The Texas Real Estate Commission (TREC) proposes amendments to §535.206, concerning Texas Real Estate Inspector Committee, §535.208, concerning Application for a License, §535.210, concerning Fees, new §535.211, concerning Professional Liability Insurance, amendments to §535.212, concerning Education and Experience for an Inspector License, §535.215, concerning Inactive Inspector Status, §535.216, concerning Renewal of License or Registration, and §535.224, concerning Practice and Procedure. The amendments and new rule are proposed to comply with new legislation that included revisions to Texas Occupations Code Chapter 1102 enacted during the 80th Legislative Session, Regular Session, by Senate Bill 914 and House Bill 1530. The effective date of SB 914 and HB 1530 was September 1, 2007.

On August 6, 2007, the commission adopted emergency rules to comply with the September 1 effective date. The emergency rules were published in the August 24, 2007, issue of the Texas Register (32 TexReg 5244). Also, on October 8, 2007, the commission amended by emergency action §535.212 which is published in a different part of this issue of the Texas Register.

The proposed amendments to §535.206, Texas Real Estate Inspector Committee, set the composition of the committee to consist of 6 professional inspector members and 3 public members appointed by the commission. The amendments detail the qualifications and terms for each member.

The proposed amendments to §535.208, Application for a License, require all applicants for home inspector licenses to provide proof that the applicant maintains professional liability insurance or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102 as required by Texas Occupations Code Chapter 1102. The amendments also propose to adopt by reference Certificate of Insurance, Form REI 8-0, to provide the requisite proof of insurance.

The proposed amendments to §535.210, Fees, establish the fee for an educational evaluation of $30, and delete the fee provisions for filing and renewing a professional inspector business license as the business license requirement was repealed by H.B. 1530.

Proposed new §535.211, provides for home inspector applicants to show proof of professional liability insurance or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102.

The proposed amendments to §535.212 require both education and experience in lieu of the experience required under the traditional three-tier application process to reflect new requirements under §1102.111, Texas Occupations Code. The proposed amendments require an applicant under the alternate application process for a professional inspector license to provide proof of completion of 200 additional hours of education and either proof of completion of 120 hours of an experience training module, 120 hours of experience working with a licensed professional inspector, or evidence of 5 years of experience in a field directly related to home inspecting.

Under the rule, there are three ways for applicants who are other than actively practicing licensed or registered architects, professional engineers, or engineer-in-trainings to gain required experience. The "education model" experience alternative will provide for experience to be obtained under conditions where the hands-on experience is systematic in its coverage under closely supervised field instruction by an approved education provider. The "inspection experience" alternative will assure that the aspiring licensee gets actual home inspecting experience with a licensed professional inspector for a stated period. Lastly, the experience alternative assures that the applicant has experience in a field directly related to home inspecting. The applicant will be able to choose which method of alternate experience is best suited to the applicant's background and training.

The proposed amendments to §535.212 require an applicant under the alternate application process for a real estate inspector license to provide proof of completion of 30 additional hours of education and proof of either completion of 60 hours of an experience training module, 60 hours of experience working with a licensed professional inspector, or evidence of 3 years of experience in a field directly related to home inspecting.

If the applicant is an actively practicing licensed or registered architect, professional engineer, or engineer-in-training, the applicant meets the professional inspector education and experience requirement by actively practicing for 3 years, and meets the real estate inspector education and experience requirement by actively practicing for 1 year.

If the applicant was enrolled in an education program with a significant experience component prior to September 1, 2007, the applicant meets the experience requirement in §1102.111(a), Texas Occupations Code. Not more than two persons may accompany a licensed professional inspector on inspections to meet the alternate experience component described in the amendments to §535.212.

All applicants under the alternate education and experience licensing method would be required to take the threshold education courses for each license type and pass the relevant licensing examination.

The proposed amendments to §535.215, Inactive Inspector Status, provide that a license will revert to inactive status if a licensee is unable to maintain professional liability insurance coverage or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102 as required by law.

The proposed amendments to §535.216, Renewal of License or Registration, provide for home inspector renewal applicants to show proof of professional liability insurance or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102.

The proposed amendments to §535.224 delete provisions that authorized the committee to hear disciplinary cases as such cases must, under the new laws, be heard by the State Office of Administrative Hearings. The amendments also provide that failure to maintain proof of professional liability insurance or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102 is an additional cause for disciplinary action.

Loretta R. DeHay, General Counsel, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the sections. There is no anticipated impact on local or state employment as a result of implementing the sections. There is an anticipated impact on small businesses and micro-businesses as a result of implementing the rules requiring professional liability insurance coverage or any other insurance that provides coverage for violations of Subchapter G of Chapter 1102. Based on information obtained from the Texas Department of Insurance, it is anticipated that such coverage would cost approximately $1,500 to $3,100 per year per licensee employed by the business.

Ms. DeHay also has determined that for each year of the first five years the sections as proposed are in effect the public benefit anticipated as a result of enforcing the sections will be compliance with new statutory provisions to better protect consumers of home inspection services in Texas. Although the total cost of obtaining a license under the alternate education/experience track is difficult to calculate because education providers charge different fees for courses offered to meet the requirements, the anticipated economic cost to persons who are required to comply with the proposed amendments is insignificant as the total number of additional education hours will remain the same. With respect to the liability insurance coverage requirements, based on information provided by the Texas Department of Insurance, the anticipated economic cost to persons who are required to comply with the proposed sections is from $1,500 to $3,100 per year to obtain insurance coverage required under Chapter 1102, Texas Occupations Code.

The amendments and new rule are proposed 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 statutes affected by the proposed amendments and proposed new rule are Texas Occupations Code, Chapters 1101 and 1102. No other statute, code or article is affected by the proposed amendments and new rule.