The Texas Real Estate Commission (TREC) adopts an amendment to §535.213, concerning schools and courses of study in real estate inspection and new §535.217, concerning dishonest conduct as grounds for disciplinary action, with changes to the proposed text as published in the September 1, 2000, issue of the Texas Register (25 TexReg 8589). New §535.212 and amendments to §§535.206, 535.208, 535.214, 535.216, 535.218, 535.221, 535.223, 535.224, and 535.226, concerning licensed inspectors, have been adopted without changes.

The amendment to §535.206 modifies the section to be similar in voice and style with other TREC rules and deletes archaic language. The amendment to §535.208 requires applicants for the professional inspector license or the real estate inspector license to obtain an education evaluation prior to filing an application, permitting on-line filing of applications. On line applicants will be required to complete the process by submitting a printed copy of the application containing a signature and photograph within 60 days after paying the filing fee on-line. The amendment also adopts by reference a revised Inspection Log, used by applicants and licensees to show satisfaction of experience requirements, and three revised license application forms. The forms were changed to obtain a permanent mailing address from the applicant and, at the discretion of the applicant, daytime telephone numbers or e-mail addresses to facilitate curative work by TREC staff.

New §535.212 adopts revised guidelines for the acceptance of courses submitted by applicants and permits the acceptance of courses offered by a professional trade association, consistent with changes to other TREC rules. Experience requirements for a license are also addressed in the new section. Those applicants who are applying directly for an inspector license or a professional license on the basis of additional course work will be required to show proportional credit in each of the structural, mechanical and electrical systems. Experience for work in another licensed occupation will be restricted to persons licensed as architects, professional engineers, or engineers-in-training. Applicants who substitute personal work experience will be required to show five years of experience for a real estate inspector license and seven years of experience for a professional inspector license; the experience claimed also will have to be derived from work on each of the three systems found in improvements to real property.

The amendment to §535.213 clarifies that the accreditation and regulation of inspection schools and approval of courses and instructors are conducted under the same guidelines governing real estate schools and instructors. Based on a staff suggestion, the text was modified on adoption to clarify that inspection school instructor approvals issued under prior rules are effective until May 1, 2001. The amendment also provides that a school accredited to offer real estate courses is not required to obtain a separate accreditation to offer inspection courses, provided any inspection courses have been approved by TREC before they are offered. The amendment to §535.214 deletes archaic language referring to the scheduling of an examination.

The amendment to §535.216 requires licensed inspectors on inactive status to provide TREC with a permanent mailing address and report changes to that address within 10 days after the change. The amendment also permits licenses to be renewed on-line as TREC develops the capacity to handle the inspection renewals in that fashion. If TREC requests information from a licensee in connection with a renewal application, the amendment requires the licensee to furnish the information within 30 days after the request, or be subject to disciplinary action.

New §535.217 addresses conduct by an inspector which may warrant disciplinary action as being dishonest. The proposed text would have required an inspector to disclose and obtain the consent to all parties to a transaction before accepting a fee or other valuable consideration from a person other than the inspector's client. Based on a comment from the Texas Real Estate Inspector Committee that obtaining consent from all parties could be an unnecessary burden and that the most important goal of the section was to ensure that all parties were aware of the inspector's intention to accept a fee or other valuable consideration, §535.217 was modified to require disclosure to all parties and the consent of the inspector's client only. Another comment suggested that the section should be limited so as to require the disclosure and consent of a client only if the service provider paying the fee is providing service to the inspector's client. The commission disagreed with this suggestion, since services may also be provided to the other party in the transaction, for whom the disclosure of fees paid by the service provider to the inspector may be equally material. The new section also requires a licensed inspector to obtain the consent of the inspector's client before paying a portion of the inspector's fee to a service provider or other participant in the real estate transaction for which the inspection has been performed.

The amendment to §535.218 clarifies that, consistent with TREC rules governing real estate courses, completion of a final examination is required for a course offered by alternative delivery methods, such as by computer. The amendment to §535.221 clarifies that Internet advertising and e-mail are included in the definition of the term "advertisements" and that the name or assumed name of a licensee's sponsoring inspector must be included in the licensee's advertisements. The amendment to §535.223 updates references to the standards of practice governing inspectors. The amendment to §535.224 deletes archaic language referring to registrations and update rule and statutory citations found in the section. The amendment to §535.226 requires inspector licensees to notify each other in writing if either terminates a sponsorship or leaves the sponsorship of a professional inspector.

Adoption of the new sections and amendments is necessary to update the sections relating to obtaining and renewing an inspector's license to be consistent with TREC's other licensing programs, ensure quality education programs and instructors, protect the public from unqualified inspectors and provide guidance to licensees concerning their conduct under the law.

The amendments and new sections are adopted under Texas Civil Statutes, Article 6573a, §5(h), which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties.