The Texas Real Estate Commission (TREC) proposes amendments to 22 TAC §§535.1 - 535.5, 535.16, 535.17, 535.20, 535.31, 535.33, 535.34, 535.41, 535.42, 535.51 - 535.53, 535.55, 535.56, 535.81, 535.82, 535.91 - 535.93, 535.101, 535.112, 535.121 - 535.123, 535.131 - 535.133, 535.141, 535.143 - 535.145, 535.147 - 535.149, 535.153, 535.154, 535.156, 535.161, 535.171, 535.181, 535.191, 535.201, 535.206, 535.208 - 535.211, 535.215 - 535.217, 535.219 - 535.221, 535.223, 535.224, 535.226, 535.240, 535.300, and 535.400 - 535.405; new §§535.21, 535.43, 535.44, 535.54, 535.57, 535.60 - 535.67, 535.70 - 535.75, 535.77, 535.213, and 535.218; and the repeal of existing §§535.54, 535.57, 535.61 - 535.68, 535.71 - 535.75, 535.213, 535.214, and 535.218 in Chapter 535, General Provisions. The amendments, new sections and repeals are in Subchapter A, Definitions; Subchapter B, General Provisions Relating to the Requirements of Licensure; Subchapter C, Exemptions to Requirements of Licensure; Subchapter D, The Commission; Subchapter E, Requirements for Licensure; Subchapter F, Pre-License Education and Examination; Subchapter G, Mandatory Continuing Education; Subchapter H, Recovery Fund; Subchapter I, Licenses; Subchapter J, Fees; Subchapter K, Place of Business; Subchapter L, Termination of Salesperson's Association with Sponsoring Broker; Subchapter M, Nonresidents; Subchapter N, Suspension and Revocation of Licensure; Subchapter O, Hearing on Suspension or Revocation of Licensure; Subchapter P, Penalty for Unlicensed Activity; Subchapter Q, Administrative Penalties; Subchapter R, Real Estate Inspectors; Subchapter S, Residential Rental Locators; and Subchapter T, Easement or Right-of-Way Agents.

The proposed revisions to Chapter 535 are made following a comprehensive quadrennial rule review of this chapter to better reflect current TREC procedures, to simplify and clarify where needed and to improve overall readability. To accomplish this, redundant or unused provisions were removed and certain rules were restructured in whole or in part. Rules that are no longer needed or that have been totally rewritten are being proposed for repeal.

The proposed revisions capitalize the term "Commission" and replace the term "licensee" with "license holder" throughout the chapter. The terms "promptly" and "reasonable time" were replaced throughout the chapter with the specific timeframe previously set out in the chapter definitions (3 days and 10 days respectively) so that the required timeframe would be immediately clear in each rule. Other substantive changes by subchapter are:

Subchapter A: adds new definitions for terms used throughout the chapter, and deletes other definitions that are no longer used throughout the chapter.

Subchapter B: amends §535.2 to require that the broker give notice of the scope of authorized activities to a sponsored salesperson in writing, ties the handling of trust funds to the requirements of revised §535.146; revises §535.4 to hold a person conducting brokerage business from another state through the mail, internet or other medium under the jurisdiction of The Real Estate Licensing Act (Act) if the property is located in Texas and adds §535.21, Mailing Address and other Contact Information that was moved from §535.96.

Subchapter D: adds §535.43, Education Standards Advisory Committee, that was moved from Subchapter G, §535.75 and adds §535.44, Commission Seal, to clarify that the Commission seal may be used only by the Commission for official agency business.

Subchapter E: adds language related to specific requirements of each real estate license type, including language that was moved from Subchapter I which now houses rules related to renewal only; repeals §535.54 since the provisions of that section were moved to other more appropriate sections within the chapter; adds a new §535.54 dealing with hearings on license denial and probationary licenses that was moved from Subchapter I; amends §535.56 to revise the experience point credits allowed for application for a broker license based on recommendations from the Broker Responsibility Working Group; and amends §535.57 regarding licensure examinations to put all relevant provisions from the chapter in one location and adds more specific requirements regarding the administration of licensing examinations.

Subchapter F: The proposed rules regarding pre-licensure education programs are reorganized and updated to better reflect TREC policies and procedures, to more clearly reflect the approval process for real estate and real estate inspector educational programs and to simplify for greater understanding. Most of the proposed rules contain the same requirements as in the current rules, although more clearly set out and more consistently applied across educational programs for different license types. However, based on policy recommendations from the Education Standards Advisory Committee (ESAC) and procedural issues raised by TREC ELS and ITS staff, there are some substantive changes set out below. All of these changes have been reviewed and recommended by ESAC and the Texas Real Estate Inspector Committee (TREIC).

Correspondence Courses will not be allowed as a delivery method for TREC real estate pre-licensure courses after December 31, 2015 due lack of any meaningful standards or oversight of courses delivered by this method. The amendments do not eliminate the use of all online courses. Online courses may still be offered if they qualify as alternative delivery. Under the proposal, alternative delivery courses must be certified by a distance learning certification center acceptable to TREC. This certification center reviews the course and certifies the quality of the design and delivery, including that: the course is designed for mastery based learning; verification that the average time it takes a student to complete the course is the number hours assigned for credit for the course; the instructor is certified as a distance education instructor; and a procedure is in place to authenticate that the person registered to take the course is the person taking the course and final exam. The Commission rules currently provide alternative delivery and there are courses approved under this method in use today. The amendments do not phase out the use of correspondence courses for inspector courses at this time so that TREIC can have more time to study available alternatives for inspector courses, given the different nature of inspector courses and the dramatically lower pool of students and available providers.

Terminology was changed for consistency, including "proprietary school" being changed to the more generic "provider", "core" being changed to "qualifying" and classroom delivery including live webinars where the instructor and student can see each other via computer or other technology.

Clarifying that approved providers can provide approved real estate and real estate inspection qualifying courses and not have to get a separate approval by license program.

A separate section was developed to deal with accredited colleges and universities, since these are the only entities exempt from approval of core educational programs and courses by statute. It should be noted that TREC still has the statutory authority to determine whether core courses offered by an accredited college or university qualifies for credit for a license. Courses that qualify for academic credit and meet the statutory content requirements will be accepted for credit by TREC. However, accredited colleges and universities who wish to offer courses that do not qualify for academic credit to be used toward qualifying license requirements can do so, but must comply with the course approval process set out by TREC rule for that course. The rule also reflects the current TREC requirement that a college or university must be approved as a continuing education (CE) provider to offer courses for CE credit and CE courses offered must comply with the course approval process set out by TREC rule.

Class rosters for pre-licensure courses still have to be retained by providers but do not have to be delivered to TREC monthly. Certificates of completion issued by the provider for qualifying courses will remain the evidence students submit to receive credit toward a license. Course completion certificates will now have to also include the instructor's name and TREC identification number and the date of issuance.

Beginning January 1, 2016, instructors of qualifying and non-elective continuing education courses will be required to complete 8 hours of adult education training every 5 years.

Subchapter G: The proposed rules regarding continuing education programs are reorganized and updated to better reflect TREC policies and procedures, to more clearly reflect the approval process for real estate and real estate inspector educational programs and to simplify for greater understanding. Most of the proposed rules contain the same requirements as in the current rules, although more clearly set out and more consistently applied across educational programs for different license types. However, based on policy recommendations from the Education Standards Advisory Committee (ESAC) and procedural issues raised by TREC ELS and ITS staff, there are some substantive changes set out below. All of these changes have been reviewed and recommended by ESAC and the Texas Real Estate Inspector Committee (TREIC).

Correspondence Courses will not be allowed as a delivery method for TREC real estate related continuing education courses after December 31, 2015 due lack of any meaningful standards or oversight of courses delivered by this method. See issue and summary as under Subchapter F.

Clarifying that approved CE providers can provide approved CE real estate and real estate inspection courses and not have to get a separate approval by license program.

Class rosters or Alternative Delivery Methods Reporting form will continue to be required to be submitted in a format required by TREC for all CE courses.

The requirement for open enrollment to the general public for all courses was removed to recognize that trade associations market courses to members who pay dues and allow brokerage firms to become providers and get their in house training courses approved for CE credit.

The method of using proctored supervised videos for CE classroom instruction was removed as it did not comport to the methods of delivery ESAC recommended. This does not prohibit the use of videos in a classroom course taught by an approved instructor.

The subjects permitted for related credit hours for a broker's license were tightened up.

Requirements on the type of courses that qualify for credit for the various license types were not changed but were moved to the appropriate rule for that license type.

Allowing partial credit for a real estate CE course that was not fully attended was removed for consistency since partial credit is not currently allowed for real estate core, inspector core, and inspector CE courses and it is difficult to determine and program for partial credit.

Subchapter I: restructures and clarifies the rules regarding license renewal; moves other provisions not dealing with renewals (§§535.94, 535.96 and portions of 535.95) to other more appropriate subchapters; and amends language to stipulate that the fee to defer completion of continuing education for up to an additional 60 days will now be due at the time of the filing of the renewal application.

Subchapter J: revises §535.101 effective January 1, 2015, as part of the FY2015 budget adopted by the Commission, including restructuring license fees by reducing renewal fees and increasing fees for initial applications and reinstatements; setting out the statutory fee required for the Real Estate Recovery Trust Account.

Subchapter L: restructures the chapter and adds language to more clearly set out when each real estate license type becomes inactive and how to reactive a license on inactive status.

Subchapter R: restructures §535.208 and add provisions related to license renewal for members of the military and military spouses; clarifies in §535.209 that an applicant is not eligible to take the inspector examination until the applicant provides evidence to the Commission that all education and experience requirements have been met; revises §535.210 effective January 1, 2015, as part of the FY2015 budget adopted by the Commission, including restructuring inspector license application fees, slightly reducing the examination fee and significantly reduce the contribution to the Real Estate Inspection Recovery Fund; restructures §535.213 and §535.218 for improved readability after removal of certain provisions related to approval of education providers, courses or instructors that were moved to Subchapters F or G.

Subchapter T: adds clarifying language to the requirements for obtaining and renewing an easement or right of way agent license.

Kerri Lewis, General Counsel, has determined that for the first five-year period the proposed amendments are in effect there will be no fiscal implications for the state or for units of local government as a result of enforcing or administering the sections. Except as described below, there is not a significant anticipated impact on small businesses, micro-businesses or local or state employment as a result of implementing the sections. There is an anticipated economic cost to persons who are required to comply with some of the proposed amendments in that there will be some cost to education providers if they choose to convert correspondence courses to alternative delivery online courses which must be certified by a distance learning certification center. This cost may be passed on incrementally resulting in slightly higher course costs to license holders.

Ms. Lewis 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 amendments will be better clarity and requirements that are easier to understand, apply, and process. Another benefit will be better quality education for license holders, resulting in greater consumer protection.

Comments on the proposal may be submitted to Kerri Lewis, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188 or via email to general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The new rules are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its licensees to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statute affected by this proposal is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposal.