Texas Register

TITLE 22 EXAMINING BOARDS
PART 23TEXAS REAL ESTATE COMMISSION
CHAPTER 535GENERAL PROVISIONS
SUBCHAPTER FEDUCATION, EXPERIENCE, EDUCATIONAL PROGRAMS, TIME PERIODS AND TYPE OF LICENSE
RULE §535.66Payment of Annual Fee, Audits, Investigations and Enforcement Actions
ISSUE 10/31/2003
ACTION Final/Adopted
Preamble Texas Admin Code Rule

(a)Payment of annual fee. A school shall pay the fee prescribed by Section 1101.152(a)(11) of Texas Occupations Code, Chapter 1101 (the Act) and by §535.101 of this title (relating to Fees) no later than the anniversary of the date of the school's accreditation. At least 30 days prior to the day the fee is due, the commission shall send a written notice to the school to pay the fee, but the school's obligation to pay the fee is not affected by any failure to receive the notice.

(b)Audits and evaluations. Schools are subject to audit by commission employees. Commission employees may conduct on-site audits without prior notice to the school, and may enroll and attend a course without identifying themselves as employees of the commission. Commission employees also may evaluate the effectiveness of course materials or instructors through surveys of students. The commission may require a school to furnish students with an evaluation form approved by the commission and to request that the students complete and return the form directly to the licensing and education division of the commission. An audit report or evaluation indicating noncompliance with these sections will be treated as a written complaint against the school or instructor concerned and will be referred to the enforcement division of the commission for appropriate resolution.

(c)Complaints, investigations and hearings. The commission shall investigate complaints against schools or instructors which allege acts constituting violations of these sections. Complaints must be in writing, and the commission may not initiate an investigation or take action against a school or instructor based on an anonymous complaint. Complaints against a school or instructor received by any division of the commission will be referred to the enforcement division for appropriate resolution. Commission employees may file written complaints against a school or instructor if course completion rosters or other documents filed with the commission provide reasonable cause to believe a violation of these sections has occurred. The school or instructor named in the complaint will be provided with a copy of the complaint. Proceedings against schools and instructors will be conducted in the manner required by the Act, §1101.657, 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 will be in Travis County.

(d)Grounds for disciplinary action against a school. The commission may issue a reprimand, place on probation, suspend or revoke accreditation of a school, or impose an administrative penalty when it has been determined that the school has been guilty of engaging in any of the following acts:

  (1)procuring or attempting to procure approval for a school, course or instructor by fraud, misrepresentation or deceit, or by making a material misrepresentation of fact in an application filed with the commission;

  (2)making a false representation to the commission, either intentionally or negligently, that a person had attended a course or a portion of a course for which credit was awarded, that a person had completed an examination, or that the person had completed any other requirement for course credit;

  (3)aiding or abetting a person to circumvent the requirements for attendance established by these sections, the completion of any examination, or any other requirement for course credit;

  (4)failing to provide within 15 days information requested by the commission as a result of a complaint which would indicate a violation of these sections;

  (5)making a materially false statement to the commission in response to a request from the commission for information relating to a complaint against the school or instructor;

  (6)disregarding or violating a provision of these sections or of the Act; or

  (7)failing to maintain sufficient financial resources to continue operation of the school without placing students at risk of financial loss.

(e)The existence of any of the following conditions shall constitute prima facie evidence that a school's financial condition is insufficient for continuing operation:

  (1)nonpayment of a liability when due, if the balance due is greater than 5% of the school'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 school for nonpayment of a liability which remains unpaid more than 30 days after becoming final; or

  (10)execution of a writ of garnishment on any of the assets of the school.

(f)Grounds for disciplinary action against instructor. The commission may issue a reprimand, place on probation, suspend or revoke approval of an instructor, or impose an administrative penalty when it has been determined that the instructor has been guilty of engaging in any of the following acts:

  (1)making a false representation to the commission, either intentionally or negligently, that a person had attended a course or a portion of a course for which credit was awarded, that a person had completed an examination, or that the person had completed any other requirement for course credit;

  (2)aiding or abetting a person to circumvent the requirements for attendance established by these sections, the completion of any examination, or any other requirement for course credit;

  (3)failing to provide within 15 days information requested by the commission as a result of a complaint which would indicate a violation of these sections;

  (4)making a materially false statement to the commission in response to a request from the commission for information relating to a complaint against a school or instructor; or

  (5)violating or disregarding any provision of the Act or a rule of the commission.

(g)Probation. An order of suspension or revocation issued under this section may be probated upon reasonable terms and conditions as determined by the commission.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on October 20, 2003

TRD-200306912

Loretta DeHay

General Counsel

Texas Real Estate Commission

Effective date: January 1, 2004

Proposal publication date: August 29, 2003

For further information, please call: (512) 465-3900



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