The Texas Real Estate Commission (TREC) adopts new 22 TAC §535.35, Registration of Certain Business Entities, in Chapter 535, General Provisions, without changes, as published in the August 25, 2023, issue of the Texas Register (48 TexReg 4597), and will not be republished.

New §535.35 implements statutory changes enacted by the 88th Legislature in SB 1577, which becomes effective January 1, 2024. Currently, §1101.355(c), Occupations Code, requires business entities who receive compensation on behalf of a license holder to be licensed as a broker. Licensure requires certain conditions be satisfied, including, for instance, that the entity have a designated broker and payment of an initial license application fee of $150 and a subsequent $72 application fee to renew. SB 1577 amends §1101.355 by allowing 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 and requires the Commission to adopt rules providing for this registration. The new rule outlines the requirements these exempt business entities must follow to register the business entity with the Commission. The changes also provide a term for the registration once issued, as well as an obligation to certify continuing compliance. Additionally, SB 1577 also amends §1101.152, Occupations Code, which specifically directs the Commission to adopt a rule to charge and collect fees in amounts reasonable and necessary to cover the costs of registering a business entity. Therefore, the changes set forth the fee obligations for such registration and certification of continued compliance. Finally, under the proposal, a license holder must also notify the Commission in writing not later than the 10th day after the date the business entity no longer qualifies for the exemption.

No comments were received on the proposed new rule as published.

The new rule is 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.