The Texas Real Estate Commission (TREC or the commission) adopts amendments to §535.141, regarding Initiation of Investigation; §535.143, regarding Fraudulent Procurement of License; §535.144, regarding When Acquiring or Disposing of Own Property or Property of Spouse, Parent or Child; §535.145, regarding False Promise; §535.146, regarding Failure to Properly Account for Money; Commingling; §535.147, regarding Splitting Fee with Unlicensed Person; §535.148, regarding Receiving an Undisclosed Commission or Rebate; §535.149, regarding Lottery or Deceptive Trade Practice; §535.153, regarding Violating an Exclusive Agency; §535.159, regarding Failing to Properly Deposit Escrow Monies; §535.160, regarding Failing to Properly Disburse Escrow Money; and §535.161, regarding Failing to Provide Information. Section 535.148 is adopted with changes to the proposed text as published in the September 10, 2010, issue of the Texas Register (35 TexReg 8268) and will be republished. Sections 535.141, 535.143 - 535.147, 535.149, 535.153, and 535.159 - 535.161 are adopted without changes to the proposed text and will not be republished.

Section 535.148(e) was changed to add an effective date for that subsection of March 1, 2011. The form adopted by reference in §535.148(f) was also changed to remove the phrase "to buyers and sellers of real estate" from the paragraph which discloses the receipt of compensation from a residential service company. The revisions to the rule as adopted do not change the nature or scope so much that it could be deemed a different rule. The rule as adopted does not affect individuals other than those contemplated by the rule as proposed. The rule as adopted does not impose more onerous requirements than the proposed version and does not materially alter the issues raised in the proposed rule. The changes in the rule reflects a nonsubstantive variation from the proposed rule to make the affected rule consistent with other rules.

The amendments to §535.141 streamline the section, update the cites and clarify existing subsections; subsection (h) is amended to include advertising in the laundry list activities that a licensee may not engage in while the person's license is under suspension; subsection (i)(3) and (4) is added to include home inspectors; subsection (j) is added to address matters relating to automatic suspension of a license for violating a term or condition of an agreed probated revocation or suspension.

The amendments to §535.144 clarify that a licensee must disclose the information required by §1101.652(a)(3) in writing.

The amendments to §535.146 clarify existing requirements that apply to maintenance of trust accounts, including that a broker is ultimately responsible for compliance with the trust account requirements in the Act and Rules; subsection (h) is amended to require a broker to notify all parties in writing when a broker makes a disbursement to which all parties have not expressly agreed in writing; and subsection (k) is amended to clarify that a broker may deposit and maintain additional amounts in a trust account to cover bank service fees.

Section 535.147(a) is deleted and moved to the definitions in §535.1; new subsection (a) clarifies that a licensee may not share a commission with an unlicensed person except as provided by the Act or Rules; new subsection (b) authorizes an unlicensed person to share in the income earned by a licensee as long as the person does not engage in real estate brokerage activity; and new subsection (c) clarifies that a broker or salesperson may not share a commission with an unlicensed corporation or limited liability company created by a licensee for the purpose of collecting a commission or fees on behalf of the licensee.

New subsection (c) is added to §535.148 to prohibit a licensee from entering into contracts with service providers which prohibits a licensee from entering into or offering similar service on behalf of a competing service provider; new subsection (d) prohibits contingent fee arrangements where the licensee accepts a fee that is contingent upon a party purchasing a contract or services from a specific service provider; new subsection (e) adopts by a reference RSC-1, Disclosure of Relationship with Residential Service Company, which licensees are required to use as of March 1, 2010 to disclose compensation for services provided to or on behalf of a residential service company.

The amendments to §535.149 clarify the definition of "lottery" and "deceptive trade practices."

Amendments to §§535.143, 535.145, 535.153, and 535.159 - 535.161 clarify and streamline existing provisions.

The reasoned justification for the amendments is more streamlined, consistent and readable rules.

Additional justification is provided below in response to the comments on the advertising rules as proposed.

The Texas Association of Realtors, the Texas Apartment Association, and the Metrotex Association of Realtors commented on the rules proposed under Subchapter N.

The commission received 86 comments on the rules as proposed

Comments: Two commenters commented in favor of §535.146 as proposed.

Comments: Approximately 82 comments expressed concerns about the costs and burden of complying with §535.154 as proposed.

Comment: One commenter noted that the requirements of subsection (d) of §535.154 are also overly burdensome because it places potential liability on a licensee for inadvertent advertising inaccuracies.

Comment: One commenter suggested that adding the broker's license number to advertisements and requiring the broker's name to be identified in a clear and conspicuous manner will potentially clutter advertisements making them harder to read by the general public.

Response: The commission will continue to seek recommendations from interested parties regarding proposed new §535.154, and therefore did not take final action to adopt proposed new §535.154. Similarly, the commission decided not to take final action to repeal existing §535.154 until such time that a decision is made on a provision to replace it.

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 ensure compliance with the provisions of the Act.

The statutes affected by this adoption are Texas Occupations Code, Chapter 1101 and Chapter 1102. No other statute, code or article is affected by the adoption.