79R6235 MXM-F

By:  Ellis                                                        S.B. No. 926


A BILL TO BE ENTITLED
AN ACT
relating to the regulation of residential property managers and providing for mediation and education regarding residential landlord and tenant disputes; providing penalties. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subtitle A, Title 7, Occupations Code, is amended by adding Chapter 1104 to read as follows:
CHAPTER 1104. RESIDENTIAL PROPERTY MANAGEMENT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1104.001. DEFINITIONS. In this chapter: (1) "Board" means the governing board of the department. (2) "Department" means the Texas Department of Housing and Community Affairs. (3) "Executive director" means the executive director of the department. (4) "Residential property manager" means a person who performs, or supervises another person in the performance of, residential property management services for compensation. (5) "Residential property management services" means collecting rent and performing other management activities related to the lease of residential rental property. Sec. 1104.002. EXEMPTIONS FROM REGISTRATION. A person is not required to be registered under this chapter if the person: (1) performs only maintenance on the leased property; (2) performs only accounting or bookkeeping activities; (3) is the record title holder of the property; (4) is a governmental entity or is acting on behalf of a governmental entity; or (5) is licensed: (A) as a real estate broker or salesperson under Chapter 1101; or (B) to practice law in this state.
[Sections 1104.003–1104.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF BOARD, EXECUTIVE DIRECTOR, AND DEPARTMENT
Sec. 1104.051. STANDARDS OF CONDUCT. The board by rule shall establish standards of practice, conduct, and ethics for registration certificate holders under this chapter. Sec. 1104.052. MONEY RECEIVED BY DEPARTMENT. The department shall receive and account for all money received under this chapter. Sec. 1104.053. FEES. (a) The department shall set fees in amounts reasonable and necessary to cover the costs of administering this chapter, except that the fee for registration or renewing a registration under this chapter may not exceed $400 for each registration or renewal. (b) The department may set a different fee for different types of residential property managers, taking into consideration the number of units being managed, the supervision level of the person, and other factors determined by the department. Sec. 1104.054. DISPUTE RESOLUTION AND EDUCATION REGARDING LANDLORD-TENANT DISPUTES. (a) In this section, "Texas nonprofit corporation" means an organization: (1) described by Section 501(c)(3) of the Internal Revenue Code; and (2) organized as a nonprofit corporation under the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes). (b) The department shall contract with at least one Texas nonprofit corporation for each county with a population of 500,000 or more, and in any other appropriate location as determined by the department, to: (1) mediate landlord-tenant disputes in that county or location related to property management services regulated under this chapter; and (2) educate landlords and tenants of their rights and responsibilities in that county or location related to property management services regulated under this chapter.
[Sections 1104.055–1104.100 reserved for expansion]
SUBCHAPTER C. PROPERTY MANAGEMENT ADVISORY COUNCIL
Sec. 1104.101. DEFINITION. In this subchapter, "council" means the Property Management Advisory Council. Sec. 1104.102. COUNCIL MEMBERSHIP. (a) The council is composed of six members appointed by the executive director, with the board's approval. (b) The executive director shall appoint at least two members who are residential tenants in this state. (c) Each member who is not a residential tenant must: (1) be registered under this chapter; or (2) be a member of a nonprofit organization or voluntary trade association whose membership consists primarily of persons who perform residential property management services in this state or assist residential tenants in this state. Sec. 1104.103. MEMBERSHIP RESTRICTIONS. A person is not eligible for appointment as a council member if the person is required to register as a lobbyist under Chapter 305, Government Code. Sec. 1104.104. TERMS. Members of the council serve staggered three-year terms, with the terms of two members expiring on February 1 of each year. Sec. 1104.105. VACANCY. A council vacancy is filled in the same manner as the original appointment. A person appointed to fill a vacancy is appointed to serve the unexpired portion of the term. Sec. 1104.106. PRESIDING OFFICER. The executive director, with the board's approval, shall appoint a council member to serve as presiding officer of the council for a two-year term. Sec. 1104.107. MEETINGS. The council shall meet at least once every six months at the call of the presiding officer or at the call of a majority of council members. Sec. 1104.108. VOTE REQUIRED FOR ACTION. A council decision requires the affirmative vote of at least four members. Sec. 1104.109. COMPENSATION; REIMBURSEMENT. (a) A council member may not receive compensation for serving on the council. (b) A council member is entitled to reimbursement for actual and necessary expenses incurred in performing functions as a council member, subject to any applicable limitation on reimbursement provided by the General Appropriations Act. Sec. 1104.110. COUNCIL ADVISORY POWERS. The council shall: (1) recommend to the department for adoption standards of practice, conduct, and ethics for registration holders under this chapter; (2) recommend to the department amounts for the fees set under this chapter; (3) assist and advise the department in recognizing continuing education programs and educational courses for registration holders under this chapter; and (4) advise the department in establishing educational requirements for initial applicants for registration under this chapter.
[Sections 1104.111–1104.150 reserved for expansion]
SUBCHAPTER D. REGISTRATION REQUIREMENTS
Sec. 1104.151. REGISTRATION REQUIRED. (a) A person may not perform residential property management services for compensation unless the person holds a certificate of registration issued under this chapter. (b) A person may not represent that a person is a residential property manager or an assistant residential property manager unless the person holds a certificate of registration under this chapter. Sec. 1104.152. VOLUNTARY REGISTRATION. (a) A person who is not required to hold a certificate of registration under this chapter may register if the person satisfies the registration requirements of this chapter. (b) A person exempt from the registration requirements of this chapter who elects to register is subject to the requirements of this chapter to the same extent as any other registration holder. Sec. 1104.153. REGISTRATION APPLICATION; FEES. (a) An applicant for registration must file an application with the department on a form prescribed by the department. (b) The application must be accompanied by: (1) a nonrefundable application fee in an amount set by the department; and (2) the registration fee. (c) The department shall refund the registration fee if the executive director does not approve the application. Sec. 1104.154. GENERAL ELIGIBILITY FOR REGISTRATION. Except as provided by Section 1104.155, to be eligible for registration, an applicant must: (1) be at least 18 years of age; (2) hold a high school diploma or its equivalent; (3) pay the required fees; and (4) meet any additional qualifications required by this chapter or by the department. Sec. 1104.155. REAL ESTATE BROKERS AND APPRAISERS; ISSUANCE OF CERTIFICATE. (a) The department shall issue a certificate of registration to an applicant who provides satisfactory proof to the department that the person holds: (1) an active real estate broker license or an active real estate salesperson license under Chapter 1101; or (2) an active real estate appraiser license or certificate under Chapter 1103. (b) Section 1104.154 does not apply to an applicant under this section. Sec. 1104.156. ELIGIBILITY TO REGISTER AS RESIDENTIAL PROPERTY MANAGER. (a) In addition to satisfying the requirements of Section 1104.154 or 1104.155, an applicant for registration must: (1) complete at least 15 classroom hours of educational courses approved by the department, including at least four hours of instruction on laws and other legal issues in this state related to residential property management services; or (2) submit to the department, if the person is eligible for registration under Section 1104.155, proof satisfactory to the department that the applicant has completed at least four classroom hours of educational programs or courses on the laws and other legal issues in this state related to residential property management services. (b) The department may give appropriate credit to an initial applicant for educational courses on principles of law related to residential tenancies completed by the applicant not more than two years before the date of application. Sec. 1104.157. ISSUANCE OF CERTIFICATE OF REGISTRATION. Not later than the 31st day after the date the department receives an application for registration, the department shall issue the certificate of registration or deny the application.
[Sections 1104.158–1104.200 reserved for expansion]
SUBCHAPTER E. RENEWAL OF CERTIFICATE OF REGISTRATION
Sec. 1104.201. TERM OF CERTIFICATE OF REGISTRATION. Except as otherwise provided by the department, a certificate of registration expires on the second anniversary of the date of issuance or renewal. Sec. 1104.202. RENEWAL. The department shall renew the certificate of registration of an eligible registration certificate holder on the timely receipt of the required renewal fee. Sec. 1104.203. REQUIRED CONTINUING EDUCATION. The department by rule shall require that to renew a registration, the registration certificate holder must complete at least 15 classroom hours of continuing education courses during the term of the registration, at least six hours of which must include instruction on laws and other legal issues in this state related to residential leases and property management services. Sec. 1104.204. RECOGNITION OF EDUCATIONAL PROGRAMS AND COURSES. (a) The department by rule shall recognize appropriate continuing education programs for registration certificate holders that satisfy the requirements of Section 1104.203. (b) The department shall recognize a continuing education course, including a course on the laws and other legal issues related to residential tenancies, that is: (1) approved by the Texas Real Estate Commission or the Texas Appraiser Licensing and Certification Board; and (2) completed by a registration certificate holder who also holds a real estate broker license or real estate salesperson license under Chapter 1101. (c) The department may recognize an educational program or course: (1) related to residential tenancies; and (2) offered or sponsored by a public provider or a recognized private provider, including: (A) the comptroller; (B) the State Bar of Texas; (C) the Texas Real Estate Commission; (D) an institution of higher education that meets program and accreditation standards comparable to those for public institutions of higher education as determined by the Texas Higher Education Coordinating Board; or (E) a nonprofit and voluntary trade association, institute, or organization: (i) whose membership consists primarily of persons who are residential property managers; and (ii) that subscribes to a code of professional conduct or ethics. (d) The department may recognize a private provider of an educational program or course if the provider: (1) applies to the department on a form prescribed by the department; and (2) pays in the amounts set by the department: (A) a nonrefundable application fee; and (B) an educational provider's fee. (e) The department shall refund the educational provider's fee if the department does not recognize the provider's educational program or course.
[Sections 1104.205–1104.250 reserved for expansion]
SUBCHAPTER F. ADMINISTRATIVE PENALTY
Sec. 1104.251. IMPOSITION OF ADMINISTRATIVE PENALTY. The board may impose an administrative penalty on a person who violates: (1) this chapter; or (2) a rule adopted or order issued by the board or department. Sec. 1104.252. AMOUNT OF PENALTY. (a) The administrative penalty shall be assessed by the board in an amount that may not exceed $5,000. Each day a violation continues or occurs is a separate violation for purposes of imposing a penalty. (b) The amount of the penalty shall be based on: (1) the seriousness of the violation; (2) the respondent's history of previous violations; (3) the amount necessary to deter a future violation; (4) efforts made by the respondent to correct the violation; and (5) any other matter that justice may require. (c) The board shall by rule or by procedure published in the Texas Register establish a written enforcement plan that provides notice to registration certificate holders of the specific range of penalties that apply to specific alleged violations and the criteria by which the department determines the amount of a proposed administrative penalty. Sec. 1104.253. NOTICE OF VIOLATION AND PENALTY. If, after investigation of a possible violation and the facts surrounding the possible violation, the executive director determines that a violation occurred, the executive director shall issue to the respondent a notice of alleged violation. The notice must: (1) include a brief summary of the alleged violation; (2) state the amount of the recommended administrative penalty; and (3) inform the respondent that the respondent has the right to a hearing on the occurrence of the alleged violation, the amount of the penalty, or both. Sec. 1104.254. PENALTY TO BE PAID OR HEARING REQUESTED. (a) Not later than the 20th day after the date the respondent receives the notice under Section 1104.253, the respondent may: (1) accept the executive director's determination and recommended administrative penalty; or (2) make a written request for a hearing on that determination. (b) If the respondent accepts the determination, the board by order shall approve the determination and require the respondent to pay the recommended penalty. Sec. 1104.255. HEARING ON RECOMMENDATIONS. (a) If the respondent requests a hearing, the hearing shall be conducted by the State Office of Administrative Hearings. (b) The State Office of Administrative Hearings shall consider the department's applicable substantive rules and policies when conducting a hearing under this subchapter. (c) An administrative law judge at the State Office of Administrative Hearings shall: (1) make findings of fact and conclusions of law; and (2) promptly issue to the board a proposal for decision as to the occurrence of the violation and the amount of any proposed administrative penalty. Sec. 1104.256. DECISION BY BOARD; NOTICE OF ORDER. (a) Based on the findings of fact, conclusions of law, and proposal for decision, the board by order may determine that: (1) a violation occurred and impose an administrative penalty; or (2) a violation did not occur. (b) The executive director shall give notice of the order to the respondent. (c) The order must: (1) include separate statements of the findings of fact and conclusions of law; (2) state the amount of any penalty imposed; (3) inform the respondent of the respondent's right to judicial review of the order; and (4) include any other information required by law. Sec. 1104.257. OPTIONS FOLLOWING DECISION: PAY OR APPEAL. (a) Not later than the 30th day after the date the board's order becomes final, the respondent shall: (1) pay the administrative penalty; or (2) file a petition for judicial review contesting the fact of the violation, the amount of the penalty, or both. (b) Within the 30-day period, a respondent who acts under Subsection (a)(2) may stay enforcement of the penalty by: (1) paying the penalty to the department for placement in an escrow account; (2) giving the department a supersedeas bond in a form approved by the executive director that: (A) is for the amount of the penalty; and (B) is effective until judicial review of the order is final; or (3) filing with the department a sworn statement that the respondent is financially unable to pay the penalty and is financially unable to give the supersedeas bond. Sec. 1104.258. COLLECTION OF PENALTY. If the person on whom the administrative penalty is imposed fails to pay the penalty and enforcement of the penalty is not stayed, the department or the attorney general may bring an action to collect the penalty. Sec. 1104.259. REMITTANCE OF PENALTY AND INTEREST. (a) If, after judicial review, the administrative penalty is reduced or not imposed, the executive director shall: (1) remit to the respondent the appropriate amount, plus accrued interest, if the respondent paid the penalty; or (2) execute a release of the bond, if the person gave a supersedeas bond. (b) Interest accrues under Subsection (a)(1) at the rate charged on loans to depository institutions by the New York Federal Reserve Bank. The interest shall be paid for the period beginning on the date the penalty is paid and ending on the date the penalty is remitted.
[Sections 1104.260-1104.300 reserved for expansion]
SUBCHAPTER G. OTHER PENALTIES AND ENFORCEMENT PROVISIONS
Sec. 1104.301. DISCIPLINARY POWERS OF BOARD. After a hearing, the board may refuse to issue or renew a certificate of registration, impose an administrative sanction, seek injunctive relief, or seek a civil penalty under this chapter against a registration holder for: (1) a violation of this chapter or a rule adopted under this chapter; (2) gross incompetence in the performance of residential property management services; (3) dishonesty or fraud committed while performing residential property management services; or (4) a violation of the standards of practice, conduct, or ethics adopted by the department. Sec. 1104.302. CIVIL PENALTY. The attorney general or the board may institute an action in a district court in Travis County to collect a civil penalty from a person who violates this chapter or a rule or order of the board or the department under this chapter. Sec. 1104.303. INJUNCTIVE RELIEF. (a) The attorney general or the board may institute an action in a district court in Travis County for injunctive relief to restrain a violation by a person who appears to be in violation of or threatening to violate this chapter or a rule or order of the board or the department under this chapter. (b) The attorney general and the board may recover reasonable expenses incurred in obtaining injunctive relief under this section, including court costs, reasonable attorney's fees, investigative costs, witness fees, and deposition expenses. Sec. 1104.304. ADMINISTRATIVE SANCTIONS. (a) The board shall revoke, suspend, or refuse to renew a registration or shall reprimand a registration certificate holder for a violation of a ground listed under Section 1104.301. (b) The board may place on probation a person whose registration is suspended. If a registration suspension is probated, the board may require the person to: (1) report regularly to the department on matters that are the basis of the probation; (2) limit practice to the areas prescribed by the board; or (3) continue or renew professional education until the person attains a degree of skill satisfactory to the board in those areas that are the basis for the probation. Sec. 1104.305. RIGHT TO HEARING; ADMINISTRATIVE PROCEDURE. (a) A respondent is entitled to a hearing conducted by the State Office of Administrative Hearings if the board proposes to deny, suspend, or revoke a registration. (b) A proceeding under this chapter to deny, suspend, or revoke a registration is considered to be a contested case under Chapter 2001, Government Code. Sec. 1104.306. CRIMINAL PENALTIES. (a) A person required to register under this chapter commits an offense if the person: (1) is not registered under this chapter; and (2) performs residential property management services for compensation. (b) A person commits an offense if the person: (1) knows that a person required to register under this chapter is not registered; and (2) represents that the person required to register is a residential property manager or assistant residential property manager. (c) An offense under this section is a Class B misdemeanor. SECTION 2. (a) Not later than January 1, 2006, the Texas Department of Housing and Community Affairs shall prescribe fees and forms, adopt rules, appoint the Property Management Advisory Council, and take any other action required by Chapter 1104, Occupations Code, as added by this Act. (b) The initial Property Management Advisory Council members appointed under Section 1104.102(c)(1), Occupations Code, as added by this Act, are not required to be registered under Chapter 1104, Occupations Code, as added by this Act, but are required to be eligible for registration under that chapter. SECTION 3. Sections 1104.151, 1104.152, and Subchapters F and G, Chapter 1104, Occupations Code, as added by this Act, take effect July 1, 2006. SECTION 4. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2005.