(a)Each residential service company licensed by the
Commission that does not maintain a reimbursement insurance policy shall
maintain a funded reserve [reserves]
in the amount required by Subchapter D of the Act. Accounts containing
funded reserves must be identified as such and may not be encumbered
or commingled with funds that are not reserves. A separate [
Separate] funded reserve is [reserves are]
required for service contracts written in Texas unless the company's
combined funded reserve meets [reserves meet]
the minimum reserve requirements of the Act, Subchapter D, calculated
based on all outstanding contracts. Each company shall maintain a
level of liquidity equal to or greater than the amount of its funded
reserve.
(b)The funded reserve [Funded reserves]
may be maintained in the following liquid assets only:
(1)in cash or savings deposits, time deposits, certificates
of deposit, or money market accounts in solvent banks, savings and
loan associations and credit unions and branches thereof, organized
under the laws of the United States of America or its states;
(2)in investment grade notes, bonds, bills or other
evidences of indebtedness or obligations of the United States of America
or of a state or unit of local government or in a money market mutual
fund which invests in the securities listed in this paragraph. For
the purposes of this section, the term "investment grade" shall mean
a security rated BBB and above by a nationally recognized securities
rating organization such as Standard & Poor's; or
(3)in other governmentally backed financial instruments
acceptable to the Commission, provided prior permission is obtained.
[(c)If a residential service company
reinsures the outstanding risk, as authorized under §1303.152
of the Act, through a captive insurance company as defined under §964.001,
Insurance Code, the residential service company shall maintain at
least 25% of the amount of the funded reserve required under subsection
(a).]
(c)[(d)] Each residential service
company required to maintain a funded reserve shall complete
a monthly reconciliation to confirm that it meets the minimum funded
reserve requirements of the Act, Subchapter D. If the minimum reserve
requirement has not been met, the residential service company shall
take immediate steps to increase the amount of its funded reserve
to meet the minimum funded reserve required.
(d)[(e)] The Commission may
suspend or revoke the license of a residential service company for
failure to comply with this section.
The agency certifies that legal counsel has reviewed
the proposal and found it to be within the state agency's legal authority
to adopt.
Filed with the Office
of the Secretary of State on August
11, 2017
TRD-201703110 Kerri Lewis
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: September 24, 2017
For further information, please call: (512) 936-3092
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