The Texas Real Estate Commission (TREC) adopts amendments to §535.91, concerning renewal applications, §535.92, concerning renewal: time for filing; satisfaction of mandatory continuing education requirements, and §535.94, concerning hearing on application disapproval: probationary licenses. Section 535.92 is adopted with changes to the proposed text as published in the June 25, 2004, issue of the Texas Register (29 TexReg 6044). Changes in §535.92 reflect nonsubstantive variations from the proposed rule to clarify its intent and improve style and readability. Section 535.91 and §535.94 are adopted without changes to the proposed text and will not be republished.

The amendments to §§535.91, 535.92, and 535.94 change the cites to the relevant statutory provisions in Chapter 1101, Texas Occupations Code. House Bill 2813, 77th Legislature (2001), added Chapter 1101, a nonsubstantive codification of The Real Estate License Act, and repealed Article 6573a, Texas Civil Statutes effective June 1, 2003. The amendments are also proposed in connection with TREC's on-going review of its rules.

In addition, the revisions to §535.91 and §535.92 require all licensees to take a three hour legal update course and a three hour legal ethics course created for and approved by TREC to satisfy the 6 legal hours of mandatory continuing education required by Occupations Code §1101.455 (the Act). Elective courses to be used as credit for the remaining 9 hours required by §1101.455 of the Act must be presentations of relevant issues that impact the practice of real estate or which increase or support the development of skill and competence. Core and mandatory continuing legal education courses may be accepted for satisfying MCE elective credit only. Correspondence and alternate delivery method courses may be taken to satisfy elective and legal credit subject to certain conditions. A provider may grant partial credit to a student who attends less than the complete course registered with the commission only if the segments of the course for which partial credit may be granted are not less than one hour in length; the student must attend a full class hour to get credit for attendance for that hour. Under the proposed revisions, the commission may approve on an individual basis for MCE credit specific professional designation courses that a licensee takes and applies for credit using an MCE Professional Designation Request Form. The purpose of the revisions to the sections is to increase the knowledge base and maintain consistent education on current real estate related case law, statutory provisions and legal ethics.

Licensees on active status will be required to take the required legal update and legal ethics courses for their next and all subsequent renewals of their license after January 1, 2005. Thus a licensee may, but is not required to attend the required legal courses for his or her first renewal after the effective date, but the licensee is required to take the courses for the next and all subsequent renewals. For licenses granted after the effective date, the licensee must attend the required courses to renew a license on active status. Distance learning courses may be offered for required legal course credit on or after July 1, 2005.

A draft of the mandatory continuing education rules was released for comment and displayed on the TREC web site for several months prior to the filing of the formal rulemaking proposal to adopt them. Approximately 150 comments were received and considered by the Commission during this period, and a number of changes, primarily regarding the acceptability of distance learning courses for required legal continuing education credit, were made in the draft of the rules prior to proposal as a result of the comments. After the proposed rules appeared in the Texas Register, approximately 20 comments were received. The Texas Association of Realtors commented in favor of the rules as proposed. The Texas Apartment Association commented against the rules as proposed. A number of comments did not result in changes to the text of the rules.

The comments and Commission responses to those comments are summarized as follows. All comments regarding this adoption, including any not specifically referenced herein, were fully considered by the commission.

Comment: Several commenters, apparently referring to the first draft of the rules available to the public prior to proposal, commented against the draft provisions that would have required attendance at live courses to obtain credit for the 6 legal hours required by the Act.

Response: The rules as proposed and adopted permit licensees to obtain legal course credit by taking distance learning courses that are approved by the Commission and are substantially similar to the live courses developed for the commission.

Comment: One commenter disagreed with the rules as proposed to the extent that the required legal update and ethics courses must be based on commission-developed course materials and approved subject matter that may only be taught by commission certified instructors. The commenter suggested that the rule be amended to continue allowing classes which cover the core topics outlined in the Act to be approved by the commission as legal update MCE hours. The commenter believes that the commission may be unable to timely update the course created for and approved by the commission to respond to changes in the industry.

Response: The commission disagrees with the commenter for the following reasons. Based on input from the education task force, the commission has determined that requiring licensees to attend the same legal update and ethics courses would provide much needed consistency in approaches to both learning and teaching current legal and ethics issues relevant to real estate continuing education. The commission intends to update the courses as necessary, at least every 6 months, and the rules require that the providers and instructors provide updated materials to students whenever the commission updates the courses. The two-year period ending on December 31 of every odd-numbered year is merely the time at which the courses will be replaced with new courses if necessary. The rules permit providers to alter a course to provide additional materials as long as the three hour portion of the course is substantially similar to the course approved by the commission. In addition, the rules permit providers to combine the required legal courses with elective courses that may provide additional or supplemental coverage of the course topics.

Comment: One commenter disagreed with the rules as proposed and requested that the commission postpone adoption of the rules until 2006 to provide sufficient time for providers to digest and understand changes they can make to existing approved courses to incorporate the required legal courses. The commenter spoke at the commission meeting held on August 9, 2004, and explained his understanding that currently approved courses might automatically expire on the January 1, 2005 effective date giving him little or no time to create new courses that included the required legal courses.

Response: The commission disagrees with the commenter because the rules as adopted permit providers to combine the required legal courses with elective courses that may provide additional or supplemental coverage of the course topics. In addition, currently approved courses will not automatically expire on January 1, 2005. Currently approved courses expire on the date of their expiration, or two years from the date of original approval. The adopted rules do not contain a provision that automatically expires such courses. Such courses may continue to be offered and used for MCE credit, including legal credit, for the first renewal of an active license on or after January 1, 2005.

The amendments are adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to insure compliance with the provisions of the Act.

The statute affected by this adoption is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the adopted amendments.