The Texas Real Estate Commission (TREC or the commission) adopts amendments to §535.61, regarding examinations; §535.62, regarding Acceptable Courses of Study; new §535.63, regarding Accreditation of Core Education Schools; new §535.64, regarding Obtaining Approval to Offer a Course; new §535.65, regarding Operation of Core Education Schools; new §535.66, regarding Core Education Providers: Audits, Investigations, and Enforcement Actions; new §535.67, regarding Approval of Instructors; and new §535.68, regarding Additional Information Related to an Application. Sections 535.64 and 535.65 are adopted with changes to the proposed text as published in the September 24, 2010, issue of the Texas Register (35 TexReg 8706) and will be republished. Sections 535.61 - 535.63 and 535.66 - 535.68 are adopted without changes and will not be republished.

The differences between the rule as proposed and the rule as finally adopted are as follows: Section 535.64(d) corrects a typographical error referencing §535.62(g) to the correct reference of §535.62(f); 535.65(4) clarifies that a school may rely on published objective information such as pass rates in advertising regarding the school's course of instruction; §535.65(9)(D) regarding records retention is clarified to address records that are maintained in an electronic format; and §535.65(10) is changed to require schools to use, at a minimum, course and instructor evaluation criteria established by the commission, rather than requiring schools to use evaluation forms approved by the commission.

The commission renames the subchapter name from "Education, Experience, Educational Programs, Time Periods and Type of Licensure" to "Pre-License Education and Examination."

The subchapter name as amended more appropriately addresses the new content of the subchapter which TREC is simultaneously adopting as part of a comprehensive rule review of 22 TAC Chapter 535. As the reformation of the subchapters comprehensively addresses the subjects of the adopted amendments and new rules, it is necessary to avoid confusion and repetition.

Section 535.61 is amended to delete a redundant provision regarding the confidentiality of the examination as contents of the examination are confidential under the Texas Public Information Act, Texas Government Code Chapter 552. The amendments to §535.61(a)(1) and (3) remove the requirements of intent or knowledge. Thus, engaging in any of the listed activities with respect to the TREC exam is considered grounds for disciplinary action regardless of the intent or knowledge of the applicant or licensee. Subsections (f) and (g) are moved to new §535.57.

The amendments to §535.62(a) delete a reference to acceptable real estate related courses as the term "related course" is defined in new §535.50. The following amendments to §535.62 are adopted as part of the reformation of the section to group similar subjects into the same sections and to clarify the subject matter of each rules. Paragraphs (1) and (2) of subsection (a) are moved from existing §535.62(f)(1) and (2); the first sentence of subsection (b) is moved from §535.62(b); paragraph (5) of subsection (b) is amended to track the terminology used in the Act; subsection (c) is reworded for clarity; paragraphs (3) and (4) of subsection (d) are moved from existing §535.62(d)(9) and (e). Subsections (e) - (g) are moved from other parts of existing §535.62 to put like subject matter together. Existing §535.62(d)(6)(B) regarding courses offered by an alternative delivery method was deleted because distance learning certification (required under §535.62(g)(1)) ensures the requirements of that subparagraph and it was therefore redundant. Although the remaining provisions of §535.62 indicate that they were deleted, there were moved to other sections for clarity.

Existing §535.63 was repealed and moved to new §§535.54 - 535.56. Much of new §535.63 is moved from existing §535.64 which addresses accreditation of schools. The renewal period for accreditation of schools is changed from five years to four years in §535.63(b). For purposes of calculation a school's passage rate in §535.63(b)(3), the commission will use a four-year period instead of a five-year period (current). Thus a school's passage rate will be calculated by dividing the number of students affiliated with that school who passed the examination on their first attempt in the four-year period ending on the last day of the previous quarter by the total number of the school's graduates who took the exam for the first time in the same period.

Existing §535.64 is repealed and replaced with new §535.64 which contains the parts of existing §535.64 that deal with obtaining approval to offer a course. There are new course renewal provision in subsections (f) and (g) of new §535.64. A course approval expires four years from the date of approval, and if any school that offers the same course obtains TREC approval to offer the same course, the expiration date remains unchanged. The requirement in existing §535.64 that examination preparation course be submitted to TREC for approval is deleted.

Existing §535.65 is repealed and replaced with new §535.65. The text of new §535.65 comes from existing §535.65 except that it has been rearranged, streamlined and reformatted for clarity and consistency. A new provision in paragraph (2)(D) addresses the requirements for schools which do not maintain an office in the State of Texas. A provision in paragraph (10) clarifies that a school must provide to students and maintain for commission review instructor and course evaluation for each course. At a minimum, schools must use evaluation criteria approved by the commission. Under paragraph (9)(D), a school is required to maintain records of each student enrolled for a minimum of four years; and the full class file and student enrollment agreements must be retained for at least 24 months following completion; records may be retained electronically if they are held in a common format such as pdf or html.

Existing §535.66 is repealed and replaced with new §535.66. The text of new §535.66 comes from existing §535.66 except that it has been rearranged, streamlined and reformatted for clarity and consistency.

New §535.67 contains the part of existing §535.64 that deals with approval of instructors. The renewal period for instructor approval is changed from five years to two years.

New §535.68 contains the parts of existing §535.64(m) which deal with additional information related to an application for a school, course or instructor; and §535.64(n) which addresses the commission's delegation of authority to staff.

Generally speaking, the amendments and new sections correct typographical errors, reorganize, clarify, and streamline existing rules, and update cites to new laws and codes.

The revisions 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 versions and do not materially alter the issues raised in the proposed rules. The changes in the rules reflect a nonsubstantive variation from the proposed rules to make the affected rule consistent with other rules.

The reasoned justification for the amendments is more streamlined, consistent and readable rules, and more accountability for schools, instructors, and courses accredited by the commission.

The Texas Association of Realtors and the Texas Apartment Association commented on the rules as proposed.

The commission received four comments on the rules as proposed.

Comment: Three commenters suggested that the commission should not require that schools use a commission approved form for course and instructor evaluations. Instead, the commission should permit schools to use their own forms as long as they use commission approved criteria at a minimum.

Response: The commission agrees with the comments and has changed the rules accordingly.

Comment: Two comments suggested that the commission should clarify that schools may rely on published objective information such as pass rates for advertising purposes.

Response: The commission agrees with the comments and has changed the rules accordingly.

Comment: One commenter disagrees with changing the approval process for instructors from five years to two years.

Response: The commission respectfully disagrees with the commenter and believes it is appropriate to change the renewal period to two years to be consistent with renewal periods for a license from the agency.

Comment: Two commenters suggested that the commission should clarify records retention requirements for records held in an electronic format.

Response: The commission agrees with the comments and has revised §535.65(9)(D) accordingly.

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 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.