TITLE 22. EXAMINING BOARDS

PART 22. TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY

CHAPTER 501. RULES OF PROFESSIONAL CONDUCT

SUBCHAPTER E. RESPONSIBILITIES TO THE BOARD/PROFESSION

22 TAC §501.93

The Texas State Board of Public Accountancy adopts an amendment to §501.93, concerning Responses, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7793). The rule text will not be republished.

The amendment to §501.93 helps clarify what constitutes a substantive response from a licensee to a Board communication requesting a response and/or Board records.

One comment was received regarding adoption of the amendment.

Comment:

Commenter expressed concern with the proposed revision to Board Rule 501.93 requiring a substantive response to Board communications seeking a response to questions or documents requested by the Board. The commenter takes the position that "A response or non-response is a response." Commenter also suggests that the "additional burden of providing a substantive response is a judgment by the firm that should not be removed from the firm's choices of responses." Commenter also asks "who determines what a substantive response is?"

Response:

Staff disagrees with the comment. The Board rule requiring a substantive response to Board communications has been in effect for many years. The issue that the commenter addresses is not the rule revision being proposed. What the proposed rule revision attempts to clarify is that a response that consists solely of the licensee stating it does not intend to respond is, by definition, not a substantive response. The comment is not on topic and does not address the proposed rule revision published in the Texas Register.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605897

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


CHAPTER 519. PRACTICE AND PROCEDURE

SUBCHAPTER A. GENERAL PROVISIONS

22 TAC §519.2

The Texas State Board of Public Accountancy adopts an amendment to §519.2, concerning Definitions, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7794). The rule text will not be republished.

The amendment to §519.2 removes independent consultants from the definition of Board staff and clarifies what constitutes direct administrative costs.

One comment was received regarding adoption of the amendment.

Comment:

Commenter noted that the Board has proposed to add the underlined wording "filing fees and expenses of support staff of the office of Attorney General" to Board Rule 519.2(8) concerning the definition of direct administrative costs. Commenter suggests that there be a definition of "support staff."

Response:

Staff does not agree with the comment. The purpose of the proposed language revision is to clarify, in accordance with case law that direct administrative costs may include the expenses incurred by the support staff and therefore not the costs of the Attorney General's attorneys. Since the Board staff must prove up direct administrative costs to the court, what constitutes "support staff" will be precisely decided on a case by case basis by the court rather than the Board.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605898

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.7

The Texas State Board of Public Accountancy adopts an amendment to §519.7, concerning Misdemeanors that Subject a Licensee or Certificate Holder to Discipline by the Board, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7795). The rule text will not be republished.

The amendment to §519.7 adds licensee's failure to file his personal tax return, obstructing a highway or other passageway, and repeated violations of criminal laws as misdemeanors that could subject a licensee to disciplinary action.

One comment was received regarding adoption of the amendment.

Comment:

Commenter expresses concern that the addition of the misdemeanor offense of "obstructing highway or other passageway" to the Board's list of misdemeanors that could be considered a Board rule violation (Board Rule 519.7) does not specify what public highways or passageways may not be obstructed and should be defined. The commenter also suggests that the Board could be seen as "suppressing First Amendment rights granted to each Licensee or Certificate Holder of the Constitution of the United States." Commenter further suggests that the Board already has the authority to address alcohol or substance abuse problems with its proposed addition to the language in Rule 519.7(a)(3)(J) concerning "... under the influence of alcohol or a controlled substance" and therefore paragraph (a)(3)(I) is unnecessary.

Response:

Staff does not agree with the comment. Oftentimes an individual will be criminally charged with a DUI offense while either driving or parked in a motor vehicle. If it is a first offense, it may be pled down to the lesser offense of obstructing highway or other passageway. This offense is in the Texas Penal Code and the Board does not have the authority to define the legislative provisions of the Texas Penal Code as suggested.

The proposed rule revision is an attempt to address a potential alcohol or other controlled substance abuse issue. If the obstructing highway or other passageway offense is not included in the Board's rules there will be no evidence of a controlled substance issue and the Board will lose the opportunity to hopefully help a licensee address a problem early on. Every obstruction of highway criminal charge is evaluated based upon the circumstances surrounding the arrest. The Board would not have a concern with a free speech issue. The Board would only be concerned with a DUI issue.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605899

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.8

The Texas State Board of Public Accountancy adopts an amendment to §519.8, concerning Administrative Penalties, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7797). The rule text will not be republished.

The amendment to §519.8 makes grammatical changes.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605900

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.9

The Texas State Board of Public Accountancy adopts an amendment to §519.9, concerning Administrative Penalty Guidelines, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7798) and will not be republished.

The amendment to §519.9 gives the board the discretion to not assess administrative costs when justified, to correct the cites in the references in the attached graphic and to remove the reference to possession of controlled substances.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605901

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: December 2, 2016

For further information, please call: (512) 305-7842


22 TAC §519.12

The Texas State Board of Public Accountancy adopts an amendment to §519.12, concerning Emergency Suspension, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7799) and will not be republished.

The amendment to §519.12 clarifies that the meaning of "day" is a business day, in subsection (e).

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605902

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


SUBCHAPTER B. COMPLAINTS AND INVESTIGATIONS

22 TAC §519.21

The Texas State Board of Public Accountancy adopts an amendment to §519.21, concerning Investigations, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7800) and will not be republished.

The amendment to §519.21 makes it clear that the Board has the discretion to determine whether there is justification to open a complaint and clarifies what the Board considers to be a non-substantial response.

One comment was received regarding adoption of the amendment.

Comment

Commenter raises the same issues with regard to the proposed rule revision to Board Rule 519.21. Commenter suggests that the firm has the right to structure its responses in any appropriate manner it desires.

Response

Similar to the above response to the prior comment, the issue being raised by the commenter is not the rule revision being proposed. The requirement for a substantive response has been in effect for many years. The proposed rule revision is an effort to help the public understand what will be considered a non-substantive response.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605903

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.23

The Texas State Board of Public Accountancy adopts an amendment to §519.23, concerning Informal Conferences, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7801) and will not be republished.

The amendment to §519.23 clarifies the Board procedures of an informal conference.

Two comments were received regarding adoption of the amendment.

Comment

The proposed revision to Board Rule 519.23(d) puts the licensee on notice that an enforcement committee investigating a complaint wants to hear from the licensee and not the licensee’s attorney when the licensee has been invited to provide the licensee’s side of the story at the enforcement committee’s informal conference. Commenter expresses the concern that this proposed rule revision would "suppress the rights granted to each Licensee or Certificate Holder by the Fifth Amendment to the Constitution of the United States."

Commenter also expresses concern with the proposed language revision to Board Rule 519(f) providing that "the committee will determine who may attend and the process of the informal conference." Commenter believes that "this may serve to deprive the respondent of due process by permitting the committee to have a third party witness and not permitting the respondent the same right."

Response

Staff does not agree with the comment. Commenter is overlooking the fact that the informal conference is a part of the investigation of a complaint and not a hearing as referenced in the Commenter's letter.

The Board enforcement committee is best able to decide what information it needs to review and investigate and what the process is in order to obtain the information it needs to make an informed decision. Upon completion of the investigation by the enforcement committee, the Respondent receives due process in the form of an opportunity for a public hearing before an Administrative Law Judge at the State Office of Administrative Hearings. That hearing is conducted in accordance with the Rules of Evidence as they apply in a non-jury civil case in the State District Courts in Texas and to some extent, the Texas Civil Practices and Remedies Code.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605904

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.24

The Texas State Board of Public Accountancy adopts an amendment to §519.24, concerning Committee Recommendations, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7802) and will not be republished.

The amendment to §519.24 confirms that a Board issued Letter of Comment is confidential.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605905

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.26

The Texas State Board of Public Accountancy adopts an amendment to §519.26, concerning Complaint and Eligibility of an Applicant for Certification, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7803) and will not be republished.

The amendment to §519.26 removes the reference to "possession of a controlled substance" so that the public understands that abuse of a controlled substance is not limited to just possessing the controlled substance.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605906

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.27

The Texas State Board of Public Accountancy adopts an amendment to §519.27, concerning Factors Considered in Certification Application, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7803). The rule text will not be republished.

The amendment to §519.27 removes the reference to "possession of" a controlled substance so that the public understands that abuse of a controlled substance is not limited to just possessing the controlled substance.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605907

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.28

The Texas State Board of Public Accountancy adopts an amendment to §519.28, concerning Action Relating to Investigation, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7805) and will not be republished.

The amendment to §519.28 incorporates the language contained in the Public Accountancy Act that identifies the actions the Board may take at the conclusion of an investigation of an applicant to take the CPA exam or be certified.

One comment was received regarding adoption of the amendment.

Comment

Commenter expresses concern that the rule revision proposes to add a new item (2) to Board Rule 519.28, which states that the Board may "deny an applicant's application to take the uniform CPA examination." He points out that the provision contains no time limit and could conceivably be in place forever which could be a restraint of trade.

Response

Staff does not agree with the comment. The proposed language is not a new item. The language already exists in the Texas Public Accountancy Act ("Act"). It is found in §901.503(a)(1) of the Act. The staff is recommending the addition of the language in the rule in order to provide the public more opportunity to locate and understand that the Board has the authority to deny an individual's application to take the CPA exam.

The legislature did not establish a time limit as to how long an application could be denied because the denial lasts until a compliant application is filed. The time period for denial is therefore in the hands of the applicant. The Board should not include a time limit as doing so would result in an automatic approval regardless of the quality of the application.

Comment

Commenter also notes that in Board Rule 519.28(3) of the proposed revision permits the Board to prohibit an individual from taking the CPA exam for a period not to exceed five years. The comment is that the five years is ambiguous because none of the other proposals contain a time limitation.

Response

Staff does not agree with the comment. The five year time limitation is proposed in order to put in the Board rule language which already exists in the Act. It is being proposed to help make the public aware of the provision in the Act. Section 901.503(a)(2) of the Act permits the Board to prohibit an applicant to take the CPA exam for up to five years. This could occur, for example, when the Board has found fraud or deceit in the application or cheating on the exam.

Comment

Commenter also suggests that the proposed revision to Board Rule 519.28(5) which states that the Board may "…void an individual's uniform CPA examination grades" should not be used because the commenter is of the impression that only the AICPA has the authority to void an applicant's grades.

Response

Staff disagrees with this comment. The Act, §901.503(a)(3), provides the Board with the authority to void an individual's grades. The AICPA administers the CPA exam on behalf of the Board. The staff is proposing to carry that which already exists in the Act over into the Board's rules to help the public better understand the enumerated authorities of the Board.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605910

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.29

The Texas State Board of Public Accountancy adopts an amendment to §519.29, concerning Voluntary Surrender of Certificate, with changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7806).

The amendment to §519.29 identifies the circumstances under which a voluntary surrender will be accepted by the Board, notices that the CPA exam is not a prerequisite to reinstatement, makes the voluntary surrender effective on the date of the agency's approval, establishes circumstances under which a reinstatement may be denied, requires a four-hour Board approved ethics course as part of the required CPE prior to reinstatement and removes the reference to "possession" of a controlled substance to clarify that conviction of abuse of a controlled substance may be a disqualifier to reinstatement.

Two comments were received regarding adoption of the amendment.

Comment

One comment suggests that the denial of a voluntary surrender is a disciplinary action because it is located in Subchapter K of the Act which is titled Prohibited Practices and Disciplinary Procedures. The commenter further states that it is a disciplinary action because disapproval would deny the certificate holder the right to leave the profession and the right to end his or her responsibility to pay fees and service providers for continuing education courses. As a disciplinary action, the commenter further advises that the licensee wishing to voluntarily surrender his certificate would have the right to a hearing pursuant to §901.508(a) of the Act and the Board is required by §901.508(b) to establish procedures by which a disciplinary action under this subchapter is made or is appealable to the Board.

Response

Staff does not agree that the denial of a voluntary surrender is a disciplinary action.

Subchapter K is titled Prohibited Practices and Disciplinary Procedures however that is only the title of the subchapter. What is controlling is the substance and §901.501 specifically enumerates the Board's disciplinary powers. They include revoking a certificate or firm license, suspending a license, reprimanding a license holder, as well as other enumerated powers. The denial or approval of a voluntary surrender is not included as one of the Board's specific disciplines. A law is not interpreted by its various section titles but must be interpreted by the body of the law and §901.501 does not identify the voluntary surrender of a certificate as a discipline.

The Board has historically not interpreted a voluntary surrender as a disciplinary action. To do otherwise would allow a certificate holder to surrender his certificate at any time during a disciplinary investigation or adjudicatory proceeding because there would be no finding by the Board of a rule violation to form the basis of a denial. This could occur at the onset of an investigation or even after an Administrative Law Judge (ALJ) has recommended the revocation of a certificate but before the Board has ratified the ALJ's recommendation.

If the voluntary surrender requires a hearing, as the comment suggests, the Board would be required to hold a second hearing on the denial of the attempted voluntary surrender after the disciplinary hearing was adjourned but before the Board considered the ALJ's disciplinary hearing on the rule violation.

Staff does not believe the Texas Legislature intended such a confusing and convoluted proceeding and duplication of resources. Neither does the staff believe that a certificate holder that has violated Board rules be allowed to get off scot-free and to hide his rule violation from the public by voluntarily surrendering his certificate prior to disciplinary action. The public would not have the opportunity to be made aware of the determination of a rule violation. A voluntary surrender could occur if after the disciplinary hearing the Board found no rule violation occurred and the voluntary surrender could be approved.

Comment

The commenter also suggests that the Board adopt a set of factors for its determination of the best interests of the public.

Response

Staff agrees and recommends language be added to the last paragraph of proposed Rule 519.29(e). The added language would establish that the Board should deny a licensee's voluntary surrender prior to the final adjudication of a pending Board complaint, criminal charge or civil proceeding alleging fraud or dishonesty.

Second Comment

Comment

Commenter states that proposed paragraph (e) of Board Rule 519.29 provides the Board with the authority to deny approval of a voluntary surrender of a certificate. Commenter states that this provision contradicts a previous rule provision which allows a voluntary surrender and denies the certificate holder the freedom of choice to surrender his certificate. Commenter also states the proposed rule revision does not provide for a specified period under which the Board must act on the denial of a voluntary surrender thus forcing the certificate or firm license holder to be subject to the Board's rules and regulations. Commenter also questions how the provision provides any public benefit over other existing provisions of the Act and that the proposed provision creates uncertainty and ambiguity. Commenter also suggests that proposed paragraph (f) makes proposed paragraph (e) unnecessary.

Response

Staff does not agree with the comment. The authority to deny a voluntary surrender comes from the Act and not the proposed Board rule. It has been in the Act for many years and is not a first time rule. It is being repeated in the Board's rules in order to help the public understand the provision exists.

Section 901.506 of the Act allows a person who holds a certificate or firm license to resign and surrender the certificate or firm license "subject to Board approval." This provision facilitates the Board's effort to protect the public from a certificate holder attempting to hide his violation of a Board rule, such as a criminal or civil court's finding of fraud or deceit. The Board has the authority and the responsibility to protect the public and provide it with the opportunity to know that the former certificate holder, who is now offering tax or financial advice services, was disciplined by the Board for a major rules violation.

The staff believes that establishing a time limitation on when the Board must act on the voluntary surrender would serve no purpose. The voluntary surrender will be approved if there is no pending enforcement action against the certificate holder. If however there is a pending investigation, the voluntary surrender will not be approved until the investigation has been completed or until a complaint has been finally adjudicated. A time limitation could affect or interfere with the investigation.

Commenter also suggests that paragraph (f) makes paragraph (e) unnecessary. Staff disagrees because paragraph (e) establishes when a voluntary surrender is effective and under what circumstances it may be disapproved. Paragraph (f) discusses when the Board may set aside a previously approved voluntary surrender.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

§519.29.Voluntary Surrender of Certificate.

(a) A certificate holder may voluntarily surrender his certificate by submitting a written statement of intent to voluntarily surrender the certificate. Once a certificate holder has surrendered his certificate, he is no longer eligible to hold a license under §901.402 of the Act (relating to Eligibility Requirements; General Prohibition) and licensing exemptions will no longer apply.

(b) A former certificate holder who has voluntarily surrendered his certificate under subsection (a) of this section may apply for a new certificate upon completion of the following requirements:

(1) evidence of completion of all CPE that would have been required to be completed up to a maximum of 120 hours over the three years immediately preceding the application including a four-hour board approved ethics course;

(2) a sworn affidavit in the form provided by the board stating that the former certificate holder has not been convicted of, placed on community supervision or accepted deferred adjudication for any felony crime or for any misdemeanor crime involving dishonesty, fraud, moral turpitude, alcohol abuse or controlled substances, or physical injury or threats of physical injury to a person under the laws of any state or the United States and that the former certificate holder did not surrender the certificate to avoid disciplinary action by the board or to avoid administrative revocation under board rules adopted pursuant to §§901.159, 901.411 or 901.502 of the Act (relating to Peer Review; Continuing Professional Education; or Grounds for Disciplinary Action); and

(3) payment of all fees that would have been paid if the former certificate holder's license had been active since the date of surrender and all applicable late fees.

(c) A new certificate issued to a former certificate holder will bear the same certificate number as the original certificate.

(d) If an individual, subject to the approval of the board, voluntarily surrenders and resigns the certificate or registration during the course of a disciplinary investigation or proceeding conducted by the board, this fact shall be disclosed in any later application for a new certificate, and shall be considered before the issuance of a new certificate.

(e) A voluntary surrender is effective on the date of this agency's approval letter or other written notification. The voluntary surrender may be disapproved when doing so is in the best interest of the public. It is in the best interest of the public to deny a licensee's voluntary surrender prior to the adjudication of a board complaint, criminal charge or civil proceeding alleging fraud or dishonesty.

(f) If a certificate holder voluntarily surrenders his certificate after being charged with a crime for which he subsequently receives a conviction or deferred adjudication, or voluntarily surrenders his certificate subsequent to the filing of a civil suit alleging fraud or dishonesty which subsequently results in a finding by a court of fraud or dishonesty, the voluntary surrender may be set aside by the board upon a finding by the board that the criminal or civil adjudication warrants disciplinary action.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605911

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


SUBCHAPTER C. PROCEEDINGS AT SOAH

22 TAC §519.40

The Texas State Board of Public Accountancy adopts an amendment to §519.40, concerning General Provisions, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7807) and will not be republished.

The amendment to §519.40 establishes the rate of reimbursement for a fact witness to be equivalent to state employee reimbursement and establishes a fee of $50.00 per day for a fact witness.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605912

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


SUBCHAPTER D. PROCEDURES AFTER HEARING

22 TAC §519.72

The Texas State Board of Public Accountancy adopts an amendment to §519.72, concerning Final Decisions and Orders, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7808) and will not be republished.

The amendment to §519.72 identifies the section of the rules that are referenced as disciplinary matters including the assessment of sanctions.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605913

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 216

For further information, please call: (512) 305-7842


SUBCHAPTER E. POST BOARD ORDER PROCEDURES

22 TAC §519.93

The Texas State Board of Public Accountancy adopts an amendment to §519.93, concerning Publication of Disciplinary/Administrative Sanctions, without changes to the proposed text as published in the October 7, 2016 issue of the Texas Register (41 TexReg 7809) and will not be republished.

The amendment to §519.93 eliminates language regarding the publication of disciplinary actions in newspapers.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605914

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


22 TAC §519.95

The Texas State Board of Public Accountancy adopts an amendment to §519.95, concerning Reinstatement, without changes to the proposed text as published in the October 7, 2016, issue of the Texas Register (41 TexReg 7809) and will not be republished.

The amendment to §519.95 helps to clarify the reinstatement process.

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Public Accountancy Act (Act), Texas Occupations Code, §901.151 which provides the agency with the authority to amend, adopt and repeal rules deemed necessary or advisable to effectuate the Act.

No other article, statute or code is affected by the adoption.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605915

J. Randel (Jerry) Hill

General Counsel

Texas State Board of Public Accountancy

Effective date: December 7, 2016

Proposal publication date: October 7, 2016

For further information, please call: (512) 305-7842


PART 23. TEXAS REAL ESTATE COMMISSION

CHAPTER 534. GENERAL ADMINISTRATION

22 TAC §534.2

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §534.2, Processing Fees for Dishonored Payments, in Chapter 534, General Administration, without changes as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6611).

The amendments are adopted to clarify that a processing fee is due when a payment to the Commission, through any form of payment, is dishonored or reversed due to insufficient funds or for any other reason, including stop payment.

No comments were received on the amendments as published.

The reasoned justification for the amendments is greater clarity in the rule.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605877

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


CHAPTER 535. GENERAL PROVISIONS

SUBCHAPTER B. GENERAL PROVISIONS RELATING TO THE REQUIREMENTS OF LICENSURE

22 TAC §535.2

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.2, Broker Responsibility, in Chapter 535, General Provisions, with changes to the proposal as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6612).

The amendments are adopted to clarify that a broker must notify the Commission when the appointment of a delegated supervisor has ended except that a newly licensed broker or a broker associate named as a delegated supervisor is responsible to notify the Commission if their status as a delegated supervisor changes. The rule was also updated to replace the term "salesperson" with the new statutory term of "sales agent."

No comments were received on the amendments as published.

The reasoned justification for the amendments is greater clarity in how the Commission will be notified if the delegation of a supervisor is terminated.

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

§535.2.Broker Responsibility.

(a) A broker is required to notify a sponsored sales agent in writing of the scope of the sales agent's authorized activities under the Act. Unless such scope is limited or revoked in writing, a broker is responsible for the authorized acts of the broker's sales agents, but the broker is not required to supervise the sales agents directly. If a broker permits a sponsored sales agent to conduct activities beyond the scope explicitly authorized by the broker, those are acts for which the broker is responsible.

(b) A broker owes the highest fiduciary obligation to the principal and is obliged to convey to the principal all information known to the agent which may affect the principal's decision unless prohibited by other law.

(c) A broker is responsible for the proper handling of trust funds placed with the broker and must comply with §535.146 of this title.

(d) A broker is responsible for any property management activity by the broker's sponsored sales agent that requires a real estate license.

(e) A broker may delegate to another license holder the responsibility to assist in administering compliance with the Act and Rules, but the broker may not relinquish overall responsibility for the supervision of license holders sponsored by the broker. Any such delegation must be in writing. A broker shall provide the name of each delegated supervisor to the Commission on a form or through the online process approved by the Commission within 30 days of any such delegation that has lasted or is anticipated to last more than six months. (e) A broker may delegate to another license holder the responsibility to assist in administering compliance with the Act and Rules, but the broker may not relinquish overall responsibility for the supervision of license holders sponsored by the broker. Any such delegation must be in writing. A broker shall provide the name of each delegated supervisor to the Commission on a form or through the online process approved by the Commission within 30 days of any such delegation that has lasted or is anticipated to last more than six months. The broker shall notify the Commission in the same manner within 30 days after the delegation of a supervisor has ended. It is the responsibility of the broker associate or newly licensed broker to notify the Commission in writing when they are no longer associated with the broker or no longer act as a delegated supervisor.

(f) Listings and other agreements for real estate brokerage services must be solicited and accepted in a broker's name.

(g) A broker is responsible to ensure that a sponsored sales agent's advertising complies with §535.154 of this title.

(h) Except for records destroyed by an "Act of God" such as a natural disaster or fire not intentionally caused by the broker, the broker must, at a minimum, maintain the following records in a format that is readily available to the Commission for at least four years from the date of closing, termination of the contract, or end of a real estate transaction:

(1) disclosures;

(2) commission agreements such as listing agreements, buyer representation agreements, or other written agreements relied upon to claim compensation;

(3) work files;

(4) contracts and related addenda;

(5) receipts and disbursements of compensation for services subject to the Act;

(6) property management contracts;

(7) appraisals, broker price opinions, and comparative market analyses; and

(8) sponsorship agreements between the broker and sponsored sales agents.

(i) A broker who sponsors sales agents or is a designated broker for a business entity shall maintain, on a current basis, written policies and procedures to ensure that:

(1) Each sponsored sales agent is advised of the scope of the sales agent's authorized activities subject to the Act and is competent to conduct such activities.

(2) Each sponsored sales agent maintains their license in active status at all times while they are engaging in activities subject to the Act.

(3) Any and all compensation paid to a sponsored sales agent for acts or services subject to the Act is paid by, through, or with the written consent of the sponsoring broker.

(4) Each sponsored sales agent is provided on a timely basis, before the effective date of the change, notice of any change to the Act, Rules, or Commission promulgated contract forms.

(5) In addition to completing statutory minimum continuing education requirements, each sponsored sales agent receives such additional educational instruction the broker may deem necessary to obtain and maintain, on a current basis, competency in the scope of the sponsored sales agent's practice subject to the Act.

(6) Each sponsored sales agent complies with the Commission's advertising rules.

(7) All trust accounts, including but not limited to property management trust accounts, and other funds received from consumers are maintained by the broker with appropriate controls in compliance with §535.146.

(8) Records are properly maintained pursuant to subsection (h) of this section.

(j) A broker or supervisor delegated under subsection (e) of this section must respond to sponsored sales agents, clients, and license holders representing other parties in real estate transactions within three calendar days.

(k) A sponsoring broker or supervisor delegated under subsection (e) of this section shall deliver mail and other correspondence from the Commission to their sponsored sales agents within 10 calendar days after receipt.

(l) When the broker is a business entity, the designated broker is the person responsible for the broker responsibilities under this section.

(m) This section is not meant to create or require an employer/employee relationship between a broker and a sponsored sales agent.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605878

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


22 TAC §535.5

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.5, License Not Required in Chapter 535, General Provisions, without changes to the text as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6612).

The amendments are adopted to delete the rule exception allowing an unlicensed person to act as a host at an open house. This exception was put in place prior to the statutory requirement for consumer protection that license holders must pass criminal background reviews prior to licensure. The rule was also updated to replace the term "salesperson" with the new statutory term of "sales agent."

Twenty-one commenters were adamantly against allowing unlicensed assistants to open or show any property, including vacant property or open houses. The reasons given included that unlicensed assistants are not required to have a criminal background check and have not had the hours of education and training that a license holder has; it is not in the best interest of the consumer; it puts the professionalism of the industry at risk; and fails to fulfill brokers' fiduciary duty to their clients.

Three commenters suggested that the Commission provide a way for unlicensed assistants to have criminal background checks so they could host an open house or open properties, while one commenter suggested that unlicensed assistants showing property was okay but maybe the Commission could have brokers ensure E&O policies include unlicensed assistants. The Commission did not make such changes to the rule as both of those areas are outside the Commission's jurisdiction since the fingerprinting authority is tied to a license application and E&O insurance is not required for brokers.

The reasoned justification for the amendments is better consistency with the statute and greater consumer protection.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605883

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


SUBCHAPTER D. THE COMMISSION

22 TAC §535.45

The Texas Real Estate Commission (TREC) adopts new 22 TAC §535.45, Certain uses of Seal, Logo, or Name Prohibited, in Chapter 535, General Provisions, without changes to the text as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6614).

The amendments are adopted to clarify that license holders may not use the seal, logo, or name of the Commission to imply they are a government agency or have received special Commission endorsement or status.

No comments were received on the amendments as published.

The reasoned justification for the amendments is greater consumer protection from misleading communications by license holders.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605884

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


SUBCHAPTER E. REQUIREMENTS FOR LICENSURE

22 TAC §535.57

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.57, Examinations, in Chapter 535, General Provisions, without changes as published in the September 2, 2016 issue of the Texas Register (41 TexReg 6614).

The amendments are adopted to clarify the period that examination results remain valid for an application and better align the rules with the statutory period set forth in Texas Occupations Code, §1101.401(f).

No comments were received on the amendments as published.

The reasoned justification for the amendments is to set the time each part of a licensing examination is valid after it is passed.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605885

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: February 1, 2017

Proposal publication date: September 2, 2016

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


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

22 TAC §535.62

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.62, Approval of Qualifying Courses, in Chapter 535, General Provisions, without changes as published in the September 2, 2016 issue of the Texas Register (41 TexReg 6615).

The amendments are adopted to clarify that authorization for subsequent use of a previously approved course must be given by the owner of the rights to the course, which may or may not be the provider for whom the course was initially approved.

The reasoned justification for the amendments is greater clarity in the rule.

No comments were received on the amendments as published.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605886

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


22 TAC §535.65

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.65, Responsibilities and Operations of Providers of Qualifying Courses, in Chapter 535, General Provisions, without changes as published in the September 2, 2016 issue of the Texas Register (41 TexReg 6616).

The amendments to subsection (j) are adopted to remove the requirement for education completion certificates to include the registration date since that information not necessary for the Commission to calculate compliance with statutory timeframes for course completion. The amendments to subsection (k) are adopted to clarify that the questions required by the Commission on the approved evaluation and the order they appear are what is required, not the use of the actual form.

The reasoned justification for the amendments is greater clarity for compliance with the rule.

No comments were received on the amendments as published.

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

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605875

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


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

22 TAC §535.72

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.72, Approval of Non-elective Continuing Education Courses in Chapter 535, General Provisions, with changes to the proposal as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6617).

Amendments to subsection (i) clarify that classroom students must take the promulgated final examination independently prior to the instructor reviewing the correct answers and to correct the reference to the third party proctor definition. No comments were received on those proposed amendments. The remainder of proposed changes are being removed on the recommendation of the Texas Real Estate Inspector Committee at this time so that a more comprehensive approach and rule regarding all non-elective coursework can be brought forward at a later date.

The reasoned justification for the amendments is greater clarity in the rule.

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

§535.72.Approval of Non-elective Continuing Education Courses.

(a) General requirements.

(1) The non-elective continuing education courses must be conducted as prescribed by the rules in this Subchapter.

(2) Elective continuing education course are approved and regulated under §535.73 of this subchapter.

(b) Application for approval to offer non-elective real estate CE courses.

(1) A CE provider seeking to offer a specific non-elective real estate CE course as outlined in this section shall:

(A) submit a CE Course Application Supplement to the Commission; and

(B) pay the fee required by §535.101 of this title.

(2) A provider may file a single application for a CE course offered through multiple delivery methods. A fee is required for content review of each CE course and for each distinct delivery method utilized by a provider for that course.

(3) A provider who seeks approval of a new delivery method for a currently approved CE course must submit a new application, and pay all required fees, including a fee for content review.

(4) 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 mails the request.

(c) Real estate non-elective CE courses. Every two years, the Commission shall approve subject matter and course materials to be used for the following non-elective real estate continuing education courses as required by the Act:

(1) a four hour Legal Update I: Laws, Rules and Forms course;

(2) a four hour Legal Update II: Agency, Ethics and Hot Topics course; and

(3) a six hour broker responsibility course.

(d) Course expiration.

(1) Each legal update course expires on December 31 of each odd-numbered year.

(2) Each broker responsibility course expires on December 31 of each even-numbered year.

(3) A CE provider must use a CE instructor who has received certification to teach the version of the real estate non-elective CE course being offered.

(e) Application for approval to offer non-elective inspector CE courses.

(1) A CE provider seeking to offer a specific non-elective inspector CE course as outlined in this section shall:

(A) submit:

(i) ICE Course Application form and the Texas Standards of Practice/Legal/Ethics Update Course approval form (PIEAC-SP_LEU-1); or

(ii) Qualifying Real Estate (or Inspector) Qualifying Course Application form and the Texas Standards of Practice/Legal/Ethics Update course approval form (PIEAC-SP_LEU-1); and

(B) pay the fee required by §535.210 of this title.

(2) A separate application is required for each course delivery method.

(f) Requirements for inspector non-elective CE courses.

(1) A Texas Standards of Practice/Legal/Ethics Update course shall contain the following topics, the units of which are outlined the Texas Standards of Practice/Legal/Ethics Update Course Approval form (PIEAC-SP_LEU-1), adopted herein by reference:

(A) 4 hours of Standards of Practice;

(B) 2 hours of Legal; and

(C) 2 hours of Ethics.

(2) A Texas Standards of Practice/Legal/Ethics Update course expires two years from the date of approval and providers must reapply and meet all current requirements of this section to offer the course for another two years.

(g) Delivery method. Non-elective CE courses must be delivered by one of the following delivery methods:

(1) classroom delivery;

(2) distance education delivery; or

(3) a combination of (1) and (2) of this subsection if at least 50% of the combined course is offered by classroom delivery.

(h) Except as provided in this section, non-elective CE courses must meet the presentation requirements of §535.65(g) of this title.

(1) Classroom Delivery. The provider must submit a course completion roster in accordance with §535.75(d) of this subchapter.

(2) Distance Education Delivery:

(A) Non-elective real estate courses are designed by the Commission for interactive classroom delivery. Acceptable demonstration of a method to engage distance education delivery students in interactive discussions and group activities, as well as additional material to meet the course objectives and time requirements are required for approval.

(B) The provider must submit a course completion roster in accordance with §535.75(d) of this subchapter.

(i) Course examinations.

(1) A provider must administer a final examination promulgated by the Commission for non-elective CE courses beginning January 1, 2017 as follows:

(A) For classroom delivery, the examination will be given as a part of class instruction time with each student answering the examination questions independently followed by a review of the correct answers by the instructor. There is no minimum passing grade required to receive credit.

(B) For distance education delivery, the examination will be given after completion of regular course work and must be:

(i) proctored by a member of the provider faculty or staff, or third party proctor set out in §535.65(h)(5) of this title, who is present at the test site and has positively identified that the student taking the examination is the student registered for and who took the course; or

(ii) administered using a computer under conditions that satisfy the Commission that the student taking the examination is the student registered for and who took the course; and

(iii) graded with a pass rate of 70% in order for a student to receive credit for the course; and

(iv) kept confidential.

(2) A provider may not give credit to a student who fails a final examination and subsequent final examination as provided for in subsection (j) of this section.

(j) Subsequent final course examination.

(1) If a student fails a final course examination, a provider may permit the student to take one subsequent final examination.

(2) A student shall complete the subsequent final examination no later than the 30th day after the date the original class concludes. The subsequent final examination must be different from the first examination.

(3) A student who fails the subsequent final course examination is required to retake the course and the final course examination.

(k) Approval of currently approved courses by a subsequent provider.

(1) If a CE provider wants to offer a course currently approved for another provider, that subsequent provider must:

(A) submit the CE course application supplement form(s);

(B) submit written authorization to the Commission from the author or provider for whom the course was initially approved granting permission for the subsequent provider to offer the course; and

(C) pay the fee required by §535.101 or §535.210 of this title.

(2) If approved to offer the currently approved course, the subsequent provider is required to:

(A) offer the course as originally approved, including expiration date, with any approved revisions, using all materials required for the course; and

(B) meet the requirements of §535.75 of this subchapter.

(l) Approval notice. A CE Provider shall not offer non-elective continuing education courses until the provider has received written notice of the approval from the Commission.

(m) Required revision of a currently approved non-elective CE course. Providers are responsible for keeping current on changes to the Act and Commission Rules and must supplement materials for approved non-elective CE courses to present the current version of all applicable statutes and rules on or before the effective date of those statutes or rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605876

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


22 TAC §535.73

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.73, Approval of Elective Continuing Education Courses, in Chapter 535, General Provisions, without changes as published in the September 2, 2016 issue of the Texas Register (41 TexReg 6619).

The amendments are adopted to clarify that authorization for subsequent use of a previously approved course must be given by the owner of the rights to the course, which may or may not be the provider for whom the course was initially approved.

No comments were received on the amendments as published.

The reasoned justification for the amendments is greater clarity in the rule.

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 this amendment are Texas Occupations Code, Chapters 1101. No other statute, code or article is affected by the amendments.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605887

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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


SUBCHAPTER J. FEES

22 TAC §535.101

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.101, Fees, in Chapter 535, General Provisions, without changes as published in the September 2, 2016 issue of the Texas Register (41 TexReg 6620).

The amendments implement the budget and budget policies adopted by the Commission at their August meeting. Accordingly, renewal fees for sales agents are being reduced by $6. Additionally, the fee section for examinations was amended to indicate that those fees are a pass through fee negotiated in a contract with the vendor and can vary from contract to contract. Finally, the rule was amended to clarify that a processing fee is due when a payment to the Commission, through any form of payment, is dishonored due to insufficient funds or any other reason, including stop payment.

Three comments were received on the amendments as published. Two commenters wanted the fees for sales agent renewal increased and one wanted a reduction in the renewal fees for brokers. The Commission respectfully declined to make those changes since the proposed amendments tie to the budget the Commission approved in August.

The reasoned justification for the amendments is greater clarity in the rule and implementation of FY 2017 budget and budget policies.

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 this amendment are Texas Occupations Code, Chapters 1101. No other statute, code or article is affected by the amendments.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605889

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: January 1, 2017

Proposal publication date: September 2, 2016

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


SUBCHAPTER R. REAL ESTATE INSPECTORS

22 TAC §535.218

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.218, Continuing Education Required for Renewal in Subchapter R, Real Estate Inspectors, with changes to the proposal as published in the September 2, 2016, issue of the Texas Register (41 TexReg 6623).

Amendments to subsections (d) and (g) allow license holders to receive continuing education credit for education courses taken outside of Texas and for in-person attendance at the February meeting of the Texas Real Estate Inspector Advisory Committee. Amendments to subsections (a) and (f) make typographical corrections and conforming changes for consistency with other Commission rules. No comments were received on these amendments as published.

Amendments to subsection (a)(1)(B) are being removed at this time on the recommendation of the Texas Real Estate Inspector Advisory Committee, so that a more comprehensive approach and rule regarding all non-elective inspector continuing education coursework may be brought forward at a later date.

The Texas Real Estate Inspector Advisory Committee also recommended adding language to the rule as proposed to clarify when a license holder may receive continuing education credit for a course taken outside of Texas and to clarify the existing practice in another rule of allowing a license holder to receive continuing education credit for courses offered by an exempt provider. The Commission agrees with this recommendation and adopts additional language in subsections (d) and (e) for clarification.

The revisions to the rules as adopted do not change the nature or scope so much that they could be deemed different rules. The rules as adopted do not affect individuals other than those contemplated by the rules as proposed. The rules as adopted do not impose more onerous requirements than the proposed rules.

The reasoned justification for the amendments is greater clarity and consistency in the rule.

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 Texas Occupations Code §1102.058, which authorizes the Commission to adopt rules relating to continuing education requirements for inspectors.

The statute affected by the amendments 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) Continuing education required for renewal.

(1) Prior to renewal of a real estate inspector or professional inspector license, a license holder must take the 32 hours of continuing education which shall include the following:

(A) 24 hours of qualifying course subjects as described in §535.213(e)(1) - (8), (11) and (12) of this title, with a maximum of 16 hours on any one single subject; and

(B) eight hours of Texas Standards of Practice/Legal/Ethics Update. The Texas Standards of Practice/Legal/Ethics Update is a non-elective course and must consist of the following coursework:

(i) 4 hours of Standards of Practice;

(ii) 2 hours of Legal; and

(iii) 2 hours of Ethics.

(2) A real estate inspector or professional inspector who files an application for reinstatement of an expired license within two years of the expiration date of the previous license, must provide evidence satisfactory to the Commission that the applicant has completed any continuing education that would have been otherwise required for timely renewal of the previous license had that license not expired.

(b) Ride-along inspection course.

(1) Up to eight hours of continuing education credit per two year license period can be given to a license holder for completion of ride-along inspection course.

(2) At a minimum, a ride-along inspection course must:

(A) consist of one full residential property inspection; and

(B) review applicable standards of practice and departure provisions contained in §§535.227 - 535.233 of this title.

(3) In order to qualify for real estate inspector continuing education credit, a ride-along inspection course shall consist of no more than two students per session.

(4) The instructor of a ride-along inspection course may:

(A) review report writing;

(B) deliver a notice regarding the ride along session on a form approved by the Commission to the prospective buyer or seller of the home being inspected.

(c) Continuing education credit for students.

(1) Courses submitted for inspector continuing education credit must be successfully completed during the term of the current license.

(2) The Commission may not grant continuing education credit twice for a course with the same course content taken by a licensee within a two year period.

(3) Unless a real estate inspection continuing education course is offered by alternative delivery methods, completion of a final examination is not required for a license holder to receive continuing education credit for a course.

(4) The commission will not grant partial credit to an inspector who attends a portion of a course.

(d) Continuing education credit for course taken outside of Texas. An inspector may receive continuing education elective credit for a course taken to satisfy the continuing education requirements of a country, territory, or state other than Texas if:

(1) the real estate inspector or professional inspector licensed in Texas held an active inspector license in a country, territory, or state other than Texas at the time the course was taken;

(2) the course was approved for continuing education credit for an inspector license by a country, territory, or state other than Texas at the time the course was taken;

(3) the successful completion of the course has been evidenced by a course completion certificate, a letter from the provider or such other proof satisfactory to the Commission;

(4) the subject matter of the course was predominately devoted to a subject acceptable for continuing education credit for a real estate inspector or professional inspector licensed in Texas; and

(5) the real estate inspector or professional inspector licensed in Texas has filed a Continuing Education (CE) Credit Request for an Out of State Course, with the Commission.

(e) 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:

(i) covers subject matter appropriate for an inspector continuing education course;

(ii) and is current and accurate.

(f) 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) 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 adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on November 17, 2016.

TRD-201605890

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: December 7, 2016

Proposal publication date: September 2, 2016

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