TITLE 22. EXAMINING BOARDS

PART 23. TEXAS REAL ESTATE COMMISSION

CHAPTER 535. GENERAL PROVISIONS

SUBCHAPTER B. GENERAL PROVISIONS RELATING TO THE REQUIREMENTS OF LICENSURE

22 TAC §535.4

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.4, License Required, in Chapter 535, General Provisions, with changes to the proposal as published in the December 2, 2016, issue of the Texas Register (41 TexReg 9432).

The amendments are adopted to clarify the definition of what constitutes showing property in light of the statutory requirement that license holders must pass criminal background reviews prior to licensure. The amendments also set out the circumstances under which a license holder can provide an unescorted person access to a vacant rental property. The rule was also updated to replace the term "salesperson" with the new statutory term of "sales agent." A typographical error was also corrected in subsection (i) to reference subsection (h) instead of (i).

There were 22 comments received on the rule as published. One comment was from an industry trade association. The association is concerned that the clarified definition of "to show" a property in the proposed rule "unfairly disadvantage license holders engaged in real estate specialties." The association states that commercial license holders "often utilize unlicensed assistants to allow prospective buyers or tenants to access the property" and an employee of a ranch owner "may provide access to a property prior to a license holder's arrival." The Commission notes that this last example is not prohibited by the amended rule since an employee of an owner can show the owner's property without obtaining a real estate license. The association requested that an exception be made in the proposed rule to allow the use of unlicensed assistants to access a property for commercial and farm and ranch property claiming that "any consumer protection concerns are likely diminished when solely contemplating commercial or farm and ranch property as opposed to residential property."

Of the remaining comments, 10 were in full support of the proposal, many specifically mentioning that there should not be different standards for commercial or farm and ranch specialties. Some of the specific comments in support of the proposal were: "TREC will be ignoring a clear and visible danger to the public by not adopting this proposal." "No one should be allowed inside a home unless they have a license, which means they've had a background check and been fingerprinted." "…there is no less liability for commercial and farm and ranch." "…a consumer [of commercial and farm and ranch properties] is entitled to every bit of protection that TREC affords a residential consumer."

Of the 11 who objected to the proposal, 2 commenters objected to restricting unlicensed assistants providing access to properties outright, one stating, "What [is the] purpose of making brokers less efficient?" The 9 remaining dissenting commenters qualified their objections recognizing the need for prior owner consent and/or background checks for unlicensed assistants. One thought there should be an exception only for property management. Some of the specific comments in opposition to the amendment were: "The law regarding unlicensed assistants could be amended to insure and increase safety by requiring TREC approved background checks, fingerprinting and Broker responsibility." "Keep it simple: ‘inform' the consumer in writing." "[allow] unlicensed assistants to show lease properties when the owner gives permission and perhaps adding that the unlicensed assistant must go through a background and fingerprinting check." No commenters specifically objected to allowing controlled unescorted entry to vacant properties for lease with disclosure requirements.

The Commission respectfully declines to make any changes as a result of the comments received for the following reasons. The Real Estate License Act requires an applicant to go through a criminal history background check prior to being licensed. To allow an unlicensed person to open and enter a property for sale would effectively bypass the legislative requirement of requiring fingerprint-based criminal history background checks before granting or renewing a real estate license. This requirement is in place to ensure that a person with an inappropriate criminal background will not receive a license that would allow them to potentially engage in additional criminal activity when accessing properties for sale or lease or escorting unsuspecting consumers to properties for sale or lease. Most of the commenters, both for and against, recognize this fact. The Commission cannot require criminal history background checks on unlicensed assistants unless the legislature gives the Commission authority to do so.

It would be impractical to rely solely on the license holder obtaining consumer consent to allow unlicensed assistants to provide access to properties. The consent would have to be obtained from all parties, owners and potential buyers and tenants and would have to include a statement that the unlicensed assistant has not had a criminal background check and the inherent risks associated with that. A mere statement that the person providing access to the property is unlicensed and cannot answer questions about the property would not constitute informed disclosure. This would also be very hard to monitor and enforce. Further, a license holder cannot undo a legislative licensing mandate via consumer consent.

The Commission, as well as several other commenters, were not persuaded by the association's argument that buyers and sellers of commercial and farm and ranch properties should have lesser protection than the law requires for residential consumers in order to maintain or increase those license holders' efficiency or convenience.

The reasoned justification for the amendments is better clarity in the rule, increased consumer protection and in connection with allowing controlled unescorted entry into vacant rental properties increasing access to properties without compromising 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.

§535.4.License Required.

(a) The Act applies to any person acting as a real estate broker or sales agent while physically within Texas, regardless of the location of the real estate involved or the residence of the person's customers or clients. For the purposes of the Act, a person conducting brokerage business from another state by mail, telephone, the Internet, email, or other medium is acting within Texas if the real property concerned is located wholly or partly in Texas.

(b) This section does not prohibit cooperative arrangements between non-resident brokers and Texas brokers pursuant to §1101.651(a)(2) of the Act and §535.131 of this title.

(c) Unless otherwise exempted by the Act, a person must be licensed as a broker or sales agent to show a property. For purposes of this section, "show" a property includes causing or permitting the property to be viewed by a prospective buyer or tenant, unlocking or providing access onto or into a property for a prospective buyer or tenant, and hosting an open house at the property.

(d) A license holder may permit a prospective tenant unescorted access to view a property available for rent or lease only if:

(1) the property is vacant, meaning no person lives at, and no personal property except property intended to remain or convey is stored at, the property;

(2) the license holder employs a method to control access and verify the identity of the prospective tenant; and

(3) the property owner has signed a written consent that sets out in bold print in at least 12-point font that:

(A) the property owner is aware that unescorted access may occur; and

(B) specifies whether the broker enabling unescorted access or the property owner will be responsible for any damage that results from such unescorted access.

(e) The employees, agents or, associates of a licensed broker must be licensed as brokers or sales agents if they direct or supervise other persons who perform acts for which a license is required.

(f) A real estate license is required for a person to solicit listings or to negotiate in Texas for listings.

(g) A business entity owned by a broker or sales agent which receives compensation on behalf of the license holder must be licensed as a broker under the Act.

(h) A person controls the acceptance or deposit of rent from a resident of a single-family residential real property unit and must be licensed under the Act if the person has the authority to:

(1) use the rent to pay for services related to management of the property;

(2) determine where to deposit the rent; or

(3) sign checks or withdraw money from a trust account.

(i) For purposes of subsection (h) of this section, a single-family residential unit includes a single family home or a unit in a condominium, co-operative, row-home or townhome. The term does not include a duplex, triplex or four-plex unless the units are owned as a condominium, cooperative, row-home, or townhome.

(j) A person must be licensed as a broker to operate a rental agency.

(k) A real estate license is required of a subsidiary corporation, which, for compensation, negotiates in Texas for the sale, purchase, rent, or lease of its parent corporation's real property.

(l) A person who arranges for a tenant to occupy a residential property must have a real estate license if the person:

(1) does not own the property or lease the property from its owner;

(2) receives valuable consideration; and

(3) is not exempt under the Act.

(m) A real estate license is required for a person to receive a fee or other consideration for assisting another person to locate real property for sale, purchase, rent, or lease, including the operation of a service which finds apartments or homes.

(n) The compilation and distribution of information relating to rental vacancies or property for sale, purchase, rent, or lease is activity for which a real estate license is required if payment of any fee or other consideration received by the person who compiles and distributes the information is contingent upon the sale, purchase, rental, or lease of the property. An advance fee is a contingent fee if the fee must be returned if the property is not sold, purchased, rented, or leased.

(o) A person must be licensed as a broker or sales agent if, for compensation, the person:

(1) advertises for others regarding the sale, purchase, rent, or lease of real property;

(2) accepts inquiries received in response to such advertisements; and

(3) refers the inquiry to the owner of the property.

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 February 14, 2017.

TRD-201700607

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: March 6, 2017

Proposal publication date: December 2, 2016

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


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

22 TAC §535.61

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.61, Approval of Providers of Qualifying Courses, in Chapter 535, General Provisions, without changes to the text as published in the December 2, 2016, issue of the Texas Register (41 TexReg 9433).

The amendments are adopted to ensure greater consumer protection by requiring out-of-state providers to substantially meet the same standards required for in-state providers before they can offer a course for credit to Texas consumers.

The reasoned justification for the amendments is greater consumer protection by ensuring consistent standards for out-of-state education providers.

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 February 14, 2017.

TRD-201700608

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: March 6, 2017

Proposal publication date: December 2, 2016

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


22 TAC §535.64

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.64, Content Requirements for Qualifying Real Estate Courses, in Chapter 535, General Provisions, without changes to the text as published in the December 2, 2016, issue of the Texas Register (41 TexReg 9434).

The amendments are adopted to set out the topics and times required for the content for the Real Estate Math Qualifying Course, with the guideline form for course approval containing specific units being adopted by reference in the rule.

The reasoned justification for the amendments is greater clarity for providers in course preparation and better quality and consistency in new agent education.

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 February 14, 2017.

TRD-201700609

Kerri Lewis

General Counsel

Texas Real Estate Commission

Effective date: March 6, 2017

Proposal publication date: December 2, 2016

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


SUBCHAPTER R. REAL ESTATE INSPECTORS

22 TAC §535.216

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.216, Renewal of License in Subchapter R, Real Estate Inspectors, without changes to the text as published in the December 2, 2016, issue of the Texas Register (41 TexReg 9435).

The Commission adopts the amendments to clarify the process for renewing an expired inspector license when the license has been expired for less than six months.

The reasoned justification for the amendments is to provide greater clarity to license holders.

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.

The statute affected by the amendments is Chapter 1102, Texas Occupations Code. 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 February 14, 2017.

TRD-201700610

Kristen Worman

Deputy General Counsel

Texas Real Estate Commission

Effective date: March 6, 2017

Proposal publication date: December 2, 2016

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