By Wentworth S.B. No. 1097 75R6484 CAG-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of the Texas Real Estate Inspector 1-3 Licensing Board and the regulation of real estate inspectors; 1-4 providing a criminal penalty. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Title 113A, Revised Statutes, is amended by 1-7 adding Article 6573a.3 to read as follows: 1-8 Art. 6573a.3. TEXAS REAL ESTATE INSPECTOR LICENSING BOARD 1-9 Sec. 1. SHORT TITLE. This article may be cited as the Texas 1-10 Real Estate Inspector License Act. 1-11 Sec. 2. DEFINITIONS. In this article: 1-12 (1) "Board" means the Texas Real Estate Inspector 1-13 Licensing Board. 1-14 (2) "Continuing education course" means an educational 1-15 course approved by the board relating to the real estate inspection 1-16 profession, including a core inspection course. 1-17 (3) "Core inspection course" means an educational 1-18 course approved by the board relating to the profession of real 1-19 estate inspection, including a course on: 1-20 (A) structural and construction principles, 1-21 including components that constitute a structure such as walls, 1-22 floors, ceilings, doors, and windows, and their claddings, 1-23 coverings, or finishes; 1-24 (B) electrical, mechanical, plumbing, or roofing 2-1 systems; 2-2 (C) appliances, equipment, or other improvements 2-3 to real property; 2-4 (D) the standards of practice, conduct, or 2-5 ethics of inspectors; 2-6 (E) inspection report writing; 2-7 (F) legal or business principles; or 2-8 (G) the study of environmental conditions that 2-9 have a direct bearing on real estate inspections. 2-10 (4) "Direct supervision" means the instruction and 2-11 control by a professional inspector or a real estate inspector 2-12 license holder who is: 2-13 (A) responsible for the actions of a person 2-14 performing a real estate inspection or preparing a report of an 2-15 inspection; 2-16 (B) available to consult with or assist a person 2-17 performing a real estate inspection or preparing a report of an 2-18 inspection; and 2-19 (C) physically present at the inspection. 2-20 (5) "Indirect supervision" means the instruction and 2-21 control by a professional inspector license holder who is: 2-22 (A) responsible for the actions of a person 2-23 performing a real estate inspection or preparing a report of an 2-24 inspection; 2-25 (B) available to consult with or assist a person 2-26 performing a real estate inspection or preparing a report of an 2-27 inspection; and 3-1 (C) not required to be physically present at the 3-2 inspection but is reasonably available, as determined by the board, 3-3 to provide oversight or assistance. 3-4 (6) "Inspection" means a written or oral opinion 3-5 concerning the condition of an improvement to real property, 3-6 including an opinion on: 3-7 (A) the condition of a structure and the 3-8 components that constitute the structure and its cladding, 3-9 covering, or waterproofing or weatherproofing; 3-10 (B) the structure's electrical, mechanical, 3-11 heating, ventilation, air conditioning, plumbing, roofing, or other 3-12 system; or 3-13 (C) other appliances or equipment on the 3-14 property. 3-15 (7) "Inspector" means a person licensed by the board. 3-16 Sec. 3. POWERS AND DUTIES OF BOARD. (a) The Texas Real 3-17 Estate Inspector Licensing Board shall administer this article. 3-18 (b) The board may adopt: 3-19 (1) rules for the licensing of inspectors; 3-20 (2) rules relating to the enforcement of this article 3-21 and discipline of an inspector licensed under this article; 3-22 (3) rules relating to the education and experience 3-23 requirements for licensing as an inspector; 3-24 (4) rules relating to the qualifying examination 3-25 required for licensing as an inspector; 3-26 (5) rules relating to the approval of education 3-27 providers or schools providing inspection-related courses for core 4-1 inspection and continuing education courses; 4-2 (6) rules establishing a code of professional conduct 4-3 and ethics for inspectors; 4-4 (7) reasonable fees in amounts necessary to implement 4-5 this article, including a license application fee, an examination 4-6 fee, a license renewal fee, or any other fee required by law; 4-7 (8) rules relating to the length and content of core 4-8 inspection courses and continuing education requirements for an 4-9 inspector; 4-10 (9) rules relating to the standards of practice for 4-11 conducting an inspection; 4-12 (10) rules relating to grounds for granting or denying 4-13 an application for a license; 4-14 (11) rules prescribing the form and content of an 4-15 application or form required under this article; and 4-16 (12) rules relating to the design and use of a seal or 4-17 imprint on reports and other documents. 4-18 (c) The board may employ an administrator, an assistant 4-19 administrator, or other staff necessary to implement this article. 4-20 The board may contract with another agency or board for the 4-21 provision of goods or services necessary to implement this article. 4-22 (d) The board shall adopt a seal. A copy of a record of the 4-23 board, certified and authenticated by the seal, shall be received 4-24 in evidence in a court and considered as the original. 4-25 (e) The board may adopt and enforce rules necessary for the 4-26 performance of its duties, establish standards of conduct and 4-27 ethics for inspectors, or ensure compliance with this article. 5-1 (f) In addition to any other action, proceeding, or remedy, 5-2 the board may institute an action in district court in its own name 5-3 to enjoin any violation of this article or a board rule. In filing 5-4 such an action, the board is not required to allege or prove either 5-5 that an adequate remedy at law does not exist or that substantial 5-6 or irreparable damage would result from the continued violation. A 5-7 party to an action filed under this section may appeal to an 5-8 appellate court. The board is not required to give an appeal bond 5-9 in any action or proceeding to enforce this article. 5-10 (g) Money derived from fees, assessments, or charges under 5-11 this article shall be paid by the board to the comptroller for 5-12 safekeeping and shall be placed by the comptroller in a separate 5-13 fund to be available for the use of the board in the administration 5-14 of this article, including the payment of expenses related to 5-15 equipment and maintenance of supplies for the offices or quarters 5-16 occupied by the board and necessary travel expenses for the board 5-17 or its employees. The comptroller shall, on requisition of the 5-18 board, draw warrants from time to time for the amount specified in 5-19 the requisition. All money spent in the administration of this 5-20 article shall be specified and determined by an itemized 5-21 appropriation in the General Appropriations Act for the Texas Real 5-22 Estate Inspector Licensing Board. The board shall file with the 5-23 governor and the presiding officer of each house of the legislature 5-24 an annual detailed written report accounting for all funds received 5-25 and disbursed by the board during the preceding fiscal year. The 5-26 annual report must be in the form and reported in the time provided 5-27 by the General Appropriations Act. 6-1 (h) The board may contract for services or authorize 6-2 specific employees to conduct hearings and render final decisions 6-3 in contested cases. The board may employ or contract for services 6-4 from another agency, board, or commission of a general counsel, 6-5 attorneys, investigators, and support staff to administer and 6-6 enforce this article. 6-7 Sec. 4. TEXAS REAL ESTATE INSPECTOR LICENSING BOARD. 6-8 (a) The Texas Real Estate Inspector Licensing Board consists of 6-9 nine members appointed by the governor with the advice and consent 6-10 of the senate. 6-11 (b) Five members of the board must be professional 6-12 inspectors. Three members of the board must be public members. One 6-13 member of the board must be a licensed real estate broker. 6-14 (c) The members of the board hold office for staggered terms 6-15 of six years, with the terms of three members expiring February 1 6-16 of each odd-numbered year. Each member holds office until the 6-17 member's successor is appointed. Not later than the 15th day after 6-18 the date of the person's appointment to the board, the person must 6-19 take the constitutional oath of office. 6-20 (d) An appointment to the board shall be made without regard 6-21 to the sex, race, color, age, disability, religion, or national 6-22 origin of the appointee. 6-23 (e) A professional inspector member of the board may not 6-24 hold an active real estate broker or salesman license and must have 6-25 been licensed and practicing as an inspector for at least 10 years 6-26 preceding appointment to the board. 6-27 (f) A member of the board is entitled to compensation and 7-1 reimbursement of the member's travel expenses as provided by the 7-2 General Appropriations Act. 7-3 (g) The board shall elect annually from its membership a 7-4 presiding officer, assistant presiding officer, and secretary. The 7-5 presiding officer and assistant presiding officer must be 7-6 professional inspectors. 7-7 (h) Five members of the board are necessary for a quorum. 7-8 (i) The board shall adopt procedural rules to be used by the 7-9 board in implementing its powers and duties. 7-10 (j) The board and its employees and agents are subject to 7-11 Chapters 551 and 2001, Government Code. 7-12 (k) The board shall meet semiannually. The board may also 7-13 meet at the call of a majority of its members. 7-14 Sec. 5. REMOVAL OF MEMBER. (a) It is a ground for removal 7-15 from the board if the member: 7-16 (1) does not have at the time of appointment or does 7-17 not maintain during service on the board the qualifications 7-18 required by Section 4 of this article; 7-19 (2) cannot discharge the member's duties for a 7-20 substantial part of the term for which the member is appointed 7-21 because of illness or disability; 7-22 (3) violates a prohibition established by Section 6 of 7-23 this article; or 7-24 (4) is absent from more than half of the regularly 7-25 scheduled board meetings that the member is eligible to attend 7-26 during each year, unless the absence is excused by the board. 7-27 (b) The validity of an action of the board is not affected 8-1 by the fact that it was taken when a ground for removal of a board 8-2 member existed. 8-3 (c) If a board member has knowledge that a potential ground 8-4 for removal exists, the member shall notify the presiding officer 8-5 of the board of the potential ground. The presiding officer shall 8-6 then notify the governor and the attorney general that a potential 8-7 ground for removal exists. If the potential ground for removal 8-8 involves the presiding officer, the member shall notify the next 8-9 highest officer of the board, who shall notify the governor and the 8-10 attorney general that a potential ground for removal exists. 8-11 Sec. 6. CONFLICTS OF INTEREST. (a) An officer, employee, 8-12 or paid consultant of a Texas trade association in the field of 8-13 real estate inspections may not be a public member of the board or 8-14 employee of the board who is exempt from the state's position 8-15 classification plan or is compensated at or above the amount 8-16 prescribed by the General Appropriations Act for step 1, salary 8-17 group 17, of the position classification salary schedule. 8-18 (b) A person who is the spouse of an officer, manager, or 8-19 paid consultant of a Texas trade association in the field of real 8-20 estate inspections may not be a public member of the board and may 8-21 not be an employee of the board who is exempt from the state's 8-22 position classification plan or is compensated at or above the 8-23 amount prescribed by the General Appropriations Act for step 1, 8-24 salary group 17, of the position classification salary schedule. 8-25 (c) For the purposes of this section, a Texas trade 8-26 association is a nonprofit, cooperative, and voluntarily joined 8-27 association of business or professional competitors in this state 9-1 designed to assist its members and its industry or profession in 9-2 dealing with mutual business or professional problems and in 9-3 promoting their common interest. 9-4 Sec. 7. LOBBYIST RESTRICTION. A person may not serve as a 9-5 member of the board or act as the general counsel to the board if 9-6 the person is required to register as a lobbyist under Chapter 305, 9-7 Government Code, because of the person's activities for 9-8 compensation on behalf of a profession related to the operation of 9-9 the board. 9-10 Sec. 8. PUBLIC PARTICIPATION. The board shall develop and 9-11 implement policies that provide the public with a reasonable 9-12 opportunity to appear before the board and to speak on any issue 9-13 under the jurisdiction of the board. 9-14 Sec. 9. MEMBER TRAINING. (a) Before a member of the board 9-15 may assume the member's duties and before the member may be 9-16 confirmed by the senate, the member must complete at least one 9-17 course of a training program established by the board. 9-18 (b) A training program established under this section must 9-19 provide information to the member regarding: 9-20 (1) the enabling legislation that created the board to 9-21 which the member is appointed to serve; 9-22 (2) the programs operated by the board; 9-23 (3) the role and functions of the board; 9-24 (4) the rules of the board, with an emphasis on the 9-25 rules that relate to disciplinary and investigatory authority; 9-26 (5) the current budget for the board; 9-27 (6) the results of the most recent formal audit of the 10-1 board; 10-2 (7) the requirements of the: 10-3 (A) open meetings law, Chapter 551, Government 10-4 Code; 10-5 (B) open records law, Chapter 552, Government 10-6 Code; and 10-7 (C) administrative procedure law, Chapter 2001, 10-8 Government Code; 10-9 (8) the requirements of the conflict of interest laws 10-10 and other laws relating to public officials; and 10-11 (9) any applicable ethics policies adopted by the 10-12 agency or the Texas Ethics Commission. 10-13 Sec. 10. RESPONSIBILITIES OF BOARD AND STAFF. The board 10-14 shall develop and implement policies that clearly separate the 10-15 policy-making responsibilities of the board and the management 10-16 responsibilities of the board and the staff of the board. 10-17 Sec. 11. CAREER LADDER. The board or the board's designee 10-18 shall develop an intra-agency career ladder program that addresses 10-19 opportunities for mobility and advancement for employees within the 10-20 board. The program must require intra-agency posting of all 10-21 positions concurrently with any public posting. 10-22 Sec. 12. PERFORMANCE REVIEW. The board or the board's 10-23 designee shall develop a system of annual performance evaluations 10-24 that are based on documented employee performance. All merit pay 10-25 for board employees must be based on the system established under 10-26 this section. 10-27 Sec. 13. PUBLIC INFORMATION. The board or the board's 11-1 designee shall provide to members of the board and to board 11-2 employees, as often as necessary, information regarding their 11-3 qualifications for office or employment under this article and 11-4 their responsibilities under applicable laws relating to standards 11-5 of conduct for state officers or employees. 11-6 Sec. 14. EQUAL EMPLOYMENT OPPORTUNITY. (a) The board or 11-7 the board's designee shall prepare and maintain a written policy 11-8 statement to assure implementation of a program of equal employment 11-9 opportunity under which all personnel transactions are made without 11-10 regard to race, color, disability, sex, religion, age, or national 11-11 origin. The policy statement must include: 11-12 (1) personnel policies, including policies relating to 11-13 recruitment, evaluation, selection, appointment, training, and 11-14 promotion of personnel that are in compliance with requirements of 11-15 Chapter 21, Labor Code; 11-16 (2) a comprehensive analysis of the board workforce 11-17 that meets federal and state guidelines; 11-18 (3) procedures by which a determination can be made 11-19 about the extent of underuse in the board workforce of all persons 11-20 for whom federal or state guidelines encourage a more equitable 11-21 balance; and 11-22 (4) reasonable methods to appropriately address those 11-23 areas of underuse. 11-24 (b) A policy statement prepared under Subsection (a) of this 11-25 section must cover an annual period, be updated annually and 11-26 reviewed by the Commission on Human Rights for compliance with 11-27 Subsection (a)(1) of this section, and be filed with the governor's 12-1 office. 12-2 (c) The governor's office shall deliver a biennial report to 12-3 the legislature based on the information received under Subsection 12-4 (b) of this section. The report may be made separately or as a 12-5 part of other biennial reports made to the legislature. 12-6 Sec. 15. PUBLIC INTEREST INFORMATION. (a) The board shall 12-7 prepare information of public interest describing the functions of 12-8 the board and the procedures by which complaints are filed with and 12-9 resolved by the board. The board shall make the information 12-10 available to the public and appropriate state agencies. 12-11 (b) The board by rule shall establish methods by which 12-12 consumers and service recipients are notified of the name, mailing 12-13 address, and telephone number of the board for the purpose of 12-14 directing complaints to the board. The board may provide for that 12-15 notification: 12-16 (1) on each registration form, application, or written 12-17 contract for services of an individual licensed under this article; 12-18 (2) on a sign prominently displayed in the place of 12-19 business of each individual licensed under this article; or 12-20 (3) in a bill for service provided by an individual 12-21 licensed under this article. 12-22 Sec. 16. INFORMATION ON COMPLAINTS. The board shall keep 12-23 information about each complaint filed with the board. The 12-24 information must include: 12-25 (1) the date the complaint is received; 12-26 (2) the name of the complainant; 12-27 (3) the subject matter of the complaint; 13-1 (4) a record of all persons contacted in relation to 13-2 the complaint; 13-3 (5) a summary of the results of the review or 13-4 investigation of the complaint; and 13-5 (6) for complaints for which the board took no action, 13-6 an explanation of the reason the complaint was closed without 13-7 action. 13-8 Sec. 17. NOTIFICATION OF COMPLAINTS. The board shall keep 13-9 a file about each written complaint filed with the board that the 13-10 board has authority to resolve. The board shall provide to the 13-11 person filing the complaint and the persons or entities complained 13-12 about the board's policies and procedures pertaining to complaint 13-13 investigation and resolution. The board, at least quarterly and 13-14 until final disposition of the complaint, shall notify the person 13-15 filing the complaint and the persons or entities complained about 13-16 of the status of the complaint unless the notice would jeopardize 13-17 an undercover investigation. 13-18 Sec. 18. ACCESSIBILITY. The board shall comply with federal 13-19 and state laws related to program and facility accessibility. The 13-20 board shall also prepare and maintain a written plan that describes 13-21 how a person who does not speak English can be provided reasonable 13-22 access to the board's programs and services. 13-23 Sec. 19. LICENSE REQUIRED. A person may not act as a 13-24 professional inspector, a real estate inspector, or an apprentice 13-25 inspector of improvements to real property unless the person holds 13-26 the appropriate license issued by the board. 13-27 Sec. 20. POWER AND DUTIES OF LICENSE HOLDER. (a) A 14-1 professional inspector license holder may represent to the public 14-2 that the person is trained and qualified to perform an inspection 14-3 and may accept employment to perform an inspection of improvements 14-4 to real property for any party. 14-5 (b) A real estate inspector license holder may represent to 14-6 the public that the person is trained and qualified to perform 14-7 inspections under the indirect supervision of a professional 14-8 inspector and may accept employment to perform an inspection of 14-9 improvements to real property for any party. 14-10 (c) An apprentice inspector license holder may perform 14-11 activities under the direct supervision of a professional inspector 14-12 or real estate inspector license holder that are necessary to 14-13 become qualified to perform an inspection. 14-14 Sec. 21. ELIGIBILITY; APPLICATION. (a) To receive a 14-15 license as an apprentice inspector, an applicant must: 14-16 (1) be a citizen of the United States or a lawfully 14-17 admitted alien; 14-18 (2) be a resident of this state at the time of the 14-19 filing of the application; 14-20 (3) be sponsored by a professional inspector license 14-21 holder who is determined by the commission to have performed 200 or 14-22 more inspections; 14-23 (4) be 18 years of age or older; and 14-24 (5) satisfy the board as to the applicant's honesty, 14-25 trustworthiness, and integrity. 14-26 (b) To receive a license as a real estate inspector, an 14-27 applicant must: 15-1 (1) have been licensed as an apprentice inspector for 15-2 three months or more; 15-3 (2) have performed 25 or more inspections under direct 15-4 supervision before the date of the filing of an application for the 15-5 license; 15-6 (3) satisfy the board as to the applicant's honesty, 15-7 trustworthiness, integrity, and competency; 15-8 (4) present satisfactory evidence to the board of 15-9 completion by the applicant of 200 or more classroom hours in core 15-10 inspection courses; 15-11 (5) satisfy the examination requirements under Section 15-12 22 of this article; and 15-13 (6) be sponsored by a professional inspector license 15-14 holder who is determined by the commission to have performed 200 or 15-15 more inspections. 15-16 (c) To receive a license as a professional inspector, an 15-17 applicant must: 15-18 (1) have been licensed as a real estate inspector for 15-19 at least one year; 15-20 (2) have performed 175 or more inspections under 15-21 indirect supervision before the date of the filing of an 15-22 application for the license; 15-23 (3) submit satisfactory evidence to the board of the 15-24 completion by the applicant, since the issuance of a real estate 15-25 inspector license, of 64 or more classroom hours of core inspection 15-26 courses, of which 32 classroom hours must be related to the study 15-27 of standards of practice or ethics of inspection or legal issues 16-1 related to the profession of inspections; and 16-2 (4) satisfy the examination requirements under Section 16-3 22 of this article. 16-4 (d) The board by rule shall provide for the substitution of 16-5 additional relevant experience or education to satisfy the 16-6 requirements of performing a specified number of inspections or 16-7 having been previously licensed as an apprentice inspector or a 16-8 real estate inspector under this section. A rule adopted under 16-9 this subsection may not require an applicant seeking to substitute 16-10 relevant experience or education for other licensing requirements 16-11 to complete more than 60 additional classroom hours of core 16-12 inspection courses. 16-13 (e) An applicant must file an application for a license on a 16-14 form prescribed by the board. 16-15 Sec. 22. EXAMINATION. (a) The board shall prescribe and 16-16 prepare or contract for the preparation of a licensing examination. 16-17 The board may authorize a contract vendor to collect a fee for the 16-18 examination in an amount determined by the board. 16-19 (b) A licensing examination must evaluate competence in the 16-20 subject matter of any core inspection courses. 16-21 (c) The licensing examination shall be offered at least once 16-22 every two months in Austin. 16-23 (d) If an applicant fails the examination, the applicant may 16-24 apply for reexamination by filing a request with the board and 16-25 paying the examination fee. 16-26 (e) An applicant must satisfy the examination requirement 16-27 during the six-month period after the date the license application 17-1 is filed. A license applicant who fails to satisfy the examination 17-2 requirement within that time must submit a new license application 17-3 to the board and pay the examination fee to be eligible for 17-4 examination. 17-5 (f) If a license applicant fails the examination four 17-6 consecutive times in connection with an application for the same 17-7 license, the applicant may not apply for reexamination or submit a 17-8 new license application with the board until the expiration of six 17-9 months after the date the applicant failed the last examination. 17-10 (g) Not later than the 30th day after the date a licensing 17-11 examination is administered under this section, the board shall 17-12 notify each examinee of the results of the examination. However, 17-13 if an examination is graded or reviewed by a national testing 17-14 service, the board shall notify examinees of the results of the 17-15 examination not later than the 14th day after the date the board 17-16 receives the results from the testing service. If the notice of 17-17 examination results graded or reviewed by a national testing 17-18 service will be delayed for longer than 90 days after the 17-19 examination date, the board shall notify the examinee of the reason 17-20 for the delay before the 90th day after the examination date. 17-21 (h) If requested in writing by a person who fails a 17-22 licensing examination administered under this section, the board 17-23 shall furnish the person with an analysis of the person's 17-24 performance on the examination. 17-25 Sec. 23. ISSUANCE OF LICENSE. (a) The board shall issue an 17-26 apprentice inspector license, a real estate inspector license, or a 17-27 professional inspector license to an applicant who possesses the 18-1 required qualifications, passes the appropriate examination, if 18-2 required, and pays the fee required by Section 29 of this article. 18-3 (b) The board may waive a license requirement for an 18-4 applicant with a valid license from another state having license 18-5 requirements substantially equivalent to those of this state. 18-6 (c) On receipt of notice that the person has successfully 18-7 completed the licensing examination under Section 22 of this 18-8 article, the person must pay, in addition to any other fees, a fee 18-9 not to exceed $200, to be deposited in the inspection recovery fund 18-10 before the board issues the person a license. 18-11 Sec. 24. RECIPROCAL LICENSES. The board may waive any 18-12 prerequisite to obtaining a license for an applicant with a valid 18-13 license from another state with which this state has a reciprocity 18-14 agreement. The board may enter into reciprocal agreements with 18-15 other states to allow for licensing by reciprocity. 18-16 Sec. 25. EXPIRATION OF LICENSE; RENEWAL. (a) A license 18-17 issued under this article expires on the first anniversary of the 18-18 date it is issued. 18-19 (b) A person may renew an unexpired license by paying to the 18-20 board before the expiration date of the license the required 18-21 renewal fee. 18-22 (c) If a person's license has been expired for 90 days or 18-23 less, the person may renew the license by paying to the board the 18-24 required renewal fee and a fee that is one-half of the examination 18-25 fee for the license. 18-26 (d) If a person's license has been expired for longer than 18-27 90 days but for less than two years, the person may renew the 19-1 license by paying to the board the unpaid renewal fees and a fee 19-2 that is equal to the examination fee for the license. 19-3 (e) Except as provided by Section 26 of this article, if a 19-4 person's license has been expired for two years or longer, the 19-5 person may not renew the license and may obtain a new license only 19-6 by submitting to reexamination, if required, and complying with the 19-7 requirements and procedures for obtaining an original license. 19-8 Sec. 26. LAPSED LICENSE. (a) The board may renew without 19-9 reexamination an expired license of a person who was licensed in 19-10 this state, moved to another state, and is currently licensed and 19-11 has been in practice in the other state for at least one year 19-12 before the date of the application. The person must pay to the 19-13 board a fee that is equal to the examination fee for the license 19-14 and an additional fee, not to exceed $200, to be deposited in the 19-15 inspection recovery fund. 19-16 (b) The board may issue a license to an applicant under this 19-17 section who has satisfied all requirements for a license, including 19-18 requirements satisfied under Section 21(d) of this article, as a 19-19 professional inspector or real estate inspector if: 19-20 (1) the applicant was previously licensed as a 19-21 professional inspector or real estate inspector during the 24 19-22 months before the date of the filing of the application; 19-23 (2) the applicant is sponsored by a professional 19-24 inspector, if the applicant is applying for a real estate inspector 19-25 license; and 19-26 (3) the applicant satisfies the board as to the 19-27 applicant's honesty, trustworthiness, and integrity. 20-1 Sec. 27. NOTIFICATION; CHANGE OF ADDRESS. (a) Before the 20-2 30th day preceding the expiration date of a person's license, the 20-3 board shall send written notice of the impending license expiration 20-4 to the person at the person's last known address according to the 20-5 records of the board. 20-6 (b) An inspector shall notify the board and pay the required 20-7 fee, if any, not later than the 30th day after the date a change of 20-8 place of business occurs. 20-9 Sec. 28. INACTIVE LICENSE. The board by rule may adopt 20-10 terms and conditions by which an inspector may apply for, renew, or 20-11 place a license on inactive status and rules by which an inactive 20-12 inspector may return to active status. 20-13 Sec. 29. FEES. (a) The board shall charge and collect 20-14 reasonable and necessary fees to recover the costs of administering 20-15 this article. 20-16 (b) A fee may be paid by cash, check, cashier's check, or 20-17 money order. 20-18 (c) A fee set by the board shall be reviewed annually and 20-19 reduced to the extent that the costs of administering this article 20-20 are funded by the inspector regulation account established under 20-21 Section 41 of this article. 20-22 Sec. 30. CONTINUING EDUCATION STANDARDS. (a) The board 20-23 shall recognize, prepare, or administer continuing education 20-24 programs for inspectors. 20-25 (b) Before a real estate inspector license holder may renew 20-26 a license, the holder must submit satisfactory evidence to the 20-27 board of successful completion of at least 16 classroom hours of 21-1 continuing education courses in the year preceding the date of 21-2 renewal. 21-3 (c) Before a professional inspector license holder may renew 21-4 a license, the holder must submit satisfactory evidence to the 21-5 board of successful completion of at least 16 classroom hours of 21-6 continuing education courses in the year preceding the date of 21-7 renewal. 21-8 (d) If an inspector does not complete any continuing 21-9 education requirement before the date of renewal of a license, the 21-10 inspector may renew the inspector's license if the inspector: 21-11 (1) completes the requirement not later than the 90th 21-12 day after the date of renewal; and 21-13 (2) pays a fee, determined by the board, not to exceed 21-14 $300. 21-15 Sec. 31. PROHIBITED ACTS. An inspector may not: 21-16 (1) accept an assignment for an inspection if the 21-17 employment or fee is contingent on the reporting of a specific, 21-18 predetermined condition of the improvements to real property or is 21-19 contingent on the reporting of specific findings other than those 21-20 known by the inspector to be facts at the time of accepting the 21-21 assignment; 21-22 (2) act in a manner or engage in a practice that is 21-23 dishonest or fraudulent or that involves deceit or 21-24 misrepresentation; 21-25 (3) perform an inspection in a negligent or 21-26 incompetent manner, as determined by the standards of practice 21-27 adopted by the board; 22-1 (4) act in the dual capacity of inspector and 22-2 undisclosed principal in a transaction; 22-3 (5) act in the dual capacity of inspector and real 22-4 estate broker or salesman in a transaction; 22-5 (6) perform or agree to perform any repair or 22-6 maintenance in connection with an inspection; or 22-7 (7) violate this article or a rule of the board. 22-8 Sec. 32. OFFENSE. (a) A person commits an offense if the 22-9 person knowingly engages in the business of inspections and does 22-10 not hold a license issued under this article. 22-11 (b) An offense under this section is a Class B misdemeanor. 22-12 Sec. 33. DISCIPLINARY ACTIONS. (a) The board may conduct 22-13 an administrative hearing and may recommend disciplinary actions in 22-14 contested cases regarding an inspector. 22-15 (b) The board may contract with another agency to conduct 22-16 hearings or may authorize specific persons to conduct hearings and 22-17 render final decisions in contested cases regarding an inspector. 22-18 (c) The board may investigate the actions of an inspector 22-19 and may, after notice and hearing, reprimand, place on probation, 22-20 or suspend or revoke the license of a person for a violation of 22-21 this article or a rule of the board. 22-22 (d) If the board revokes a person's license, the person may 22-23 not apply to the board before the first anniversary of the date of 22-24 revocation. 22-25 (e) A license granted under this article may be revoked by 22-26 the board on proof that the board has made a payment from the 22-27 inspection recovery fund of any amount toward satisfaction of a 23-1 judgment against the inspector. The board may probate an order 23-2 revoking a license. An inspector is not eligible to receive a new 23-3 license until the person has repaid in full, including interest at 23-4 the current legal rate, the amount paid from the inspection 23-5 recovery fund on the person's account. 23-6 (f) This section does not limit the authority of the board 23-7 to take disciplinary action against an inspector for a violation of 23-8 this article or a rule of the board. The repayment in full of an 23-9 obligation to the inspection recovery fund by a person does not 23-10 nullify or modify the effect of any other disciplinary proceeding 23-11 of the board. 23-12 Sec. 34. DISCIPLINARY ACTIONS. The board may revoke, 23-13 suspend, or refuse to renew a license, place on probation a person 23-14 whose license has been suspended, or reprimand a license holder for 23-15 a violation of this article or a rule of the board. If a license 23-16 suspension is probated, the board may require the practitioner: 23-17 (1) to report regularly to the board on matters that 23-18 are the basis of the probation; 23-19 (2) to limit practice to the areas prescribed by the 23-20 board; or 23-21 (3) to continue or review professional education until 23-22 the practitioner attains a degree of skill satisfactory to the 23-23 board in those areas that are the basis of the probation. 23-24 Sec. 35. EXEMPTIONS. (a) This article does not apply to a 23-25 person licensed by this state as an architect, engineer, plumber, 23-26 or heating and air conditioning contractor, a person engaged in the 23-27 business of structural pest control under the Texas Structural Pest 24-1 Control Act (Article 135b-6, Vernon's Texas Civil Statutes), or 24-2 another person who, under a license or registration issued to that 24-3 person, repairs, maintains, or inspects improvements to real 24-4 property and who does not represent to the public through 24-5 solicitation or public advertising that the person is in the 24-6 business of inspecting the improvements, unless the person's 24-7 license or registration permits inspections. 24-8 (b) This article does not prevent a person from performing 24-9 an act that the person is authorized to perform under a license, 24-10 permit, certification, or registration issued by the federal 24-11 government, this state, or a political subdivision. 24-12 (c) A person licensed under this article is exempt from any 24-13 other law that conflicts with this article. 24-14 Sec. 36. INSPECTION RECOVERY FUND. (a) The board shall 24-15 establish an inspection recovery fund. 24-16 (b) The fund shall be used to reimburse a person who suffers 24-17 actual damages by reason of an act committed by an inspector, if: 24-18 (1) the inspector was licensed at the time the act was 24-19 committed; and 24-20 (2) recovery of damages is ordered by a court of 24-21 competent jurisdiction against the inspector. 24-22 (c) The use of the fund is limited to an act that is a 24-23 violation of Section 31 of this article. 24-24 Sec. 37. LIMITATIONS ON CLAIMS AGAINST FUND. (a) An action 24-25 for a judgment that results in an order for collection from the 24-26 inspection recovery fund must be commenced not later than the 24-27 second anniversary of the date of the accrual of the cause of 25-1 action. 25-2 (b) If an aggrieved person commences an action for a 25-3 judgment that may result in collection from the inspection recovery 25-4 fund, the inspector who is the subject of the lawsuit shall 25-5 promptly notify the board in writing. 25-6 (c) The failure by an aggrieved person to comply with this 25-7 section constitutes a waiver of any right to recover from the 25-8 inspection recovery fund. 25-9 Sec. 38. PREREQUISITES FOR CLAIMS AGAINST FUND. (a) If an 25-10 aggrieved person recovers a valid judgment in a court of competent 25-11 jurisdiction against an inspector on the grounds described in 25-12 Section 36 of this article, the aggrieved person may, after final 25-13 judgment has been entered, execution returned nulla bona, and a 25-14 judgment lien perfected, file a verified claim in the court in 25-15 which the judgment was entered. After the 20th day after the date 25-16 written notice was given to the board and the judgment debtor, the 25-17 aggrieved person may apply to the court in which the judgment was 25-18 rendered for an order directing payment out of the inspection 25-19 recovery fund in the amount unpaid on the judgment, subject to the 25-20 limitations under Section 39 of this article. 25-21 (b) The court shall promptly proceed on the aggrieved 25-22 person's application. On hearing the application, the aggrieved 25-23 person is required to show: 25-24 (1) that the judgment is based on facts allowing 25-25 recovery under Section 36 of this article; 25-26 (2) that the person is not a spouse of the debtor or 25-27 the personal representative of the spouse; 26-1 (3) that the person has obtained a judgment under 26-2 Section 36 of this article that is not subject to a stay or 26-3 discharge in bankruptcy, stating the amount of the judgment and the 26-4 amount owing on the judgment at the date of the application; 26-5 (4) that, based on the best information available, the 26-6 judgment debtor lacks sufficient attachable assets in this state or 26-7 any other state to satisfy the judgment; and 26-8 (5) the amount that may be realized from the sale of 26-9 real or personal property or other assets liable to be sold or 26-10 applied in satisfaction of the judgment and the balance remaining 26-11 due on the judgment after application of the amount that may be 26-12 realized. 26-13 (c) The court shall order the board to pay from the 26-14 inspection recovery fund the amount the court finds to be payable 26-15 on the claim, consistent with the limitations contained in Section 26-16 39 of this article, if the court is satisfied after hearing: 26-17 (1) of the truth of all matters required to be shown 26-18 by the aggrieved person under Subsection (b) of this section; and 26-19 (2) that the aggrieved person has satisfied all the 26-20 requirements of Subsections (b)(4) and (5) of this section. 26-21 (d) On receipt of notice of entry of a final judgment and 26-22 that a hearing is to be conducted under Subsection (b), the board 26-23 may notify the attorney general of the board's desire to enter an 26-24 appearance, file a response, appear at the court hearing, defend 26-25 the action, or take other appropriate action. In taking action, 26-26 the board and the attorney general shall act only to protect the 26-27 fund from spurious or unjust claims or to ensure compliance with 27-1 the requirements for recovery under this section. 27-2 (e) In hearing the application, the board may relitigate any 27-3 material and relevant issue that was determined in the underlying 27-4 action on which the judgment in favor of the applicant was based. 27-5 (f) A recovery on the judgment against a single defendant 27-6 made before payment from the inspection recovery fund must be 27-7 applied by the creditor first to actual damages. 27-8 (g) If, on the order of the court, the board pays from the 27-9 inspection recovery fund an amount to the judgment creditor, the 27-10 board is subrogated to all of the rights of the judgment creditor 27-11 to the extent of the amount paid. The judgment creditor shall 27-12 assign all the creditor's right, title, and interest in the 27-13 judgment up to the amount paid by the board. The amount paid by 27-14 the board has priority for repayment on a subsequent recovery on 27-15 the judgment. Any amount in interest recovered by the board on the 27-16 judgment shall be deposited to the credit of the fund. 27-17 Sec. 39. LIMITATIONS ON PAYMENT FROM FUND. (a) 27-18 Notwithstanding any other provision of this article, payments from 27-19 the inspection recovery fund are subject to the following 27-20 conditions and limitations: 27-21 (1) payments may be made only under an order by a 27-22 court of competent jurisdiction, as provided by Section 38 of this 27-23 article, and in the manner prescribed by this section; 27-24 (2) payments for claims, including attorney's fees, 27-25 interest, and court costs, arising out of the same transaction are 27-26 limited in the aggregate to $7,500, regardless of the number of 27-27 claimants; and 28-1 (3) payments for claims based on judgments against an 28-2 inspector may not exceed in the aggregate $15,000 until the fund 28-3 has been reimbursed by the inspector for all amounts paid. 28-4 (b) A person receiving payment from the inspection recovery 28-5 fund under Subsection (a) of this section is entitled to receive 28-6 reasonable attorney's fees as determined by the court, subject to 28-7 the limitations stated in that subsection. 28-8 Sec. 40. CONSUMER NOTIFICATION. An inspector licensed under 28-9 this article shall notify consumers and service recipients of the 28-10 availability of the inspection recovery fund for reimbursing 28-11 certain aggrieved persons. The notice must include the name, 28-12 mailing address, and telephone number of the board and any other 28-13 information required by board rule. The notification may be 28-14 provided: 28-15 (1) on a written contract for the services of an 28-16 inspector; 28-17 (2) on a brochure distributed by an inspector; 28-18 (3) on a sign prominently displayed in the place of 28-19 business of an inspector; 28-20 (4) in a bill or receipt for service provided by an 28-21 inspector; or 28-22 (5) on a written inspection report. 28-23 Sec. 41. OPERATION OF FUND; NECESSARY BALANCES. (a) 28-24 Section 403.095, Government Code, does not apply to the inspection 28-25 recovery fund or the inspector regulation account. 28-26 (b) If on December 31 of any year the balance remaining in 28-27 the inspection recovery fund is less than $300,000, each inspector, 29-1 on the next renewal of the person's license, shall pay, in addition 29-2 to the license renewal fee, a fee of $75, or a pro rata share of 29-3 the amount necessary to bring the fund to $450,000, whichever is 29-4 less, to be deposited in the inspection recovery fund. 29-5 (c) If on December 31 of any year the balance remaining in 29-6 the inspection recovery fund is greater than $600,000, the amount 29-7 of money in excess of $600,000 shall be transferred to a separate 29-8 account in the general revenue fund to be known as the inspector 29-9 regulation account. The money in the inspector regulation account 29-10 may be used only for the payment of costs incurred by the board in 29-11 the regulation of inspectors. 29-12 Sec. 42. RECOMMENDATIONS BY INTERESTED PARTIES. The board 29-13 shall consider the recommendations of all interested parties 29-14 relating to the qualifications and licensing of inspectors to 29-15 assure the public of a quality professional inspection system in 29-16 real estate transactions in this state. 29-17 Sec. 43. ADVERTISING. (a) The board may not adopt rules 29-18 restricting competitive bidding or advertising by a license holder 29-19 except to prohibit false, misleading, or deceptive practices. 29-20 (b) In its rules to prohibit false, misleading, or deceptive 29-21 practices, the board may not include a rule that: 29-22 (1) restricts the use of any medium for advertising; 29-23 (2) restricts the use of a license holder's personal 29-24 appearance or voice in an advertisement; 29-25 (3) relates to the size or duration of an 29-26 advertisement by a license holder; or 29-27 (4) restricts a license holder's advertisement under a 30-1 trade name. 30-2 SECTION 2. Section 23, The Real Estate License Act (Article 30-3 6573a, Vernon's Texas Civil Statutes), is repealed. 30-4 SECTION 3. (a) The initial members appointed to the Texas 30-5 Real Estate Inspector Licensing Board under Article 6573a.3, 30-6 Revised Statutes, as added by this Act, shall be appointed as 30-7 follows: 30-8 (1) for public members: 30-9 (A) one member for a term expiring February 1, 30-10 1999; 30-11 (B) one member for a term expiring February 1, 30-12 2001; and 30-13 (C) one member for a term expiring February 1, 30-14 2003; 30-15 (2) for professional inspector members: 30-16 (A) one member for a term expiring February 1, 30-17 1999; 30-18 (B) two members for terms expiring February 1, 30-19 2001; and 30-20 (C) two members for terms expiring February 1, 30-21 2003; and 30-22 (3) for the real estate broker member, a term expiring 30-23 February 1, 1999. 30-24 (b) The initial professional inspector members of the Texas 30-25 Real Estate Inspector Licensing Board appointed under this section 30-26 must have been issued an inspector's license by the Texas Real 30-27 Estate Commission. 31-1 SECTION 4. (a) The unobligated and unexpended balance of 31-2 the appropriation made to the Texas Real Estate Commission for the 31-3 regulation of real estate inspectors for the fiscal year ending 31-4 August 31, 1997, is transferred to the Texas Real Estate Inspector 31-5 Licensing Board for the purposes of implementing Article 6573a.3, 31-6 Revised Statutes, as added by this Act. 31-7 (b) The administrator of the Texas Real Estate Commission 31-8 shall identify the records and property in the custody of the 31-9 commission relating to the licensing of real estate inspectors 31-10 under Section 23, The Real Estate License Act (Article 6573a, 31-11 Vernon's Texas Civil Statutes), as that section existed on the day 31-12 before the effective date of this Act, and those records and 31-13 property, including any money in the real estate inspector 31-14 regulation account and the real estate inspection recovery fund, 31-15 shall be transferred to the Texas Real Estate Inspector Licensing 31-16 Board. 31-17 (c) The Texas Real Estate Inspector Committee is abolished 31-18 on the effective date of this Act. 31-19 (d) A person licensed as an apprentice inspector, a real 31-20 estate inspector, or a professional inspector under Section 23, The 31-21 Real Estate License Act (Article 6573a, Vernon's Texas Civil 31-22 Statutes), on the day before the effective date of this Act shall 31-23 be issued an appropriate license under Article 6573a.3, Revised 31-24 Statutes, as added by this Act. A person who receives a license 31-25 under this subsection is subject to Article 6573a.3, Revised 31-26 Statutes, as added by this Act, when applying for a real estate 31-27 inspector or professional inspector license. A holder of a license 32-1 issued under this subsection shall complete the continuing 32-2 education requirements of Article 6573a.3, Revised Statutes, as 32-3 added by this Act, before the initial renewal of a license under 32-4 that article. 32-5 (e) The Texas Real Estate Inspector Licensing Board may 32-6 adopt emergency rules under Chapter 2001, Government Code, as 32-7 necessary to provide a smooth transition between the former law and 32-8 Article 6573a.3, Revised Statutes, as added by this Act. 32-9 SECTION 5. (a) The change in law made by this Act applies 32-10 only to an offense committed on or after the effective date of this 32-11 Act. For purposes of this section, an offense is committed before 32-12 the effective date of this Act if any element of the offense occurs 32-13 before that date. 32-14 (b) An offense committed before the effective date of this 32-15 Act is covered by the law in effect when the offense was committed, 32-16 and the former law is continued in effect for that purpose. 32-17 SECTION 6. (a) An investigation or disciplinary action by 32-18 the Texas Real Estate Commission pending on the effective date of 32-19 this Act shall be continued under Article 6573a.3, Revised 32-20 Statutes, as added by this Act, by the Texas Real Estate Inspector 32-21 Licensing Board. The administration of a disciplinary matter 32-22 conducted under this subsection is to be conducted by the Texas 32-23 Real Estate Inspector Licensing Board. 32-24 (b) A claim against the real estate inspection recovery fund 32-25 pending on the effective date of this Act is governed by the law in 32-26 effect on the date the claim arose, and the former law is continued 32-27 in effect for that purpose. 33-1 SECTION 7. This Act takes effect July 1, 1997. 33-2 SECTION 8. The importance of this legislation and the 33-3 crowded condition of the calendars in both houses create an 33-4 emergency and an imperative public necessity that the 33-5 constitutional rule requiring bills to be read on three several 33-6 days in each house be suspended, and this rule is hereby suspended, 33-7 and that this Act take effect and be in force according to its 33-8 terms, and it is so enacted.