77R9484 JMM-D
By Pickett, Reyna of Bexar H.B. No. 659
Substitute the following for H.B. No. 659:
By Haggerty C.S.H.B. No. 659
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of the sale and inspection of real
1-3 estate.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 6(a), The Real Estate License Act
1-6 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
1-7 as follows:
1-8 (a) A person desiring to act as a real estate broker in this
1-9 state shall file an application for a license with the commission
1-10 on a form prescribed by the commission. [A broker desiring to
1-11 engage a person to participate in real estate brokerage activity
1-12 shall join the person in filing an application for a salesperson
1-13 license on a form prescribed by the commission.] A person
1-14 previously licensed as a broker may apply for inactive status. A
1-15 person desiring to act as a real estate salesperson in this state
1-16 must [previously licensed as a salesperson may] apply for a
1-17 salesperson license on a form prescribed by the commission. If the
1-18 person satisfies all requirements for a salesperson license, the
1-19 commission may issue an inactive salesperson license to the person.
1-20 The person may not act as a salesperson unless the person is
1-21 sponsored by a licensed broker who has notified the commission and
1-22 paid the fee for issuance of an active license to the salesperson
1-23 as required by Section 13(b) of this Act [inactive status without
1-24 the participation of a broker. The person must apply for inactive
2-1 status on a form prescribed by the commission not later than the
2-2 first anniversary of the date of the expiration of the broker or
2-3 salesperson license].
2-4 SECTION 2. Sections 8(c) and (f), The Real Estate License
2-5 Act (Article 6573a, Vernon's Texas Civil Statutes), are amended to
2-6 read as follows:
2-7 (c) On determination by the commission at any time that [If
2-8 on December 31 of any year] the balance remaining in the real
2-9 estate recovery fund is less than $1 million, each real estate
2-10 broker and each real estate salesperson, on the next renewal of the
2-11 license, shall pay, in addition to the license renewal fee, a fee
2-12 of $10, which shall be deposited in the real estate recovery fund,
2-13 or a pro rata share of the amount necessary to bring the fund to
2-14 $1.7 million, whichever is less. If on December 31 of any year the
2-15 balance remaining in the real estate recovery fund is more than
2-16 $3.5 million or more than the total amount of claims paid from the
2-17 fund during the previous four fiscal years, whichever is greater,
2-18 the amount of money in excess of the greater amount shall be
2-19 transferred to the general revenue fund. To ensure the
2-20 availability of a sufficient amount of money to pay anticipated
2-21 claims on the fund, the commission by rule may provide for the
2-22 collection of assessments at different times and under conditions
2-23 other than those specified in this Act.
2-24 (f) The court shall proceed on the application forthwith.
2-25 On the hearing on the application, the aggrieved person is required
2-26 to show that:
2-27 (1) the judgment is based on facts allowing recovery
3-1 under Subsection (a) of this section;
3-2 (2) the person is not a spouse of the debtor, or the
3-3 personal representative of the spouse; and the person is not a
3-4 registrant under Section 9A of this Act or a real estate broker or
3-5 salesperson, as defined by this Act, who is seeking to recover a
3-6 real estate commission or any compensation in the transaction or
3-7 transactions for which the application for payment is made;
3-8 (3) [the person has obtained a judgment under
3-9 Subsection (e) of this section that is not subject to a stay or
3-10 discharge in bankruptcy, stating the amount of the judgment and the
3-11 amount owing on the judgment at the date of the application;]
3-12 [(4)] based on the best available information, the
3-13 judgment debtor lacks sufficient attachable assets in this state or
3-14 any other state to satisfy the judgment; and
3-15 (4) [(5)] the amount that may be realized from the
3-16 sale of real or personal property or other assets liable to be sold
3-17 or applied in satisfaction of the judgment and the balance
3-18 remaining due on the judgment after application of the amount that
3-19 may be realized.
3-20 SECTION 3. Section 11, The Real Estate License Act (Article
3-21 6573a, Vernon's Texas Civil Statutes), is amended to read as
3-22 follows:
3-23 Sec. 11. The commission shall charge and collect the
3-24 following fees:
3-25 (1) a fee not to exceed $100 for the filing of an
3-26 original application for a real estate broker license;
3-27 (2) a fee not to exceed $100 for annual renewal of a
4-1 real estate broker license;
4-2 (3) a fee not to exceed $50 for the filing of an
4-3 original application for a real estate salesperson license;
4-4 (4) a fee not to exceed $50 for annual renewal of a
4-5 real estate salesperson license;
4-6 (5) a fee not to exceed $50 for an application for a
4-7 license examination;
4-8 (6) a fee not to exceed $20 for filing a request for a
4-9 license for each additional office or place of business;
4-10 (7) a fee not to exceed $20 for filing a request for a
4-11 license or certificate of registration for a change of place of
4-12 business, change of name, return to active status, or change of
4-13 sponsoring broker;
4-14 (8) a fee not to exceed $20 for filing a request to
4-15 replace a license or certificate of registration lost or destroyed;
4-16 (9) a fee not to exceed $400 for filing an application
4-17 for approval of an education program under Section 7(f) of this
4-18 Act;
4-19 (10) a fee not to exceed $200 a year for operation of
4-20 an education program under Section 7(f) of this Act;
4-21 (11) a fee of $20 [$15] for transcript evaluation;
4-22 (12) a fee not to exceed $10 for preparing a license
4-23 or registration history;
4-24 (13) a fee not to exceed $50 for the filing of an
4-25 application for a moral character determination;
4-26 (14) an annual fee of $20 from each real estate broker
4-27 and each registrant under Section 9A of this Act to be transmitted
5-1 to Texas A&M University for the Texas Real Estate Research Center
5-2 as provided by Section 5(m) of this Act;
5-3 (15) an annual fee of $17.50 from each real estate
5-4 salesperson to be transmitted to Texas A&M University for the Texas
5-5 Real Estate Research Center as provided by Section 5(m) of this
5-6 Act;
5-7 (16) an annual fee of $80 from each registrant under
5-8 Section 9A of this Act; and
5-9 (17) any fee authorized under Section 8 of this Act
5-10 for the real estate recovery fund.
5-11 SECTION 4. Section 15(a), The Real Estate License Act
5-12 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
5-13 as follows:
5-14 (a) The commission may, on its own motion, and shall, on the
5-15 signed complaint in writing of any person [a consumer or service
5-16 recipient], provided the complaint, or the complaint together with
5-17 evidence, documentary or otherwise, presented in connection with
5-18 the complaint, provides reasonable cause, investigate the actions
5-19 and records of a real estate broker or real estate salesperson.
5-20 The commission may suspend or revoke a license issued under the
5-21 provisions of this Act or take other disciplinary action authorized
5-22 by this Act at any time when it has been determined that:
5-23 (1) the licensee has entered a plea of guilty or nolo
5-24 contendere to, or been found guilty of, or been convicted of, a
5-25 felony, in which fraud is an essential element, and the time for
5-26 appeal has elapsed or the judgment or conviction has been affirmed
5-27 on appeal, irrespective of an order granting probation following
6-1 such conviction, suspending the imposition of sentence;
6-2 (2) the licensee has procured, or attempted to
6-3 procure, a real estate license, for the licensee or a salesperson,
6-4 by fraud, misrepresentation or deceit, or by making a material
6-5 misstatement of fact in an application for a real estate license;
6-6 (3) the licensee, when selling, buying, trading, or
6-7 renting real property in the licensee's own name, engaged in
6-8 misrepresentation or dishonest or fraudulent action;
6-9 (4) the licensee has failed within a reasonable time
6-10 to make good a check issued to the commission after the commission
6-11 has mailed a request for payment by certified mail to the
6-12 licensee's last known business address as reflected by the
6-13 commission's records;
6-14 (5) the licensee has disregarded or violated a
6-15 provision of this Act;
6-16 (6) the licensee, while performing an act constituting
6-17 an act of a broker or salesperson, as defined by this Act, has been
6-18 guilty of:
6-19 (A) making a material misrepresentation, or
6-20 failing to disclose to a potential purchaser any latent structural
6-21 defect or any other defect known to the broker or salesperson.
6-22 Latent structural defects and other defects do not refer to trivial
6-23 or insignificant defects but refer to those defects that would be a
6-24 significant factor to a reasonable and prudent purchaser in making
6-25 a decision to purchase;
6-26 (B) making a false promise of a character likely
6-27 to influence, persuade, or induce any person to enter into a
7-1 contract or agreement when the licensee could not or did not intend
7-2 to keep such promise;
7-3 (C) pursuing a continued and flagrant course of
7-4 misrepresentation or making of false promises through agents,
7-5 salespersons, advertising, or otherwise;
7-6 (D) failing to make clear, to all parties to a
7-7 transaction, which party the licensee is acting for, or receiving
7-8 compensation from more than one party except with the full
7-9 knowledge and consent of all parties;
7-10 (E) failing within a reasonable time properly to
7-11 account for or remit money coming into the licensee's possession
7-12 which belongs to others, or commingling money belonging to others
7-13 with the licensee's own funds;
7-14 (F) paying a commission or fees to or dividing a
7-15 commission or fees with anyone not licensed as a real estate broker
7-16 or salesperson in this state or in any other state for compensation
7-17 for services as a real estate agent;
7-18 (G) failing to specify a definite termination
7-19 date that is not subject to prior notice in a contract, other than
7-20 a contract to perform property management services, in which the
7-21 licensee agrees to perform services for which a license is required
7-22 under this Act;
7-23 (H) accepting, receiving, or charging an
7-24 undisclosed commission, rebate, or direct profit on expenditures
7-25 made for a principal;
7-26 (I) soliciting, selling, or offering for sale
7-27 real property under a scheme or program that constitutes a lottery
8-1 or deceptive practice;
8-2 (J) acting in the dual capacity of broker and
8-3 undisclosed principal in a transaction;
8-4 (K) guaranteeing, authorizing, or permitting a
8-5 person to guarantee that future profits will result from a resale
8-6 of real property;
8-7 (L) placing a sign on real property offering it
8-8 for sale, lease, or rent without the written consent of the owner
8-9 or the owner's authorized agent;
8-10 (M) inducing or attempting to induce a party to
8-11 a contract of sale or lease to break the contract for the purpose
8-12 of substituting in lieu thereof a new contract;
8-13 (N) negotiating or attempting to negotiate the
8-14 sale, exchange, lease, or rental of real property with an owner,
8-15 lessor, buyer, or tenant, knowing that the owner, lessor, buyer, or
8-16 tenant had a written outstanding contract, granting exclusive
8-17 agency in connection with the transaction to another real estate
8-18 broker;
8-19 (O) offering real property for sale or for lease
8-20 without the knowledge and consent of the owner or the owner's
8-21 authorized agent, or on terms other than those authorized by the
8-22 owner or the owner's authorized agent;
8-23 (P) publishing, or causing to be published, an
8-24 advertisement including, but not limited to, advertising by
8-25 newspaper, radio, television, the Internet, or display which is
8-26 misleading, or which is likely to deceive the public, or which in
8-27 any manner tends to create a misleading impression, or which fails
9-1 to identify the person causing the advertisement to be published as
9-2 a licensed real estate broker or agent;
9-3 (Q) having knowingly withheld from or inserted
9-4 in a statement of account or invoice, a statement that made it
9-5 inaccurate in a material particular;
9-6 (R) publishing or circulating an unjustified or
9-7 unwarranted threat of legal proceedings, or other action;
9-8 (S) establishing an association, by employment
9-9 or otherwise, with an unlicensed person who is expected or required
9-10 to act as a real estate licensee, or aiding or abetting or
9-11 conspiring with a person to circumvent the requirements of this
9-12 Act;
9-13 (T) failing or refusing on demand to furnish
9-14 copies of a document pertaining to a transaction dealing with real
9-15 estate to a person whose signature is affixed to the document;
9-16 (U) failing to advise a purchaser in writing
9-17 before the closing of a transaction that the purchaser should
9-18 either have the abstract covering the real estate which is the
9-19 subject of the contract examined by an attorney of the purchaser's
9-20 own selection, or be furnished with or obtain a policy of title
9-21 insurance;
9-22 (V) conduct which constitutes dishonest
9-23 dealings, bad faith, or untrustworthiness;
9-24 (W) acting negligently or incompetently in
9-25 performing an act for which a person is required to hold a real
9-26 estate license;
9-27 (X) disregarding or violating a provision of
10-1 this Act;
10-2 (Y) failing within a reasonable time to deposit
10-3 money received as escrow agent in a real estate transaction, either
10-4 in trust with a title company authorized to do business in this
10-5 state, or in a custodial, trust, or escrow account maintained for
10-6 that purpose in a banking institution authorized to do business in
10-7 this state;
10-8 (Z) disbursing money deposited in a custodial,
10-9 trust, or escrow account, as provided in Subsection (Y) before the
10-10 transaction concerned has been consummated or finally otherwise
10-11 terminated; or
10-12 (AA) discriminating against an owner, potential
10-13 purchaser, lessor, or potential lessee on the basis of race, color,
10-14 religion, sex, national origin, or ancestry, including directing
10-15 prospective home buyers or lessees interested in equivalent
10-16 properties to different areas according to the race, color,
10-17 religion, sex, national origin, or ancestry of the potential owner
10-18 or lessee;
10-19 (7) the licensee has failed or refused on demand to
10-20 produce a document, book, or record in the licensee's possession
10-21 concerning a real estate transaction conducted by the licensee for
10-22 inspection by the commission or its authorized personnel or
10-23 representative;
10-24 (8) the licensee has failed within a reasonable time
10-25 to provide information requested by the commission as a result of a
10-26 formal or informal complaint to the commission which would indicate
10-27 a violation of this Act; or
11-1 (9) the licensee has failed without just cause to
11-2 surrender to the rightful owner, on demand, a document or
11-3 instrument coming into the licensee's possession.
11-4 SECTION 5. Section 15B(e), The Real Estate License Act
11-5 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
11-6 as follows:
11-7 (e) The commission may authorize a commission employee to
11-8 file a signed written complaint against a licensee and to conduct
11-9 an investigation if:
11-10 (1) a judgment against the licensee has been paid from
11-11 a recovery fund established under this Act;
11-12 (2) the licensee is convicted of a criminal offense
11-13 that may constitute grounds for the suspension or revocation of the
11-14 licensee's license; [or]
11-15 (3) the licensee fails to make good a check issued to
11-16 the commission;
11-17 (4) the licensee fails to comply with a commission
11-18 rule adopted under Section 7A(g) of this Act; or
11-19 (5) the licensee fails to provide, within a reasonable
11-20 time, information requested by the commission in connection with an
11-21 application to renew a license.
11-22 SECTION 6. Sections 19A(a), (b), (d), (h), (m), and (o), The
11-23 Real Estate License Act (Article 6573a, Vernon's Texas Civil
11-24 Statutes), are amended to read as follows:
11-25 (a) If a person [licensed under this Act] violates this Act
11-26 or a rule or order adopted by the commission under this Act, the
11-27 commission may assess an administrative penalty against the person
12-1 as provided by this section.
12-2 (b) The penalty for each violation shall be set in an amount
12-3 not to exceed $1,000 a day. Each day a violation continues or
12-4 occurs may be considered a separate violation for purposes of
12-5 penalty assessment.
12-6 (d) If, after investigation of a possible violation and the
12-7 facts surrounding that possible violation, the administrator
12-8 determines that a violation has occurred, the administrator may
12-9 issue a violation report stating the facts on which the conclusion
12-10 that a violation occurred is based, recommending that an
12-11 administrative penalty under this section be imposed on the person
12-12 charged, and recommending the amount of that proposed penalty. The
12-13 administrator shall base the recommended amount of the proposed
12-14 penalty on the seriousness of the violation determined by the
12-15 consideration of the factors set forth in Subsection (c) of this
12-16 section. The commission may authorize the administrator to
12-17 delegate to another commission employee the administrator's
12-18 authority to act under this section.
12-19 (h) If the person charged requests a hearing or fails to
12-20 timely respond to the notice, the administrator shall set a hearing
12-21 and give notice of the hearing. The hearing shall be held by a
12-22 hearing examiner designated by the administrator. The hearing
12-23 examiner shall make findings of fact and conclusions of law and
12-24 promptly issue to the commission a proposal for decision as to the
12-25 occurrence of the violation, including a recommendation as to the
12-26 amount of the proposed penalty if a penalty is warranted. Based on
12-27 the findings of fact, conclusions of law, and recommendations of
13-1 the hearing examiner, the commission by order may find a violation
13-2 has occurred and may assess a penalty or may find that no violation
13-3 has occurred. All proceedings under this subsection are subject to
13-4 Chapter 2001, Government Code [the Administrative Procedure and
13-5 Texas Register Act (Article 6252-13a, Vernon's Texas Civil
13-6 Statutes)]. The commission may authorize the hearing examiner to
13-7 conduct the hearing and enter a final decision.
13-8 (m) Judicial review of the order or decision of the
13-9 commission assessing the penalty shall be under the substantial
13-10 evidence rule and shall be instituted by filing a petition with a
13-11 district court in Travis County, as provided by Chapter 2001,
13-12 Government Code [Section 19, Administrative Procedure and Texas
13-13 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)].
13-14 (o) A penalty collected under this section for a violation
13-15 by a person licensed as a real estate broker or salesperson shall
13-16 be deposited in the real estate recovery fund. A penalty collected
13-17 under this section for a violation by a person licensed or
13-18 registered as a real estate inspector shall be deposited in the
13-19 real estate inspection recovery fund. A penalty collected under
13-20 this section for a violation by a person who is not licensed under
13-21 this Act shall be deposited in the real estate recovery fund or the
13-22 real estate inspection recovery fund, as determined by the
13-23 commission.
13-24 SECTION 7. Section 23(h)(1), The Real Estate License Act
13-25 (Article 6573a, Vernon's Texas Civil Statutes), is amended to read
13-26 as follows:
13-27 (1) The commission shall charge and collect reasonable
14-1 and necessary fees to recover the cost of administering this
14-2 section as follows:
14-3 (A) a fee not to exceed $75 for the filing of an
14-4 original application for a license as an apprentice inspector;
14-5 (B) a fee not to exceed $125 for the filing of
14-6 an original application for a license as a real estate inspector;
14-7 (C) a fee not to exceed $150 for the filing of
14-8 an original application for a license as a professional inspector;
14-9 (D) a fee not to exceed $125 for the annual
14-10 license renewal of an apprentice inspector;
14-11 (E) a fee not to exceed $175 for the annual
14-12 license renewal of a real estate inspector;
14-13 (F) a fee not to exceed $200 for the annual
14-14 license renewal of a professional inspector;
14-15 (G) a fee not to exceed $100 for taking a
14-16 license examination; [and]
14-17 (H) a fee not to exceed $20 for a request for a
14-18 change of place of business or to replace a lost or destroyed
14-19 license; and
14-20 (I) a fee not to exceed $20 for filing a request
14-21 for issuance of a license because of a change of name, return to
14-22 active status, or change in sponsoring professional inspector.
14-23 SECTION 8. Sections 23(o)(3), (7), and (15), The Real Estate
14-24 License Act (Article 6573a, Vernon's Texas Civil Statutes), are
14-25 amended to read as follows:
14-26 (3) If at [on December 31 of] any time [year] the
14-27 balance remaining in the real estate inspection recovery fund is
15-1 less than $300,000, each inspector, on the next renewal of the
15-2 person's license, shall pay, in addition to the license renewal
15-3 fee, a fee of $75, or a pro rata share of the amount necessary to
15-4 bring the fund to $450,000, whichever is less, which shall be
15-5 deposited in the real estate inspection recovery fund. To ensure
15-6 the availability of a sufficient amount of money to pay anticipated
15-7 claims on the fund, the commission by rule may provide for the
15-8 collection of assessments at different times and under conditions
15-9 other than those specified by this Act.
15-10 (7) The court shall proceed on the application
15-11 forthwith. On the hearing on the application, the aggrieved person
15-12 is required to show:
15-13 (A) that the judgment is based on facts allowing
15-14 recovery under Subdivision (1) of this subsection;
15-15 (B) that the person is not a spouse of the
15-16 debtor or the personal representative of the spouse and the person
15-17 is not an inspector, as defined by this section;
15-18 (C) [that the person has obtained a judgment
15-19 under Subdivision (6) of this subsection that is not subject to a
15-20 stay or discharge in bankruptcy, stating the amount of the judgment
15-21 and the amount owing on the judgment at the date of the
15-22 application;]
15-23 [(D)] that based on the best information
15-24 available, the judgment debtor lacks sufficient attachable assets
15-25 in this state or any other state to satisfy the judgment; and
15-26 (D) [(E)] the amount that may be realized from
15-27 the sale of real or personal property or other assets liable to be
16-1 sold or applied in satisfaction of the judgment and the balance
16-2 remaining due on the judgment after application of the amount that
16-3 may be realized.
16-4 (15) Notwithstanding any other provision, payments
16-5 from the real estate inspection recovery fund are subject to the
16-6 following conditions and limitations:
16-7 (A) payments may be made only pursuant to an
16-8 order of a court of competent jurisdiction, as provided by
16-9 Subdivision (6) of this subsection, and in the manner prescribed by
16-10 this subsection;
16-11 (B) payments for claims, including attorney
16-12 fees, interest, and court costs, arising out of the same
16-13 transaction shall be limited in the aggregate to $10,000 [$7,500]
16-14 regardless of the number of claimants; and
16-15 (C) payments for claims based on judgments
16-16 against a licensed inspector may not exceed in the aggregate
16-17 $30,000 [$15,000] until the fund has been reimbursed by the
16-18 licensee for all amounts paid.
16-19 SECTION 9. (a) This Act takes effect September 1, 2001.
16-20 (b) The change in law made by this Act to Sections 8(f) and
16-21 23(o)(7), The Real Estate License Act (Article 6573a, Vernon's
16-22 Texas Civil Statutes), applies only to a cause of action that
16-23 arises on or after the effective date of this Act. A cause of
16-24 action that arises before the effective date of this Act is
16-25 governed by the law in effect on the date the cause of action
16-26 arose, and the former law is continued in effect for that purpose.
16-27 (c) A change in law made by this Act that relates to a
17-1 disciplinary action or imposition of an administrative penalty
17-2 applies only to a violation of The Real Estate License Act (Article
17-3 6573a, Vernon's Texas Civil Statutes) that occurs on or after the
17-4 effective date of this Act. A violation that occurs before the
17-5 effective date of this Act is governed by the law in effect on the
17-6 date the violation occurred, and the former law is continued in
17-7 effect for that purpose.