TITLE 22. EXAMINING BOARDS

PART 23. TEXAS REAL ESTATE COMMISSION

CHAPTER 531. CANONS OF PROFESSIONAL ETHICS AND CONDUCT

22 TAC §531.18

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §531.18, Consumer Information in Chapter 531, Canons of Professional Ethics and Conduct.

The proposed amendments to §531.18 increases the font size of the link to the required notice and prohibits its placement in the footer so that the link to the notice will be easier for consumers to find. The amendments also define "business website" and provide additional methods for compliance for social media platforms.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§531.18.Consumer Information.

(a) The Commission adopts by reference the Consumer Protection Notice TREC No. CN 1-2. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188, www.trec.texas.gov.

(b) Each active real estate broker shall provide the notice adopted under subsection (a) by:

(1) displaying it in a readily noticeable location in each place of business the broker maintains; and

(2) providing a link to it labeled "Texas Real Estate Commission Consumer Protection Notice", in at least a 12 [10] point font, in a readily noticeable place on the homepage of the business website of the broker and sponsored sales agents. "TREC" may be substituted for "Texas Real Estate Commission."

(c) The link to the Consumer Protection Notice may not be placed in the footer of the homepage of a business website.

(d) For purposes of this section, business website means a website on the internet that:

(1) is accessible to the public;

(2) contains information about a license holder's real estate brokerage services; and

(3) the content of the website is controlled by the license holder.

(e) For purposes of providing the link required under subsection (b)(2) on a social media platform, the link may be located on:

(1) the account holder profile; or

(2) a separate page or website through a direct link from the social media platform or account holder profile.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703078

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §531.20

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §531.20, Information About Brokerage Services in Chapter 531, Canons of Professional Ethics and Conduct.

The proposed amendments to §531.20 increases the font size of the link to the required notice and prohibits its placement in the footer so that the link to the notice will be easier for consumers to find. The amendments also clarify existing requirements, define "business website" and provide additional methods for compliance for social media platforms.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§531.20.Information About Brokerage Services.

(a) The Commission adopts by reference the Information About Brokerage Services Notice [Form], TREC No. IABS 1-0 (IABS Notice [Form]). The IABS Notice [Form] is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188, www.trec.texas.gov.

(b) Each active real estate broker and sales agent shall provide:

(1) a link to a completed [the] IABS Notice [Form] labeled "Texas Real Estate Commission Information About Brokerage Services", in at least a 12 [10] point font, in a readily noticeable place on the homepage of the business website of the broker and sales agent. "TREC" may be substituted for "Texas Real Estate Commission"; and

(2) the completed IABS Notice at the first substantive communication [Form] as required under §1101.558, Texas Occupations Code.

(c) For purposes of §1101.558, Texas Occupations Code, the completed IABS Notice [Form] can be provided:

(1) by personal delivery by the broker or sales agent;

(2) by first class mail or overnight common carrier delivery service;

(3) in the body of an email; or

(4) as an attachment to an email, or a link within the body of an email, with a specific reference to the IABS Notice [Form] in the body of the email.

(d) The [Providing a] link to a completed [the] IABS Notice may not be: [Form]

(1) in the footer of the homepage of a business website; or

(2) in a footnote or signature block in an email [does not satisfy the requirements of subsection (c)].

(e) For purposes of this section, business website means a website on the internet that:

(1) is accessible to the public;

(2) contains information about a license holder's real estate brokerage services; and

(3) the content of the website is controlled by the license holder.

(f) For purposes of providing the link required under subsection (b)(1) on a social media platform, the link may be located on:

(1) the account holder profile; or

(2) a separate page or website through a direct link from the social media platform or account holder profile.

(g) [(e)] License holders may reproduce the IABS Notice [Form] published by the Commission, provided that the text of the IABS Notice [Form] is copied verbatim and the spacing, borders and placement of text on the page must appear to be identical to that in the published version of the IABS Notice [Form], except that the Broker Contact Information section may be prefilled.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703079

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


CHAPTER 533. PRACTICE AND PROCEDURE

SUBCHAPTER B. GENERAL PROVISIONS RELATING TO PRACTICE AND PROCEDURE

22 TAC §533.3

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §533.3, Filing and Notice, in Chapter 533, Practice and Procedure.

The proposed amendments to §533.3 extend the time the applicant has to request a hearing following notice from the Commission and clarifies the starting date for the statutory two year waiting period following denial before an applicant can reapply. The amendments were recommended by the Commission's Enforcement Committee.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be will be greater clarity in the rule and a timeframe consistent with other appellate timeframes under the law for requesting a hearing.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§533.3.Filing and Notice.

(a) If the Commission denies an application for a license, the Commission shall send the applicant written notice of the denial. An applicant may accept the denial or make a written request for a hearing on that denial. If an applicant fails to request a hearing in writing not later than the 30th [20th] day after the date the notice denying an application is sent, the Commission's denial is final.

(b) When an application is denied by the Commission, no subsequent application will be accepted from the applicant until two years after the date of the Commission's written notice of denial under subsection (a).

(c) [(b)] If after investigation of a possible violation and the facts surrounding that possible violation the Commission determines that a violation has occurred, the Commission may issue a written Notice of Alleged Violation to the Respondent. The Commission shall provide notice in accordance with the APA.

(d) [(c)] Not later than the 30th [20th] day after the date on which the Notice of Alleged Violation is sent, the Respondent may:

(1) accept the determination of the Commission, including sanctions recommended by the Commission; or

(2) make a written request for a hearing on that determination.

(e) [(d)] Upon receipt of a written request for hearing, the Commission shall submit a request to docket case to SOAH accompanied by copies of relevant documents giving rise to a contested case.

(f) [(e)] When the Commission submits a request to docket case with SOAH, SOAH acquires jurisdiction over a contested case until SOAH issues final amendments or corrections to the Proposal for Decision. In case of a conflict with the Commission's rules, SOAH's rules control while SOAH has jurisdiction.

(g) [(f)] Pleadings, other documents, and service to SOAH shall be filed in accordance with SOAH's rules.

(h) [(g)] If a real estate sales agent is a Respondent, the Commission will notify the sales agent's sponsoring broker of the hearing. If an apprentice inspector or real estate inspector is a Respondent, the Commission will notify the sponsoring professional inspector of the hearing. Notice under this subsection need not be provided by certified or registered mail.

(i) [(h)] Any document served upon a party is prima facie evidence of receipt, if it is directed to the party's mailing address or email address. This presumption is rebuttable. Failure to claim properly addressed certified or registered mail will not support a finding of nondelivery.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703080

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


CHAPTER 534. GENERAL ADMINISTRATION

22 TAC §534.3

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §534.3, Employee Training and Education, in Chapter 534, General Administration.

The proposed amendments to §534.3 sets out the general rules required by Subchapter C, Chapter 656 of the Texas Government Code but allows the detail regarding employee eligibility for training, and employee obligations after completion of training and education, etc. to be set by the Executive Director through employee policies. This will allow more flexibility for the Executive Director to respond to the needs of the workforce and to remain competitive in this area with other employers. It will also provide one central place for employees to find detailed information about the Commission's policies on employee education and training.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater clarity for employees and flexibility for employee education policy changes.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§534.3.Employee Training and Education.

(a) The Commission may [use state funds to] provide training and education for its employees in accordance with Subchapter C, Chapter 656, Texas Government Code [the State Employees Training Act (Texas Government Code, §§656.041 - 656.049)].

(b) The Commission may spend public funds as appropriate to pay the costs associated with employee training, including, but not limited to, salary, tuition and other fees, travel, and living expenses, training stipend, expense of training materials and other necessary expenses of an instructor, student or other participant in a training or education program [training or education shall be related to the duties or prospective duties of the employee].

(c) The executive director shall adopt policies related to training for Commission employees, including eligibility and obligations assumed upon completion. [Commission's training and education program benefits both the Commission and the employees participating by:]

[(1) preparing for technological and legal developments;]

[(2) increasing work capabilities;]

[(3) increasing the number of qualified employees in areas for which the Commission has difficulty in recruiting and retaining employees; and]

[(4) increasing the competence of Commission employees].

(d) Before an employee may receive reimbursement of tuition expenses for successful completion of a training or education program offered by an accredited institution of higher education, the executive director must pre-approve the program and authorize the tuition reimbursement payment [A Commission employee may be required to attend, as part of the employee's duties, a training or education program related to the employee's duties or prospective duties].

[(e) Approval to participate in a training or education program is not automatic and is subject to the availability of funds within the Commission's budget.]

[(f) The employee training and education program for the Commission shall include:]

[(1) agency-sponsored training provided in-house or by contract;]

[(2) seminars and conferences;]

[(3) technical or professional certifications and licenses; and]

[(4) tuition reimbursement for degree and non-degree program courses.]

[(g) The Administrator or Administrator's designee shall develop policies for administering each of the components of the employee training and education program. These policies shall include:]

[(1) eligibility requirements for participation;]

[(2) designation of appropriate level of approval for participation; and]

[(3) obligations of program participants.]

(e) [(h)] Approval to participate in any portion of the Commission's training and education program does not [shall not in any way] affect an employee's at-will status.

(f) [(i)] Participation in the training and education program does not [shall not in any way] constitute a guarantee or indication of continued employment, nor does [shall] it constitute a guarantee or indication of future employment in a current or prospective position.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703081

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


CHAPTER 535. GENERAL PROVISIONS

SUBCHAPTER B. GENERAL PROVISIONS RELATING TO THE REQUIREMENTS OF LICENSURE

22 TAC §535.17

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.17, Broker Price Opinion or Comparative Market Analysis, in Chapter 535, General Provisions.

The proposed amendments to §535.17 include estimated worth or sales price in the types of price statements that require a broker to provide a written statement to consumers. The amendments also revise and shorten the required written statement. "Salesperson" was also updated to the statutory term "sales agent" wherever it appeared.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be a better understanding by consumers of what a price statement given by a broker represents and what it is not.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.17.Broker Price Opinion, [or] Comparative Market Analysis, or Sales Price Estimate.

(a) A real estate license holder may not perform an appraisal of, or provide an opinion of value for, real property unless the license holder is licensed or certified under Texas Occupations Code, Chapter 1103.

(b) If a real estate license holder provides a broker price opinion, [or] comparative market analysis, or estimated worth or sale price under the Act, the license holder shall also provide the person for whom the opinion, [or] analysis, or estimate is prepared with a written statement containing the following language: "This represents an estimated sale price for this property. It is not the same as the opinion of value in an appraisal used by a lender to approve a mortgage loan." ["THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS AND SHOULD NOT BE CONSIDERED AN OR OPINION OF VALUE. In making any decision that relies upon my work, you should know that I have not followed the guidelines for development of an appraisal or analysis contained in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation."]

(c) The statement required by subsection (b) of this section must be made part of any written opinion, [or] analysis, or estimate of worth or sale price [report] and must be reproduced verbatim in at least 12-point font.

(d) A sales agent [salesperson] may prepare, sign, and present a broker price opinion, [or ] comparative market analysis, or estimate of worth or sale price for the sales agent's [salesperson's] sponsoring broker, but the sales agent [salesperson] must submit the broker price opinion, [or] comparative market analysis, or estimate of worth or sale price in the broker's name and the broker is responsible for it.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703083

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER F. REQUIREMENTS FOR EDUCATION PROVIDERS, COURSES AND INSTRUCTORS FOR QUALIFYING EDUCATION

22 TAC §535.65

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.65, Responsibilities and Operations of Providers of Qualifying Courses, in Chapter 535, General Provisions.

The proposed amendments to §535.65 implement changes made to Chapter 53 of the Texas Occupations Code in HB 1508, adopted by the 85th Legislature effective September 1, 2017. These changes require education providers to notify potential students before they enroll in an occupational licensing education program that a criminal history may make them ineligible for the license they seek and that they have a right to request a criminal history evaluation from the licensing authority. The statutory changes also provide authority for licensing agencies to order reimbursements be paid to the student if the provider fails to give the required notices.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the section. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the section. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the section as proposed is in effect, the public benefit anticipated as a result of enforcing the section will be greater clarity about the process for education providers and greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.65.Responsibilities and Operations of Providers of Qualifying Courses.

(a) Responsibility of Providers.

(1) A provider is responsible for:

(A) the administration of each course, including, but not limited to, compliance with any prescribed period of time for any required course topics required by the Act, Chapter 1102, and Commission rules;

(B) maintaining student attendance records and pre-enrollment agreements;

(C) verifying instructor qualification, performance and attendance;

(D) proper examination administration;

(E) validation of student identity acceptable to the Commission;

(F) maintaining student course completion records;

(G) ensuring all advertising complies with subsection (c);

(H) ensuring that instructors or other persons do not recruit or solicit prospective sales agents, brokers or inspectors during course presentation; and

(I) ensuring staff is reasonably available for public inquiry and assistance.

(2) A provider may not promote the sale of goods or services during the presentation of a course.

(3) A provider may remove a student and not award credit if a student does not participate in class, or disrupts the orderly conduct of a class, after being warned by the provider or the instructor.

(4) If a provider approved by the Commission does not maintain a fixed office in Texas for the duration of the provider's approval to offer courses, the provider shall designate a resident of this state as attorney-in-fact to accept service of process and act as custodian of any records in Texas that the provider is required to maintain by this section. A power-of-attorney designating the resident must be filed with the Commission in a form acceptable to the Commission.

(b) - (c) (No change.)

(d) Pre-enrollment agreements for approved providers.

(1) Prior to a student enrolling in a course, a provider approved by the Commission shall provide the student with a pre-enrollment agreement that includes all of the following information:

(A) the tuition for the course;

(B) an itemized list of any fees charged by the provider for supplies, materials, or books needed in course work;

(C) the provider's policy regarding the refund of tuition and other fees, including a statement addressing refund policy when a student is dismissed or withdraws voluntarily;

(D) the attendance requirements;

(E) the acceptable makeup procedures, including any applicable time limits and any fees that may be charged for makeup sessions; [and]

(F) the procedure and fees for taking any permitted makeup final examination or any permitted re-examination, including any applicable time limits; and[.]

(G) the notices regarding potential ineligibility for a license based on criminal history required by Section 53.152, Texas Occupations Code.

(2) A pre-enrollment agreement must be signed by a representative of the provider and the student.

(e) Refund of fees by approved provider.

(1) A provider shall establish written policies governing refunds and contingency plans in the event of course cancellation.

(2) If a provider approved by the Commission cancels a course, the provider shall:

(A) fully refund all fees collected from students within a reasonable time; or

(B) at the student's option, credit the student for another course.

(3) The provider shall inform the Commission when a student requests a refund because of a withdrawal due to the student's dissatisfaction with the quality of the course.

(4) If a provider fails to give the notice required by subsection (d)(1)(G), and an individual's application for a license is denied by the Commission because the individual has been convicted of a criminal offense, the provider shall reimburse the individual the amounts required by Section 53.153, Texas Occupations Code.

(f) - (m) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703085

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER G. REQUIREMENTS FOR CONTINUING EDUCATION PROVIDERS, COURSES AND INSTRUCTORS

22 TAC §535.71

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.71, Approval of CE Providers, in Chapter 535, General Provisions.

Based on the recommendation of the Texas Real Estate Inspector Committee (TREIC), the proposed amendments would eliminate exemptions from TREC requirements for certain education providers of real estate inspection continuing education courses. These exemptions caused confusion in the marketplace, were inconsistent with exemptions allowed by TREC for education providers of real estate courses, and were only utilized by license holders to obtain continuing education course credits in a few limited circumstances. For these reasons, TREIC recommends the repeal of these exemptions.

Kristen Worman, Deputy General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the section. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the section. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Worman also has determined that for each year of the first five years the section as proposed is in effect the public benefits anticipated as a result of enforcing the section will be improved clarity for license holders and education providers and consistent requirements that are easier to understand and follow.

Comments on the proposal may be submitted to Kristen Worman, Deputy General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102; and Texas Occupations Code §1102.058, which authorizes the Commission to adopt rules relating to continuing education requirements for inspectors.

The statutes affected by this proposal are Chapters 1101 and 1102, Texas Occupations Code. No other statute, code or article is affected by the proposed amendments.

§535.71.Approval of CE Providers.

(a) Application for approval.

(1) A [Unless otherwise exempt under this subsection (b), a] person desiring to be approved by the Commission to offer real estate or real estate inspection continuing education courses shall:

(A) file an application on the appropriate form approved by the Commission, with all required documentation;

(B) submit the required fee under §535.101 or §535.210 of this title; and

(C) maintain a fixed office in the state of Texas or designate a resident of this state as attorney-in-fact to accept service of process and act as custodian of any records in Texas which the continuing education provider is required to maintain by this subchapter.

(2) The Commission may:

(A) request additional information be provided to the Commission relating to an application; and

(B) terminate an application without further notice if the applicant fails to provide the additional information not later than the 60th day after the Commission sends the request.

(3) A CE provider is permitted to offer continuing education courses in both real estate and real estate inspector that have been approved by the Commission.

[(b) Exempt Providers. The following entities may offer real estate inspector continuing education courses without being approved by the Commission:]

[(1) a unit of federal, state or local government; or]

[(2) a nationally recognized building, electrical, plumbing, mechanical or fire code organization.]

(b) [(c)] Standards for approval. To be approved by the Commission to offer real estate or real estate inspector continuing education courses, the applicant must satisfy the Commission as to the applicant's ability to administer courses with competency, honesty trustworthiness and integrity. If the applicant proposes to employ another person to manage the operation of the applicant, that person must meet this standard as if that person were the applicant.

(c) [(d)] Approval notice. An applicant shall not act as or represent itself to be an approved CE provider until the applicant has received written notice of the approval from the Commission.

(d) [(e)] Period of initial approval. The initial approval of a CE provider is valid for two years.

(e) [(f)] Disapproval.

(1) If the Commission determines that an applicant does not meet the standards for approval, the Commission will provide written notice of disapproval to the applicant.

(2) The disapproval notice, applicant's request for a hearing on the disapproval, and any hearing are governed by the Administrative Procedure Act, Texas Government Code, Chapter 2001, and Chapter 533 of this title (relating to Practice and Procedure). Venue for any hearing conducted under this section shall be in Travis County.

(f) [(g)] Subsequent approval.

(1) Not earlier than 90 days before the expiration of its current approval, an approved provider may apply for subsequent approval for another two year period.

(2) Approval or disapproval of a subsequent application shall be subject to the standards for initial applications for approval set out in this section.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703116

Kristen Worman

Deputy General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3093


SUBCHAPTER N. SUSPENSION AND REVOCATION OF LICENSURE

22 TAC §535.141

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.141, Initiation of Investigation, in Chapter 535, General Provisions.

The proposed amendments to §535.141 removes subsection (a) which references the Mortgage Fraud Task Force that was abolished by SB 526 in the 85th Legislative Session. The remaining section was renumbered and "salesperson" was updated to the statutory term "sales agent" wherever it appeared.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater clarity in the rule.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.141.Initiation of Investigation.

[(a) Except as authorized under Texas Government Code §402.031(b), the Commission may not conduct an undercover or covert investigation of a person under the Act and Chapter 1102. Notwithstanding §1101.204(d), the Commission shall not disclose to any person who is the subject of an investigation involving fraudulent activity, that the activity has been reported to the proper authority pursuant to Texas Government Code §402.031.]

(a) [(b)] A complaint which names a licensed real estate sales agent [salesperson] as the subject of the complaint but does not specifically name the sales agent's [salesperson's] sponsoring broker, is a complaint against the broker sponsoring the sales agent [salesperson ] at the time of any alleged violation for the limited purposes of determining the broker's involvement in any alleged violation and whether the broker fulfilled his or her professional responsibilities provided the complaint concerns the conduct of the sales agent [salesperson] as an agent for the broker.

(b) [(c)] The designated broker is responsible for all real estate brokerage activities performed by, on behalf of, or through a business entity. A complaint which names a business entity licensed as a broker as the subject of the complaint but which does not specifically name the designated broker is a complaint against the designated broker at the time of any alleged violation for the limited purposes of determining the designated broker's involvement in any alleged violation and whether the designated broker fulfilled his or her professional responsibilities. A complaint which names a sales agent [salesperson] sponsored by a licensed business entity but which does not specifically name the designated broker of the business entity is a complaint against the designated broker at the time of any alleged violation by the sales agent [salesperson] for the limited purposes of determining the designated broker's involvement in any alleged violation and whether the designated broker fulfilled his or her professional responsibilities provided the complaint concerns the conduct of the sales agent [salesperson] as an agent of the business entity.

(c) [(d)] Once a written and signed complaint has been filed with the Commission, the Commission has jurisdiction to consider, investigate and take action based on the complaint. Complaints may be withdrawn only with the consent of the Commission.

(d) [(e)] If information obtained during the course of an investigation of a complaint reveals reasonable cause to believe the respondents to the complaint may have committed other violations of the Act or rules, no additional authorization shall be required to investigate and take action based upon the information.

(e) [(f)] If the Commission suspends or revokes a license or probates an order of suspension or revocation against a license holder, the Commission may monitor compliance with its order and initiate action based on the authority of the original complaint or original authorization by the members of the Commission.

(f) [(g)] A person whose license has been suspended may not during the period of any suspension perform, attempt to perform, or advertise to perform any act for which a license is required by the Act or Rules

(g) [(h)] A person whose license is subject to an order suspending the license must provide notice in writing not later than the third day before the date of the suspension as follows:

(1) if the person is a sales agent [salesperson ], notify his or her sponsoring broker in writing that his or her license will be suspended;

(2) if the person is a broker, notify any sales agent [salespersons] he or she sponsors, or any business entity for which the person is designated broker that:

(A) his or her broker license will be suspended; and

(B) once the suspension is effective, any sales agent [salesperson] he or she sponsors, or who is sponsored by the business entity, will no longer be authorized to engage in real estate brokerage unless:

(i) the sales agent [salesperson] is sponsored by another broker and files a change of sponsorship with the Commission; or

(ii) the business entity designates a new broker and files a change of designated broker with the Commission;

(3) If the person is an apprentice inspector or real estate inspector, notify his or her sponsoring professional inspector that his or her license will be suspended;

(4) if the person is a professional inspector notify any apprentice or real estate inspectors he or she sponsors that:

(A) his or her professional inspector license will be suspended; and

(B) once the suspension is effective any apprentice or real estate inspectors he or she sponsors will no longer be authorized to inspect any real property unless the apprentice or real estate inspectors associate with another professional inspector and file a change of sponsorship with the Commission.

(5) if the person has a contractual obligation to perform services for which a license is required by law or Commission rule, notify all other parties to the contract that the services cannot be performed during the suspension;

(6) if the person is a sales agent [salesperson ] and is directly involved in any real estate transaction in which the sales agent [salesperson] acts as an agent, notify all other parties, including principals and other brokers, that the person cannot continue performing real estate brokerage services during the suspension; and

(7) if the person holds money in trust in any transaction in which the person is acting as a broker, remit such money in accordance with the instructions of the principals.

(h) [(i)] If, in conjunction with an application or disciplinary matter, an applicant or license holder agrees to automatic suspension or revocation of his or her license for failing to comply with an administrative term or requirement of an agreed order such as payment of a penalty or completion of coursework, the license may be automatically suspended or revoked with no further action by the Commission.

(i) [(j)] A broker may not assign to another broker a listing agreement, buyer's representation agreement or other personal service agreement to which the broker is a party and which obligates the broker to perform acts for which a license is required without first obtaining the written consent of the other parties to the contract.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703086

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §535.154

The Texas Real Estate Commission (TREC) proposes the repeal of 22 TAC §535.154, Advertising, in Chapter 535, General Provisions.

The repeal is necessary because a new rule is being proposed to provide greater clarity for advertising requirements and to conform the rule with statutory changes made by the 85th Legislature.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed repeal is in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the repeal. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the repeal. There is no anticipated significant economic cost to persons who are required to comply with the proposed repeal.

Ms. Lewis also has determined that for each year of the first five years the repeal as proposed is in effect, the public benefit anticipated as a result of enforcing the repeal will be greater consumer knowledge and protection and consistency with statutory requirements.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The repeal is proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statute affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed repeal.

§535.154.Advertising.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703088

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §535.154, §535.155

The Texas Real Estate Commission (TREC) proposes new 22 TAC §535.154, Registration and Use of Alternate, Team and Assumed Business Names Used in Advertisements and new 22 TAC §535.155, Advertisements, in Chapter 535, General Provisions.

The new rules are proposed to align the rules with statutory changes adopted in SB 2212 by the 85th Legislature effective September 1, 2017, and to implement changes to the rules recommended by the Commission's Executive Committee following over a year of study and input from stakeholders. The rule was split into two rules to separate out name and registration of name requirements from advertising requirements. Most of the new requirements involve changes to how team names are defined, registered and used. New statutory provisions and a consensus that team names presently cause most of the consumer confusion in advertisements drove these changes. Much of the new rules contain provisions that are similar or identical to the current rule but have been rewritten for clarity. Additionally, new definitions were added, the requirement for notifying the Commission of the use of an alternate name, assumed business name or team name was amended to require registration of the names with the Commission prior to their use, and the current safe harbor policy regarding the size of the broker's name in advertisement was put into the rule.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There will be varied anticipated economic cost to some license holders who are required to comply with the proposed amendments. Not all license holders will need to change their signage under the revised statute and rules; however, most teams will incur the cost of signage replacement. To ameliorate this expense, the Commission will extend the effective date of the rule upon adoption for six months to allow those license holders to spread out the cost of new signage over time.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be compliance with statutory changes, greater clarity in the rule, fewer misleading advertisements and greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The new sections are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.154.Registration and Use of Alternate, Team and Assumed Business Names Used in Advertisements.

(a) Definitions. For the purposes of this section:

(1) "Advertisement" has the meaning assigned by §535.155.

(2) "Alternate name" (commonly known as an alias) means a name used by an individual license holder other than the name shown on the license issued by the Commission, such as a middle name, maiden name, or nickname. It does not include a common derivative of a name, such as Kim for Kimberly or Bill for William, which is considered the same as the name shown on the license.

(3) "Associated broker" means a broker who associates with and gets paid through another broker under a relationship that is intended to be a continuous relationship, including but not limited to, an employment or ongoing independent contractor relationship.

(4) "Assumed business name" (commonly known as a DBA or trade name) means any name used in business by a broker, other than the name shown on the broker's license issued by the Commission, a team name, or an alternate name.

(5) "Team name" means a name used by a group of one or more license holders sponsored by or associated with the same broker.

(b) Alternate names.

(1) Before a license holder starts using an alternate name in an advertisement, the license holder must register the name with the Commission on a form approved by the Commission.

(2) The Commission may request supporting documentation evidencing the legal authority to use the alternate name if the last name submitted is different from the last name shown on the license issued by the Commission.

(3) A license holder must notify the Commission, and their sponsoring broker, not later than the 10th day after the date the license holder stops using an alternate name.

(c) Team names:

(1) A team name may not include any terms that could mislead the public to think that the team is offering brokerage services independent from its sponsoring broker.

(2) A team name must end with the word "team" or "group".

(3) Before an associated broker or a sales agent sponsored by a broker starts using a team name in an advertisement, the broker must register the name with the Commission on a form approved by the Commission.

(4) A broker must notify the Commission in writing not later than the 10th day after the date the associated broker or a sales agent sponsored by the broker stops using a team name.

(d) Assumed business names.

(1) Before a broker, associated broker or a sales agent sponsored by a broker starts using an assumed business name of the broker in an advertisement, the broker must:

(A) register the name with the Commission on a form approved by the Commission; and

(B) provide written evidence of legal authority to use the assumed business name in Texas, such as registration of the name with the Secretary of State or county clerk's office.

(2) A broker must notify the Commission in writing not later than the 10th day after the date the broker stops using an assumed business name.

§535.155.Advertisements.

(a) Each advertisement must include the following in a readily noticeable location in the advertisement:

(1) the name of the license holder placing the advertisement; and

(2) the broker's name in at least half the size of the largest contact information for any sales agent, associated broker, or team name contained in the advertisement.

(b) For the purposes of this section:

(1) "Advertisement" is any form of communication by or on behalf of a license holder designed to attract the public to use real estate brokerage services and includes, but is not limited to, all publications, brochures, radio or television broadcasts, all electronic media including email, text messages, social media, the Internet, business stationery, business cards, displays, signs and billboards. Advertisement does not include a communication from a license holder to the license holder's current client.

(2) Associated broker has the meaning assigned by §535.154.

(3) "Broker's name" means:

(A) the broker's name as shown on a license issued by the Commission;

(B) if an individual, an alternate name registered with the Commission; or

(C) any assumed business name that meets the requirements of §535.154.

(4) "Contact Information" means any information that can be used to contact a license holder featured in the advertisement, including a name, phone number, email address, website address, social media handle, scan code or other similar information.

(5) "Party" means a prospective buyer, seller, landlord, or tenant, or an authorized legal representative of a buyer, seller, landlord, or tenant, including a trustee, guardian, executor, administrator, receiver, or attorney-in-fact. The term does not include a license holder who represents a party.

(6) "Team name" has the meaning assigned by §535.154.

(c) For an advertisement on social media or by text, the information required by this section may be located on a separate page or on the account user profile page of the license holder, if the separate page or account user profile is:

(1) readily accessible by a direct link from the social media or text; and

(2) readily noticeable on the separate page or in the account user profile.

(d) For purposes of this section and §1101.652(b)(23) of the Act, an advertisement that misleads or is likely to deceive the public, tends to create a misleading impression, or implies that a sales agent is responsible for the operation of the broker's real estate brokerage business includes, but is not limited to, any advertisement:

(1) that is inaccurate in any material fact or representation;

(2) that does not comply with this section;

(3) that identifies a sales agent as a broker;

(4) that uses a title, such as owner, president, CEO, COO, or other similar title, email or website address that implies a license holder is responsible for the operations of a brokerage unless the license holder is the designated broker;

(5) that contains a team name with terms that imply that the team is offering brokerage services independent from its sponsoring broker, including, but not limited to, "realty", "brokerage", "company", and "associates";

(6) that contains the name of a sales agent that is not the name as shown on the sales agent's license issued by the Commission or an alternate name registered with the Commission;

(7) that contains the name of a sales agent whose name is, in whole or in part, the same as the broker's name and does not contain a disclosure that the sales agent is not responsible for the operation of the brokerage;

(8) that causes a member of the public to believe that a person not licensed to conduct real estate brokerage is engaged in real estate brokerage;

(9) that contains the name or likeness of an unlicensed person that does not clearly disclose that the person does not hold a license;

(10) that creates confusion regarding the permitted use of a property;

(11) about the value of a property, unless it is based on an appraisal that is disclosed and readily available upon request by a party or it is given in compliance with §535.17;

(12) that implies the person making the advertisement was involved in a transaction regarding a property when the person had no such role;

(13) about a property that is subject to an exclusive listing agreement without the permission of the listing broker and without disclosing the name of the listing broker unless the listing broker has expressly agreed in writing to waive disclosure;

(14) offering a listed property that is not discontinued within 10 days after the listing agreement is no longer in effect;

(15) about a property 10 days or more after the closing of a transaction unless the current status of the property is included in the advertisement;

(16) that offers to rebate a portion of a license holder's compensation to a party if the advertisement does not disclose that payment of the rebate is subject to the consent of the party the license holder represents in the transaction;

(17) that offers to rebate a portion of a license holder's commission contingent upon a party's use of a specified service provider, or subject to approval by a third party such as a lender, unless the advertisement also contains a disclosure that payment of the rebate is subject to restrictions;

(18) that offers or promotes the use of a real estate service provider other than the license holder and the license holder expects to receive compensation if a party uses those services, if the advertisement does not contain a disclosure that the license holder may receive compensation from the service provider;

(19) that ranks the license holder or another service provider unless the ranking is based on objective criteria disclosed in the advertisement; or

(20) that states or implies that the license holder teaches or offers Commission approved courses in conjunction with an approved school or other approved organization unless the license holder is approved by the Commission to teach or offer the courses.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703089

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER Q. ADMINISTRATIVE PENALTIES

22 TAC §535.191

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.191, Schedule of Administrative Penalties, in Chapter 535, General Provisions.

The proposed amendments to §535.191 inserts administrative penalties for failure to comply with Commission rules §531.18 and §531.20. These rules were adopted 18 months ago and, following a long education campaign, the Commission now needs to clarify and modify the sanctions in place for license holders who still do not properly provide these important statutorily required consumer notices. The amendments also add §535.155 to align with the new rule proposals to replace current §535.154 and add §535.65 related to responsibilities and operations of education providers.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the section. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the section. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the section as proposed is in effect, the public benefit anticipated as a result of enforcing the section will be greater compliance and consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.191.Schedule of Administrative Penalties.

(a) - (b) (No change.)

(c) An administrative penalty range of $100-$1,500 per violation per day may be assessed for violations of the following sections of the Act and Rules:

(1)§1101.552;

(2) §1101.652(a)(3);

(3) §1101.652(a)(7);

(4) §§1101.652(a-1)(3);

(5) §1101.652(b)(23);

(6) §1101.652(b)(29);

(7) 22 TAC §535.21(a);

(8) 22 TAC §535.53;

(9) 22 TAC §535.65;

(10) [(9)] 22 TAC §535.91(d);

(11) [(10)] 22 TAC §535.154; [and]

(12) 22 TAC §535.155; and

(13) [(11)] 22 TAC §535.300.

(d) An administrative penalty range of $500-$3,000 per violation per day may be assessed for violations of the following sections of the Act and Rules:

(1) §§1101.652(a)(4)-(5);

(2) §1101.652(a-1)(2);

(3) §1101.652(b)(1);

(4) §§1101.652(b)(7)-(8);

(5) §1101.652(b)(12);

(6) §1101.652(b)(14);

(7) §1101.652(b)(22);

(8) §1101.652(b)(28);

(9) §§1101.652(b)(30)-(31);

(10) §1101.654(a);

(11) 22 TAC §531.18;

(12) 22 TAC §531.20;

(13) [(11)] 22 TAC §535.2; and

(14) [(12)] 22 TAC §535.144.

(e) An administrative penalty range of $1,000-$5,000 per violation per day may be assessed for violations of the following sections of the Act and Rules:

(1) §1101.351;

(2) §1101.366(d);

(3) §1101.557(b);

(4) §1101.558 [§§1101.558(b)-(c)];

(5) §§1101.559(a) and (c);

(6) §1101.560;

(7) §1101.561(b);

(8) §1101.615;

(9) §1101.651;

(10) §§1101.652(a)(2) and (6);

(11) §1101.652(a-1)(1);

(12) §§1101.652(b)(2)-(6);

(13) §§1101.652(b)(9)-(11);

(14) §1101.652(b)(13);

(15) §§1101.652(b)(15)-(21);

(16) §§1101.652(b)(24)-(27);

(17) §§1101.652(b)(32)-(33);

(18) 22 TAC §535.141(g);

(19) 22 TAC §§535.145 - 535.148; and

(20) 22 TAC §535.156.

(f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703091

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER R. REAL ESTATE INSPECTORS

22 TAC §535.211

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.211, Professional Liability Insurance, or Any Other Insurance that Provides Coverage for Violations of Subchapter G of Chapter 1102, in Subchapter R, Real Estate Inspectors.

The proposed amendments to §535.211 clarify the minimum standards of financial liability that an inspector must maintain during the period an inspector is licensed. The Legislature has enacted §1102.1141, Texas Occupations Code, which requires an inspector to maintain a minimum of $100,000 financial responsibility in the form of an insurance policy, bond, or other acceptable security, to provide for professional liability coverage to protect the public against a violation of Subchapter G, Chapter 1102, Texas Occupations Code. TREC has long interpreted the language in §1102.1141 to require inspectors who choose to maintain financial responsibility through an insurance policy to obtain a policy with the minimum liability coverage required in the statute excluding any offsets or reductions in coverage for attorney's fees, defense costs, or other costs. The basis for this long-standing interpretation is found in subsection (a)(1)(B), which requires the insurance policy to "provide{} for professional liability coverage to protect the public against a violation of {law}."

TREC has received questions about whether certain clauses in an insurance policy, such as a defense within limits or wasting clause, which reduce the limits of liability insurance coverage available under the policy, comply with the statutory requirements in §1102.1141. Because these and other similar clauses reduce the amount of liability insurance coverage available to protect the public against a violation of Subchapter G, Chapter 1102, Texas Occupations Code, TREC proposes these amendments to clarify its interpretation that an insurance policy containing such clauses does not satisfy the statutory requirements to maintain financial responsibility in §1102.1141.

Kristen Worman, Deputy General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There will be an economic cost to persons who are required to comply with the proposed amendments due to an expected increase in license holder insurance premiums of approximately 10 to 20 percent.

Ms. Worman also has determined that for each year of the first five years the amendments as proposed are in effect the public benefits anticipated as a result of enforcing the sections will be improved clarity for license holders and protection for consumers.

Comments on the proposal may be submitted to Kristen Worman, Deputy General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102.

The statute affected by this proposal is Chapter 1102, Texas Occupations Code. No other statute, code or article is affected by the proposed amendments.

§535.211.Professional Liability Insurance, Bond or Any Other Security [Insurance] that Provides Coverage for Violations of Subchapter G of Chapter 1102.

(a) (No change.)

(b) An inspector must maintain financial responsibility with the minimum coverage limits required by §1102.1141. An inspector may maintain financial responsibility in excess of the minimum coverage limits required in §1102.1141. Any provision in an insurance policy, including a defense within limits provision, also known as a wasting clause or eroding limits provision, that reduces the minimum coverage limits below the limits required in §1102.1141 violates this section and Chapter 1102 [during the period the license is active].

(c) - (f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703117

Kristen Worman

Deputy General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3093


22 TAC §535.218

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.218, Continuing Education Required for Renewal in Subchapter R, Real Estate Inspectors.

Based on the recommendation of the Texas Real Estate Inspector Committee (TREIC), the proposed amendments would eliminate exemptions from TREC requirements for certain education providers of real estate inspection continuing education courses and conform this rule with amendments proposed to §535.71 of this Chapter. These exemptions caused confusion in the marketplace, were inconsistent with exemptions allowed by TREC for education providers of real estate courses, and were only utilized by license holders to obtain continuing education course credits in a few limited circumstances. For these reasons, TREIC recommends the repeal of these exemptions.

Kristen Worman, Deputy General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Worman also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be improved clarity for license holders and education providers that are easier to understand and follow.

Comments on the proposal may be submitted to Kristen Worman, Deputy General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102; and Texas Occupations Code §1102.058, which authorizes the Commission to adopt rules relating to continuing education requirements for inspectors.

The statute affected by this proposal is Chapter 1102, Texas Occupations Code. No other statute, code or article is affected by the proposed amendments.

§535.218.Continuing Education Required for Renewal.

(a) - (e) (No change.)

[(f) Continuing education credit for course offered by an exempt provider. An inspector may receive continuing education elective credit for a course not approved under §535.73 if the course is:]

[(1) offered by an exempt provider listed under §535.71(b); and]

[(2) the Commission determines the course:]

[(A) covers subject matter appropriate for an inspector continuing education course;]

[(B) and is current and accurate.]

(f) [(g)] Continuing education credit for instructors.

(1) Providers may request continuing education credit be given to instructors of real estate inspection courses subject to the following guidelines:

(A) instructors may receive credit for only those portions of the course which they teach; and

(B) instructors may receive full course credit by attending all of the remainder of the course.

(2) An Instructor of a ride-along inspection course is eligible to receive continuing education credit for a ride-along inspection course conducted by the instructor if the Commission is provided a certification of course completion within one week of completion of the course, on a form approved by the Commission.

(3) Instructors of ride-along inspection course sessions may only receive up to 8 hours of continuing education credit for teaching the course per license period.

(g) [(h)] Continuing education credit for attendance at a meeting of the Texas Real Estate Inspector Committee. A real estate inspector or professional inspector licensed in Texas may receive up to four hours of continuing education elective credit per license period for attendance in person at the February meeting of the Texas Real Estate Inspector Committee.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703118

Kristen Worman

Deputy General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3093


SUBCHAPTER S. RESIDENTIAL RENTAL LOCATORS

22 TAC §535.300

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §535.300, Advertising by Residential Rental Locators, in Chapter 535, General Provisions.

The amendments are adopted to align the rules with statutory changes in SB 2212 adopted by the 85th Legislature to be effective September 1, 2017. As required by the statutory changes, the amendments eliminate the current required reference to the Commission in all advertising. "Salesperson" was also updated to the statutory term "sales agent" wherever it appeared.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be compliance with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments.

§535.300.Advertising by Residential Rental Locators.

(a) This section is intended to establish standards relating to permissible forms of advertising by a person licensed as a real estate broker or sales agent [salesperson] and functioning as a residential rental locator ("locator"). For the purposes of this section, the term "residential rental locator" has the meaning provided by §1101.002(6) of the Act. For the purposes of this section, the term "advertisement" has the same meaning provided by §535.155 [§535.154(a)] of this chapter.

(b) (No change.)

(c) Advertisements in a printed publication comply with subsection (b) of this section if the publication in which an advertisement appears contains this notice at the beginning of the section in which the advertisement appears: Notice: Residential rental locators [are required to be licensed by the Texas Real Estate Commission (P.O. Box 12188, Austin, Texas 78711-2188, (512) 936-3000 or (512) 936-3005). Locators] may advertise apartment units in general terms, and all units may not have the same features. The amount of rent quoted in an advertisement may be the starting rent for a basic unit or for a unit which does not have all advertised features.

(d) (No change.)

(e) Advertising by locators must comply with §1101.652(b)(23) of the Act and §535.154 and §535.155 of this chapter.

(f) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703093

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


CHAPTER 537. PROFESSIONAL AGREEMENTS AND STANDARD CONTRACTS

22 TAC §537.11

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §537.11, Use of Standard Contract Forms in Chapter 537, Professional Agreements and Standard Contracts.

The proposed amendments to §537.11 clarifies when a license holder can hire an attorney to prepare a form for use by the license holder' s clients and the specific disclosures such a form must contain. It further clarifies that a license holder cannot have an attorney draft a form that changes any rights remedies or responsibilities of a party contained in a mandatory use standard contract form or addendum. Those types of changes can only be made by a party to the transaction or an attorney that represents a party to the transaction. The remaining amendments to the rule consolidate and update how a license holder can use the standard contract forms approve by the Commission and what is considered the unauthorized practice of law.

Texas real estate license holders are generally required to use forms promulgated by TREC when negotiating contacts for the sale of real property. These forms are drafted and recommended for adoption by the Texas Real Estate Broker-Lawyer Committee, an advisory body consisting of six attorneys appointed by the President of the State Bar of Texas, six brokers appointed by TREC, and one public member appointed by the governor.

The Broker-Lawyer Committee supports proposal of the recommended amendments.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater clarity in the rule and greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by these amendments are Texas Occupations Code, Chapter 1101 and 1102. No other statute, code or article is affected by the amendments.

§537.11.Use of Standard Contract Forms.

(a) When negotiating contracts binding the sale, exchange, option, lease or rental of any interest in real property, a real estate license holder [licensee] shall use only those contract forms approved for mandatory use [promulgated] by the Texas Real Estate Commission (the Commission) for that type [kind] of transaction with the following exceptions:

(1) transactions in which the license holder is functioning solely as a principal, not as an agent;

(2) transactions in which an agency of the United States government requires a different form to be used;

(3) transactions for which a contract form, or addendum to a contract form, has been prepared by a principal to the transaction or prepared by a lawyer representing [an attorney and required by] a principal to the transaction;or

(4) transactions for which no mandatory [standard ] contract form or addendum has been approved [promulgated] by the Commission, and the license holder usesa form:

(A) prepared by a lawyer [an attorney at law] licensed by this state, or a trade association in consultation with one or more lawyers licensed by this state, [and approved by the attorney] for the particular type [kind] of transactions involved that contains: [or]

(i) the name of the lawyer or trade association who prepared the form;

(ii) the name of the broker or trade association for whom the form was prepared;

(iii) the type of transaction for which the lawyer has approved the use of the form;

(iv) any restrictions on the use of the form;

(v) a statement that the form has not been approved by the Commission; and

(vi) a statement that Commission rules prohibit real estate license holders from giving legal advice; or

(B) prepared by the Texas Real Estate Broker-Lawyer Committee (the committee) and approved by the Commission [made available] for voluntary [trial] use by license holders [with the consent of the Commission].

(b) Subsection (a)(4)(A) does not permit a license holder to use a form that changes the rights, remedies or responsibilities of a principal contained in a mandatory contract form or addendum.

(c) [(b)] A license holder may not:

(1) practice law;

(2) directly or indirectly offer, give or attempt to give legal advice[, directly or indirectly];

(3) give advice or opinions as to the legal effect of any contracts or other such instruments which may affect the title to real estate;

(4) give opinions concerning the status or validity of title to real estate; [or]

(5) draft language defining or affecting the legal rights, remedies, or responsibilities of the principals of a real estate transaction, including escalation, appraisal or other contingency clauses;

(6) add factual statements or business details to a form approved by the Commission if the Commission has approved a form or addendum for mandatory use for that purpose;

(7) [(5)] attempt to prevent or in any manner whatsoever discourage any principal to a real estate transaction from employing a lawyer; or[.]

(8) employ or pay for the services of a lawyer, directly or indirectly, to represent a principal to a real estate transaction in which the license holder is acting as an agent.

(d) [(c)] This section does not limit a license holder's fiduciary obligation to disclose to the license holder's principals all pertinent facts that [which] are within the knowledge of the license holder, including such facts which might affect the status of or title to real estate.

[(d) A license holder may not undertake to draw or prepare documents fixing and defining the legal rights of the principals to a real estate transaction.]

[(e) In negotiating real estate transactions, a license holder may prepare forms using only forms that have been approved and promulgated by the Commission or such forms as are otherwise permitted by these rules.]

(e) [(f)] It is not the practice of law for a license holder to fill in the blanks in a contract form authorized for use by this section. A [When filling in a form authorized for use by this section, the license holder may only fill in the blanks provided and may not add to or strike matter from such form, except that a] license holder shall only add factual statements and business details or [desired by the principals and] shall strike text [only such matter] as directed in writing [is desired] by the principals [and as is necessary to conform the instrument to the intent of the parties].

[(g) A license holder may not add to a promulgated contract form factual statements or business details for which a contract addendum, lease or other form has been promulgated by the commission for mandatory use.]

(f) [(h)] This section does not prevent the license holder from explaining to the principals the meaning of the alternative choices, factual statements and business details contained in an instrument so long as the license holder does not offer or give legal advice.

[(i) It is not the practice of law as defined in this Act for a real estate license holder to complete a contract form which is either promulgated by the Commission or prepared by the committee and made available for trial use by license holder with the consent of the Commission.]

[(j) Contract forms prepared by the committee for trial use may be used on a voluntary basis after being approved by the Commission.]

[(k) A contract form prepared by the committee and approved by the Commission to replace a previously promulgated form may be used by license holders on a voluntary basis before the effective date of rules requiring use of the replacement form.]

(g) [(l)] When a transaction involves unusual matters that should be reviewed by a lawyer [legal counsel] before an instrument is executed, or if the instrument must be acknowledged and filed of record, the license holder shall advise the principals that each should consult a lawyer of the principal's choice before executing the instrument.

(h) [(m)] A [license holder may not employ, directly or indirectly, a lawyer nor pay for the services of a lawyer to represent any principal to a real estate transaction in which the license holder is acting as an agent. The] license holder may employ and pay for the services of a lawyer to represent only the license holder in a real estate transaction[, including preparation of the contract, agreement, or other legal instruments to be executed by the principals to the transactions].

(i) [(n)] A license holder shall advise the principals that the instrument they are about to execute is binding on them.

(j) [(o)] Forms approved [or promulgated] by the Commission may be reproduced only from the following sources:

(1) [numbered copies obtained from the Commission, whether in a printed format or] electronically reproduced from the files available on the Commission's website;

(2) printed copies made from copies obtained from the Commission [commission];

(3) legible photocopies made from such copies; or

(4) computer-driven printers following these guidelines:

(A) The computer file or program containing the form text must not allow the end user direct access to the text of the form and may only permit the user to insert language in blanks in the forms. Blanks may be scalable to accommodate the inserted language. The Commission may approve the use of a computer file or program that permits a principal of a license holder to strike through language of the form text. The program must be:

(i) limited to use only by a principal of a transaction; and

(ii) in a format and authenticated in manner acceptable to the Commission.

(B) Typefaces or fonts must appear to be identical to those used by the Commission in printed copies of the particular form.

(C) The text and order of the text must be identical to that used by the Commission in printed copies of the particular form.

(D) The name and address of the person or firm responsible for developing the software program must be legibly printed below the border at the bottom of each page in no less than six point type and in no larger than 10 point type.

(k) [(p)] Forms approved or promulgated by the Commission must be reproduced on the same size of paper used by the Commission [commission] with the following changes or additions only:

(1) The business name or logo of a broker, organization or printer may appear at the top of a form outside the border.

(2) The broker's name may be inserted in any blank provided for that purpose.

(l) [(q)] Standard Contract Forms adopted by the Commission are published by and available from the Commission at P.O. Box 12188, Austin, Texas 78711-2188 or www.trec.texas.gov.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703094

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §§537.20, 537.28, 573.30 - 537.32, 537.37, 537.55, 537.56

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §537.20, Standard Contract Form TREC No. 9-12; §537.28, Standard Contract Form TREC No. 20-13; §537.30, Standard Contract Form TREC No. 23-14; §537.31, Standard Contract Form TREC No. 24-14; §537.32, Standard Contract Form TREC No. 25-11; §537.37, Standard Contract Form TREC No. 30-12; new §537.55, Standard Contract Form TREC No. 48-0 and new §537.56, Standard Contract Form TREC No. 49-0, in Chapter 537, Professional Agreements and Standard Contracts.

Texas real estate license holders are generally required to use forms promulgated by TREC when negotiating contacts for the sale of real property. These forms are drafted and recommended for adoption by the Texas Real Estate Broker-Lawyer Committee, an advisory body consisting of six attorneys appointed by the President of the State Bar of Texas, six brokers appointed by TREC, and one public member appointed by the governor.

The Broker Lawyer Committee recommended revisions to the contract forms adopted by reference under the proposed amendments to Chapter 537 to address issues that have arisen since the last contract revisions.

The changes listed below apply to all contract forms unless specified otherwise. Paragraph numbers referenced are from the One to Four Family Residential Contract (Resale).

Paragraph 5 is amended to require Earnest Money to be delivered within 3 days of the Effective Date. Seller may terminate the contract if buyer fails to timely deliver the Earnest Money and time is made of the essence for this paragraph.

"Effective Date" is made a defined term throughout the contracts but is still tied to the final date of acceptance provided on the signature page.

Paragraph 6 D is amended to define the time by which seller is to cure objections as the "Cure Period", provide a specific time frame by which the buyer must notify the seller that the buyer will terminate or waive the objections if the objections are not cured within the Cured Period, and address additional time periods for the buyer to object and the seller to cure if a revised commitment, revised survey, or updated exception documents are provided.

Paragraph 20 is amended to clarify what is meant by "applicable law" and an "affidavit" when seller is a "foreign person."

The space for fax numbers were removed from the Broker Information page and a space for phone numbers for the brokers were added.

Separate receipt boxes were added to the forms for Earnest Money, the Contract and Additional Earnest Money.

Paragraph 2B(2) and 2C (Condominium Contract Only) is amended to clarify that the seller bears the expense to deliver the condominium documents and the resale certificate to buyer.

Paragraph 2F. Reservations (Farm and Ranch Contract Only) is amended to strike the parenthetical stating that reservations may be included in special provisions (suggesting that reservations are to be addressed only in a properly drafted addendum).

A new addendum is proposed to address who pays for and is responsible for damages from a hydrostatic test, if the parties agree to have one performed.

A new addendum is proposed to address the situation where the parties create a contingency to the contract based on the appraisal performed by the lender and termination rights or waiver associated with that contingency.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated significant economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be greater clarity in the standard contract forms and greater consistency and consumer protection for the newly proposed addenda.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statutes affected by these amendments are Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the amendments.

§537.20.Standard Contract Form TREC No. 9-13 [9-12].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 9-13 [9-12] approved by the Commission in 2017 [2015] for use in the sale of unimproved property where intended use is for one to four family residences.

§537.28.Standard Contract Form TREC No. 20-14 [20-13].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 20-14 [20-13] approved by the Commission in 2017 [2015] for use in the resale of residential real estate.

§537.30.Standard Contract Form TREC No. 23-15 [23-14].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 23-15 [23-14] approved by the Commission in 2017 [2015] for use in the sale of a new home where construction is incomplete.

§537.31.Standard Contract Form TREC No. 24-15 [24-14].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 24-15 [24-14] approved by the Commission in 2017 [2015] for use in the sale of a new home where construction is completed.

§537.32.Standard Contract Form TREC No. 25-12 [25-11].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 25-12 [25-11] approved by the Commission in 2017 [2015] for use in the sale of a farm or ranch.

§537.37.Standard Contract Form TREC No. 30-13 [30-12].

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 30-13 [30-12] approved by the Commission in 2017 [2015] for use in the resale of a residential condominium unit.

§537.55.Standard Contract Form TREC No. 48-0.

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 48-0 approved by the Commission in 2017 for use as an addendum to be added to promulgated forms if the parties agree to hydrostatic testing.

§537.56.Standard Contract Form TREC No. 49-0.

The Texas Real Estate Commission (Commission) adopts by reference standard contract form TREC No. 49-0 approved by the Commission in 2017 for use as an addendum to be added to promulgated forms concerning the right to terminate due to lender's appraisal.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703095

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


CHAPTER 539. RULES RELATING TO THE RESIDENTIAL SERVICE COMPANY ACT

SUBCHAPTER D. DEFINITIONS

22 TAC §539.31

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.31, Definitions, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to improve comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and alignment of the rule with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.31.Definitions.

(a) "Act" has the meaning assigned by [Act ]--Chapter 1303, Texas Occupation Code.

(b) "Commission" means--the [Commission--The ] Texas Real Estate Commission.

(c) "Residential Service Contract"--has the meaning assigned by [Residential Service Contract--A contract or agreement whereby a person, for a fee, undertakes to indemnify against or reimburse the costs of maintenance, repair, or replacement of the structural components, appliances, or electrical, plumbing, heating, cooling, or air-conditioning systems of residential property is not a "residential service contract" within the meaning of the Residential Service Company Act, Texas Occupations Code, Chapter 1303,] §1303.002(5) of the Act.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703099

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER E. DISCLOSURES

22 TAC §539.41

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.41, Disclosures, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018 and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.41.Disclosures.

A residential service company that pays persons not employed by the company for the sale, advertising, inspection, or processing of a residential service contract under [Texas Occupations Code] §1303.304 of the Act may not offer to sell a residential service contract unless the contract contains the following statement in at least 10-point bold type: NOTICE: THIS COMPANY PAYS PERSONS NOT EMPLOYED BY THE COMPANY FOR THE SALE, ADVERTISING, INSPECTION, OR PROCESSING OF A RESIDENTIAL SERVICE CONTRACT UNDER TEXAS OCCUPATIONS CODE §1303.304.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703100

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER F. AUTHORIZED PERSONNEL

22 TAC §539.51

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.51, "Employed By" Defined, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments are proposed to update the term "salesperson" to the statutory "sales agent".

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and consistency in the rules.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.51."Employed By" Defined.

For the purposes of §1303.101(b) of the Act, a person is "employed by a residential service company" if the person is other than a licensed real estate sales agent [salesperson], real estate broker, mobile home dealer, or insurance agent and is authorized by a licensed residential service company to sell, offer to sell, arrange or solicit the sale of, or receive applications for residential service contracts subject to the following conditions.

(1) The residential service company must have the right to direct and control the employee's performance.

(2) The residential service company must accept responsibility for representations made by the employee within the scope of the employee's employment.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703102

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3902


SUBCHAPTER G. APPLICATIONS AND MAINTENANCE OF LICENSE

22 TAC §539.61, §539.62

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.61, Application for Residential Service Company License and §539.62, Application to Approve Evidence of Coverage/Schedule of Charges, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to increase comprehension. The reference to the fees is for clarity of the process. The fees are not new and have not changed.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and alignment of the rules with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.61.Application for Residential Service Company License.

(a) A residential service company that intends to be licensed by the Commission must:

(1) file an application on a form prescribed by the [The] Commission for that purpose; and [adopts by reference Application Form RSC 1-3 approved by the commission. This document is published by and available from the Commission at P.O. Box 12188, Austin, Texas 78711-2188, or www.trec.texas.gov.]

(2) submit the required fee under §539.231.

(b) (No change.)

§539.62.Application to Approve [Evidence of Coverage/] Schedule of Charges.

(a) A residential service company must file an application to approve a schedule of charges on a form prescribed by the Commission for that purpose and submit the required fee under §539.231.

[(a) The Commission adopts by reference Application to Approve Evidence of Coverage/Schedule of Charges, Form RSC 3-2 approved by the Commission. This document is published by and available from the Commission at P.O. Box 12188, Austin, Texas 78711-2188, or www.trec.texas.gov.]

[(b) Each approved evidence of coverage shall be designated by a unique form number and include the Commission's approval date.]

(b) [(c)] A discount or any other change in any amount to be charged a consumer by a residential service company for coverage under a residential service contract is a change to a schedule of charges previously approved by the Commission. A residential service company must obtain the Commission's prior approval of a revised schedule of charges before offering the discount or other price reduction.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703103

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §539.63

The Texas Real Estate Commission (TREC) proposes the repeal of 22 TAC §539.63, Termination of Application, in Chapter 539, Rules Relating to the Residential Service Company Act.

The repeal is proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018. A new rule is being proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018 and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed repeal is in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the repeal. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the repeal. There is no anticipated significant economic cost to persons who are required to comply with the proposed repeal.

Ms. Lewis also has determined that for each year of the first five years the repeal as proposed is in effect, the public benefit anticipated as a result of enforcing the repeal will be greater clarity and alignment with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The repeal is proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed repeal.

§539.63.Termination of Application.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703104

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §539.63

The Texas Real Estate Commission (TREC) proposes new §539.63, Application to Approve Contract, in Chapter 539, Rules Relating to the Residential Service Company Act.

The new rules are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to increase comprehension. The reference to the fees is for clarity of the process. The fees are not new and have not changed.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed new rules are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed new rules.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and alignment of the rules with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The new rules are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed new rules.

§539.63.Application to Approve Contract.

(a) A residential service company must file an application to approve a contract on a form prescribed by the Commission for that purpose and submit the required fee under §539.231.

(b) Each approved contract is designated by a unique form number and includes the Commission's approval date.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703105

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


22 TAC §539.64, §539.65

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.64, Mailing Address and Other Contact Information, and §539.65, Change in Company Ownership or Officers, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments to §539.64 and §539.65 are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018 and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and requirements that are aligned with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.64.Mailing Address and Other Contact Information.

Each residential service company shall furnish a mailing address, telephone number and email address to the Commission and shall report all subsequent changes not later than the 10th day after the date of a change of any of the listed contact information on a [the] form prescribed by the Commission for that purpose [Notice of Modification, RSC 8-0]. If a [the] residential service company fails to update its [the] mailing address, the last known mailing address provided to the Commission is the address of the residential service company. Failure to provide the information in a timely manner violates §1303.352(a)(7) of the Act.

§539.65.Change in Company Ownership or Officers.

A residential service company shall report changes in its ownership or officers to the Commission on a [the] form prescribed by the Commission for that purpose [Notice of Modification, RSC 8-0]. Failure to provide the information in a timely manner violates §1303.352(a)(7) of the Act.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703106

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER H. MISCELLANEOUS FORMS

22 TAC §539.71

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.71, Miscellaneous Forms, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and requirements that are aligned with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.71.Miscellaneous Forms.

(a) A residential service company shall use forms prescribed [The Commission adopts by reference the following forms approved] by the Commission for submission of a bond required by the Act and consent to service of process.

(b) All forms prescribed by the Commission [These forms] are [published and] available from the Commission at[, P.O. Box 12188, Austin, Texas 78711-2188,] www.trec.texas.gov.

[(1) Residential Service Company Bond, Form RSC 2-4;]

[(2) Notice of Modification, Form RSC 8-0; and]

[(3) Consent to Service of Process, Form RSC 9-0.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703108

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER I. FINANCIAL ASSURANCES

22 TAC §539.81, §539.82

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.81, Funded Reserves and §539.82, Security, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments to §539.81 and §539.82 are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and alignment of the rule with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.81.Funded Reserves.

(a) Each residential service company licensed by the Commission that does not maintain a reimbursement insurance policy shall maintain a funded reserve [reserves] in the amount required by Subchapter D of the Act. Accounts containing funded reserves must be identified as such and may not be encumbered or commingled with funds that are not reserves. A separate [Separate] funded reserve is [reserves are] required for service contracts written in Texas unless the company's combined funded reserve meets [reserves meet] the minimum reserve requirements of the Act, Subchapter D, calculated based on all outstanding contracts. Each company shall maintain a level of liquidity equal to or greater than the amount of its funded reserve.

(b) The funded reserve [Funded reserves] may be maintained in the following liquid assets only:

(1) in cash or savings deposits, time deposits, certificates of deposit, or money market accounts in solvent banks, savings and loan associations and credit unions and branches thereof, organized under the laws of the United States of America or its states;

(2) in investment grade notes, bonds, bills or other evidences of indebtedness or obligations of the United States of America or of a state or unit of local government or in a money market mutual fund which invests in the securities listed in this paragraph. For the purposes of this section, the term "investment grade" shall mean a security rated BBB and above by a nationally recognized securities rating organization such as Standard & Poor's; or

(3) in other governmentally backed financial instruments acceptable to the Commission, provided prior permission is obtained.

[(c) If a residential service company reinsures the outstanding risk, as authorized under §1303.152 of the Act, through a captive insurance company as defined under §964.001, Insurance Code, the residential service company shall maintain at least 25% of the amount of the funded reserve required under subsection (a).]

(c) [(d)] Each residential service company required to maintain a funded reserve shall complete a monthly reconciliation to confirm that it meets the minimum funded reserve requirements of the Act, Subchapter D. If the minimum reserve requirement has not been met, the residential service company shall take immediate steps to increase the amount of its funded reserve to meet the minimum funded reserve required.

(d) [(e)] The Commission may suspend or revoke the license of a residential service company for failure to comply with this section.

§539.82.Security.

[Each residential service company licensed by the Commission shall maintain a security in the amount required by Subchapter D of the Act.] Each residential service company that is required to maintain a security required by Subchapter D of the Act shall confirm, by February 1 of each year, that the security required by §1303.154(b) of the Act is sufficient based on the amount of claims the residential service company paid in this state during the preceding calendar year. If the required amount of security is not sufficient, the residential service company shall take immediate steps to increase the amount of its security to meet the minimum security required and shall give the Commission written notice of the increase and documentation evidencing the increase.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703110

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER J. REPORTS

22 TAC §539.91

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.91, Annual Report, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments to §539.91 proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018 and to increase comprehension. The subsection regarding mid-year reports was moved and rewritten from another rule that is being repealed for better clarity. The reference to the fee is for clarity of the process. The fee is not new and has not changed.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the section. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the section. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the section as proposed is in effect, the public benefit anticipated as a result of enforcing the section will be better clarity and alignment of the rule with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.91.Reports [Annual Report].

[(a) The Commission (Commission) adopts by reference the Annual Report Form RSC 6-5 approved by the Commission. This document is published by and available from the Commission, at P.O. Box 12188, Austin, Texas 78711-2188, or www.trec.texas.gov.]

(a) [(b)] Annual Report. Each residential service company shall file an Annual Report on a form prescribed by the Commission for that purpose and submit the required fee under §539.231 no later than February 1 of each year for the preceding calendar year, with the financial statements filed no later than April 1.

(b) Mid-Year Report. Each residential service company shall file a Mid-Year Report on a form prescribed by the Commission for that purpose and submit the required fee under §539.231 no later than August 1 of each year for the preceding months of January through June.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703111

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER M. EXAMINATIONS

22 TAC §539.121

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.121, Examinations, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments to §539.121 are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018, and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the sections as proposed are in effect, the public benefit anticipated as a result of enforcing the sections will be better clarity and alignment of the rule with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.121.Examinations.

The Commission shall examine the affairs of each licensed residential service company as the Commission deems necessary[, but no less than once every five years]. A company's failure to provide access to the Commission to the books and records of the company is a violation of §1303.053 of the Act, and may subject the company to the penalties provided in the Act.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703112

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER N. MID-YEAR REPORT

22 TAC §539.137

The Texas Real Estate Commission (TREC) proposes the repeal of 22 TAC §539.137, Mid-Year Report, in Chapter 539, Rules Relating to the Residential Service Company Act.

The repeal is proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018. The subject matter of this rule was moved to §539.91 dealing with all reports for greater clarity.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed repeal is in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the repeal. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the repeal. There is no anticipated significant economic cost to persons who are required to comply with the proposed repeal.

Ms. Lewis also has determined that for each year of the first five years the repeal as proposed is in effect, the public benefit anticipated as a result of enforcing the repeal will be greater clarity and alignment with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The repeal is proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed repeal.

§539.137.Mid-Year Report.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703113

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER Q. ISSUES AFFECTING CONSUMERS

22 TAC §539.160

The Texas Real Estate Commission (TREC) proposes the repeal of 22 TAC §539.160, Copy of Residential Service Company Contract, in Chapter 539, Rules Relating to the Residential Service Company Act.

The repeal is proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed repeal is in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the repeal. There is no significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the repeal. There is no anticipated significant economic cost to persons who are required to comply with the proposed repeal.

Ms. Lewis also has determined that for each year of the first five years the repeal as proposed is in effect, the public benefit anticipated as a result of enforcing the repeal will be will be alignment with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The repeal is proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed repeal.

§539.160.Copy of Residential Service Company Contract.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703114

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092


SUBCHAPTER X. FEES

22 TAC §539.231

The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §539.231, Fees, in Chapter 539, Rules Relating to the Residential Service Company Act.

The amendments to §539.231 are proposed to align the rules with statutory changes in HB 2279 adopted by the 85th Legislature to be effective January 1, 2018 and to increase comprehension.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the section. There is no anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the section. There is no anticipated economic cost to persons who are required to comply with the proposed amendments.

Ms. Lewis also has determined that for each year of the first five years the section as proposed is in effect, the public benefit anticipated as a result of enforcing the section will be better clarity and alignment of the rule with the statute.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, §1303.051, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapter 1303.

The statute affected by this proposal is Texas Occupations Code, Chapter 1303. No other statute, code or article is affected by the proposed amendments.

§539.231.Fees.

The Commission shall charge and collect the following fees:

(1) a fee of $3,500 for filing an application for a license;

(2) a fee of $3,500 for filing an Annual Report [annual report];

(3) a fee of $250 for filing an application to approve a contract [an evidence of coverage] or changes to an approved contract [evidence of coverage]; and

(4) a fee of $250 for filing an application to approve a schedule of charges or changes to an approved schedule of charges.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 11, 2017.

TRD-201703115

Kerri Lewis

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: September 24, 2017

For further information, please call: (512) 936-3092