The Texas Real Estate Commission adopts amendments to §535.223, concerning Standard Inspection Report Form, with non-substantive changes to the proposed text as published in the March 1, 2013, issue of the Texas Register (38 TexReg 1334) and with one non-substantive change to the new Property Inspection Form (REI 7-3) adopted by reference in the rule. The differences between the rule as published and as adopted are the deletion of the word "and" in the first sentence, changing "they are" to "it is" in paragraph (3)(B) and deleting "s" from the word "forms" in the last sentence of paragraph (6)(F). The difference between the REI 7-3 as published and as adopted was that the reference to carbon monoxide alarms in the section on Texas Real Estate Consumer Notice Concerning Hazards or Deficiencies was made a separate bullet point for malfunctioning of that alarm. This change was made in response to a comment received to make REI 7-3 consistent with the inspector standards of practice as re-proposed under separate rule (Standards). The adoption takes effect January 1, 2014.

The amendments were previously proposed and published in the November 23, 2012, issue of the Texas Register (37 TexReg 9278) but were withdrawn on February 12, 2013, for re-proposal. The amendments are adopted to track revisions to the Standards. The amendments also clarify how the form is to be used by an inspector and in what ways an inspector is authorized to modify the form. The amendments provide an additional exemption for inspectors conducting inspections on single component systems, which are defined by the rule. The amendments adopt by reference a new Property Inspection Form (REI 7-3) and remove the requirements for the two current forms, REI 7A1 and REI 7-2.

The amendments have been recommended by the Texas Real Estate Inspector Committee, an advisory committee of six professional inspectors and three public members appointed by TREC, to correspond to proposed revisions to the Standards that are also adopted and explained in this issue of the Texas Register.

The revisions to the rule and to Form REI 7-3 as adopted do not change the nature or scope so much that the rule or form could be deemed a different rule or form. The rule and form as adopted do not affect individuals other than those contemplated by the form as proposed. The rule and form as adopted do not impose more onerous requirements than the proposed rule and form.

The reasoned justification for the rule will be increased clarity for inspectors and consumers alike regarding the use of a standard inspection report form that tracks the newly adopted revised Standards.

Comments on the amendments or Form REI 7-3 adopted by reference in the amendments were received from two licensed inspectors.

One commenter thought that the Texas Real Estate Consumer Notice concerning Hazards or Deficiencies (form OP-I) should remain as a stand-alone form and not be incorporated into Form REI 7-3. Another commenter approved the addition of this notice in Form REI 7-3. The Texas Real Estate Inspector Committee reviewed these comments and recommended that the notice remain in Form REI 7-3 to ensure that consumers receive the notice from inspectors but that the optional OP-I form also remain available for use by inspectors who want to give it for special emphasis or for use by other real estate licensees. The Commission agrees.

One commenter thought that there was a discrepancy with the definition of general deficiency and specificity regarding the location of GFCI devices in the Standards and Form REI 7-3, stating they were more clearly defined in Form REI 7-3. The commenter also thought that there was discrepancy between the Standards and Form REI 7-3 with the form stating inspectors will report the lack of that device while the Standards do not require the inspector to report the lack of that device, only to report to report a defect with an existing device. The Commission agrees that the carbon monoxide alarm item in Form REI 7-3 could be read to require reporting the lack of such an alarm and clarified the form to indicate that only the malfunctioning of the alarm is a deficiency in order to be consistent with the Standards.

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, Chapters 1101 and 1102. No other statute, code or article is affected by the amendments.