As the 80th Regular Session of the Texas Legislature is just getting started, relatively few real estate related bills have been filed in the House and Senate.
The TREC Housekeeping Bill has not yet been filed. While the Housekeeping Bill primarily provides technical changes to The Real Estate License Act, the bill also includes a provision that would require an applicant for a broker license to complete 2 semester hours (30 clock hours) of real estate brokerage as part of the total 18 semester hours (270 clock hours) of core real estate courses required for a broker’s license.
For more information regarding the 80th Regular Session of the Texas Legislature, including the text of the bills described above, the Texas Legislature’s website is www.capitol.state.tx.us .
Many lenders are requiring contracts to be re-written because of a few items that are being written into the Special Provisions section of the TREC contract that cause problems with the loan. The “Special Provisions” section of the Texas Contract Forms has undergone some refining over the years. In the past it was often used to add in the amount of money that the seller was contributing to the buyer for closing costs and prepaids, but that information now has a home of its own in paragraph 12.A.(1)(b).
| 11. |
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However, many contracts
that are being written currently have items in the Special Provisions section
such as “Repair Allowances” or “Repairs to be made by Sellers.”
Paragraph 7.D. or the Amendment Form should be used to itemize the "Repairs
to be made Sellers." Repair allowances should not be used to provide
extra money from the seller to the buyer as most lenders look at “repair
allowances” unfavorably because:
It may imply that the property is not in great shape and may not be valued
properly
It may go outside of the guidelines for standard seller contributions
Most importantly, the loan cannot close until all of the repairs have been
completed unless the parties otherwise agree in writing. (See Section 7. F
of the contract)
| 7.F. |
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In most cases, the repairs must be completed prior to closing. Repairs to plumbing or electrical systems must be done by licensed individuals. Also, the lender will require an inspection to make sure that the repairs were actually completed. All of the items in the contract must be completed before the lender will fund the loan in order to prevent imperfections in the lien, which would mean that they can not sell the note on the secondary market.
Use the special provisions section wisely or else the lender might force you to get it revised.
For more information on this and many other topics, a number of TREC providers
have courses approved for real estate MCE credit that are designed to give
you a better understanding of the mortgage process.
Have you ever made the mistake of letting your license lapse? There can be serious ramifications if that happens. First and foremost, if you continue to practice real estate with an expired license, you could be criminally liable for your actions because unlicensed real estate brokerage activity is considered a Class A criminal misdemeanor. A Class A misdemeanor is punishable by a fine not to exceed $4,000; confinement in jail for a term not to exceed one year; or both a fine and confinement, depending on the circumstances.
Notwithstanding the potential criminal violations and fines, a person who
continues to practice real estate with an expired license is subject to administrative
penalties and the potential for disapproval of a new license by the Real Estate
Commission. Administrative penalties for unlicensed activity can run up to
$1,000 per violation per day.
If you are a broker and you fail to timely renew, your license expires and
every salesperson you sponsor automatically reverts to inactive status. If
you are the designated broker for a business entity, its license reverts to
inactive status. Once that happens, every salesperson sponsored by the business
entity also goes inactive. Practically speaking, this means that you will
need to get a new license, the business entity will need to get a new designated
broker and no one can practice real estate while their license is on inactive
status.
If your license expires, you cannot continue to represent your clients or
take new listings even if you believe it will only be on a temporary basis.
If you are a salesperson and your license goes inactive because your sponsoring
broker’s license expires, you will need to find a new sponsor or wait
until your sponsoring broker gets a new license. If you find a new sponsoring
broker, you cannot simply take your listings with you to the new broker. Existing
listings under the expired broker’s name will need to be terminated,
if possible, and new listing agreements must be entered into under your new
broker’s name.
What can you do to avoid these potential problems? Calendar your license expiration
date or check the commission’s website at www.trec.state.tx.us.
You can find your expiration date and information about the continuing education
courses you have taken which have been reported to TREC by entering your license
number or name. Although the commission sends renewal notices out 90 days
in advance of your expiration, it is important to note that your failure to
receive the notice is not an excuse for not timely renewing your license.
For additional convenience, if you are a salesperson or broker not subject
to annual education requirements, you can renew your license even if you have
not taken all of your mandatory continuing education (MCE) by paying an additional
fee and your renewal fee. If you pay an extra $200, you can take your MCE
within 60 days after the expiration date of your license.
Finally, what should you do to get a new license should your license expire?
First, you should stop acting as a broker or salesperson. Next, you will need
to file a late renewal and answer every question on the application truthfully,
with a full explanation of the facts. If you, even unintentionally, have been
acting as a salesperson or broker since the expiration of your license, and
you fail to answer each question honestly, it could be cause to disapprove
your license or to assess additional administrative penalties.
A frequently asked question of Commission staff is "Do I need a license do this?" In addition to taking disciplinary action against licensees, The Real Estate License Act grants authority to the Commission to take action against persons who perform real estate brokerage acts or acts of a real estate inspector in Texas without a license, if they are doing so for valuable consideration. The Enforcement Division routinely investigates complaints of this type.
Sometimes the violators are not aware that what they are doing requires a
license; other persons deliberately do so. Fines and penalties include injunctive
action, administrative penalties assessed in the amount of $1,000 per violation
(under certain circumstances $1,000 per day). Additionally, the act of 'unlicensed
activity' is a crime and carries possible jail time. A recent case prosecuted
by the Enforcement Division resulted in the unlicensed person, Christopher
Matthews of Dallas, being assessed an administrative penalty in the amount
of $11,000.
Failure to pay the fines result in referral to the Attorney General's office
for collection.
Many licensees utilize unlicensed persons in their day-to-day business. It
is important to know what acts require licensure. A general rule of thumb
is that if the act requires the use of judgment or skill on the part of the
actor--that is judgment or skill concerning real estate transactions, then
it probably requires licensure. The Commission's web site contains some helpful
information with regard to acts that an unlicensed person can perform within
a real estate brokerage. The following is an excerpt from that page:
Q: May an unlicensed person, identified as such, make calls to determine whether a person is interested in buying or selling property, or has property they wish to sell, and if so, make an appointment for a licensed agent to talk to them?
A: No. Often referred to as "telemarketing," any such activities conducted in Texas must be conducted by a licensee. In Tex. Atty. Gen. Op. H-1271 (1978), the attorney general concluded that a license was required. Also, Commission Rules 535.1(c) and 535.15(b) make it clear that all solicitation work must be conducted by licensees.
Q: May an unlicensed person sit in on an open house?
A: Yes, but care must be taken that the unlicensed person does not "show" the house to prospective purchasers. Commission Rule 535.1(c) makes clear that only licensed agents are allowed to show properties. On the other hand, Commission Rule 535.1(c) also specifically allows a broker to hire an unlicensed person to serve as a "hostess, attendant, or custodian" at homes offered for sale by the broker. The Rules do not define these terms, and such a hostess should be limited to welcoming the visitors. The hostess may register the guests and refer inquiries to a licensee. Clearly, the hostess must not point out features of the home or neighborhood to visitors; however, as is the case with secretaries and receptionists discussed below, the hostess may distribute a flyer or brochure that describes the property.Q: May unlicensed assistants set appointments to show a listing?
A: Yes. Under the general rules stated above, it is permissible for an assistant to call a homeowner and schedule an appointment for the broker to bring a potential buyer to see the home. If the broker then becomes tied up on other matters, can the unlicensed assistant drive the purchaser to the listing and let them in the home? Again, yes, but extreme care must be taken that the assistant does not engage in "showing" the property. The assistant should identify himself as an unlicensed assistant and explain the assistant's limited role. Any questions that arise regarding the property or the purchase of the property must be referred to a licensee.
Q: May the unlicensed assistant place "for sale" signs; open a property or accompany inspectors; place newspaper advertisements as directed by the broker?
A: Yes, subject to the following guidelines. Commission Rule 535.13(c) provides that answering the telephone and acts of a secretarial nature do not require licensure. Clerical employees need not be licensed so long as they do not engage in solicitation and do not hold themselves out as licensed agents. Further, Commission Rule 535.13(c) also states that an unlicensed clerical or secretarial employee, identified to callers as such, may confirm information concerning the size, price and terms of property advertised. Taken together, this means that an unlicensed person may, after identifying himself or herself as an unlicensed person, confirm information previously advertised to callers or persons dropping by. The unlicensed person should not give information about properties other than that inquired about, and should refer any requests for information regarding other properties to a licensed agent. For example, the assistant might confirm that a particular property called about has three bedrooms and one bath, as previously advertised; however, the assistant may not attempt to identify properties which instead have two baths and bring these to the attention of the caller. Such questions must be referred to a licensee. The assistant should not attempt to "qualify" the caller in any respect. Many other duties that are administrative in nature can be safely performed, such as inputting data into a computer or typing contracts, but, only as specifically directed by a licensee. Support personnel can order supplies, schedule maintenance, and all the other things that are involved in keeping the office open. Bookkeeping and office management functions may be performed by an unlicensed assistant, as discussed immediately below.
Q: What functions may an unlicensed office manager perform?
A: Commission Rule 535.1(d) provides that unlicensed persons may perform such administrative tasks as; (1) training or motivating personnel, and (2) those tasks dealing with office administration and personnel matters. And, Commission Rule 535.2(c) notes that who a broker designates to sign checks in the brokerage is not regulated by the Commission. Thus, an unlicensed person may serve as bookkeeper for the company and handle personnel matters. Such an office manager may also serve as a trainer. However, Commission Rule 535.1(g) further states that an unlicensed person may not direct or supervise agents in their work as licensees. Therefore, an unlicensed person may not direct or advise agents in their attempts to help others buy, sell, or lease property. They may not review contracts, or help make "deals" work. These tasks are properly conducted only by licensed persons.
Q: May unlicensed persons assist in arranging financing?
A: Yes, but again, great care must be taken. An unlicensed assistant may be directed by a broker or salesperson to assist a particular buyer in applying for and qualifying for a loan. The assistant may gather information, contact lenders, and set appointments. However, these acts should be at the direction of a licensee, and care should be taken that the assistant does not exercise discretion such as making the decision to apply for a different type of financing than called for in the sales contract. Mortgage brokers are licensed by the Texas Department of Savings and Mortgage Lending, and any questions regarding the requirements for licensure for persons dealing with financing issues should be directed to that agency.
Q: May unlicensed persons serve as property managers for rental properties?
A: Commission Rule 535.13(b) states that those who hold themselves out as "property managers" for others and for compensation must be licensed, provided the person also rent or leases the property for the property owner. However, many property management functions appear to fall within categories of activities that do not require licensure. These include bookkeeping functions and arranging for repairs. So long as an unlicensed person carefully limits his or her property management activities to those which do not require a license, neither criminal charges nor Commission disciplinary action would be warranted. Note that persons acting as on-site managers at apartment complexes are exempt from licensure under Section 1102.005(7) of the License Act.
Q: What can a licensee do to avoid criminal or disciplinary actions?
A: First, a broker should NOT let his or her license or any of the licensed associates' licenses lapse. The lapse of a license, often inadvertent, is a common basis for disciplinary action on the grounds of improper unlicensed activity. Second, analyze any new factual situation according to the rules above to determine the extent to which the unlicensed person is being allowed to act with discretion, and how close the unlicensed person is "directly" assisting others in buying, selling, or leasing property. If still troubled, contact your attorney. You may also write the Commission (or call in an emergency) for an informal opinion based on a particular fact situation. Managing brokers might gain some protection from disciplinary action by establishing written guidelines and training dictating to both their agents and unlicensed personnel what is allowed and not allowed of non-licensees.
Enforcement questions and answers (FAQs) may be found on TREC's web site at
http://www.trec.state.tx.us/questions/faq-enf.asp
Bashaw, Deborah
Lynn
(Garland); license #515088
Assessment of administrative penalty in the amount of $1,000, entered October
6, 2006; Revocation of salesperson license, effective November 27, 2006; after
expiration and before obtaining a late renewal of her real estate salesperson
license, Ms. Bashaw continued to act as and/or represent that she was a real
estate salesperson, in violation of §1101.351(a)(1) of the Texas Occupations
Code; Ms. Bashaw procured a real estate salesperson license by fraud, misrepresentation
and/or deceit by filing a late renewal application in which she falsely answered
"No" to a question regarding unlicensed real estate brokerage activity,
in violation of 1101.652(a)(2) of the Texas Occupations Code; and after a
complaint was filed with the Commission against the real estate salesperson
license of Ms. Bashaw, she failed to respond to the Commission's request for
information and documents, in violation of §1101.652(a)(5)&(6) of
the Texas Occupations Code
Neiss, Daniel Leonard
(Spring); license #519589
Agreed reprimand of salesperson licensed, entered November 1, 2006; Agreed
administrative penalty of $250, entered November 1, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Heredia, Francisco
(Galveston); license #519629
Agreed reprimand of salesperson license, entered November 3, 2006; Agreed
administrative penalty of $250, entered November 3, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Carey, Vernon D.
(Plano); license #450402
Revocation of salesperson license, effective November 3, 2006; failing within
a reasonable time to make good a check issued to the Commission and pay the
processing fee, in violation of §1101.652(a)(4) of the Texas Occupations
Code; failing to pay a check processing fee within 15 days after the Commission
has mailed a request for payment, in violation of 22 TAC §534.(2)(a)
of the Rules of the Texas Real Estate Commission
Otis, Patrick Houston
(Humble); license #438800
Revocation of salesperson license, effective November 6, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
Heath, Beverly Richardson
(Bergheim); license #433751
Revocation of salesperson license, effective November 6, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
Milan, David Michael
(Royce City); license #193731
Agreed reprimand of broker license, entered November 13, 2006; Agreed administrative
penalty of $250, entered November 13, 2006; failing to complete mandatory
continuing education hours and pay the $200 fee within the 60-day period provided
by 22 TAC §535.92(f) of the Rules of the Texas Real Estate Commission
Ngo, Do Cong
(Stafford); license #396232
Agreed reprimand of broker license, entered November 13, 2006; Agreed administrative
penalty of $250, entered November 13, 2006; failing to complete mandatory
continuing education hours and pay the $200 fee within the 60-day period provided
by 22 TAC §535.92(f) of the Rules of the Texas Real Estate Commission
Goode, Diane Gilliam
(Bergheim); license #438969
Revocation of salesperson license, effective November 16, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
Robinson, Steven Don
(Austin); license #333939
Agreed reprimand of broker license, entered November 17, 2006; Agreed administrative
penalty of $250, entered November 17, 2006; failing to complete mandatory
continuing education hours and pay the $200 fee within the 60-day period provided
by 22 TAC §535.92(f) of the Rules of the Texas Real Estate Commission
King, Gayle Marie
(Mission); license #431328
Agreed 6 month suspension of broker license fully probated for 5 years, effective
November 20, 2006; final conviction after appeal of three counts, Promoting
Organizing or Operating a Pyramid Promotional Scheme (two counts) and Theft
of Property (one count), all State Jail Felonies, for offenses which occurred
in Hidalgo County, Texas, in October and November 2001, pursuant to §53.021(a)
of the Texas Occupations Code
Ellis, Billie John
(Houston); license #209081
Revocation of salesperson license, effective November 27, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
Nusbaum, Dean William
(San Antonio); license #396663
Agreed reprimand of salesperson license, entered November 28, 2006; Agreed
administrative penalty of $250, entered November 28, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Estes, Joey Keith
(Austin); license #396973
Agreed reprimand of salesperson license, entered November 28, 2006; Agreed
administrative penalty of $250, entered November 28, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Shipman, Randall Ransom
(Dallas); license #326500
Agreed reprimand of broker license, entered November 30, 2006; Agreed administrative
penalty of $250, entered November 30, 2006; failing to complete mandatory
continuing education hours and pay the $200 fee within the 60-day period provided
by 22 TAC §535.92(f) of the Rules of the Texas Real Estate Commission
Blevins, Doyle J. Jr.
(Willis); license #499672
Revocation of salesperson license, effective November 1, 2006; failing within
a reasonable time to provide information to the Commission in response to
Commission's request for same in connection with an application for renewal
of real estate salesperson license, in violation of 22 TAC §535.91(c)
of the Rules of the Texas Real Estate Commission
Brown, Diedra Anne
(Arlington); license #N/A
Agreed administrative penalty in the amount of $1,000, entered December 1,
2006; after expiration of her real estate salesperson license, Ms. Brown continued
to act as and/or represent that she was a real estate salesperson, in violation
of §1101.351(a)(1) of the Texas Occupations Code
Bell, Phillip Miles
(Boerne); license #468420
Agreed reprimand of salesperson license, entered December 6, 2006; Agreed
administrative penalty of $1,000, entered December 6, 2006; acting negligently
or incompetently by failing to notify the buyer about a defect in the property
and relying on the seller's representation that he would do so, in violation
of §1101.652(b)(1) of the Texas Occupations Code
Obaseki, Kinsley Ebu
(Sugar Land); license #445923
Agreed reprimand of broker license, entered December 28, 2006; agreed administrative
penalty of $250, entered December 28, 2006; commingling money that belonged
to another person with the license holder’s own money by briefly depositing
a principal’s earnest money into an operating account instead of a trust
account, in violation of §1101.652(b)(10) of the Texas Occupations Code
Estevez, Ricardo M.
(San Antonio); license #405143
Revocation of broker license, effective October 2, 2006; licensee incarcerated
after criminal probation revoked, license revoked by operation of law pursuant
to §53.021(b) of the Texas Occupations Code
Litke, Robert William
(Waxahachie); license #506863
Agreed reprimand of salesperson license, entered December 5, 2006; Agreed
administrative penalty of $250, entered December 5, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Dutter, George Shordon, Jr.
(Dallas); license #413540
Agreed reprimand of salesperson license, entered December 5, 2006; agreed
administrative penalty of $250, entered December 5, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Vaughan, William Houston, Jr.
(Dallas); license #370886
Agreed reprimand of salesperson license, entered December 5, 2006; Agreed
administrative penalty of $250, entered December 5, 2006; failing to complete
mandatory continuing education hours within the 60-day period provided by
22 TAC §535.92(f) of the Rules of the Texas Real Estate Commission
Martin, Finis Dwane
(Corsicana); license #160797
Agreed reprimand of broker licensed, entered December 11, 2006; Agreed administrative
penalty of $500, entered December 11, 2006; failing within a reasonable time
to make good a check issued to the Commission and pay the processing fee,
in violation of $1101.652(a)(4) of the Texas Occupations Code; failing to
pay a check processing fee within the 15 days after the Commission has mailed
a request for payment, in violation of §534.2(a) of the Rules of the
Texas Real Estate Commission
Udy, Brandi Lynn
(Houston); license #506177
Agreed reprimand of salesperson license, entered December 13, 2006; Agreed
administrative penalty of $250, entered December 13, 2006; failing to complete
mandatory continuing education hours and pay the $200 fee within the 60-day
period provided by 22 TAC §535.92(f) of the Rules of the Texas Real Estate
Commission
Pierce, Judy Lee
(San Antonio); license #349085
Agreed reprimand of broker license, entered December 18, 2006; agreed administrative
penalty of $250, entered December 18, 2006; failing to complete mandatory
continuing education hours within the 60-day period provided by 22 TAC §535.92(f)
of the Rules of the Texas Real Estate Commission
McCordic, Peter
(Katy); license #429236
Revocation of salesperson license, effective December 20, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
Moore, Tina Marie
(Houston); license #470488
Revocation of salesperson license, effective December 20, 2006; failing to
complete mandatory continuing education hours and pay the $200 fee within
the 60-day period provided by 22 TAC §535.92(f) of the Rules of the Texas
Real Estate Commission
DON’T FORGET: You must still renew your license even if you choose to be inactive.
Got A Question About A Relocation Company?
Through a link maintained on the TREC web site, licensees may directly access
The Real Estate Coalition for Cooperative Business Practices (the Coalition)
of the
Employee Relocation Council
by clicking on “The Interchange” on the Coalition’s website
at
http://coalition.erc.org
Licensees may raise concerns about their dealings with a
relocation company and send a message to the appropriate company for response.
Calendar of Events
Commission
Meetings: February 26, 2007 and April 23, 2007
Broker-Lawyer
Committee Meetings: None at this time
Inspector Committee Meetings: None at this time
Web site: http://www.trec.state.tx.us
Phone: (800) 250-TREC (8732) or (512) 459-6544
Official publication of the
Texas Real Estate Commission
Volume 18, Number 1
February 2007
Rick Perry
Governor
Commission Members:
| John
Walton, Chairman |
Elizabeth
Leal, Vice-Chair |
William H. Flores, Secretary COLLEGE STATION |
James N. Austin, Jr. FORT WORTH |
|
Mary Frances Burleson |
John D. Eckstrum CONROE |
Louise E. Hull VICTORIA |
Paul
H. Jordan GEORGETOWN |
Tom C. Mesa PASADENA |
TREC Administrator
Wayne Thorburn
Desktop Publisher
Patricia Holder
The TRECAdvisor (ISSN 1047-4579) is published by the Texas Real Estate Commission (TREC) as an educational service to licensees in the state of Texas. The purpose of the newsletter is to promote a better understanding of the Real Estate License Act and to inform all licensees of changes affecting laws and practices in the real estate industry. The TRECAdvisor is funded through legislative appropriations and subscriptions collected from TREC licensees. The official text of TREC rules is filed with the Office of the Secretary of State, Texas Register. TREC encourages reproduction of this newsletter with the appropriate acknowledgments. Subscriptions are available for $4.00 for two years. Single issues are $1.00. To order a subscription or a single issue write to TRECAdvisor, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. For information regarding TREC, contact:
Texas Real Estate Commission
P.O. Box 12188
Austin, Texas 78711-2188
(512) 459-6544 or (800) 250-TREC
http://www.trec.state.tx.us