The Texas Real Estate Commission (TREC or the commission) adopts new §535.201, regarding Definitions; §535.209, regarding Examinations; §535.212, regarding Education and Experience Requirements for a License; §535.213, regarding Approval of Courses in Real Estate Inspection; §535.214, regarding Providers of Real Estate Inspections Courses; and §535.217, regarding Contact Information; and amendments to §535.206, regarding The Texas Real Estate Inspector Committee; §535.215, regarding Inactive Inspector Status; §535.216, regarding Renewal of License or Registration; §535.218, regarding Continuing Education, §535.221, regarding Advertisements; §535.222, regarding Inspection Reports; and §535.226, regarding Sponsorship of Apprentice Inspectors and Real Estate Inspectors. Section 535.212 and §535.218 are adopted with changes to the proposed text as published in the September 10, 2010, issue of the Texas Register (35 TexReg 8275) and will be republished. Sections 535.201, 535.206, 535.209, 535.213 - 535.217, 535.221, 535.222, and 535.226 are adopted without changes to the proposed text and will not be republished.

The changes to the proposed text of §535.212 establish an effective date of September 1, 2011, for the apportioning of pre-licensure hours, and the change to §535.218 establishes an effective date of September 1, 2011, for the 6-hour Standards of Practice/Legal/Ethics Update course. The revision to the rules as adopted do not change the nature or scope so much that they could be deemed different rules. The rules as adopted do not affect individuals other than those contemplated by the rules as proposed. The rules as adopted do not impose more onerous requirements than the proposed version and do not materially alter the issues raised in the proposed rules. Changes in the adopted rules will give applicants, licensees, and education providers additional time to accommodate these changes through modified course offerings.

The new rules and amendments to these sections reflect a nonsubstantive reorganization of 22 TAC Chapter 535, Subchapter R, to improve readability of the rules based on changes identified through the agency's rule review process. Other provisions throughout the rules modify language to allow the agency and its licensees to better take advantage of opportunities for online license management, as well as electronic delivery of notices and license certificates. In addition to these nonsubstantive amendments, a number of substantive changes are being adopted.

New §535.201, Definitions, consolidates definitions related to regulation of inspectors, including code organization and trade association, and introduces a Texas Standards of Practice/Legal/Ethics Update course.

Amendments to §535.206, The Texas Real Estate Inspector Committee, clarify that a member only serves until a successor has been appointed if the member completes his or her term and make other nonsubstantive changes to the section.

New §535.209, Examinations, moves the examination provisions from §535.214 (proposed for repeal) and lowers the minimum passing score on the professional inspector examination from 80% to 75%.

New §535.212, Education and Experience Requirements for a License, allocates the numbers of hours of education required by Chapter 1102 for licensure as a real estate inspector or professional inspector among the core subject matter areas. This change addresses both the hours required under the traditional three-tier method of licensure, as well as the hours required for the education/experience substitute method.

New §535.213, Approval of Courses in Real Estate Inspection, increases the maximum amount of classroom course time that may be spent on field work from 10% to 50% and defines a core course area of "legal/ethics."

New §535.214, Providers of Real Estate Inspection Courses, incorporates content from current §535.212 regarding the requirements for providers of courses in real estate inspection.

Amendments to §535.215, Inactive Inspector Status, reflect a change in requirements regarding inactive and active status to better take advantage of opportunities for online license management.

Amendments to §535.216, Renewal of License or Registration, reflect the commission's move toward online filing of applications and related forms, as well as electronic delivery of notices. The amendments also change the title of the section from "Renewal of License or Registration" to "Renewal of License."

New §535.217, Contact Information, requires that licensees provide the commission with a phone number and email address in addition to the permanent mailing address that is currently required, and further requires licensees to keep the commission apprised of any changes to this contact information.

Amendments to §535.218, Continuing Education, require all real estate inspectors and professional inspectors to take a six-hour Texas Standards of Practice/Legal/Ethics Update course in order to renew a license. This requirement does not increase the total number of hours required to renew but will be counted toward the 32-hour requirement to renew a two-year license.

Amendments to §535.221, Advertisements, explicitly brings electronic social media used for the purpose of gaining business into the definition of "advertisements" and clarifies how the rules relating to inspector advertising apply to these types of advertisements and how inspectors must identify themselves and provide their license numbers on such advertisements.

Amendments to §535.222, Inspection Reports, clarify that the names of each inspector who participated in performing an inspection, as well as all supervising real estate inspectors and/or sponsoring professional inspectors, must appear on inspection reports. The amendments also eliminate the signature requirement on inspection reports and require inspectors to deliver reports within three days unless otherwise agreed to in writing.

Amendments to §535.226, Sponsorship of Apprentice Inspectors and Real Estate Inspectors, reflect the move toward online license management and also eliminate language requiring signatures on inspection reports.

The reasoned justification for the amendments and new rules is greater availability of members willing to serve on the Inspector Committee; greater availability of inspectors with a broader base of understanding of inspection principles; increased clarity regarding the requirements for inspector advertising, report identification, and delivery of reports; and improved efficiency within the agency.

The Commission has received four comments regarding the amendments as proposed. Regarding §535.209, three commenters wrote in opposition to the reduction in the minimum passing score on the professional inspector examination, stating that reducing the minimum passing score from 80% to 75% constituted a "dumbing down" of the profession and that such a reduction would allow more inspectors and "incapable people" into the profession. The Commission respectfully disagrees, as the current passage rate of below 40% is substantially lower than passage rates on most other occupational licensing exams; lowering the minimum score to 75% is expected to bring the passage rate to approximately 60-65 percent, which is more consistent with passage rates of other occupational licensing examinations.

One of the commenters also stated his opposition to the proposed requirement that all real estate inspectors and professional inspectors take six hours of Standards of Practice/Legal/Ethics Update, applicable toward the 32-hour continuing education requirement, for renewal. This commenter acknowledged the need for such education but objected to the six-hour requirement and suggested that the Commission: (a) create a free course that inspectors would be required to take in addition to the 32-hour requirement; or (b) require licensees to sign a certification upon each renewal stating that they have read and are familiar with current Standards of Practice, laws, and rules. The Commission appreciates this commenter's position and suggestions but does not have authority to require continuing education beyond the 32 hours (16 per year) required for renewal and respectfully disagrees that signing a statement upon renewal is as effective as requiring coursework to ensure that inspectors are duly educated about the Standards of Practice and laws and rules applicable to them.

The fourth commenter expressed concern that requiring every inspector who participated in an inspection to sign the report would cause confusion and could result in the demise of multi-inspection teams and, in turn, the benefits thereof. The commission believes that the value of clearly stating who participated in an inspection outweighs any potential drawbacks.

The amendments and new rules 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 Chapter 1102 to ensure compliance with the provisions of the chapter.

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