 misrepresentation;
18-57 (3) perform a real estate inspection in a negligent or
18-58 incompetent manner;
18-59 (4) act in the dual capacity of inspector and
18-60 undisclosed principal in a transaction;
18-61 (5) act in the dual capacity of inspector and real
18-62 estate broker or salesperson <salesman> in a transaction;
18-63 (6) perform or agree to perform any repairs or
18-64 maintenance in connection with a real estate inspection pursuant to
18-65 the provisions of any earnest money contract, lease agreement, or
18-66 exchange of real estate; or
18-67 (7) violate the rules adopted by the commission or any
18-68 provisions of this section.
18-69 SECTION 30. Subsection (o), Section 23, The Real Estate
18-70 License Act (Article 6573a, Vernon's Texas Civil Statutes), is
19-1 amended by amending Subdivisions (7) and (11) and by adding
19-2 Subdivision (19) to read as follows:
19-3 (7) The court shall proceed on the application
19-4 forthwith. On the hearing on the application, the aggrieved person
19-5 is required to show:
19-6 (A) that the judgment is based on facts allowing
19-7 recovery under Subdivision (1) of this subsection;
19-8 (B) that the person is not a spouse of the
19-9 debtor or the personal representative of the spouse and the person
19-10 is not a licensed <an> inspector, as defined by this section;
19-11 (C) that the person has obtained a judgment
19-12 under Subdivision (6) of this subsection that is not subject to a
19-13 stay or discharge in bankruptcy and has been judicially determined
19-14 to be nondischargeable in a pending bankruptcy, stating the amount
19-15 of the judgment and the amount owing on the judgment at the date of
19-16 the application;
19-17 (D) that based on the best information
19-18 available, the judgment debtor lacks sufficient attachable assets
19-19 in this state or any other state to satisfy the judgment; and
19-20 (E) the amount that may be realized from the
19-21 sale of real or personal property or other assets liable to be sold
19-22 or applied in satisfaction of the judgment and the balance
19-23 remaining due on the judgment after application of the amount that
19-24 may be realized.
19-25 (11) The sums received by the commission for deposit
19-26 in the real estate inspection recovery fund shall be held by the
19-27 commission in trust for carrying out the purpose of the real estate
19-28 inspection recovery fund. Subject to legislative appropriation,
19-29 money in the fund may be used by the commission to pay the expenses
19-30 involved in collecting a judgment assigned to the commission.
19-31 These funds may be invested and reinvested in the same manner as
19-32 funds of the Employees Retirement System of Texas, and the interest
19-33 from these investments shall be deposited to the credit of the real
19-34 estate inspection recovery fund. However, investments may not be
19-35 made that will impair the necessary liquidity required to satisfy
19-36 judgment payments awarded pursuant to this subsection.
19-37 (19) If the commission is notified before making a
19-38 payment from the real estate inspection recovery fund that a
19-39 judgment debtor has initiated a bankruptcy proceeding involving a
19-40 judgment that the commission has been ordered to pay, the
19-41 commission may move for an order to withdraw the order directing
19-42 the commission to make the payment pending a judicial determination
19-43 in the bankruptcy proceeding that the judgment is nondischargeable.
19-44 A court shall grant the commission's motion on presentation by the
19-45 commission of proof that the bankruptcy proceeding involving the
19-46 judgment debtor was initiated by the judgment debtor.
19-47 SECTION 31. (a) This Act takes effect September 1, 1995.
19-48 (b) The change made by this Act in the title of a person
19-49 licensed to sell real estate does not affect the validity of a
19-50 license issued or an act performed before the effective date of
19-51 this Act.
19-52 SECTION 32. The importance of this legislation and the
19-53 crowded condition of the calendars in both houses create an
19-54 emergency and an imperative public necessity that the
19-55 constitutional rule requiring bills to be read on three several
19-56 days in each house be suspended, and this rule is hereby suspended.
19-57 * * * * *