bill rewriting real estate licensing education rules

The text as introduced · 3,904 words

89R11266 RAL-F

By: Schwertner
S.B. No. 1968

A BILL TO BE ENTITLED

AN ACT

relating to the licensing and regulation of certain real estate

professionals by the Texas Real Estate Commission.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1101.003(a), Occupations Code, is

amended to read as follows:

(a) For purposes of this chapter, "qualifying real estate

courses" include:

(1) agency law[ , which includes the following topics:

[ (A) the relationship between a principal and an

agent;

[ (B) an agent's authority;

[ (C) the termination of an agent's authority;

[ (D) an agent's duties, including fiduciary

duties;

[ (E) employment law;

[ (F) deceptive trade practices;

[ (G) listing or buying representation

procedures; and

[ (H) the disclosure of agency ];

(2) contract law[ , which includes the following

topics:

[ (A) elements of a contract;

[ (B) offer and acceptance;

[ (C) statute of frauds;

[ (D) remedies for breach, including specific

performance;

[ (E) unauthorized practice of law;

[ (F) commission rules relating to use of adopted

forms; and

[ (G) owner disclosure requirements ];

(3) principles of real estate[ , which includes:

[ (A) an overview of:

[ (i) licensing as a broker or sales agent;

[ (ii) ethics of practice as a license

holder;

[ (iii) titles to and conveyance of real

estate;

[ (iv) legal descriptions;

[ (v) deeds, encumbrances, and liens;

[ (vi) distinctions between personal and

real property;

[ (vii) appraisal;

[ (viii) finance and regulations;

[ (ix) closing procedures; and

[ (x) real estate mathematics; and

[ (B) at least three class hours of instruction on

federal, state, and local laws relating to housing discrimination,

housing credit discrimination, and community reinvestment ];

(4) property management[ , which includes the

following topics:

[ (A) the role of a property manager;

[ (B) landlord policies;

[ (C) operational guidelines;

[ (D) leases;

[ (E) lease negotiations;

[ (F) tenant relations;

[ (G) maintenance;

[ (H) reports;

[ (I) habitability laws; and

[ (J) the Fair Housing Act (42 U.S.C. Section 3601

et seq.) ];

(5) real estate appraisal[ , which includes the

following topics:

[ (A) the central purposes and functions of an

appraisal;

[ (B) social and economic determinants of the

value of real estate;

[ (C) appraisal case studies;

[ (D) cost, market data, and income approaches to

value estimates of real estate;

[ (E) final correlations; and

[ (F) reporting ];

(6) real estate brokerage[ , which includes the

following topics:

[ (A) agency law;

[ (B) planning and organization;

[ (C) operational policies and procedures;

[ (D) recruitment, selection, and training of

personnel;

[ (E) records and control; and

[ (F) real estate firm analysis and expansion

criteria ];

(7) real estate finance[ , which includes the following

topics:

[ (A) monetary systems;

[ (B) primary and secondary money markets;

[ (C) sources of mortgage loans;

[ (D) federal government programs;

[ (E) loan applications, processes, and

procedures;

[ (F) closing costs;

[ (G) alternative financial instruments;

[ (H) equal credit opportunity laws;

[ (I) community reinvestment laws, including the

Community Reinvestment Act of 1977 (12 U.S.C. Section 2901 et

seq.); and

[ (J) state housing agencies, including the Texas

Department of Housing and Community Affairs ];

(8) real estate investment[ , which includes the

following topics:

[ (A) real estate investment characteristics;

[ (B) techniques of investment analysis;

[ (C) the time value of money;

[ (D) discounted and nondiscounted investment

criteria;

[ (E) leverage;

[ (F) tax shelters depreciation; and

[ (G) applications to property tax ];

(9) real estate law[ , which includes the following

topics:

[ (A) legal concepts of real estate;

[ (B) land description;

[ (C) real property rights and estates in land;

[ (D) contracts;

[ (E) conveyances;

[ (F) encumbrances;

[ (G) foreclosures;

[ (H) recording procedures; and

[ (I) evidence of titles ];

(10) real estate marketing[ , which includes the

following topics:

[ (A) real estate professionalism and ethics;

[ (B) characteristics of successful sales agents;

[ (C) time management;

[ (D) psychology of marketing;

[ (E) listing procedures;

[ (F) advertising;

[ (G) negotiating and closing;

[ (H) financing; and

[ (I) Subchapter E, Chapter 17, Business &

Commerce Code ]; and

(11) real estate mathematics[ , which includes the

following topics:

[ (A) basic arithmetic skills and review of

mathematical logic;

[ (B) percentages;

[ (C) interest;

[ (D) the time value of money;

[ (E) depreciation;

[ (F) amortization;

[ (G) proration; and

[ (H) estimation of closing statements ].

SECTION 2. Section 1101.161, Occupations Code, is amended

to read as follows:

Sec. 1101.161. GIFTS, GRANTS, AND DONATIONS. The

commission may solicit and accept a gift, grant, donation, or other

item of value from any source to pay for any activity under this

chapter, or Chapter 1102, 1103, or 1104[ , or 1303 ] of this code, or

Chapter 221, Property Code.

SECTION 3. Section 1101.204, Occupations Code, is amended

by adding Subsection (d-1) to read as follows:

(d-1) Notwithstanding Section 1101.2051, the commission may

provide a written notice of an investigation to a person licensed

under this chapter or Chapter 1102 and who is associated with the

license holder who is the subject of the investigation. The

commission shall adopt rules to specify the persons who may receive

notice under this subsection.

SECTION 4. Section 1101.356(a), Occupations Code, is

amended to read as follows:

(a) An applicant for a broker license must provide to the

commission satisfactory evidence that the applicant:

(1) has had at least four years of active experience as

a license holder during the 60 months preceding the date the

application is filed; [ and ]

(2) has successfully completed the number of hours of

qualifying real estate and related courses required by commission

rule, not to exceed 60 semester hours or equivalent classroom

hours ; and

(3) has attended the broker responsibility course

approved by the commission under Section 1101.458 .

SECTION 5. Section 1101.358(a), Occupations Code, is

amended to read as follows:

(a) An applicant for a sales agent license must provide to

the commission satisfactory evidence that the applicant has

successfully completed at least 12 semester hours, or equivalent

classroom hours, of qualifying real estate courses required by

commission rule [ education consisting of:

[ (1) at least four semester hours of qualifying real

estate courses on principles of real estate; and

[ (2) at least two semester hours of each of the

following qualifying real estate courses:

[ (A) agency law;

[ (B) contract law;

[ (C) contract forms and addendums; and

[ (D) real estate finance ].

SECTION 6. Sections 1101.458(a), (b), and (c), Occupations

Code, are amended to read as follows:

(a) A [ designated ] broker and [ for a business entity

licensed under this chapter, a broker who sponsors ] a sales agent [ ,

or a license holder ] who supervises another license holder must

attend during the term of the current license the [ at least six

classroom hours of ] broker responsibility course [ education

courses ] approved by the commission.

(b) The commission by rule shall prescribe the title,

content, and duration of the broker responsibility course

[ education courses ] required under this section. The course may

not exceed six hours of classroom instruction.

(c) Broker responsibility [ education ] course hours may be

used to satisfy the hours described by Sections 1101.356 and

[ Section ] 1101.455(f).

SECTION 7. Section 1101.552, Occupations Code, is amended

by amending Subsection (e) and adding Subsections (f) and (g) to

read as follows:

(e) A license holder shall provide the commission with :

(1) the license holder's current :

(A) mailing address ;

(B) business address;

(C) business [ and ] telephone number ; [ , ] and

(D) [ the license holder's ] business e-mail

address ; and [ if available ]

(2) if the license holder is an associated broker, the

name of the broker with whom the license holder is associated .

(f) A license holder shall notify the commission of a change

in the information described by Subsection (e) [ license holder's

mailing or e-mail address or telephone number ].

(g) In this section, "associated broker" means a broker who

associates with and is paid through another broker under a

relationship that is intended to be a continuous relationship,

including as an employee or an ongoing independent contractor.

SECTION 8. Section 1101.558(b-1), Occupations Code, is

amended to read as follows:

(b-1) At the time of a license holder's first substantive

communication with a party relating to a proposed transaction

regarding specific real property, the license holder shall provide

to the party written notice in at least a 10-point font that:

(1) describes the ways in which a broker can represent

a party to a real estate transaction, including as an intermediary;

(2) describes the basic duties and obligations a

broker has to a party to a real estate transaction that the broker

represents; [ and ]

(3) describes the basic obligations a broker has to a

party to a real estate transaction that the broker does not

represent; and

(4) provides the name, license number, and contact

information for the license holder and the license holder's

supervisor and broker, if applicable.

SECTION 9. Subchapter L, Chapter 1101, Occupations Code, is

amended by adding Sections 1101.562 and 1101.563 to read as

follows:

Sec. 1101.562. REAL PROPERTY SHOWINGS WITHOUT

REPRESENTATION. (a) A broker may show real property available for

sale or lease to a party without representing the party if the

broker:

(1) has not agreed with the party, either orally or in

writing, to represent the party;

(2) is not otherwise acting as the party's agent at the

time of showing the real property;

(3) does not provide to the party opinions or advice

regarding the real property or real estate transactions in general;

and

(4) does not perform any other act of real estate

brokerage for the party.

(b) Before a broker may show real property under Subsection

(a), the broker must, as applicable:

(1) disclose to the party as required by Section

1101.558(b) if the broker represents the owner of the real

property; or

(2) provide to the party the written notice described

by Section 1101.558(b-1) if the broker does not represent the owner

of the real property.

(c) Notwithstanding Subsections (a)(3) and (4), a broker

showing real property under this section may confirm information to

a party regarding the size, price, and terms of the real property

available for sale or lease.

Sec. 1101.563. WRITTEN AGREEMENT REQUIRED. (a) In this

section, "residential real property" means:

(1) a single-family house;

(2) a duplex, triplex, or quadraplex; or

(3) a unit in a multiunit residential structure in

which title to an individual unit is transferred to the owner of the

unit under a condominium or cooperative system.

(b) Before a license holder may perform any act of real

estate brokerage for a prospective buyer of residential real

property, the license holder must enter into a written agreement

with the prospective buyer. The written agreement must:

(1) state:

(A) the services to be provided by the license

holder;

(B) the termination date of the agreement;

(C) whether the agreement is exclusive;

(D) as applicable, that the license holder:

(i) represents the prospective buyer as the

buyer's agent; or

(ii) does not represent the prospective

buyer as the buyer's agent if the only act of real estate brokerage

being performed is showing real property under Section 1101.562;

and

(E) the amount or rate of compensation the

license holder will receive and how this amount will be determined;

and

(2) disclose in conspicuous language that broker

compensation is not set by law and is fully negotiable.

(c) A license holder who enters into a written agreement

with a prospective buyer for the sole purpose of showing real

property under Section 1101.562 shall enter into a separate

agreement with the prospective buyer if additional real estate

brokerage acts are to be provided after showing the real property.

SECTION 10. Sections 1101.652(a) and (b), Occupations Code,

are amended to read as follows:

(a) The commission may suspend or revoke a license issued

under this chapter or Chapter 1102 or take other disciplinary

action authorized by this chapter or Chapter 1102 if the license

holder:

(1) enters a plea of guilty or nolo contendere to or is

convicted of a felony or a criminal offense involving fraud, and the

time for appeal has elapsed or the judgment or conviction has been

affirmed on appeal, without regard to an order granting community

supervision that suspends the imposition of the sentence;

(2) procures or attempts to procure a license under

this chapter or Chapter 1102 for the license holder by fraud,

misrepresentation, or deceit or by making a material misstatement

of fact in an application for a license;

(3) fails to honor, within a reasonable time, a

payment [ check ] issued to the commission after the commission has

sent by certified mail a request for payment to the license holder's

last known [ business ] address according to commission records;

(4) fails to provide, within a reasonable time,

information requested by the commission that relates to a formal or

informal complaint to the commission that would indicate a

violation of this chapter or Chapter 1102;

(5) fails to surrender to the owner, without just

cause, a document or instrument that is requested by the owner and

that is in the license holder's possession;

(6) fails to consider market conditions for the

specific geographic area in which the license holder is providing a

service;

(7) fails to notify the commission, not later than the

30th day after the date of a final conviction or the entry of a plea

of guilty or nolo contendere, that the person has been convicted of

or entered a plea of guilty or nolo contendere to a felony or a

criminal offense involving fraud; or

(8) disregards or violates this chapter or Chapter

1102.

(b) The commission may suspend or revoke a license issued

under this chapter or take other disciplinary action authorized by

this chapter if the license holder, while engaged in real estate

brokerage:

(1) acts negligently or incompetently;

(2) engages in conduct that is dishonest or in bad

faith or that demonstrates untrustworthiness;

(3) makes a material misrepresentation to a potential

buyer concerning a significant defect, including a latent

structural defect, known to the license holder that would be a

significant factor to a reasonable and prudent buyer in making a

decision to purchase real property;

(4) fails to disclose to a potential buyer a defect

described by Subdivision (3) that is known to the license holder;

(5) makes a false promise that is likely to influence a

person to enter into an agreement when the license holder is unable

or does not intend to keep the promise;

(6) pursues a continued and flagrant course of

misrepresentation or makes false promises through an agent or sales

agent, through advertising, or otherwise;

(7) fails to make clear to all parties to a real estate

transaction the party for whom the license holder is acting;

(8) receives compensation from more than one party to

a real estate transaction without the full knowledge and consent of

all parties to the transaction;

(9) fails within a reasonable time to properly account

for or remit money that is received by the license holder and that

belongs to another person;

(10) commingles money that belongs to another person

with the license holder's own money;

(11) pays a commission or a fee to or divides a

commission or a fee with a person other than a license holder or a

real estate broker or sales agent licensed in another state for

compensation for services as a real estate agent;

(12) fails to specify a definite termination date that

is not subject to prior notice in a contract, other than a contract

to perform property management services, in which the license

holder agrees to perform services for which a license is required

under this chapter;

(13) accepts, receives, or charges an undisclosed

commission, rebate, or direct profit on an expenditure made for a

principal;

(14) solicits, sells, or offers for sale real property

by means of a lottery;

(15) solicits, sells, or offers for sale real property

by means of a deceptive practice;

(16) acts in a dual capacity as broker and undisclosed

principal in a real estate transaction;

(17) guarantees or authorizes or permits a person to

guarantee that future profits will result from a resale of real

property;

(18) places a sign on real property offering the real

property for sale or lease without obtaining the written consent of

the owner of the real property or the owner's authorized agent;

(19) offers to sell or lease real property without the

knowledge and consent of the owner of the real property or the

owner's authorized agent;

(20) offers to sell or lease real property on terms

other than those authorized by the owner of the real property or the

owner's authorized agent;

(21) induces or attempts to induce a party to a

contract of sale or lease to break the contract for the purpose of

substituting a new contract;

(22) negotiates or attempts to negotiate the sale,

exchange, or lease of real property with an owner, landlord, buyer,

or tenant with knowledge that that person is a party to an

outstanding written contract that grants exclusive agency to

another broker in connection with the transaction;

(23) publishes or causes to be published an

advertisement that:

(A) misleads or is likely to deceive the public;

(B) tends to create a misleading impression;

(C) implies that a sales agent is responsible for

the operation of the broker's real estate brokerage business; or

(D) fails to include the name of the broker for

whom the license holder acts, which name may be the licensed name,

assumed name, or trade name of the broker as authorized by a law of

this state and registered with the commission;

(24) withholds from or inserts into a statement of

account or invoice a statement that the license holder knows makes

the statement of account or invoice inaccurate in a material way;

(25) publishes or circulates an unjustified or

unwarranted threat of a legal proceeding or other action;

(26) establishes an association by employment or

otherwise with a person other than a license holder if the person is

expected or required to act as a license holder;

(27) aids, abets, or conspires with another person to

circumvent this chapter;

(28) fails or refuses to provide, on request, a copy of

a document relating to a real estate transaction to a person who

signed the document;

(29) fails to advise a buyer in writing before the

closing of a real estate transaction that the buyer should:

(A) have the abstract covering the real estate

that is the subject of the contract examined by an attorney chosen

by the buyer; or

(B) be provided with or obtain a title insurance

policy;

(30) fails to deposit, within a reasonable time, money

the license holder receives as escrow or trust funds in a real

estate transaction:

(A) in trust with a title company authorized to

do business in this state; or

(B) in a custodial, trust, or escrow account

maintained for that purpose in a banking institution authorized to

do business in this state;

(31) disburses money deposited in a custodial, trust,

or escrow account, as provided in Subdivision (30), before the

completion or termination of the real estate transaction;

(32) discriminates against an owner, potential buyer,

landlord, or potential tenant on the basis of race, color,

religion, sex, disability, familial status, national origin, or

ancestry, including directing a prospective buyer or tenant

interested in equivalent properties to a different area based on

the race, color, religion, sex, disability, familial status,

national origin, or ancestry of the potential owner or tenant; [ or ]

(33) disregards or violates this chapter ; or

(34) fails to enter into a written agreement with a

prospective buyer as required by Section 1101.563 .

SECTION 11. Section 1101.653, Occupations Code, is amended

to read as follows:

Sec. 1101.653. GROUNDS FOR SUSPENSION OR REVOCATION OF

CERTIFICATE. The commission may suspend or revoke a certificate of

registration issued under this chapter if the certificate holder:

(1) engages in dishonest dealing, fraud, unlawful

discrimination, or a deceptive act;

(2) makes a misrepresentation;

(3) acts in bad faith;

(4) demonstrates untrustworthiness;

(5) fails to honor, within a reasonable time, a

payment [ check ] issued to the commission after the commission has

mailed a request for payment to the certificate holder's last known

address according to the commission's records;

(6) fails to provide to a party to a transaction a

written notice prescribed by the commission that:

(A) must be given before the party is obligated

to sell, buy, lease, or transfer a right-of-way or easement; and

(B) contains:

(i) the name of the certificate holder;

(ii) the certificate number;

(iii) the name of the person the

certificate holder represents;

(iv) a statement advising the party that

the party may seek representation from a lawyer or broker in the

transaction; and

(v) a statement generally advising the

party that the right-of-way or easement may affect the value of the

property;

(7) directly or indirectly accepts a financial

incentive to make an initial offer that the certificate holder

knows or should know is lower than the adequate compensation

required under the Texas Constitution; or

(8) disregards or violates this chapter or a

commission rule relating to certificate holders.

SECTION 12. The following provisions of the Occupations

Code are repealed:

(1) Section 1101.002(8); and

(2) Section 1101.805(f).

SECTION 13. Section 1101.204, Occupations Code, as amended

by this Act, applies only with respect to a notice regarding a

complaint filed on or after the effective date of this Act. A

notice regarding a complaint filed before the effective date of

this Act is governed by the law in effect on the date the complaint

was filed, and the former law is continued in effect for that

purpose.

SECTION 14. Section 1101.356(a), Occupations Code, as

amended by this Act, applies only to an application for a broker

license under Chapter 1101, Occupations Code, submitted on or after

the effective date of this Act. An application submitted before the

effective date of this Act is governed by the law in effect on the

date the application was submitted, and the former law is continued

in effect for that purpose.

SECTION 15. Section 1101.358(a), Occupations Code, as

amended by this Act, applies only to an application for a sales

agent license under Chapter 1101, Occupations Code, submitted on or

after the effective date of this Act. An application submitted

before the effective date of this Act is governed by the law in

effect on the date the application was submitted, and the former law

is continued in effect for that purpose.

SECTION 16. Section 1101.652(b), Occupations Code, as

amended by this Act, applies only to conduct occurring on or after

the effective date of this Act. Conduct occurring before the

effective date of this Act is governed by the law in effect on the

date the conduct occurred, and the former law is continued in effect

for that purpose.

SECTION 17. This Act takes effect January 1, 2026.