1-1           By:  Sibley                                      S.B. No. 221

 1-2           (In the Senate - Filed January 16, 1997; January 21, 1997,

 1-3     read first time and referred to Committee on State Affairs;

 1-4     January 29, 1997, reported favorably by the following vote:  Yeas

 1-5     13, Nays 0; January 29, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the suspension or revocation of a real estate license

 1-9     for failure to include a termination date in certain real estate

1-10     contracts.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  Subsection (a), Section 15, The Real Estate

1-13     License Act (Article 6573a, Vernon's Texas Civil Statutes), is

1-14     amended to read as follows:

1-15           (a)  The commission may, on its own motion, and shall, on the

1-16     signed complaint in writing of a consumer or service recipient,

1-17     provided the complaint, or the complaint together with evidence,

1-18     documentary or otherwise, presented in connection with the

1-19     complaint, provides reasonable cause, investigate the actions and

1-20     records of a real estate broker or real estate salesman.  The

1-21     commission may suspend or revoke a license issued under the

1-22     provisions of this Act at any time when it has been determined

1-23     that:

1-24                 (1)  the licensee has entered a plea of guilty or nolo

1-25     contendere to, or been found guilty of, or been convicted of, a

1-26     felony, in which fraud is an essential element, and the time for

1-27     appeal has elapsed or the judgment or conviction has been affirmed

1-28     on appeal, irrespective of an order granting probation following

1-29     such conviction, suspending the imposition of sentence;

1-30                 (2)  the licensee has procured, or attempted to

1-31     procure, a real estate license, for himself or a salesman, by

1-32     fraud, misrepresentation or deceit, or by making a material

1-33     misstatement of fact in an application for a real estate license;

1-34                 (3)  the licensee, when selling, buying, trading, or

1-35     renting real property in his own name, engaged in misrepresentation

1-36     or dishonest or fraudulent action;

1-37                 (4)  the licensee has failed within a reasonable time

1-38     to make good a check issued to the commission after the commission

1-39     has mailed a request for payment by certified mail to the

1-40     licensee's last known business address as reflected by the

1-41     commission's records;

1-42                 (5)  the licensee has disregarded or violated a

1-43     provision of this Act;

1-44                 (6)  the licensee, while performing an act constituting

1-45     an act of a broker or salesman, as defined by this Act, has been

1-46     guilty of:

1-47                       (A)  making a material misrepresentation, or

1-48     failing to disclose to a potential purchaser any latent structural

1-49     defect or any other defect known to the broker or salesman.  Latent

1-50     structural defects and other defects do not refer to trivial or

1-51     insignificant defects but refer to those defects that would be a

1-52     significant factor to a reasonable and prudent purchaser in making

1-53     a decision to purchase;

1-54                       (B)  making a false promise of a character likely

1-55     to influence, persuade, or induce any person to enter into a

1-56     contract or agreement when the licensee could not or did not intend

1-57     to keep such promise;

1-58                       (C)  pursuing a continued and flagrant course of

1-59     misrepresentation or making of false promises through agents,

1-60     salesmen, advertising, or otherwise;

1-61                       (D)  failing to make clear, to all parties to a

1-62     transaction, which party he is acting for, or receiving

1-63     compensation from more than one party except with the full

1-64     knowledge and consent of all parties;

 2-1                       (E)  failing within a reasonable time properly to

 2-2     account for or remit money coming into his possession which belongs

 2-3     to others, or commingling money belonging to others with his own

 2-4     funds;

 2-5                       (F)  paying a commission or fees to or dividing a

 2-6     commission or fees with anyone not licensed as a real estate broker

 2-7     or salesman in this state or in any other state for compensation

 2-8     for services as a real estate agent;

 2-9                       (G)  failing to specify a definite termination

2-10     date that is not subject to prior notice in a [listing contract or

2-11     in another] contract, other than a contract to perform property

2-12     management services, in which the licensee agrees to perform

2-13     services for which a license is required under this Act [a definite

2-14     termination date which is not subject to prior notice];

2-15                       (H)  accepting, receiving, or charging an

2-16     undisclosed commission, rebate, or direct profit on expenditures

2-17     made for a principal;

2-18                       (I)  soliciting, selling, or offering for sale

2-19     real property under a scheme or program that constitutes a lottery

2-20     or deceptive practice;

2-21                       (J)  acting in the dual capacity of broker and

2-22     undisclosed principal in a transaction;

2-23                       (K)  guaranteeing, authorizing, or permitting a

2-24     person to guarantee that future profits will result from a resale

2-25     of real property;

2-26                       (L)  placing a sign on real property offering it

2-27     for sale, lease, or rent without the written consent of the owner

2-28     or his authorized agent;

2-29                       (M)  inducing or attempting to induce a party to

2-30     a contract of sale or lease to break the contract for the purpose

2-31     of substituting in lieu thereof a new contract;

2-32                       (N)  negotiating or attempting to negotiate the

2-33     sale, exchange, lease, or rental of real property with an owner,

2-34     lessor, buyer, or tenant, knowing that the owner, lessor, buyer, or

2-35     tenant had a written outstanding contract, granting exclusive

2-36     agency in connection with the transaction to another real estate

2-37     broker;

2-38                       (O)  offering real property for sale or for lease

2-39     without the knowledge and consent of the owner or his authorized

2-40     agent, or on terms other than those authorized by the owner or his

2-41     authorized agent;

2-42                       (P)  publishing, or causing to be published, an

2-43     advertisement including, but not limited to, advertising by

2-44     newspaper, radio, television, or display which is misleading, or

2-45     which is likely to deceive the public, or which in any manner tends

2-46     to create a misleading impression, or which fails to identify the

2-47     person causing the advertisement to be published as a licensed real

2-48     estate broker or agent;

2-49                       (Q)  having knowingly withheld from or inserted

2-50     in a statement of account or invoice, a statement that made it

2-51     inaccurate in a material particular;

2-52                       (R)  publishing or circulating an unjustified or

2-53     unwarranted threat of legal proceedings, or other action;

2-54                       (S)  establishing an association, by employment

2-55     or otherwise, with an unlicensed person who is expected or required

2-56     to act as a real estate licensee, or aiding or abetting or

2-57     conspiring with a person to circumvent the requirements of this

2-58     Act;

2-59                       (T)  failing or refusing on demand to furnish

2-60     copies of a document pertaining to a transaction dealing with real

2-61     estate to a person whose signature is affixed to the document;

2-62                       (U)  failing to advise a purchaser in writing

2-63     before the closing of a transaction that the purchaser should

2-64     either have the abstract covering the real estate which is the

2-65     subject of the contract examined by an attorney of the purchaser's

2-66     own selection, or be furnished with or obtain a policy of title

2-67     insurance;

2-68                       (V)  conduct which constitutes dishonest

2-69     dealings, bad faith, or untrustworthiness;

 3-1                       (W)  acting negligently or incompetently in

 3-2     performing an act for which a person is required to hold a real

 3-3     estate license;

 3-4                       (X)  disregarding or violating a provision of

 3-5     this Act;

 3-6                       (Y)  failing within a reasonable time to deposit

 3-7     money received as escrow agent in a real estate transaction, either

 3-8     in trust with a title company authorized to do business in this

 3-9     state, or in a custodial, trust, or escrow account maintained for

3-10     that purpose in a banking institution authorized to do business in

3-11     this state;

3-12                       (Z)  disbursing money deposited in a custodial,

3-13     trust, or escrow account, as provided in Subsection (Y) before the

3-14     transaction concerned has been consummated or finally otherwise

3-15     terminated; or

3-16                       (AA) discriminating against an owner, potential

3-17     purchaser, lessor, or potential lessee on the basis of race, color,

3-18     religion, sex, national origin, or ancestry, including directing

3-19     prospective home buyers or lessees interested in equivalent

3-20     properties to different areas according to the race, color,

3-21     religion, sex, national origin, or ancestry of the potential owner

3-22     or lessee;

3-23                 (7)  the licensee has failed or refused on demand to

3-24     produce a document, book, or record in his possession concerning a

3-25     real estate transaction conducted by him for inspection by the

3-26     commission or its authorized personnel or representative;

3-27                 (8)  the licensee has failed within a reasonable time

3-28     to provide information requested by the commission as a result of a

3-29     formal or informal complaint to the commission which would indicate

3-30     a violation of this Act; or

3-31                 (9)  the licensee has failed without just cause to

3-32     surrender to the rightful owner, on demand, a document or

3-33     instrument coming into his possession.

3-34           SECTION 2.  This Act takes effect September 1, 1997, and

3-35     applies only to a contract subject to The Real Estate License Act

3-36     (Article 6573a, Vernon's Texas Civil Statutes) that is executed on

3-37     or after that date.  A contract subject to The Real Estate License

3-38     Act (Article 6573a, Vernon's Texas Civil Statutes) that is executed

3-39     before the effective date of this Act is governed by the law in

3-40     effect on the day that the contract was executed, and the former

3-41     law is continued in effect for that purpose.

3-42           SECTION 3.  The importance of this legislation and the

3-43     crowded condition of the calendars in both houses create an

3-44     emergency and an imperative public necessity that the

3-45     constitutional rule requiring bills to be read on three several

3-46     days in each house be suspended, and this rule is hereby suspended.

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