By Pickett H.B. No. 2428
75R6253 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain residential real estate
1-3 managers; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 3, The Real Estate License Act (Article
1-6 6573a, Vernon's Texas Civil Statutes), is amended to read as
1-7 follows:
1-8 Sec. 3. EXEMPTIONS. The provisions of this Act shall not
1-9 apply to any of the following persons and transactions, and each
1-10 and all of the following persons and transactions are hereby
1-11 exempted from the provisions of this Act:
1-12 (1) an attorney at law licensed in this state or in
1-13 any other state;
1-14 (2) an attorney in fact under a duly executed power of
1-15 attorney authorizing the consummation of a real estate transaction;
1-16 (3) a public official in the conduct of [his] official
1-17 duties;
1-18 (4) a person calling the sale of real estate by
1-19 auction under the authority of a license issued by this state
1-20 provided the person does not perform any other act of a real estate
1-21 broker or salesman as defined by this Act;
1-22 (5) a person acting under a court order or under the
1-23 authority of a will or a written trust instrument;
1-24 (6) a salesperson employed by an owner in the sale of
2-1 structures and land on which said structures are situated, provided
2-2 such structures are erected by the owner in the due course of the
2-3 owner's [his] business;
2-4 (7) an on-site manager of an apartment complex,
2-5 except as provided by Section 25 of this Act;
2-6 (8) transactions involving the sale, lease, or
2-7 transfer of any mineral or mining interest in real property;
2-8 (9) an owner or the owner's [his] employees in renting
2-9 or leasing the owner's [his] own real estate whether improved or
2-10 unimproved;
2-11 (10) transactions involving the sale, lease, or
2-12 transfer of cemetery lots; or
2-13 (11) transactions involving the renting, leasing, or
2-14 management of hotels or motels.
2-15 SECTION 2. Section 5(q), The Real Estate License Act
2-16 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
2-17 as follows:
2-18 (q) The commission by rule shall establish methods by which
2-19 consumers and service recipients are notified of the name, mailing
2-20 address, and telephone number of the commission for the purpose of
2-21 directing complaints to the commission. The commission may provide
2-22 for that notification to be provided with the notification required
2-23 by Section 8(r) [8(q)] of this Act or:
2-24 (1) on each registration form, application, or written
2-25 contract for services of an individual or entity regulated under
2-26 this Act;
2-27 (2) on a sign prominently displayed in the place of
3-1 business of each individual or entity regulated under this Act; or
3-2 (3) in a bill for service provided by an individual or
3-3 entity regulated under this Act.
3-4 SECTION 3. Section 8, The Real Estate License Act (Article
3-5 6573a, Vernon's Texas Civil Statutes), is amended to read as
3-6 follows:
3-7 Sec. 8. REAL ESTATE RECOVERY FUND. (a) In this section,
3-8 "license holder" means a real estate broker, a real estate
3-9 salesman, and a residential real estate manager licensed under this
3-10 Act.
3-11 (b) The commission shall establish a real estate recovery
3-12 fund which shall be set apart and maintained by the commission as
3-13 provided in this section. The fund shall be used in the manner
3-14 provided in this section for reimbursing aggrieved persons who
3-15 suffer actual damages by reason of certain acts committed by a
3-16 license holder [duly licensed real estate broker or salesman,] or
3-17 by an unlicensed employee or agent of a license holder [broker or
3-18 salesman], provided the person [broker or salesman] was licensed by
3-19 the State of Texas at the time the act was committed and provided
3-20 recovery is ordered by a court of competent jurisdiction against
3-21 the person [broker or salesman]. The use of the fund is limited to
3-22 an act that constitutes a violation of Section 15(a)(3) or (6) or
3-23 25 of this Act.
3-24 (c) [(b)] On application for an original license pursuant to
3-25 this Act, the applicant shall pay, in addition to his original
3-26 license application fee, a fee of $10 which shall be deposited in
3-27 the real estate recovery fund.
4-1 (d) [(c)] If on December 31 of any year the balance
4-2 remaining in the real estate recovery fund is less than $1 million,
4-3 each license holder [real estate broker and each real estate
4-4 salesman], on the next renewal of his license, shall pay, in
4-5 addition to his license renewal fee, a fee of $10, which shall be
4-6 deposited in the real estate recovery fund, or a pro rata share of
4-7 the amount necessary to bring the fund to $1.7 million, whichever
4-8 is less. If on December 31 of any year the balance remaining in the
4-9 real estate recovery fund is more than $3.5 million or more than
4-10 the total amount of claims paid from the fund during the previous
4-11 four fiscal years, whichever is greater, the amount of money in
4-12 excess of the greater amount shall be transferred to the general
4-13 revenue fund.
4-14 (e) [(d)] No action for a judgment which subsequently
4-15 results in an order for collection from the real estate recovery
4-16 fund shall be started later than two years from the accrual of the
4-17 cause of action. When an aggrieved person commences action for a
4-18 judgment which may result in collection from the real estate
4-19 recovery fund, the affected license holder [real estate broker or
4-20 real estate salesman] shall notify the commission in writing to
4-21 this effect at the time of the commencement of the action.
4-22 (f) [(e)] When an aggrieved person recovers a valid judgment
4-23 in a court of competent jurisdiction against a license holder [real
4-24 estate broker or real estate salesman], on the grounds described in
4-25 Subsection (b) [(a)] of this section that occurred on or after May
4-26 19, 1975, the aggrieved person may, after final judgment has been
4-27 entered, execution returned nulla bona, and a judgment lien
5-1 perfected, file a verified claim in the court in which the judgment
5-2 was entered and, on 20 days' written notice to the commission, and
5-3 to the judgment debtor, may apply to the court for an order
5-4 directing payment out of the real estate recovery fund of the
5-5 amount unpaid on the judgment, subject to the limitations stated in
5-6 Subsection (o) [(n)] of this section.
5-7 (g) [(f)] The court shall proceed on the application
5-8 forthwith. On the hearing on the application, the aggrieved person
5-9 is required to show that:
5-10 (1) the judgment is based on facts allowing recovery
5-11 under Subsection (b) [(a)] of this section;
5-12 (2) he is not a spouse of the debtor, or the personal
5-13 representative of the spouse;
5-14 (3) [and] he is not a real estate broker or salesman,
5-15 as defined by this Act, who is seeking to recover a real estate
5-16 commission in the transaction or transactions for which the
5-17 application for payment is made;
5-18 (4) [(3)] he has obtained a judgment under Subsection
5-19 (f) [(e)] of this section that is not subject to a stay or
5-20 discharge in bankruptcy, stating the amount of the judgment and the
5-21 amount owing on the judgment at the date of the application;
5-22 (5) [(4)] based on the best available information, the
5-23 judgment debtor lacks sufficient attachable assets in this state or
5-24 any other state to satisfy the judgment; and
5-25 (6) [(5)] the amount that may be realized from the
5-26 sale of real or personal property or other assets liable to be sold
5-27 or applied in satisfaction of the judgment and the balance
6-1 remaining due on the judgment after application of the amount that
6-2 may be realized.
6-3 (h) [(g)] A recovery on the judgment against a single
6-4 defendant made before payment from the recovery fund must be
6-5 applied by the creditor first to actual damages.
6-6 (i) [(h)] The court shall make an order directed to the
6-7 commission requiring payment from the real estate recovery fund of
6-8 whatever sum it finds to be payable on the claim, pursuant to and
6-9 in accordance with the limitations contained in this section, if
6-10 the court is satisfied, on the hearing, of the truth of all matters
6-11 required to be shown by the aggrieved person by Subsection (g)
6-12 [(f)] of this section and that the aggrieved person has satisfied
6-13 all of the requirements of Subsections [(e) and] (f) and (g) of
6-14 this section. The commission may relitigate any issue material and
6-15 relevant in the hearing on the application that was determined in
6-16 the underlying action on which the judgment in favor of the
6-17 applicant was based. If the court finds that the aggregate amount
6-18 of claims against a license holder [real estate broker or salesman]
6-19 exceeds the limitations contained in this section, the court shall
6-20 reduce proportionately the amount it finds payable on the claim.
6-21 (j) [(i)] A license granted under the provisions of this Act
6-22 may be revoked by the commission on proof that the commission has
6-23 made a payment from the real estate recovery fund of any amount
6-24 toward satisfaction of a judgment against a license holder
6-25 [licensed real estate broker or salesman]. The commission may
6-26 probate an order revoking a license. A person whose license is
6-27 revoked under this subsection is not [No broker or salesman is]
7-1 eligible to receive a new license until he has repaid in full,
7-2 plus interest at the current legal rate, the amount paid from the
7-3 real estate recovery fund on his account.
7-4 (k) [(j)] The sums received by the real estate commission
7-5 for deposit in the real estate recovery fund shall be held by the
7-6 commission in trust for carrying out the purposes of the real
7-7 estate recovery fund. These funds may be invested and reinvested
7-8 in the same manner as funds of the Texas State Employees Retirement
7-9 System, and the interest from these investments shall be deposited
7-10 to the credit of the real estate recovery fund, provided, however,
7-11 that no investments shall be made which will impair the necessary
7-12 liquidity required to satisfy judgment payments awarded pursuant to
7-13 this section.
7-14 (l) [(k)] When the real estate commission receives notice of
7-15 entry of a final judgment and a hearing is scheduled under
7-16 Subsection (i) [(h)] of this section, the commission may notify the
7-17 Attorney General of Texas of its desire to enter an appearance,
7-18 file a response, appear at the court hearing, defend the action, or
7-19 take whatever other action it deems appropriate. In taking such
7-20 action the real estate commission and the attorney general shall
7-21 act only to protect the fund from spurious or unjust claims or to
7-22 insure compliance with the requirements for recovery under this
7-23 section.
7-24 (m) [(l)] When, on the order of the court, the commission
7-25 has paid from the real estate recovery fund any sum to the judgment
7-26 creditor, the commission shall be subrogated to all of the rights
7-27 of the judgment creditor to the extent of the amount paid. The
8-1 judgment creditor shall assign all his right, title, and interest
8-2 in the judgment up to the amount paid by the commission which
8-3 amount shall have priority for repayment in the event of any
8-4 subsequent recovery on the judgment. Any amount and interest
8-5 recovered by the commission on the judgment shall be deposited to
8-6 the fund.
8-7 (n) [(m)] The failure of an aggrieved person to comply with
8-8 the provisions of this section relating to the real estate recovery
8-9 fund shall constitute a waiver of any rights under this section.
8-10 (o) [(n)] Notwithstanding any other provision, payments from
8-11 the real estate recovery fund are subject to the following
8-12 conditions and limitations:
8-13 (1) payments may be made only pursuant to an order of
8-14 a court of competent jurisdiction, as provided in Subsection (f)
8-15 [(e)] of this section, and in the manner prescribed by this
8-16 section;
8-17 (2) payments for claims, including attorneys' fees,
8-18 interest, and court costs, arising out of the same transaction
8-19 shall be limited in the aggregate to $50,000 regardless of the
8-20 number of claimants; and
8-21 (3) payments for claims based on judgments against any
8-22 one license holder [licensed real estate broker or salesman] may
8-23 not exceed in the aggregate $100,000 until the fund has been
8-24 reimbursed by the licensee for all amounts paid.
8-25 (p) [(o)] Nothing contained in this section shall limit the
8-26 authority of the commission to take disciplinary action against a
8-27 license holder [licensee] for a violation of this Act or the rules
9-1 and regulations of the commission; nor shall the repayment in full
9-2 of all obligations to the real estate recovery fund by a licensee
9-3 nullify or modify the effect of any other disciplinary proceeding
9-4 brought pursuant to this Act.
9-5 (q) [(p)] Any person receiving payment out of the real
9-6 estate recovery fund under this section is [pursuant to Section 8
9-7 of this Act shall be] entitled to receive reasonable attorney fees
9-8 as determined by the court, subject to the limitations stated in
9-9 Subsection (o) [(n)] of this section.
9-10 (r) Each license holder [(q) A broker or salesman licensed
9-11 under this Act] shall notify consumers and service recipients of
9-12 the availability of the real estate recovery fund established under
9-13 this section for reimbursing certain aggrieved persons. The notice
9-14 must include the name, mailing address, and telephone number of the
9-15 commission and any other information required by commission rule.
9-16 The notification may be provided with the notice required by
9-17 Section 5(q) of this Act or:
9-18 (1) on a written contract for the services of a
9-19 broker, [or] salesman, or residential real estate manager;
9-20 (2) on a brochure distributed by a broker, [or]
9-21 salesman, or residential real estate manager;
9-22 (3) on a sign prominently displayed in the place of
9-23 business of a [salesman or] broker, salesman, or residential real
9-24 estate manager; or
9-25 (4) in a bill or receipt for service provided by a
9-26 broker, [or] salesman, or residential real estate manager.
9-27 SECTION 4. The Real Estate License Act (Article 6573a,
10-1 Vernon's Texas Civil Statutes) is amended by adding Section 25 to
10-2 read as follows:
10-3 Sec. 25. RESIDENTIAL REAL ESTATE MANAGERS. (a) In this
10-4 section:
10-5 (1) "Dwelling unit" means a room or rooms suitable for
10-6 occupancy as a residence containing kitchen and bathroom
10-7 facilities.
10-8 (2) "Multi-unit single family dwelling" means a
10-9 building or buildings containing more than three dwelling units all
10-10 of which are rented primarily for nontransient use, with rental
10-11 paid at intervals of one week or longer. The term does not include
10-12 a residential condominium.
10-13 (3) "Residential real estate manager" means a person,
10-14 other than the owner of the property or a person exempt under
10-15 Section 3 of this Act, who, for consideration, manages a
10-16 multi-unit single family dwelling.
10-17 (b) A person may not act as a residential real estate
10-18 manager in this state unless the person holds a license issued
10-19 under this section and complies with the continuing education
10-20 requirements required under this section.
10-21 (c) An applicant for a license under this section shall file
10-22 an application for a license with the commission on forms
10-23 prescribed by the commission.
10-24 (d) The commission shall issue a residential real estate
10-25 manager license to an applicant who possesses the required
10-26 qualifications and pays the fee required by Subsection (i) of this
10-27 section.
11-1 (e) A license issued under this section expires on the first
11-2 anniversary of the date on which the license is issued. A license
11-3 holder may renew the license by paying the required renewal fee to
11-4 the commission and providing proof to the commission that the
11-5 license holder has attended a minimum of 15 classroom hours of
11-6 continuing education courses approved by the commission during the
11-7 term of the current license. The 15 hours of instruction must be
11-8 devoted to property issues related to leasing and discrimination in
11-9 leasing. The commission, by rule, may substitute relevant
11-10 educational experience or correspondence courses approved by the
11-11 commission for classroom instruction. The commission may approve
11-12 supervised video instruction to count as classroom hours of
11-13 mandatory continuing education.
11-14 (f) If a person's license has been expired for 90 days or
11-15 less, the person may renew the license by paying to the commission
11-16 the required renewal fee and a fee that is one-half of the
11-17 application fee for the license. If a person's license has been
11-18 expired for longer than 90 days but less than one year, the person
11-19 may renew the license by paying to the commission all unpaid
11-20 renewal fees and a fee that is equal to the application fee for
11-21 the license. If a person's license has been expired for one year
11-22 or longer, the person may not renew the license. The person may
11-23 obtain a new license by complying with the requirements and
11-24 procedures for obtaining an original license.
11-25 (g) At least 30 days before the expiration of a person's
11-26 license, the commission shall send written notice of the impending
11-27 license expiration to the person at the person's last known address
12-1 according to the records of the commission.
12-2 (h) Each residential real estate manager shall post in a
12-3 conspicuous place accessible to residents and prospective
12-4 residents:
12-5 (1) the manager's license;
12-6 (2) a statement that the manager holds a license
12-7 issued by the commission under this section; and
12-8 (3) the name, mailing address, and telephone number of
12-9 the commission as provided by Section 5(q) of this Act.
12-10 (i) The commission shall charge and collect reasonable and
12-11 necessary fees to recover the cost of administering this section
12-12 as follows:
12-13 (1) a fee not to exceed $50 for the filing of an
12-14 original application for a license as a residential real estate
12-15 manager; and
12-16 (2) a fee not to exceed $50 for the annual license
12-17 renewal of a residential real estate manager.
12-18 (j) The commission may adopt rules as necessary to implement
12-19 the licensing program established under this section.
12-20 (k) Under the commission's authority under Section 411.122,
12-21 Government Code, the commission is entitled to obtain from the
12-22 Department of Public Safety criminal record history information
12-23 maintained by that department regarding a person who is an
12-24 applicant for a license under this section or a license holder
12-25 under this section.
12-26 (l) A violation of this section or a rule adopted under this
12-27 section by a residential real estate manager constitutes grounds
13-1 for the suspension or revocation of the person's license and for
13-2 the assessment of an administrative penalty under Section 19A of
13-3 this Act.
13-4 (m) The commission may investigate the actions of a licensed
13-5 residential real estate manager and may, after notice and hearing
13-6 in accordance with Section 17 of this Act, reprimand, place on
13-7 probation, suspend, or revoke a license for a violation of this
13-8 section or a rule of the commission. If the commission revokes a
13-9 license of a person, the person may not apply to the commission for
13-10 a new license for one year after the revocation.
13-11 (n) A person commits an offense if the person acts as a
13-12 residential real estate manager in this state without a license
13-13 issued under this section. An offense under this subsection is a
13-14 Class B misdemeanor.
13-15 SECTION 5. This Act takes effect September 1, 1997, except
13-16 that the change in law made by Sections 25(b) and (n), The Real
13-17 Estate License Act (Article 6573a, Vernon's Texas Civil Statutes),
13-18 as added by this Act, takes effect July 1, 1998.
13-19 SECTION 6. The importance of this legislation and the
13-20 crowded condition of the calendars in both houses create an
13-21 emergency and an imperative public necessity that the
13-22 constitutional rule requiring bills to be read on three several
13-23 days in each house be suspended, and this rule is hereby suspended.