By Danburg                                       H.B. No. 814

      75R2495 JMM-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the title of certain persons licensed to sell real

 1-3     estate.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Sections 1(b)-(e), The Real Estate License Act

 1-6     (Article 6573a, Vernon's Texas Civil Statutes), are amended to read

 1-7     as follows:

 1-8           (b)  It is unlawful for a person to act in the capacity of,

 1-9     engage in the business of, or advertise or hold that person

1-10     [himself] out as engaging in or conducting the business of a real

1-11     estate broker or a real estate salesperson [salesman] within this

1-12     state without first obtaining a real estate license from the Texas

1-13     Real Estate Commission.  It is unlawful for a person licensed as a

1-14     real estate salesperson [salesman] to act or attempt to act as a

1-15     real estate broker or salesperson [salesman] unless that person

1-16     [he] is, at such time, associated with a licensed Texas real estate

1-17     broker and acting for the licensed real estate broker.

1-18           (c)  Each real estate broker licensed pursuant to this Act is

1-19     responsible to the commission, members of the public, and the

1-20     broker's [his] clients for all acts and conduct performed under

1-21     this Act by the broker [himself] or by a real estate salesperson

1-22     [salesman] associated with or acting for the broker.

1-23           (d)  No real estate salesperson [salesman] shall accept

1-24     compensation for real estate sales and transactions from any person

 2-1     other than the broker under whom the salesperson [he] is at the

 2-2     time licensed or under whom the salesperson [he] was licensed when

 2-3     the salesperson [he] earned the right to compensation.

 2-4           (e)  No real estate salesperson [salesman] shall pay a

 2-5     commission to any person except through the broker under whom the

 2-6     salesperson [he] is at the time licensed.

 2-7           SECTION 2.  Section 2(4), The Real Estate License Act

 2-8     (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

 2-9     as follows:

2-10                 (4)  "Real estate salesperson [salesman]" means a

2-11     person associated with a Texas licensed real estate broker for the

2-12     purposes of performing acts or transactions comprehended by the

2-13     definition of "real estate broker" as defined in this Act.

2-14           SECTION 3.  Section 3, The Real Estate License Act (Article

2-15     6573a, Vernon's Texas Civil Statutes), is amended to read as

2-16     follows:

2-17           Sec. 3.  The provisions of this Act shall not apply to any of

2-18     the following persons and transactions, and each and all of the

2-19     following persons and transactions are hereby exempted from the

2-20     provisions of this Act:

2-21                 (1)  an attorney at law licensed in this state or in

2-22     any other state;

2-23                 (2)  an attorney in fact under a duly executed power of

2-24     attorney authorizing the consummation of a real estate transaction;

2-25                 (3)  a public official in the conduct of that person's

2-26     [his] official duties;

2-27                 (4)  a person calling the sale of real estate by

 3-1     auction under the authority of a license issued by this state

 3-2     provided the person does not perform any other act of a real estate

 3-3     broker or salesperson [salesman] as defined by this Act;

 3-4                 (5)  a person acting under a court order or under the

 3-5     authority of a will or a written trust instrument;

 3-6                 (6)  a salesperson employed by an owner in the sale of

 3-7     structures and land on which said structures are situated, provided

 3-8     such structures are erected by the owner in the due course of the

 3-9     owner's [his] business;

3-10                 (7)  an on-site manager of an apartment complex;

3-11                 (8)  transactions involving the sale, lease, or

3-12     transfer of any mineral or mining interest in real property;

3-13                 (9)  an owner or the owner's [his] employees in renting

3-14     or leasing the owner's [his] own real estate whether improved or

3-15     unimproved;

3-16                 (10)  transactions involving the sale, lease, or

3-17     transfer of cemetery lots; or

3-18                 (11)  transactions involving the renting, leasing, or

3-19     management of hotels or motels.

3-20           SECTION 4.  Section 4, The Real Estate License Act (Article

3-21     6573a, Vernon's Texas Civil Statutes), is amended to read as

3-22     follows:

3-23           Sec. 4.  A person who, directly or indirectly for another,

3-24     with the intention or on the promise of receiving any valuable

3-25     consideration, offers, attempts, or agrees to perform, or performs,

3-26     a single act defined in Subdivisions 2 and 3, Section 2 of this

3-27     Act, whether as a part of a transaction, or as an entire

 4-1     transaction, is deemed to be acting as a real estate broker or

 4-2     salesperson [salesman] within the meaning of this Act.  The

 4-3     commission of a single such act by a person required to be licensed

 4-4     under this Act and not so licensed shall constitute a violation of

 4-5     this Act.

 4-6           SECTION 5.  Sections 5(a), (f), (g), (i), and (m), The Real

 4-7     Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),

 4-8     are amended to read as follows:

 4-9           (a)  The administration of the provisions of this Act is

4-10     vested in a commission, to be known as the "Texas Real Estate

4-11     Commission," consisting of nine members to be appointed by the

4-12     governor with the advice and consent of two-thirds of the senate

4-13     present.  The commissioners hold office for staggered terms of six

4-14     years with the terms of three members expiring January 31 of each

4-15     odd-numbered year.  Each member holds office until the member's

4-16     [his] successor is appointed and has qualified.  Within 15 days

4-17     after [his] appointment, each member shall qualify by taking the

4-18     constitutional oath of office and furnishing a bond payable to the

4-19     Governor of Texas in the penal sum of $10,000, conditional on the

4-20     faithful performance of the member's [his] duties as prescribed by

4-21     law.  A vacancy for any cause shall be filled by the governor for

4-22     the unexpired term. The governor shall designate as chairperson

4-23     [chairman] of the commission one member of the commission who is a

4-24     licensed real estate broker.  The chairperson [chairman] serves in

4-25     that capacity at the pleasure of the governor.  At a regular

4-26     meeting in February of each year, the commission shall elect from

4-27     its own membership a vice-chairperson [vice-chairman] and

 5-1     secretary.  A quorum of the commission consists of five members.

 5-2           (f)  If the administrator has knowledge that a potential

 5-3     ground for removal exists, the administrator shall notify the

 5-4     chairperson [chairman] of the commission of the ground.  The

 5-5     chairperson [chairman] shall then notify the governor that a

 5-6     potential ground for removal exists.

 5-7           (g)  Each member of the commission shall receive as

 5-8     compensation for each day actually spent on the member's [his]

 5-9     official duties the sum of $75 and the [his] actual and necessary

5-10     expenses incurred in the performance of the member's [his] official

5-11     duties.

5-12           (i)  The commission is empowered to select and name an

5-13     administrator and to select and employ such other subordinate

5-14     officers and employees as are necessary to administer this Act.

5-15     The salaries of the administrator and the officers and employees

5-16     shall be fixed by the commission not to exceed such amounts as are

5-17     fixed by the applicable general appropriations bill.  The

5-18     commission may designate a subordinate officer as assistant

5-19     administrator who shall be authorized to act for the administrator

5-20     in the administrator's [his] absence.  The administrator or the

5-21     administrator's designee shall develop a system of annual

5-22     performance evaluations.  All merit pay for commission employees

5-23     must be based on the system established under this subsection.  The

5-24     administrator or the administrator's designee shall develop an

5-25     intraagency career ladder program.  The program shall require

5-26     intraagency postings of all nonentry level positions concurrently

5-27     with any public posting.

 6-1           (m)  The commission shall charge and collect as a condition

 6-2     for issuance and for renewal of a real estate broker license the

 6-3     fee under Section 11(a)(14) of this Act.  The commission shall

 6-4     charge and collect as a condition for issuance and for renewal of a

 6-5     real estate salesperson [salesman] license the fee under Section

 6-6     11(a)(15) of this Act.  The commission shall transmit the fees

 6-7     under this subsection quarterly to Texas A&M University for deposit

 6-8     in a separate banking account.  The money in the separate account

 6-9     shall be expended for the support and maintenance of the Texas Real

6-10     Estate Research Center and for carrying out the purposes,

6-11     objectives, and duties of the center.  However, all money expended

6-12     from the separate account shall be as determined by legislative

6-13     appropriation.

6-14           SECTION 6.  Sections 6(a) and (b), The Real Estate License

6-15     Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to

6-16     read as follows:

6-17           (a)  A person desiring to act as a real estate broker in this

6-18     state shall file an application for a license with the commission

6-19     on a form prescribed by the commission.  A broker desiring to

6-20     engage a person to participate in real estate brokerage activity

6-21     shall join the person in filing an application for a salesperson

6-22     [salesman] license on a form prescribed by the commission.  A

6-23     person previously licensed as a broker may apply for inactive

6-24     status.  A person previously licensed as a salesperson [salesman]

6-25     may apply for inactive status without the participation of a

6-26     broker.  The person must apply for inactive status on a form

6-27     prescribed by the commission not later than the first anniversary

 7-1     of the date of the expiration of the broker or salesperson

 7-2     [salesman] license.

 7-3           (b)  To be eligible for a license, an individual must be a

 7-4     citizen of the United States or a lawfully admitted alien, be at

 7-5     least 18 years of age, and be a legal resident of Texas at the time

 7-6     of the filing of an application, and must satisfy the commission as

 7-7     to the individual's [his] honesty, trustworthiness, integrity, and

 7-8     competency.  However, the competency of the individual, for the

 7-9     purpose of qualifying for the granting of a license, shall be

7-10     judged solely on the basis of the examination referred to in

7-11     Section 7 of this Act.

7-12           SECTION 7.  Section 6A(a), The Real Estate License Act

7-13     (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

7-14     as follows:

7-15           (a)  If, at any time before a person applies for a license

7-16     under this Act, the person requests the commission to determine

7-17     whether the person's [his] moral character complies with the

7-18     commission's moral character requirements for licensing under this

7-19     Act and the person pays a fee set by the commission for the moral

7-20     character determination, the commission shall make its

7-21     determination of the person's moral character.

7-22           SECTION 8.  Sections 7(a), (c)-(e), (g), and (h), The Real

7-23     Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),

7-24     are amended to read as follows:

7-25           (a)  Competency as referred to in Section 6 of this Act shall

7-26     be established by an examination prepared by or contracted for by

7-27     the commission.  The examination shall be given at such times and

 8-1     at such places within the state as the commission shall prescribe.

 8-2     The examination shall be of scope sufficient in the judgment of the

 8-3     commission to determine that a person is competent to act as a real

 8-4     estate broker or salesperson [salesman] in a manner to protect the

 8-5     interest of the public.  The examination for a salesperson

 8-6     [salesman] license shall be less exacting and less stringent than

 8-7     the examination for a broker license.  The commission shall furnish

 8-8     each applicant with study material and references on which the

 8-9     [his] examination shall be based.  When an applicant for a real

8-10     estate license fails a qualifying examination, the applicant [he]

8-11     may apply for reexamination by filing a request therefor together

8-12     with the proper fee.  The examination requirement must be satisfied

8-13     not later than six months after the date on which the application

8-14     for a license is filed.  Courses of study required for a license

8-15     may include but are not limited to the following, which shall be

8-16     considered core real estate courses for all purposes of this Act:

8-17                 (1)  Principles of Real Estate (or equivalent) shall

8-18     include but not be limited to an overview of licensing as a real

8-19     estate broker and salesperson [salesman], ethics of practice,

8-20     titles to and conveyancing of real estate, legal descriptions, law

8-21     of agency, deeds, encumbrances and liens, distinctions between

8-22     personal and real property, contracts, appraisal, finance and

8-23     regulations, closing procedures, real estate mathematics, and at

8-24     least three classroom hours of instruction on federal, state, and

8-25     local laws relating to housing discrimination, housing credit

8-26     discrimination, and community reinvestment.

8-27                 (2)  Real Estate Appraisal (or equivalent) shall

 9-1     include but not be limited to the central purposes and functions of

 9-2     an appraisal, social and economic determinant of value, appraisal

 9-3     case studies, cost, market data and income approaches to value

 9-4     estimates, final correlations, and reporting.

 9-5                 (3)  Real Estate Law (or equivalent) shall include but

 9-6     not be limited to legal concepts of real estate, land description,

 9-7     real property rights and estates in land, contracts, conveyances,

 9-8     encumbrances, foreclosures, recording procedures, and evidence of

 9-9     titles.

9-10                 (4)  Real Estate Finance (or equivalent) shall include

9-11     but not be limited to monetary systems, primary and secondary money

9-12     markets, sources of mortgage loans, federal government programs,

9-13     loan applications, processes and procedures, closing costs,

9-14     alternative financial instruments, equal credit opportunity acts,

9-15     community reinvestment act, and state housing agency.

9-16                 (5)  Real Estate Marketing (or equivalent) shall

9-17     include but not be limited to real estate professionalism and

9-18     ethics, characteristics of successful salespersons [salesmen], time

9-19     management, psychology of marketing, listing procedures,

9-20     advertising, negotiating and closing, financing, and the Deceptive

9-21     Trade Practices-Consumer Protection Act, as amended, Section 17.01

9-22     et seq., Business & Commerce Code.

9-23                 (6)  Real Estate Mathematics (or equivalent) shall

9-24     include but not be limited to basic arithmetic skills and review of

9-25     mathematical logic, percentages, interest, time-valued money,

9-26     depreciation, amortization, proration, and estimation of closing

9-27     statements.

 10-1                (7)  Real Estate Brokerage (or equivalent) shall

 10-2    include but not be limited to law of agency, planning and

 10-3    organization, operational policies and procedures, recruiting,

 10-4    selection and training of personnel, records and control, and real

 10-5    estate firm analysis and expansion criteria.

 10-6                (8)  Property Management (or equivalent) shall include

 10-7    but not be limited to role of property manager, landlord policies,

 10-8    operational guidelines, leases, lease negotiations, tenant

 10-9    relations, maintenance, reports, habitability laws, and the Fair

10-10    Housing Act.

10-11                (9)  Real Estate Investments (or equivalent) shall

10-12    include but not be limited to real estate investment

10-13    characteristics, techniques of investment analysis, time-valued

10-14    money, discounted and nondiscounted investment criteria, leverage,

10-15    tax shelters depreciation, and applications to property tax.

10-16                (10)  Law of Agency (or equivalent) shall include but

10-17    not be limited to the principal-agent and master-servant

10-18    relationships, the authority of an agent, the termination of an

10-19    agent's authority, the fiduciary and other duties of an agent,

10-20    employment law, deceptive trade practices, listing or buying

10-21    representation procedures, and the disclosure of agency.

10-22          (c)  The commission shall waive the examination of an

10-23    applicant for a broker license who has, within one year previous to

10-24    the filing of the [his] application, been licensed in this state as

10-25    a broker, and shall waive the examination of an applicant for a

10-26    salesperson [salesman] license who has, within one year previous to

10-27    the filing of the [his] application, been licensed in this state as

 11-1    either a broker or salesperson [salesman].

 11-2          (d)  Each applicant for a broker license shall furnish the

 11-3    commission satisfactory evidence that the applicant [he] has had

 11-4    not less than two years active experience in this state as a

 11-5    licensed real estate salesperson [salesman] or broker during the

 11-6    36-month period immediately preceding the filing of the

 11-7    application; and, in addition, shall furnish the commission

 11-8    satisfactory evidence of having completed successfully 60 semester

 11-9    hours, or equivalent classroom hours, of core real estate courses

11-10    or related postsecondary education courses accepted by the

11-11    commission.  These qualifications for a broker license may not be

11-12    required of an applicant who, at the time of making the

11-13    application, is duly licensed as a real estate broker by any other

11-14    state in the United States if that state's requirements for

11-15    licensure are comparable to those of Texas.  As a prerequisite for

11-16    applying for a broker license, those persons licensed as

11-17    salespersons [salesmen] subject to the annual education

11-18    requirements provided by Subsection (e) of this section shall, as

11-19    part of the hours required by this subsection, furnish the

11-20    commission satisfactory evidence of having completed all the

11-21    requirements of Subsection (e) of this section.

11-22          (e)  Each applicant for a salesperson [salesman] license

11-23    shall furnish the commission satisfactory evidence of having

11-24    completed 12 semester hours, or equivalent classroom hours, of

11-25    postsecondary education, six hours of which must be completed in

11-26    core real estate courses, of which a minimum of two hours must be

11-27    completed in Principles of Real Estate as described in Subsection

 12-1    (a)(1) of this section and a minimum of two hours must be completed

 12-2    in Law of Agency as described in Subsection (a)(10) of this

 12-3    section.  The remaining six hours shall be completed in core real

 12-4    estate courses or related courses.  As a condition for the first

 12-5    renewal of a salesperson [salesman] license, the applicant shall

 12-6    furnish the commission satisfactory evidence of having completed a

 12-7    minimum of 14 semester hours, or equivalent classroom hours, eight

 12-8    hours of which must be completed in core real estate courses.  As a

 12-9    condition for the second renewal of a salesperson [salesman]

12-10    license, the applicant shall furnish the commission satisfactory

12-11    evidence of having completed a minimum of 16 semester hours, or

12-12    equivalent classroom hours, 10 hours of which must be completed in

12-13    core real estate courses.  As a condition for the third renewal of

12-14    a salesperson [salesman] license, the applicant shall furnish the

12-15    commission satisfactory evidence of having completed a minimum of

12-16    18 semester hours, or equivalent classroom hours, 12 hours of which

12-17    must be completed in core real estate courses.

12-18          (g)  Notwithstanding any other provision of this Act, each

12-19    applicant for a broker license shall furnish the commission with

12-20    satisfactory evidence:

12-21                (1)  that the applicant [he] has satisfied the

12-22    requirements of Subsection (d) of this section;

12-23                (2)  that the applicant [he] is a licensed real estate

12-24    broker in another state, [that he] has had not less than two years'

12-25    active experience in the other state as a licensed real estate

12-26    salesperson [salesman] or broker during the 36-month period

12-27    immediately preceding the filing of the application, and [that he]

 13-1    has satisfied the educational requirements for a broker license as

 13-2    provided by Subsection (d) of this section; or

 13-3                (3)  that the applicant [he] has, within one year

 13-4    previous to the filing of the [his] application, been licensed in

 13-5    this state as a broker.

 13-6          (h)  Notwithstanding any other provision of this Act, the

 13-7    commission shall waive the requirements of Subsection (e) of this

 13-8    section for an applicant for a salesperson [salesman] license who

 13-9    has, within one year previous to the filing of the [his]

13-10    application, been licensed in this state as a broker or salesperson

13-11    [salesman].  However, with respect to an applicant for a

13-12    salesperson [salesman] license who was licensed as a salesperson

13-13    [salesman] within one year previous to the filing of the

13-14    application but whose original license was issued under the

13-15    provisions that the first, second, and third renewal of the license

13-16    would be conditioned upon furnishing satisfactory evidence of

13-17    successful completion of additional education, the commission shall

13-18    require the applicant to furnish satisfactory evidence of

13-19    successful completion of any additional education that would have

13-20    been required if the license had been maintained without

13-21    interruption during the previous year.

13-22          SECTION 9.  Sections 7A(a)-(c), The Real Estate License Act

13-23    (Article 6573a, Vernon's Texas Civil Statutes), are amended to read

13-24    as follows:

13-25          (a)  To renew an active real estate broker license or an

13-26    active real estate salesperson [salesman] license that is not

13-27    subject to the annual education requirements of this Act, the

 14-1    licensee must provide the commission proof of attendance at at

 14-2    least 15 classroom hours of continuing education courses approved

 14-3    by the commission during the term of the current license.  The

 14-4    commission by rule may provide for the substitution of relevant

 14-5    educational experience or correspondence courses approved by the

 14-6    commission instead of classroom attendance.  In addition,

 14-7    supervised video instruction may be approved by the commission as a

 14-8    course counting as classroom hours of mandatory continuing

 14-9    education.  At least six hours of instruction must be devoted to

14-10    the rules of the commission, fair housing laws, landlord-tenant law

14-11    and other Property Code issues, agency laws, antitrust laws, the

14-12    Deceptive Trade Practices-Consumer Protection Act (Subchapter E,

14-13    Chapter 17, Business & Commerce Code), disclosures to buyers,

14-14    landlords, tenants, and sellers, current contract and addendum

14-15    forms, the unauthorized practice of law, case studies involving

14-16    violations of laws and regulations, current Federal Housing

14-17    Administration and Department of Veterans Affairs regulations, tax

14-18    laws, property tax consulting laws and legal issues, or other legal

14-19    topics approved by the commission.  The remaining hours may be

14-20    devoted to other real estate-related topics approved by the

14-21    commission.  The commission may consider equivalent courses for

14-22    continuing education credit.  Property tax consulting laws and

14-23    legal issues include but are not limited to the Tax Code,

14-24    preparation of property tax reports, the unauthorized practice of

14-25    law, agency laws, tax laws, laws concerning property taxes or

14-26    assessments, deceptive trade practices, contract forms and

14-27    addendum, and other legal topics approved by the commission.  Real

 15-1    estate related courses approved by the State Bar of Texas for

 15-2    minimum continuing legal education participatory credit and core

 15-3    real estate courses under Section 7(a) of this Act shall

 15-4    automatically be approved as mandatory continuing education courses

 15-5    under this Act.  The commission may not require examinations except

 15-6    for correspondence courses or courses offered by alternative

 15-7    delivery systems such as computers.  Daily classroom course

 15-8    segments must be at least three hours long but not more than 10

 15-9    hours long.

15-10          (b)  An applicant for an active real estate broker license or

15-11    an active real estate salesperson [salesman] license who is not

15-12    subject to the education requirements of Section 7 of this Act must

15-13    provide the commission with proof of attendance of the number of

15-14    classroom hours of continuing education that would have been

15-15    required for a timely renewal as specified in Subsection (a) of

15-16    this section during the two-year period preceding the filing of the

15-17    application.

15-18          (c)  As a condition of returning to active status, an

15-19    inactive salesperson [salesman] whose license is not subject to the

15-20    annual education requirements of this Act must provide the

15-21    commission with proof of attendance at at least 15 hours of

15-22    continuing education as specified in Subsection (a) of this section

15-23    during the two-year period preceding the filing of the application.

15-24          SECTION 10.  Sections 8(a)-(f), (h), (i), (l), (n), and (q),

15-25    The Real Estate License Act (Article 6573a, Vernon's Texas Civil

15-26    Statutes), are amended to read as follows:

15-27          (a)  The commission shall establish a real estate recovery

 16-1    fund which shall be set apart and maintained by the commission as

 16-2    provided in this section.  The fund shall be used in the manner

 16-3    provided in this section for reimbursing aggrieved persons who

 16-4    suffer actual damages by reason of certain acts committed by a duly

 16-5    licensed real estate broker or salesperson [salesman], or by an

 16-6    unlicensed employee or agent of a broker or salesperson [salesman],

 16-7    provided the broker or salesperson [salesman] was licensed by the

 16-8    State of Texas at the time the act was committed and provided

 16-9    recovery is ordered by a court of competent jurisdiction against

16-10    the broker or salesperson [salesman].  The use of the fund is

16-11    limited to an act that constitutes a violation of Section 15(a)(3)

16-12    or (6) of this Act.

16-13          (b)  On application for an original license pursuant to this

16-14    Act, the applicant shall pay, in addition to the [his] original

16-15    license application fee, a fee of $10 which shall be deposited in

16-16    the real estate recovery fund.

16-17          (c)  If on December 31 of any year the balance remaining in

16-18    the real estate recovery fund is less than $1 million, each real

16-19    estate broker and each real estate salesperson [salesman], on the

16-20    next renewal of the [his] license, shall pay, in addition to the

16-21    [his] license renewal fee, a fee of $10, which shall be deposited

16-22    in the real estate recovery fund, or a pro rata share of the amount

16-23    necessary to bring the fund to $1.7 million, whichever is less.  If

16-24    on December 31 of any year the balance remaining in the real estate

16-25    recovery fund is more than $3.5 million or more than the total

16-26    amount of claims paid from the fund during the previous four fiscal

16-27    years, whichever is greater, the amount of money in excess of the

 17-1    greater amount shall be transferred to the general revenue fund.

 17-2          (d)  No action for a judgment which subsequently results in

 17-3    an order for collection from the real estate recovery fund shall be

 17-4    started later than two years from the accrual of the cause of

 17-5    action.  When an aggrieved person commences action for a judgment

 17-6    which may result in collection from the real estate recovery fund,

 17-7    the real estate broker or real estate salesperson [salesman] shall

 17-8    notify the commission in writing to this effect at the time of the

 17-9    commencement of the action.

17-10          (e)  When an aggrieved person recovers a valid judgment in a

17-11    court of competent jurisdiction against a real estate broker or

17-12    real estate salesperson [salesman], on the grounds described in

17-13    Subsection (a) of this section that occurred on or after May 19,

17-14    1975, the aggrieved person may, after final judgment has been

17-15    entered, execution returned nulla bona, and a judgment lien

17-16    perfected, file a verified claim in the court in which the judgment

17-17    was entered and, on 20 days' written notice to the commission, and

17-18    to the judgment debtor, may apply to the court for an order

17-19    directing payment out of the real estate recovery fund of the

17-20    amount unpaid on the judgment, subject to the limitations stated in

17-21    Subsection (n) of this section.

17-22          (f)  The court shall proceed on the application forthwith.

17-23    On the hearing on the application, the aggrieved person is required

17-24    to show that:

17-25                (1)  the judgment is based on facts allowing recovery

17-26    under Subsection (a) of this section;

17-27                (2)  the person [he] is not a spouse of the debtor, or

 18-1    the personal representative of the spouse; and the person [he] is

 18-2    not a real estate broker or salesperson [salesman], as defined by

 18-3    this Act, who is seeking to recover a real estate commission in the

 18-4    transaction or transactions for which the application for payment

 18-5    is made;

 18-6                (3)  the person [he] has obtained a judgment under

 18-7    Subsection (e) of this section that is not subject to a stay or

 18-8    discharge in bankruptcy, stating the amount of the judgment and the

 18-9    amount owing on the judgment at the date of the application;

18-10                (4)  based on the best available information, the

18-11    judgment debtor lacks sufficient attachable assets in this state or

18-12    any other state to satisfy the judgment; and

18-13                (5)  the amount that may be realized from the sale of

18-14    real or personal property or other assets liable to be sold or

18-15    applied in satisfaction of the judgment and the balance remaining

18-16    due on the judgment after application of the amount that may be

18-17    realized.

18-18          (h)  The court shall make an order directed to the commission

18-19    requiring payment from the real estate recovery fund of whatever

18-20    sum it finds to be payable on the claim, pursuant to and in

18-21    accordance with the limitations contained in this section, if the

18-22    court is satisfied, on the hearing, of the truth of all matters

18-23    required to be shown by the aggrieved person by Subsection (f) of

18-24    this section and that the aggrieved person has satisfied all of the

18-25    requirements of Subsections (e) and (f) of this section.  The

18-26    commission may relitigate any issue material and relevant in the

18-27    hearing on the application that was determined in the underlying

 19-1    action on which the judgment in favor of the applicant was based.

 19-2    If the court finds that the aggregate amount of claims against a

 19-3    real estate broker or salesperson [salesman] exceeds the

 19-4    limitations contained in this section, the court shall reduce

 19-5    proportionately the amount it finds payable on the claim.

 19-6          (i)  A license granted under the provisions of this Act may

 19-7    be revoked by the commission on proof that the commission has made

 19-8    a payment from the real estate recovery fund of any amount toward

 19-9    satisfaction of a judgment against a licensed real estate broker or

19-10    salesperson [salesman].  The commission may probate an order

19-11    revoking a license.  No broker or salesperson [salesman] is

19-12    eligible to receive a new license until the broker or salesperson

19-13    [he] has repaid in full, plus interest at the current legal rate,

19-14    the amount paid from the real estate recovery fund on the broker's

19-15    or salesperson's [his] account.

19-16          (l)  When, on the order of the court, the commission has paid

19-17    from the real estate recovery fund any sum to the judgment

19-18    creditor, the commission shall be subrogated to all of the rights

19-19    of the judgment creditor to the extent of the amount paid.  The

19-20    judgment creditor shall assign all of the creditor's [his] right,

19-21    title, and interest in the judgment up to the amount paid by the

19-22    commission which amount shall have priority for repayment in the

19-23    event of any subsequent recovery on the judgment.  Any amount and

19-24    interest recovered by the commission on the judgment shall be

19-25    deposited to the fund.

19-26          (n)  Notwithstanding any other provision, payments from the

19-27    real estate recovery fund are subject to the following conditions

 20-1    and limitations:

 20-2                (1)  payments may be made only pursuant to an order of

 20-3    a court of competent jurisdiction, as provided in Subsection (e) of

 20-4    this section, and in the manner prescribed by this section;

 20-5                (2)  payments for claims, including attorneys' fees,

 20-6    interest, and court costs, arising out of the same transaction

 20-7    shall be limited in the aggregate to $50,000 regardless of the

 20-8    number of claimants; and

 20-9                (3)  payments for claims based on judgments against any

20-10    one licensed real estate broker or salesperson [salesman] may not

20-11    exceed in the aggregate $100,000 until the fund has been reimbursed

20-12    by the licensee for all amounts paid.

20-13          (q)  A broker or salesperson [salesman] licensed under this

20-14    Act shall notify consumers and service recipients of the

20-15    availability of the real estate recovery fund established under

20-16    this section for reimbursing certain aggrieved persons.  The notice

20-17    must include the name, mailing address, and telephone number of the

20-18    commission and any other information required by commission rule.

20-19    The notification may be provided with the notice required by

20-20    Section 5(q) of this Act or:

20-21                (1)  on a written contract for the services of a broker

20-22    or salesperson [salesman];

20-23                (2)  on a brochure distributed by a broker or

20-24    salesperson [salesman];

20-25                (3)  on a sign prominently displayed in the place of

20-26    business of a salesperson [salesman] or broker; or

20-27                (4)  in a bill or receipt for service provided by a

 21-1    broker or salesperson [salesman].

 21-2          SECTION 11.  Sections 9(a), (b), and (e), The Real Estate

 21-3    License Act (Article 6573a, Vernon's Texas Civil Statutes), are

 21-4    amended to read as follows:

 21-5          (a)  When an applicant has satisfactorily met all

 21-6    requirements and conditions of this Act, a license shall be issued

 21-7    which may remain in force and effect so long as the holder of the

 21-8    license remains in compliance with the obligations of this Act,

 21-9    which include payment of the renewal fee as provided in Section 11

21-10    of this Act.  Each active salesperson [salesman] license issued

21-11    shall be delivered or mailed to the broker with whom the

21-12    salesperson [salesman] is associated and shall be kept under the

21-13    broker's [his] custody and control.

21-14          (b)  An applicant is not permitted to engage in the real

21-15    estate business either as a broker or salesperson [salesman] until

21-16    a license evidencing the applicant's [his] authority to engage in

21-17    the real estate business has been received.

21-18          (e)  The commission shall require in any application for a

21-19    broker or salesperson [salesman] license or a renewal of a broker

21-20    or salesperson [salesman] license the applicant to disclose whether

21-21    the applicant has entered a plea of guilty or nolo contendere to,

21-22    been found guilty of, or been convicted of a felony and the time

21-23    for appeal has elapsed or the judgment or conviction has been

21-24    affirmed on appeal, irrespective of an order granting probation

21-25    following the conviction or suspending the imposition of sentence.

21-26          SECTION 12.  Section 10(a), The Real Estate License Act

21-27    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

 22-1    as follows:

 22-2          (a)  If the commission declines or fails to license an

 22-3    applicant, it shall immediately give written notice of the refusal

 22-4    to the applicant.  Before the applicant may appeal to a district

 22-5    court as provided in Section 18 of this Act, the applicant [he]

 22-6    must file within 10 days after the receipt of the notice an appeal

 22-7    from the ruling, requesting a time and place for a hearing before

 22-8    the commission.  The commission shall set a time and place for the

 22-9    hearing within 30 days from the receipt of the appeal, giving 10

22-10    days' notice of the hearing to the applicant.  The time of the

22-11    hearing may be continued from time to time with the consent of the

22-12    applicant.  Following the hearing, the commission shall enter an

22-13    order which is, in its opinion, appropriate in the matter

22-14    concerned.

22-15          SECTION 13.  Section 11, The Real Estate License Act (Article

22-16    6573a, Vernon's Texas Civil Statutes), is amended to read as

22-17    follows:

22-18          Sec. 11.  [(a)]  The commission shall charge and collect the

22-19    following fees:

22-20                (1)  a fee not to exceed $100 for the filing of an

22-21    original application for a real estate broker license;

22-22                (2)  a fee not to exceed $100 for annual renewal of a

22-23    real estate broker license;

22-24                (3)  a fee not to exceed $50 for the filing of an

22-25    original application for a real estate salesperson [salesman]

22-26    license;

22-27                (4)  a fee not to exceed $50 for annual renewal of a

 23-1    real estate salesperson [salesman] license;

 23-2                (5)  a fee not to exceed $25 for an application for a

 23-3    license examination;

 23-4                (6)  a fee not to exceed $20 for filing a request for a

 23-5    license for each additional office or place of business;

 23-6                (7)  a fee not to exceed $20 for filing a request for a

 23-7    license for a change of place of business, change of name, return

 23-8    to active status, or change of sponsoring broker;

 23-9                (8)  a fee not to exceed $20 for filing a request to

23-10    replace a license lost or destroyed;

23-11                (9)  a fee not to exceed $400 for filing an application

23-12    for approval of an education program under Section 7(f) of this

23-13    Act;

23-14                (10)  a fee not to exceed $200 a year for operation of

23-15    an education program under Section 7(f) of this Act;

23-16                (11)  a fee of $15 for transcript evaluation;

23-17                (12)  a fee not to exceed $10 for preparing a license

23-18    history;

23-19                (13)  a fee not to exceed $50 for the filing of an

23-20    application for a moral character determination;

23-21                (14)  an annual fee of $20 from each real estate broker

23-22    to be transmitted to Texas A&M University for the Texas Real Estate

23-23    Research Center as provided by Section 5(m) of this Act;  and

23-24                (15)  an annual fee of $17.50 from each real estate

23-25    salesperson [salesman] to be transmitted to Texas A&M University

23-26    for the Texas Real Estate Research Center as provided by Section

23-27    5(m) of this Act.

 24-1          SECTION 14.  Sections 12(a), (b), and (d), The Real Estate

 24-2    License Act (Article 6573a, Vernon's Texas Civil Statutes), are

 24-3    amended to read as follows:

 24-4          (a)  Each resident broker shall maintain a fixed office

 24-5    within this state.  The address of the office shall be designated

 24-6    on the broker's license.  Within 10 days after a move from a

 24-7    previously designated address, the broker shall submit an

 24-8    application for a new license, designating the new location of the

 24-9    broker's [his] office, together with the required fee, whereupon

24-10    the commission shall issue a license, reflecting the new location,

24-11    provided the new location complies with the terms of this section.

24-12          (b)  If a broker maintains more than one place of business

24-13    within this state, the broker [he] shall apply for, pay the

24-14    required fee for, and obtain an additional license to be known as a

24-15    branch office license for each additional office the broker [he]

24-16    maintains.

24-17          (d)  Each broker shall also prominently display in the

24-18    broker's [his] place or in one of the broker's [his] places of

24-19    business the license of each real estate salesperson [salesman]

24-20    associated with the broker [him].

24-21          SECTION 15.  Section 13, The Real Estate License Act (Article

24-22    6573a, Vernon's Texas Civil Statutes), is amended to read as

24-23    follows:

24-24          Sec. 13.  (a)  When the association of a salesperson

24-25    [salesman] with the salesperson's [his] sponsoring broker is

24-26    terminated, the broker shall immediately return the salesperson

24-27    [salesman] license to the commission.  The salesperson [salesman]

 25-1    license then becomes inactive.

 25-2          (b)  The salesperson [salesman] license may be activated if,

 25-3    before the license expires, a request, accompanied by the required

 25-4    fee, is filed with the commission by a licensed broker advising

 25-5    that the broker [he] assumes sponsorship of the salesperson

 25-6    [salesman].

 25-7          SECTION 16.  Section 13A(a), The Real Estate License Act

 25-8    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

 25-9    as follows:

25-10          (a)  A real estate broker who holds a license issued under

25-11    this Act and who is not acting as a broker or sponsoring a

25-12    salesperson [salesman] may apply to the commission in writing to be

25-13    placed on the inactive status list maintained by the commission.

25-14    The broker must apply for inactive status before the expiration of

25-15    the broker's license.  The broker shall terminate the broker's

25-16    association with any salesperson [salesmen] sponsored by the broker

25-17    by giving written notice to the salesperson [salesmen] before the

25-18    30th day before the date the broker applies for inactive status.  A

25-19    person on inactive status under this section is required to pay the

25-20    annual renewal fees.

25-21          SECTION 17.  Section 14, The Real Estate License Act (Article

25-22    6573a, Vernon's Texas Civil Statutes), is amended to read as

25-23    follows:

25-24          Sec. 14.  (a)  It is unlawful for a licensed broker to employ

25-25    or compensate directly or indirectly a person for performing an act

25-26    enumerated in the definition of real estate broker in Section 2 of

25-27    this Act if the person is not a licensed broker or licensed

 26-1    salesperson [salesman] in this state.  However, a licensed broker

 26-2    may pay a commission to a licensed broker of another state if the

 26-3    foreign broker does not conduct in this state any of the

 26-4    negotiations for which the fee, compensation, or commission is

 26-5    paid.

 26-6          (b)  A resident broker of another state who furnishes the

 26-7    evidence required under Section 7(g) of this Act may apply for a

 26-8    license as a broker in this state.  A resident of another state who

 26-9    is not licensed as a broker but who was formerly licensed as a

26-10    salesperson [salesman] or broker in this state may apply for a

26-11    license in this state not later than the first anniversary of the

26-12    date of the expiration of the previous license.  An application by

26-13    a nonresident is subject to the requirements under this Act for the

26-14    type of license applied for.  A nonresident licensee need not

26-15    maintain a place of business in this state.  The commission may in

26-16    its discretion refuse to issue a license to an applicant who is not

26-17    a resident of this state for the same reasons that it may refuse to

26-18    license a resident of this state.  The commission shall judge the

26-19    competency of a nonresident applicant solely on the basis of the

26-20    examination conducted under Section 7 of this Act.

26-21          (c)  Each nonresident applicant shall file an irrevocable

26-22    consent that legal actions may be commenced against the applicant

26-23    [him] in the proper court of any county of this state in which a

26-24    cause of action may arise, or in which the plaintiff may reside, by

26-25    service of process or pleading authorized by the laws of this

26-26    state, or by serving the administrator or assistant administrator

26-27    of the commission.  The consent shall stipulate that the service of

 27-1    process or pleading shall be valid and binding in all courts as if

 27-2    personal service had been made on the nonresident in this state.

 27-3    The consent shall be duly acknowledged, and if made by a

 27-4    corporation, shall be authenticated by its seal.  A service of

 27-5    process or pleading served on the commission shall be by duplicate

 27-6    copies, one of which shall be filed in the office of the commission

 27-7    and the other forwarded by registered mail to the last known

 27-8    principal address which the commission has for the nonresident

 27-9    against whom the process or pleading is directed.  No default in an

27-10    action may be taken except on certification by the commission that

27-11    a copy of the process or pleading was mailed to the defendant as

27-12    provided in this section, and no default judgment may be taken in

27-13    an action or proceeding until 20 days after the day of mailing of

27-14    the process or pleading to the defendant.

27-15          Notwithstanding any other provision of this subsection, a

27-16    nonresident of this state who resides in a city whose boundaries

27-17    are contiguous at any point to the boundaries of a city of this

27-18    state, and who has been an actual bona fide resident of that city

27-19    for at least 60 days immediately preceding the filing of his

27-20    application, is eligible to be licensed as a real estate broker or

27-21    salesperson [salesman] under this Act in the same manner as a

27-22    resident of this state.  If a person [he] is licensed in this

27-23    manner, the person [he] shall at all times maintain a place of

27-24    business either in the city in which the person [he] resides or in

27-25    the city in this state which is contiguous to the city in which the

27-26    person [he] resides, and the person [he] may not maintain a place

27-27    of business at another location in this state unless the person

 28-1    [he] also complies with the requirements of Section 14(b) of this

 28-2    Act.  The place of business must satisfy the requirements of

 28-3    Subsection (a) of Section 12 of this Act, but the place of business

 28-4    shall be deemed a definite place of business in this state within

 28-5    the meaning of Subsection (a) of Section 12.

 28-6          SECTION 18.  Sections 15(a) and (d), The Real Estate License

 28-7    Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to

 28-8    read as follows:

 28-9          (a)  The commission may, on its own motion, and shall, on the

28-10    signed complaint in writing of a consumer or service recipient,

28-11    provided the complaint, or the complaint together with evidence,

28-12    documentary or otherwise, presented in connection with the

28-13    complaint, provides reasonable cause, investigate the actions and

28-14    records of a real estate broker or real estate salesperson

28-15    [salesman].  The commission may suspend or revoke a license issued

28-16    under the provisions of this Act at any time when it has been

28-17    determined that:

28-18                (1)  the licensee has entered a plea of guilty or nolo

28-19    contendere to, or been found guilty of, or been convicted of, a

28-20    felony, in which fraud is an essential element, and the time for

28-21    appeal has elapsed or the judgment or conviction has been affirmed

28-22    on appeal, irrespective of an order granting probation following

28-23    such conviction, suspending the imposition of sentence;

28-24                (2)  the licensee has procured, or attempted to

28-25    procure, a real estate license, for the licensee [himself] or a

28-26    salesperson [salesman], by fraud, misrepresentation or deceit, or

28-27    by making a material misstatement of fact in an application for a

 29-1    real estate license;

 29-2                (3)  the licensee, when selling, buying, trading, or

 29-3    renting real property in the licensee's [his] own name, engaged in

 29-4    misrepresentation or dishonest or fraudulent action;

 29-5                (4)  the licensee has failed within a reasonable time

 29-6    to make good a check issued to the commission after the commission

 29-7    has mailed a request for payment by certified mail to the

 29-8    licensee's last known business address as reflected by the

 29-9    commission's records;

29-10                (5)  the licensee has disregarded or violated a

29-11    provision of this Act;

29-12                (6)  the licensee, while performing an act constituting

29-13    an act of a broker or salesperson [salesman], as defined by this

29-14    Act, has been guilty of:

29-15                      (A)  making a material misrepresentation, or

29-16    failing to disclose to a potential purchaser any latent structural

29-17    defect or any other defect known to the broker or salesperson

29-18    [salesman].  Latent structural defects and other defects do not

29-19    refer to trivial or insignificant defects but refer to those

29-20    defects that would be a significant factor to a reasonable and

29-21    prudent purchaser in making a decision to purchase;

29-22                      (B)  making a false promise of a character likely

29-23    to influence, persuade, or induce any person to enter into a

29-24    contract or agreement when the licensee could not or did not intend

29-25    to keep such promise;

29-26                      (C)  pursuing a continued and flagrant course of

29-27    misrepresentation or making of false promises through agents,

 30-1    salespersons [salesmen], advertising, or otherwise;

 30-2                      (D)  failing to make clear, to all parties to a

 30-3    transaction, which party the licensee [he] is acting for, or

 30-4    receiving compensation from more than one party except with the

 30-5    full knowledge and consent of all parties;

 30-6                      (E)  failing within a reasonable time properly to

 30-7    account for or remit money coming into the licensee's [his]

 30-8    possession which belongs to others, or commingling money belonging

 30-9    to others with the licensee's [his] own funds;

30-10                      (F)  paying a commission or fees to or dividing a

30-11    commission or fees with anyone not licensed as a real estate broker

30-12    or salesperson [salesman] in this state or in any other state for

30-13    compensation for services as a real estate agent;

30-14                      (G)  failing to specify in a listing contract or

30-15    in another contract in which the licensee agrees to perform

30-16    services for which a license is required under this Act a definite

30-17    termination date which is not subject to prior notice;

30-18                      (H)  accepting, receiving, or charging an

30-19    undisclosed commission, rebate, or direct profit on expenditures

30-20    made for a principal;

30-21                      (I)  soliciting, selling, or offering for sale

30-22    real property under a scheme or program that constitutes a lottery

30-23    or deceptive practice;

30-24                      (J)  acting in the dual capacity of broker and

30-25    undisclosed principal in a transaction;

30-26                      (K)  guaranteeing, authorizing, or permitting a

30-27    person to guarantee that future profits will result from a resale

 31-1    of real property;

 31-2                      (L)  placing a sign on real property offering it

 31-3    for sale, lease, or rent without the written consent of the owner

 31-4    or the owner's [his] authorized agent;

 31-5                      (M)  inducing or attempting to induce a party to

 31-6    a contract of sale or lease to break the contract for the purpose

 31-7    of substituting in lieu thereof a new contract;

 31-8                      (N)  negotiating or attempting to negotiate the

 31-9    sale, exchange, lease, or rental of real property with an owner,

31-10    lessor, buyer, or tenant, knowing that the owner, lessor, buyer, or

31-11    tenant had a written outstanding contract, granting exclusive

31-12    agency in connection with the transaction to another real estate

31-13    broker;

31-14                      (O)  offering real property for sale or for lease

31-15    without the knowledge and consent of the owner or the owner's [his]

31-16    authorized agent, or on terms other than those authorized by the

31-17    owner or the owner's [his] authorized agent;

31-18                      (P)  publishing, or causing to be published, an

31-19    advertisement including, but not limited to, advertising by

31-20    newspaper, radio, television, or display which is misleading, or

31-21    which is likely to deceive the public, or which in any manner tends

31-22    to create a misleading impression, or which fails to identify the

31-23    person causing the advertisement to be published as a licensed real

31-24    estate broker or agent;

31-25                      (Q)  having knowingly withheld from or inserted

31-26    in a statement of account or invoice, a statement that made it

31-27    inaccurate in a material particular;

 32-1                      (R)  publishing or circulating an unjustified or

 32-2    unwarranted threat of legal proceedings, or other action;

 32-3                      (S)  establishing an association, by employment

 32-4    or otherwise, with an unlicensed person who is expected or required

 32-5    to act as a real estate licensee, or aiding or abetting or

 32-6    conspiring with a person to circumvent the requirements of this

 32-7    Act;

 32-8                      (T)  failing or refusing on demand to furnish

 32-9    copies of a document pertaining to a transaction dealing with real

32-10    estate to a person whose signature is affixed to the document;

32-11                      (U)  failing to advise a purchaser in writing

32-12    before the closing of a transaction that the purchaser should

32-13    either have the abstract covering the real estate which is the

32-14    subject of the contract examined by an attorney of the purchaser's

32-15    own selection, or be furnished with or obtain a policy of title

32-16    insurance;

32-17                      (V)  conduct which constitutes dishonest

32-18    dealings, bad faith, or untrustworthiness;

32-19                      (W)  acting negligently or incompetently in

32-20    performing an act for which a person is required to hold a real

32-21    estate license;

32-22                      (X)  disregarding or violating a provision of

32-23    this Act;

32-24                      (Y)  failing within a reasonable time to deposit

32-25    money received as escrow agent in a real estate transaction, either

32-26    in trust with a title company authorized to do business in this

32-27    state, or in a custodial, trust, or escrow account maintained for

 33-1    that purpose in a banking institution authorized to do business in

 33-2    this state;

 33-3                      (Z)  disbursing money deposited in a custodial,

 33-4    trust, or escrow account, as provided in Subsection (Y) before the

 33-5    transaction concerned has been consummated or finally otherwise

 33-6    terminated; or

 33-7                      (AA)  discriminating against an owner, potential

 33-8    purchaser, lessor, or potential lessee on the basis of race, color,

 33-9    religion, sex, national origin, or ancestry, including directing

33-10    prospective home buyers or lessees interested in equivalent

33-11    properties to different areas according to the race, color,

33-12    religion, sex, national origin, or ancestry of the potential owner

33-13    or lessee;

33-14                (7)  the licensee has failed or refused on demand to

33-15    produce a document, book, or record in the licensee's [his]

33-16    possession concerning a real estate transaction conducted by the

33-17    licensee [him] for inspection by the commission or its authorized

33-18    personnel or representative;

33-19                (8)  the licensee has failed within a reasonable time

33-20    to provide information requested by the commission as a result of a

33-21    formal or informal complaint to the commission which would indicate

33-22    a violation of this Act; or

33-23                (9)  the licensee has failed without just cause to

33-24    surrender to the rightful owner, on demand, a document or

33-25    instrument coming into the licensee's [his] possession.

33-26          (d)  The commission may not investigate under this section a

33-27    complaint submitted more than four years after the date of the

 34-1    incident involving a real estate broker or salesperson [salesman]

 34-2    that is the subject of the complaint.

 34-3          SECTION 19.  Section 15C(m)(3), The Real Estate License Act

 34-4    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

 34-5    as follows:

 34-6                (3)  "Licensee" means a real estate broker or real

 34-7    estate salesperson [salesman] and includes a licensed associate of

 34-8    a licensee.

 34-9          SECTION 20.  Section 15D, The Real Estate License Act

34-10    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

34-11    as follows:

34-12          Sec. 15D.  No licensed real estate broker, licensed real

34-13    estate salesperson [salesman], or not for profit real estate board

34-14    or association which provides information about real property sales

34-15    prices or terms of sale for the purpose of facilitating the

34-16    listing, selling, leasing, financing, or appraisal of real property

34-17    shall be liable to any other person as a result of so providing

34-18    such information unless the disclosure of same is otherwise

34-19    specifically prohibited by statute.

34-20          SECTION 21.  Sections 16(a), (b), (d), and (e), The Real

34-21    Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),

34-22    are amended to read as follows:

34-23          (a)  A license granted under the provisions of this Act shall

34-24    be suspended or revoked by the commission on proof that the

34-25    licensee, not being licensed and authorized to practice law in this

34-26    state, for a consideration, reward, pecuniary benefit, present or

34-27    anticipated, direct or indirect, or in connection with or as a part

 35-1    of the licensee's [his] employment, agency, or fiduciary

 35-2    relationship as a licensee, drew a deed, note, deed of trust, will,

 35-3    or other written instrument that may transfer or anywise affect the

 35-4    title to or an interest in land, except as provided in the

 35-5    subsections below, or advised or counseled a person as to the

 35-6    validity or legal sufficiency of an instrument or as to the

 35-7    validity of title to real estate.

 35-8          (b)  Notwithstanding the provisions of this Act or any other

 35-9    law, the completion of contract forms which bind the sale,

35-10    exchange, option, lease, or rental of any interest in real property

35-11    by a real estate broker or salesperson [salesman] incident to the

35-12    performance of the acts of a broker as defined by this article does

35-13    not constitute the unauthorized or illegal practice of law in this

35-14    state, provided the forms have been promulgated for use by the

35-15    commission for the particular kind of transaction involved, or the

35-16    forms have been prepared by an attorney at law licensed by this

35-17    state and approved by said attorney for the particular kind of

35-18    transaction involved, or the forms have been prepared by the

35-19    property owner or prepared by an attorney and required by the

35-20    property owner.

35-21          (d)  The Texas Real Estate Broker-Lawyer Committee shall have

35-22    12 members including six members appointed by the commission and

35-23    six members of the State Bar of Texas appointed by the President of

35-24    the State Bar of Texas.  The members of the committee shall hold

35-25    office for staggered terms of six years with the terms of two

35-26    commission appointees and two State Bar appointees expiring every

35-27    two years.  Each member shall hold office until the member's [his]

 36-1    successor is appointed.  A vacancy for any cause shall be filled

 36-2    for the expired term by the agency making the original appointment.

 36-3    Appointments to the committee shall be made without regard to race,

 36-4    creed, sex, religion, or national origin.

 36-5          (e)  In the best interest of the public the commission may

 36-6    adopt rules and regulations requiring real estate brokers and

 36-7    salespersons [salesmen] to use contract forms which have been

 36-8    prepared by the Texas Real Estate Broker-Lawyer Committee and

 36-9    promulgated by the commission; provided, however, that the

36-10    commission shall not prohibit a real estate broker or salesperson

36-11    [salesman] from using a contract form or forms binding the sale,

36-12    exchange, option, lease, or rental of any interest in real property

36-13    which have been prepared by the property owner or prepared by an

36-14    attorney and required by the property owner.  For the purpose of

36-15    this section, contract forms prepared by the Texas Real Estate

36-16    Broker-Lawyer Committee appointed by the commission and the State

36-17    Bar of Texas and promulgated by the commission prior to the

36-18    effective date of this Act shall be deemed to have been prepared by

36-19    the Texas Real Estate Broker-Lawyer Committee.  The commission may

36-20    suspend or revoke a license issued under the provisions of this

36-21    article when it has determined that the licensee failed to use a

36-22    contract form as required by the commission pursuant to this

36-23    section.

36-24          SECTION 22.  Section 17(a), The Real Estate License Act

36-25    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

36-26    as follows:

36-27          (a)  If the commission proposes to suspend or revoke a

 37-1    person's license or registration, the person is entitled to a

 37-2    hearing before the commission or a hearings officer appointed by

 37-3    the commission.  The commission shall prescribe procedures by which

 37-4    all decisions to suspend or revoke are made by or are appealable to

 37-5    the commission.  The commission shall prescribe the time and place

 37-6    of the hearing.  However, the hearing shall be held, if the

 37-7    licensee so desires, within the county where the licensee has the

 37-8    licensee's [his] principal place of business, or if the licensee is

 37-9    a nonresident, the hearing may be called for and held in any county

37-10    within this state.  The hearing is governed by the procedures for a

37-11    contested case under Chapter 2001, Government Code [the

37-12    Administrative Procedure and Texas Register Act (Article 6252-13a,

37-13    Vernon's Texas Civil Statutes)].

37-14          SECTION 23.  Section 18A(a), The Real Estate License Act

37-15    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

37-16    as follows:

37-17          (a)  Any listing contract form adopted by the commission

37-18    relating to the contractual obligations between a seller of real

37-19    estate and a real estate broker or salesperson [salesman] acting as

37-20    an agent for the seller shall include a section that informs the

37-21    parties to the contract that real estate commissions are

37-22    negotiable.

37-23          SECTION 24.  Section 18B(a), The Real Estate License Act

37-24    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

37-25    as follows:

37-26          (a)  If a person files a complaint with the commission

37-27    relating to a real estate broker or salesperson [salesman], the

 38-1    commission shall furnish to the person an explanation of the

 38-2    remedies that are available to the person under this Act and

 38-3    information about appropriate state or local agencies or officials

 38-4    with which the person may file a complaint.  The commission shall

 38-5    furnish the same explanation and information to the person against

 38-6    whom the complaint is filed.

 38-7          SECTION 25.  Sections 19(a) and (b), The Real Estate License

 38-8    Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to

 38-9    read as follows:

38-10          (a)  A person acting as a real estate broker or real estate

38-11    salesperson [salesman] without first obtaining a license is guilty

38-12    of a misdemeanor and on conviction shall be punishable by a fine of

38-13    not less than $100 nor more than $500, or by imprisonment in the

38-14    county jail for a term not to exceed one year, or both; and if a

38-15    corporation or a limited liability company, shall be punishable by

38-16    a fine of not less than $1,000 nor more than $2,000.  A person, on

38-17    conviction of a second or subsequent offense, shall be punishable

38-18    by a fine of not less than $500 nor more than $1,000, or by

38-19    imprisonment for a term not to exceed two years, or both; and if a

38-20    corporation or a limited liability company, shall be punishable by

38-21    a fine of not less than $2,000 nor more than $5,000.

38-22          (b)  In case a person received money, or the equivalent

38-23    thereof, as a fee, commission, compensation, or profit by or in

38-24    consequence of a violation of Subsection (a) of this section, the

38-25    person [he] shall, in addition, be liable to a penalty of not less

38-26    than the amount of the sum of money so received and not more than

38-27    three times the sum so received, as may be determined by the court,

 39-1    which penalty may be recovered in a court of competent jurisdiction

 39-2    by an aggrieved person.

 39-3          SECTION 26.  Section 19A(o), The Real Estate License Act

 39-4    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

 39-5    as follows:

 39-6          (o)  A penalty collected under this section for a violation

 39-7    by a person licensed as a real estate broker or salesperson

 39-8    [salesman] shall be deposited in the real estate recovery fund.  A

 39-9    penalty collected under this section for a violation by a person

39-10    licensed or registered as a real estate inspector shall be

39-11    deposited in the real estate inspection recovery fund.

39-12          SECTION 27.  Section 20, The Real Estate License Act (Article

39-13    6573a, Vernon's Texas Civil Statutes), is amended to read as

39-14    follows:

39-15          Sec. 20.  (a)  A person may not bring or maintain an action

39-16    for the collection of compensation for the performance in this

39-17    state of an act set forth in Section 2 of this Act without alleging

39-18    and proving that the person performing the brokerage services was a

39-19    duly licensed real estate broker or salesperson [salesman] at the

39-20    time the alleged services were commenced, or was a duly licensed

39-21    attorney at law in this state or in any other state.

39-22          (b)  An action may not be brought in a court in this state

39-23    for the recovery of a commission for the sale or purchase of real

39-24    estate unless the promise or agreement on which the action is

39-25    brought, or some memorandum thereof, is in writing and signed by

39-26    the party to be charged or signed by a person lawfully authorized

39-27    by the party [him] to sign it.

 40-1          (c)  When an offer to purchase real estate in this state is

 40-2    signed, the real estate broker or salesperson [salesman] shall

 40-3    advise the purchaser or purchasers, in writing, that the purchaser

 40-4    or purchasers should have the abstract covering the real estate

 40-5    which is the subject of the contract examined by an attorney of the

 40-6    purchaser's own selection, or that the purchaser or purchasers

 40-7    should be furnished with or obtain a policy of title insurance.

 40-8    Failure to advise the purchaser as provided in this subsection

 40-9    precludes the payment of or recovery of any commission agreed to be

40-10    paid on the sale.

40-11          SECTION 28.  Sections 23(b)(2), (5), and (9), The Real Estate

40-12    License Act (Article 6573a, Vernon's Texas Civil Statutes), are

40-13    amended to read as follows:

40-14                (2)  The committee is composed of nine members

40-15    appointed by the commission.  The members of the committee hold

40-16    office for staggered terms of six years, with the terms of three

40-17    members expiring February 1 of each odd-numbered year.  Each member

40-18    holds office until the member's successor is appointed.

40-19    Appointments to the committee shall be made without regard to the

40-20    sex, race, color, age, handicap, religion, or national origin of

40-21    the appointees.  In the event of a vacancy during a term, the

40-22    commission shall appoint a replacement who meets the qualifications

40-23    for appointment under this subdivision to fill the unexpired part

40-24    of the term.  A member of the committee must be a professional

40-25    inspector actively engaged in the practice of real estate

40-26    inspecting at the time of appointment and must have been primarily

40-27    engaged in the practice of real estate inspecting for at least five

 41-1    years before the member's appointment.  A member of the committee

 41-2    may not hold a real estate broker or salesperson [salesman]

 41-3    license.  Each member of the committee is entitled to a per diem

 41-4    allowance and to reimbursement of travel expenses necessarily

 41-5    incurred in performing functions as a member of the committee,

 41-6    subject to any applicable limitation in the General Appropriations

 41-7    Act.  The committee shall annually elect from its members a

 41-8    chairperson [chairman], a vice-chairperson [vice-chairman], and

 41-9    secretary.  A quorum of the committee consists of five members.

41-10                (5)  If the administrator of the commission has

41-11    knowledge that a potential ground for removal exists, the

41-12    administrator shall notify the chairperson [chairman] of the

41-13    commission that a potential ground exists.

41-14                (9)  The committee shall act in an advisory capacity to

41-15    develop and recommend to the commission rules under this section.

41-16    The committee shall review commission rules relating to this

41-17    section and recommend changes in the rules to the commission.  The

41-18    commission shall submit all proposed rules, all proposed rule

41-19    changes and all requests for proposed rules or rule changes that

41-20    relate to the regulation and licensing of inspectors under this

41-21    section to the committee for development or recommendation.  The

41-22    commission may modify the rules developed by the committee if the

41-23    commission finds such modifications are in the public interest.

41-24    This section does not prohibit the commission from developing and

41-25    adopting rules relating to the regulation and licensing of

41-26    inspectors under this section if the committee fails to develop or

41-27    recommend rules under this section within a reasonable period of

 42-1    time after the commission submits the proposed rules, rule changes

 42-2    or requests for proposed rules or rule changes to the committee.

 42-3    If the committee determines that a rule requested by the commission

 42-4    should not be developed or recommended for adoption by the

 42-5    commission, the committee shall submit a report on the matter to

 42-6    the commission.  The chairperson [chairman] of the commission and

 42-7    the chairperson [chairman] of the committee shall then appoint

 42-8    three members each from their respective bodies to meet as an ad

 42-9    hoc committee to consider the report and recommend possible action

42-10    by the commission.  The chairperson [chairman] of the commission or

42-11    a member of the commission designated by the chairperson [chairman]

42-12    shall serve as the seventh member of the ad hoc committee.  At

42-13    least one member of the ad hoc committee must be a public member of

42-14    the commission.

42-15          SECTION 29.  Section 23(l), The Real Estate License Act

42-16    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

42-17    as follows:

42-18          (l)  Prohibited acts.  A professional inspector, real estate

42-19    inspector or an apprentice inspector licensed under this section

42-20    may not:

42-21                (1)  accept an assignment for real estate inspection if

42-22    the employment or fee is contingent on the reporting of a specific,

42-23    predetermined condition of the improvements to real property or is

42-24    contingent on the reporting of specific findings other than those

42-25    known by the inspector to be facts at the time of accepting the

42-26    assignment;

42-27                (2)  act in a manner or engage in a practice that is

 43-1    dishonest or fraudulent or that involves deceit or

 43-2    misrepresentation;

 43-3                (3)  perform a real estate inspection in a negligent or

 43-4    incompetent manner;

 43-5                (4)  act in the dual capacity of inspector and

 43-6    undisclosed principal in a transaction;

 43-7                (5)  act in the dual capacity of inspector and real

 43-8    estate broker or salesperson [salesman] in a transaction;

 43-9                (6)  perform or agree to perform any repairs or

43-10    maintenance in connection with a real estate inspection pursuant to

43-11    the provisions of any earnest money contract, lease agreement, or

43-12    exchange of real estate; or

43-13                (7)  violate the rules adopted by the commission or any

43-14    provisions of this section.

43-15          SECTION 30.  Section 24(b), The Real Estate License Act

43-16    (Article 6573a, Vernon's Texas Civil Statutes), is amended to read

43-17    as follows:

43-18          (b)  A person may not engage in business as a residential

43-19    rental locator in this state unless the person holds a license

43-20    issued under this Act to operate as a real estate broker or real

43-21    estate salesperson [salesman] and complies with the continuing

43-22    education requirements under Section 7A of this Act.

43-23          SECTION 31.  (a)  This Act takes effect September 1, 1997.

43-24          (b)  The change made by this Act in the title of a person

43-25    licensed to sell real estate does not affect the validity of a

43-26    license issued or an act performed before the effective date of

43-27    this Act.

 44-1          SECTION 32.  The importance of this legislation and the

 44-2    crowded condition of the calendars in both houses create an

 44-3    emergency and an imperative public necessity that the

 44-4    constitutional rule requiring bills to be read on three several

 44-5    days in each house be suspended, and this rule is hereby suspended.