HBA-DMD C.S.S.B. 1016 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 1016 By: Wentworth Licensing & Administrative Procedures 5/3/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, Texas law requires real estate brokers, salespersons, and inspectors to conform to certain requirements of the Real Estate License Act. C.S.S.B. 1016 authorizes a broker desiring to engage a person to participate in real estate brokerage activity to join the person in filing an application for an active salesperson license on a form prescribed by the Texas Real Estate Commission (commission). This bill authorizes the commission, by rule, to limit the number of times an applicant may take all or part of the examination and to set a reasonable waiting period before a person who fails an examination may file another application. This bill modifies the number of education hours needed for each applicant for a salesperson license. C.S.S.B. 1016 makes further modifications to the Texas Real Estate License Act. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Real Estate Commission in SECTIONS 2, 3, 9, and 11 (Sections 7, 8, and 23, Article 6573a, V.T.C.S. (The Real Estate License Act)) and rulemaking authority previously delegated to the Texas Real Estate Commission is modified in SECTION 2 (Section 7, Article 6573a, V.T.C.S. (The Real Estate License Act)) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 6(a), Article 6573a, V.T.C.S. (The Real Estate License Act), to authorize, rather than require, a broker desiring to engage a person to participate in real estate brokerage activity to join the person in filing an application for an active salesperson license on a form prescribed by the Texas Real Estate Commission (commission). Authorizes a person, rather than a person previously licensed as a salesperson, to apply for a salesperson license on inactive status without the participation of a broker. Deletes text authorizing a person previously licensed as a broker to apply for inactive status. Deletes text providing that the person must apply for inactive status on a form prescribed by the commission by a specified date. SECTION 2. Amends Sections 7(a), (b), and (e), Article 6573a, V.T.C.S. (The Real Estate License Act), as follows: (a) Authorizes the commission, by rule, to limit the number of times an applicant is authorized to take all or part of the examination and to set a reasonable waiting period before a person who fails an examination is authorized to file another application. Authorizes the rules adopted by the commission to permit a person to file another application without regard to the waiting period if the person has completed additional courses of study specified by the commission. (b) Authorizes the commission, by rule, to prescribe the content of core real estate courses listed in Subsection (a) of this section. (e) Requires each applicant for a salesperson license to furnish the commission satisfactory evidence of having completed 12 semester hours of postsecondary education, eight, rather than six, hours of which must be completed in core real estate courses. Requires the remaining four, rather than six, hours to be completed in core real estate courses or related courses. Requires the applicant, as a condition for the first renewal of a salesperson license, to furnish the commission satisfactory evidence of having completed a minimum of 14 semester hours, 10, rather than eight, hours of which must be completed in core real estate courses. Requires the applicant, as a condition for the second renewal of a salesperson license, to furnish the commission satisfactory evidence of having completed a minimum of 16 semester hours, or equivalent classroom hours, 12, rather than 10, hours of which must be completed in core real estate courses. Requires the applicant, as a condition for the third renewal of a salesperson license, to furnish the commission satisfactory evidence of having completed a minimum of 18 semester hours, or equivalent classroom hours, 14, rather than 12, hours of which must be completed in core real estate courses. SECTION 3. Amends Sections 8(c) and (f), Article 6573a, V.T.C.S.(The Real Estate License Act), to require each real estate broker and each real estate salesperson to pay certain fees, if the commission determines at any time, rather than on December 31 of any year, the balance remaining in the real estate recovery fund is less than $1 million. Authorizes the commission, in order to ensure the availability of a sufficient amount of money to pay anticipated claims on the fund, to provide, by rule, for the collection of assessments at different times and under conditions other than those specified by this Act. Deletes text requiring the aggrieved person, on the hearing on the application, to show that the person has obtained a judgment under Subsection (e) of this section that is not subject to a stay or discharge in bankruptcy, stating the amount of the judgment and the amount owing on the judgment at the date of the application. Makes conforming changes. SECTION 4. Amends Section 11, Article 6573a, V.T.C.S. (The Real Estate License Act), to require the commission to charge and collect certain fees including a fee of $20, rather than $15, for transcript evaluation. SECTION 5. Amends Section 15(a), Article 6573a, V.T.C.S. (The Real Estate License Act), to require the commission, on its own motion, to investigate the signed and written complaint of any person, rather than a consumer or service recipient, provided the complaint, or the complaint together with evidence, documentary or otherwise, presented in connection with the complaint, provides reasonable cause, as well as investigate the actions and records of a real estate broker or real estate salesperson. Authorizes the commission to suspend or revoke a license issued under the provisions of this Act or take other disciplinary action authorized by this Act at any time when it has been determined that the licensee, among other enumerated provisions, has been guilty of publishing an advertisement on the Internet, while performing an act constituting an act of a broker or salesperson, which is misleading. SECTION 6. Amends Section 15B(e), Article 6573(a), V.T.C.S. (The Real Estate License Act), to authorize the commission to authorize a commission employee to file a signed written complaint against a licensee and to conduct an investigation provided that the licensee fails to comply with a commission rule adopted under Section 7A(g) of this Act or fails to provide, within a reasonable time, information requested by the commission in connection with an application for the renewal of a license. SECTION 7. Amends Sections 19A(a), (b), (d), (h), (m), and (o), Article 6573a, V.T.C.S. (The Real Estate License Act), as follows: (a) Provides that if a person, rather than a person licensed under this Act, violates this Act or a rule or order adopted by the commission under this Act, the commission is authorized to assess an administrative penalty against the person as provided by this section. (b) Requires the penalty for each violation to be set in an amount not to exceed $1,000 a day, rather than not to exceed $1,000. Authorizes each day a violation continues or occurs to be considered a separate violation for the purpose of the assessment of a penalty. (d) Authorizes the commission to authorize the administrator to delegate to another employee of the commission the administrator's authority to act under this section. (h) Provides that all proceedings under this subsection are subjected to Chapter 2001 (Administrative Procedure), Government Code, rather than the Administrative Procedure and Texas Register Act (Article 6252-13a, V.T.C.S.), which has been repealed. Authorizes the commission to authorize the hearing examiner to conduct the hearing and to enter a final decision. (m) Makes conforming changes. (o) Requires a penalty collected under this section for a violation by a person who is not licensed under this Act to be deposited either in the real estate recovery fund or in the real estate inspection recovery fund. SECTION 8. Amends Section 23(h)(1), Article 6573a, V.T.C.S. (The Real Estate License Act), to include a fee not to exceed $20 for filing a request for issuance of a license because of a change of name, return to active status, or change in sponsoring professional inspector, among the enumerated list of fees that the commission is required to charge and collect for administering this section. SECTION 9. Amends Section 23(i)(1), Article 6573a, V.T.C.S. (The Real Estate License Act), to authorize the commission, by rule, to limit the number of times an applicant is authorized to take all or part of the examination and to set a reasonable waiting period before a person who fails an examination is authorized to file another application. Authorizes the rules adopted by the commission to permit a person to file another application without regard to the waiting period if the person has completed additional courses of study specified by the commission. Deletes text relating to the procedure for an applicant who fails the examination three times. SECTION 10. Amend Section 23(k), Article 6573a, V.T.C.S. (The Real Estate License Act), to provide that a real estate inspector must submit satisfactory evidence to the commission of successful completion of at least eight, rather than four, classroom hours of core real estate inspection courses annually before a license renewal is issued. Requires a professional inspector to submit satisfactory evidence to the commission of the successful completion of at least 16, rather than eight, classroom hours of core real estate inspection courses annually before a license renewal is issued. Makes a nonsubstantive change. SECTION 11. Amends Sections 23(o)(3), (7), and (15), Article 6573a, V.T.C.S. (The Real Estate License Act), to require each inspector, if at any time, rather than on December 31 of any year, the balance remaining in the real estate inspection recovery fund is less than $300,000, on the next renewal of the person's license, to pay, in addition to the license renewal fee, a fee of $75, or a pro rata share of the amount necessary to bring the fund to $450,000, whichever is less, which is required to be deposited in the real estate inspection recovery fund. Authorizes the commission, by rule, in order to ensure the availability of a sufficient amount of money to pay anticipated claims on the fund, to provide for the collection of assessments at different times and under conditions other than those specified by this Act. Requires payments for claims to be limited in the aggregate to $10,000, rather than $7,500, regardless of the number of claimants. Prohibits claims based on judgments against a licensed inspector from exceeding in the aggregate $30,000, rather than $15,000, until the fund has been reimbursed by the licensee for all amounts paid. Deletes the requirement of the aggrieved person, upon the hearing on the application, to show that the person has obtained a judgment under Subdivision (6) of this subsection that is not subject to a stay or discharge in bankruptcy, stating the amount of the judgment and the amount owing on the judgment at the date of the application. Makes conforming changes. SECTION 12. (a) Effective date: September 1, 1999, except as provided by Subsection (b) of this section. (b) Effective date: January 1, 2000, for Section 7(e), Article 6573a, V.T.C.S. (The Real Estate License Act). Makes application of Section 7(e), Article 6573a, V.T.C.S. (The Real Estate License Act) as amended by this Act, prospective. (c) Makes application of Section 23(k), Article 6573a, V.T.C.S., as amended by this Act, prospective on December 31, 1999. (d) Makes application of Sections 8(f) and 23(o)(7), Article 6573a, V.T.C.S. (The Real Estate License Act), as amended by this Act, prospective. (e) Makes application of this Act prospective, as it applies to a disciplinary action or imposition of an administrative penalty. SECTION 13.Emergency clause. SUMMARY OF COMMITTEE CHANGES This substitute modifies the original in the caption by providing that this substitute relates to the regulation of the sale and inspection of real estate, whereas, the original bill relates to the regulation of real estate brokers, salespersons, and inspectors and to the administration of certain recovery funds; providing administrative penalties. This substitute further amends Section 7(a), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 2, to authorize the commission, by rule, to limit the number of times an applicant is authorized to take all or part of the examination and to set a reasonable waiting period before a person who fails an examination is authorized to file another application. This substitute authorizes the rules adopted by the commission to permit a person to file another application without regard to the waiting period if the person has completed additional courses of study specified by the commission. This substitute deletes new text from the original bill which prohibited a license applicant who fails the examination four consecutive times in connection with the same application from applying for reexamination or submitting a new license application before the 180th day after the date the applicant failed the fourth examination. This substitute further amends Section 8(c), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 3, to delete the change in the original bill which renamed the real estate recovery fund as the real estate recovery trust account. This substitute deletes "notwithstanding any other provision of this Act" from the commission's authority, in order to ensure the availability of a sufficient amount of money to pay anticipated claims on the fund, to provide, by rule, for the collection of assessments at different times and under conditions other than those specified by this Act. Makes conforming and nonsubstantive changes. This substitute further amends Section 11, Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 4, to make a conforming change. This substitute further amends Section 15(a), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 5, to make a nonsubstantive change. This substitute does not address Section 19A(j), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 7, which was amended in the original to update a statutory reference. This substitute also makes conforming and nonsubstantive changes. This substitute further amends Section 23(i)(1), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 9, to authorize the commission, by rule, to limit the number of times an applicant is authorized to take all or part of the examination and to set a reasonable waiting period before a person who fails an examination is authorized to file another application. This substitute authorizes the rules adopted by the commission to permit a person to file another application without regard to the waiting period if the person has completed additional courses of study specified by the commission. This substitute deletes text relating to the procedure for an applicant who fails the examination three times, whereas the original bill amended this text to prohibit the applicant from applying for reexamination or submitting a new license application with the commission for six months from the date the applicant, rather than he, failed the last examination, if a license applicant fails the examination four, rather than three, consecutive times in connection with the same application. This substitute further amends Section 23(k), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 10, to make a nonsubstantive change. This substitute further amends Sections 23(o)(3), (7), and (15), Article 6573a, V.T.C.S. (The Real Estate License Act), in SECTION 11, to delete "notwithstanding any other provision of this Act" from the commission's authority, in order to ensure the availability of a sufficient amount of money to pay anticipated claims on the fund, to provide, by rule, for the collection of assessments at different times and under conditions other than those specified by this Act. Makes conforming and nonsubstantive changes. This substitute modifies SECTION 12(c), to make the prospective clause relate to an expired license, rather than continuing education requirements. This substitute modifies proposed SECTION 12(d), to include Section 8(f), Article 6573a, V.T.C.S. (The Real Estate License Act), in the prospective clause and to replace the reference to Section 23(o)(15) with one to Section 23(o)(7). This substitute adds new SECTION 12(e), to make application of this Act prospective, as it applies to a disciplinary action or imposition of an administrative penalty. This substitute deletes SECTION 13 of the original bill, which made application Section 11, Article 6573a, V.T.C.S. (The Real Estate License Act), of this Act prospective, as it applies to a fee for a transcript. This substitute deletes SECTION 14 of the original bill, which made application of Section 19A(a), Article 6573a, V.T.C.S. (The Real Estate License Act), as amended by this Act, prospective. This substitute adds new SECTION 13 as the emergency clause.