(a)Application for approval.
(1)Unless otherwise exempt under subsection (b), a
person desiring to be approved by the Commission to offer real estate
or real estate inspection qualifying courses shall:
(A)file an application on the appropriate form approved
by the Commission, with all required documentation;
(B)submit the required fee under §535.101 or §535.210
of this title;
(C)submit the statutory bond or other security acceptable
to the Commission under §1101.302 of the Act; and
(D)maintain a fixed office in the state of Texas or
designate a resident of this state as attorney-in-fact to accept service
of process and act as custodian of any records in Texas which the
provider is required to maintain by this Subchapter.
(2)The Commission may:
(A)request additional information be provided to the
Commission relating to an application; and
(B)terminate an application without further notice
if the applicant fails to provide the additional information not later
than the 60th day after the Commission mails the request.
(3)An approved provider is permitted to offer courses
in both real estate and real estate inspection that have been approved
by the Commission.
(b)Exempt Providers.
(1)The following persons may submit real estate qualifying
courses for approval for credit under §535.62(i) of this subchapter
without becoming an approved provider of qualifying courses:
(A)a person approved by a real estate regulatory agency
to offer qualifying real estate courses in another state;
(B)an accredited college or university in accordance
with §535.66 of this subchapter;
(C)a post-secondary educational institution established
in and offering qualifying real estate courses in another state;
(D)a United States armed forces institute; and
(E)a nationally recognized professional designation
institute or council in the real estate industry.
(2)The following persons may submit real estate inspector
qualifying courses for approval for credit under §535.62(i) of
this subchapter without becoming an approved provider of qualifying
courses:
(A)a provider approved by an inspector regulatory
agency of another state;
(B)an accredited college or university in accordance
with §535.66 of this subchapter;
(C)a United States armed forces institute;
(D)a unit of federal, state or local government;
(E)a nationally recognized building, electrical, plumbing,
mechanical or fire code organization;
(F)a professional trade association in the inspection
field or in a related technical field; or
(G)an entity whose courses are approved and regulated
by an agency of this state.
(c)Standards for approval. To be approved as a provider
by the Commission, the applicant must meet the following standards:
(1)the applicant must satisfy the Commission as to
the applicant's ability to administer courses with competency, honesty,
trustworthiness and integrity. If the applicant proposes to employ
another person to manage the operation of the applicant, that person
must meet this standard as if that person were the applicant;
(2)the applicant must demonstrate that the applicant
has sufficient financial resources to conduct its proposed operations
on a continuing basis without risk of loss to students taking courses
from the approved provider; and
(3)that any proposed facilities will be adequate and
safe for conducting courses.
(d)Financial review. An applicant shall provide the
following information to enable the Commission to determine if an
applicant has sufficient financial resources to conduct its proposed
operations:
(1)business financial statements prepared in accordance
with generally accepted accounting principles, which shall include
a current income statement and balance sheet;
(2)a proposed budget for the first year of operation;
and
(3)a market survey indicating the anticipated enrollment
for the first year of operation.
(e)Insufficient financial condition. The existence
of any of the following conditions shall constitute prima facie evidence
that an applicant's financial condition is insufficient:
(1)nonpayment of a liability when due, if the balance
due is greater than 5% of the approved provider's current assets in
the current or prior accounting period;
(2)nonpayment of three or more liabilities when due,
in the current or prior accounting period, regardless of the balance
due for each liability;
(3)a pattern of nonpayment of liabilities when due,
in two or more accounting periods, even if the liabilities ultimately
are repaid;
(4)a current ratio of less than 1.75 for the current
or prior accounting period, this ratio being total current assets
divided by total current liabilities;
(5)a quick ratio of less than 1.60 for the current
or prior accounting period, this ratio being the sum of all cash equivalents,
marketable securities, and net receivables divided by total current
liabilities;
(6)a cash ratio of less than 1.40 for the current
or prior accounting period, this ratio being the sum of cash equivalents
and marketable securities divided by total current liabilities;
(7)a debt ratio of more than .40 for the current or
prior accounting period, this ratio being total liabilities divided
by total assets;
(8)a debt-to-equity ratio of greater than .60 for
the current or prior accounting period, this ratio being total liabilities
divided by owners' or shareholders' equity;
(9)a final judgment obtained against the approved
provider for nonpayment of a liability which remains unpaid more than
30 days after becoming final; or
(10)the execution of a writ of garnishment on any
of the assets of the approved provider.
(f)Approval notice. An applicant shall not act as
or represent itself to be an approved provider until the applicant
has received written notice of approval from the Commission.
(g)Period of initial approval. The initial approval
of a provider of qualifying courses is valid for four years.
(h)Payment of an annual operation fee.
(1)An approved provider shall submit the Commission
approved form and pay an annual operation fee prescribed by §535.101
of this title no later than each anniversary of the date of the provider's
approval.
(2)An approved provider who fails to pay the annual
operation fee as prescribed shall be placed on inactive status and
notified in writing by the Commission.
(3)The approved provider will remain on inactive status
until the annual fee is paid.
(4)The Commission will not give credit for courses
given by a provider on inactive status.
(i)Disapproval of application.
(1)If the Commission determines that an applicant
does not meet the standards for approval, the Commission will provide
written notice of disapproval to the applicant.
(2)The disapproval notice, applicant's request for
a hearing on the disapproval, and any hearing are governed by the
Administrative Procedure Act, Texas Government Code, Chapter 2001,
and Chapter 533 of this title (relating to Practice and Procedure).
Venue for any hearing conducted under this section shall be in Travis
County.
(j)Subsequent Approval.
(1)Not earlier than 90 days before the expiration
of its current approval, an approved provider may apply for subsequent
approval for another four year period.
(2)Approval or disapproval of a subsequent application
shall be subject to:
(A)the standards for initial applications for approval
set out in this section; and
(B)whether the approved provider has met or exceeded
the exam passage rate benchmark established by the Commission under
subsection (k).
(3)The Commission will not require a financial review
for subsequent approval if the applicant has provided a statutory
bond or other security acceptable to the Commission under §1101.302
of the Act, and there are no unsatisfied final money judgments against
the applicant.
(k)Exam passage rates and benchmark.
(1)The exam passage rate for an approved provider
shall be:
(A)calculated for each license category for which
the provider offers courses; and
(B)displayed on the Commission website by license
category.
(2)The Commission will calculate the exam passage
rate of an approved provider on a monthly basis by:
(A)determining the number of students affiliated with
that approved provider who passed the examination on their first attempt
in the two-year period ending on the last day of the previous month;
and
(B)dividing that number by the total number of students
affiliated with that provider who took the exam for the first time
during that same period.
(3)A student is affiliated with a provider under this
subsection if the student took the majority of his or her hours of
qualifying education with the provider in the two year period prior
to taking the exam for the first time.
(4)For purposes of approving a subsequent application
under subsection (j), the established exam passage rate benchmark
for each license category is 80% of the average percentage of the
total examinees for that license category who passed the examination
on the first attempt in the two year period ending on the last day
of the previous month.
(5)If at the time the Commission receives a subsequent
application for a provider, the provider's exam passage rate does
not meet the established benchmark for a license category the provider
will be:
(A)disapproved for that license category if the provider's
exam passage rate is less than 50% of the average percentage of the
total examinees for that license category who passed the examination
on the first attempt in the two year period ending on the last day
of the previous month; or
(B)placed on probation by the Commission if the provider's
exam passage rate is 50% or greater of the average percentage of the
total examinees for that license category who passed the examination
on the first attempt in the two year period ending on the last day
of the previous month.
(6)The exam passage rate of a provider on probation
will be reviewed annually at the time the annual operating fee is
due to determine if the provider can be removed from probation, remain
on probation or have its license revoked, based on the criteria set
out in paragraph (5) of this subsection.
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 6, 2015
TRD-201504792 Kerri Lewis
General Counsel
Texas Real Estate Commission
Effective date: January 1, 2016
Proposal publication date: September 4, 2015
For further information, please call: (512) 936-3092
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