The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §535.4, License Required, and §535.5, License Not Required, in Chapter 535, General Provisions, without changes, as published in the August 25, 2023, issue of the Texas Register (48 TexReg 4594) and will not be republished.

The amendments implement statutory changes enacted by the 88th Legislature in SB 1577, which become effective January 1, 2024. Currently, Chapter 1101, Occupations Code, requires business entities who receive compensation on behalf of a license holder to be licensed as a broker. SB 1577 allows certain entities-limited liability companies and s-corporations (as that term is defined by federal law)-to register with the Commission in lieu of obtaining a license. In order to be eligible for registration, these exempted entities must: (i) perform no acts of a broker, other than receiving said compensation on behalf of a license holder; and (ii) be at least 51 percent owned by the license holder on whose behalf the business entity receives compensation. The rule changes reflect this statutory change.

No comments were received for §535.5 as published. Six comments were received for §535.4. Five comments were in support of the change. One commenter expressed concern that the amendment was simultaneously not necessary and was also concerned that by not requiring a license, unlicensed individuals would reduce the integrity of the industry. TREC general counsel reviewed this comment and noted the proposed changes are in line with statute and do not authorize unlicensed brokerage activity. Because the change in this rule is required to reflect the statutory changes made by the legislature, the Commission declines to make changes to the amendments as published.

The amendments are adopted under Texas Occupations Code, §1101.151 and §1101.355, as that section is amended by SB 1577. Section 1101.151 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 license holders to fulfill the purposes of Chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102. Section 1101.355, as amended by SB 1577, requires the Commission to adopt rules providing for the registration of an exempted business entity.