79R9730 CLG-D

By:  Harper-Brown                                                 H.B. No. 3037



A BILL TO BE ENTITLED

AN ACT

relating to a duty to report suspected fraud in a transaction 
involving the sale of residential real estate; providing a civil 
penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Title 5, Finance Code, is amended by adding 
Chapter 397 to read as follows:

CHAPTER 397.  FRAUD IN RESIDENTIAL REAL ESTATE TRANSACTIONS
	Sec. 397.001.  DEFINITIONS.  In this chapter:                           
		(1)  "Finance commission" means the Finance Commission 
of Texas.     
		(2)  "Residential real estate" means real property 
located in this state improved by a one-to-four family dwelling 
used or occupied wholly or partly as the home or residence of one or 
more persons and unimproved real property on which the dwelling 
will be constructed.
	Sec. 397.002.  DUTY TO REPORT SUSPECTED FRAUD IN RESIDENTIAL 
REAL ESTATE TRANSACTIONS.  (a)  If a real estate broker, real estate 
appraiser, loan officer, employee of a title insurance company, or 
mortgage broker has cause to believe that fraudulent conduct or 
activity may have occurred in a transaction involving the sale of 
residential real estate, the person shall immediately report the 
information to the finance commission.
	(b)  The report may be made orally or in writing and must 
include:    
		(1)  the name and address of the person making the 
report;           
		(2)  the name and address of the person or persons 
allegedly engaging in fraudulent conduct or activity;
		(3)  the basis of the reporter's knowledge; and                        
		(4)  any other relevant information.                                   
	(c)  The finance commission shall report the information to 
the state agency that licenses, certifies, or registers the person 
or persons reported to be engaging in suspected fraudulent conduct 
or activity under this section for investigation by that agency.
	Sec. 397.003.  FAILURE TO REPORT; CIVIL PENALTY.  A person 
who knowingly fails to report to the finance commission as required 
by Section 397.002 is liable to this state for a civil penalty of 
$500.  The attorney general may sue to collect the penalty.
	SECTION 2.  This Act takes effect September 1, 2005.