TRECAdvisor

• Fingerprint Law Became Effective January 1, 2008
• Meeting Highlights

• Annual Report for Fiscal Year 2007

• Rule Actions
• Disciplinary Actions

Fingerprint Law Effective January 1, 2008

Fingerprint Requirements

A recently enacted law (HB 1530, 80th Legislature, regular session) requires any person applying for or renewing a broker or salesperson license on or after January 1, 2008, to provide their fingerprints, in a specified format, in order to enable an FBI criminal background check to be performed. These new fingerprint requirements apply only to brokers and salespersons. They do not apply to other TREC licensees, such as inspectors. Once fingerprints provided for TREC are on file with DPS, a licensee will not need to be fingerprinted for subsequent renewals.

Where do I get a FAST Print Pass

To get a Fast Print Pass go to the TREC web site at www.trec.state.tx.us and follow the instructions in the blue box at the top of the web page.

Click on Read about it and get your FAST Print Pass this will take you to the screen where you will be asked for your license number or TREC ID number if you are not yet a licensee. The TREC ID number will be preprinted on the FAST Print Pass.

The FAST Print Pass also has a specific number printed on it called an ORI or Agency Number. This number is the number assigned to TREC and ensures that DPS sends the report to the correct agency.

Where to Get Your Fingerprints Taken

Integrated Biometric Technologies (IBT) is the vendor that handles the collecting and submitting of fingerprints to the FBI via the Texas Department of Public Safety (DPS). IBT gathers the fingerprints and takes a photograph. Note that you must first obtain a FAST Print Pass from TREC in order to make an appointment with IBT. IBT has locations all over Texas. See our web site for more information.

I've already had my fingerprints taken for another license type. Why do I have to do it again?

The fingerprints must be identified with a specific agency. This is a requirement of DPS to ensure that each background check request submitted to FBI is from an agency that is statutorily required to obtain it.

Remember once this information is on file with TREC a licensee will not have to repeat the fingerprinting process.

For real estate licensees who renew their licenses after
January 1, 2008 there are three steps to renew.

1. Complete the required education for the license type. (Either 30 or 60 hour core course for SAE or 15 hours of MCE)

2. Submit your fingerprints through IBT.

3. Pay the renewal fee.

Education and fingerprinting are not required for a timely renewed inactive license if you are subject to MCE.

If you are subject to SAE you are required to complete the annual education requirement even if you are renewing on an inactive status. Renewals without education for this type of license will be rejected. Both SAE and fingerprinting should be completed at least 10 days prior to the license expiration date. Fingerprinting is not required for a timely renewed inactive license if you are subject to SAE.

Late renewal applications require the submission of fingerprints.

Meeting Highlights

The Texas Real Estate Commission held its regularly scheduled meeting at the TREC headquarters in Austin, Texas on Monday, December 10, 2007. Chairman John Walton presided.

During staff reports new employees were introduced. During committee reports, Fred Willcox of the Texas Real Estate Inspector Advisory Committee reported that officers had been elected. They are Larry Foster, Chairman, Brad Murphy, Vice-chair and Jill Frankel, Secretary.

The Commission voted to authorize payment on three claims against the Real Estate Trust Account in the amounts of $50,000, $2,400 and $14,530.

The Commission adopted on a permanent basis a series of amended and new rules and 2 repeals. The majority of the rules and both the repeals were adopted on an emergency basis at the August 6, 2007 meeting.

Rules were adopted which adopt by reference two revised contracts (new home complete and incomplete) and three addenda concerning Property Located Seaward of the Gulf Intracoastal Waterway, Third Party Financing and a new Addendum Containing Required Notices Under Texas Property Code §5.016, §420.001 and §420.002.

The Commission heard comments on Texas Attorney General Opinion No. GA-0581(2007) regarding whether an applicant for a real estate inspector license is required to carry general liability insurance, professional liability insurance, or both.

The Commission authorized Mr. Irvine to enter into a Memorandum of Understanding with the Texas Department of Public Safety to provide fingerprinting services for the Commission as required by law.

The Commission re-appointed George Stephens for another term to the Mortgage Broker Advisory Committee.

The Commission denied a motion for modification of order and a motion for probation in the matter of Gerald Lee Morey, Hearing No. 07-348-070178.

The next scheduled meetings of the Commission will be February 25, 2008, and April 28, 2008, at the TREC headquarters in Austin, TX.

• The Sunset Review process culminated in the 80th Legislature’s continuing the Commission’s existence for 12 more years and adopting the Sunset Review Commission recommendations, including streamlining and prioritizing complaint resolution and enforcement activities, enhancing enforcement powers, and merging more fully the activities and operations of the Commission and the Appraiser Board while retaining the Appraiser Board’s status as an independent regulatory authority.
• New enhanced MCE requirements took effect for real estate licensees.   
  Real estate brokers and salespersons became, effective January 1, 2008, subject to new fingerprinting and criminal background check requirements.
• The Commission and the Appraiser Board, along with the Attorney General, the Department of Insurance, the Office of the Consumer Credit Commissioner, the Savings and Mortgage Lending Department, and the Department of Public Safety were assigned new responsibilities as a mortgage fraud task force.
• “Fast track” provisions for inspector licenses were changed to require both education and experience, and inspectors were required to obtain insurance to protect the public against certain violations.
• New federal education and testing requirements for appraisers were instituted to take effect January 1, 2008.
• The Commission was appropriated the funds to undertake significant enhancements to its systems, facilitating a transition to web-based technology and the implementation of imaging technology. The former will facilitate the Commission in keeping pace with the licensees it oversees while controlling costs, relying increasingly on technology to achieve greater efficiency while enhancing customer service. The latter will dovetail with the goal of enhancing customer service, ultimately making the Commission’s licensee records, which occupy a 6,000 s.f. file room, to be more readily accessible not only to the Commission staff but also to licensees and the general public.
• As FY 2007 drew to a close, the Commission’s long time administrator, Wayne Thorburn, retired, and Tim Irvine joined the agency as administrator.
• Somewhere around the middle of FY 2007, it became clear on a national level that mortgage markets were in for significant change. Significant numbers of adjustable rate mortgages re-priced, placing borrowers under financial stress as they dealt with rapidly escalating payments. Other non-traditional mortgage products, including subprime loans, products tailored to reduce front end equity requirements, and products that did not use extensive, traditional income verification, began to experience problems. These issues have continued to unfold. Although Texas is blessed with many things that enhance the stability of real estate values, Texas is not immune to these national forces. So FY 2007 set the stage for changes in the Texas real estate markets. As the numbers below will show, it is too early to say what these changes will be, but the Commission is prepared for the possibility that real estate license activity may cool if the Texas real estate markets cool substantially. The Appraiser Board is already dealing with increased enforcement activity as the effects of raising loan defaults lead to more lenders, investors, and mortgage loan servicers questioning appraisals.
  

More Licensees

When Fiscal Year 2007 closed on August 31, 2007 the State of Texas had a total of 153,161 licensed real estate brokers and salespersons 4,260 licensed inspectors, and 1,545 easement or right-of-way registrants. The number of individuals entering the business far exceeds the number leaving or retiring as a total of 19,022 new broker and salesperson licenses were issued in Fiscal Year 2007 and an additional 10,975 previously-licensed salespersons and brokers regained a license. In fact, there has been an increase in real estate licensees consistently every month since January 2001. Moreover, there is, as of this report, every indication that the trend will continue in the immediate future as more Texans seek to obtain real estate licenses and a high percentage of licensees decide to renew. Over eighty-six percent of all brokers renewed their licenses in a timely fashion in FY2007, and approximately five of six experienced salespersons did the same.

The continuing influx of new licensees can be seen in the “pipeline” (table above) from transcript evaluation (where one finds out how many classes must be completed before filing an application) to original application (where one obtains approval to take a real estate examination) and on to individuals examined (the number who take an examination at a testing center) ending up with new licenses issued. At each of these stages, the increase over the past six years has been substantial, resulting in an overall 41.9% increase in licensed salespersons.

While more individuals are attempting to obtain real estate licensure, the overall pass rate on the salesperson examination has increased. The overall broker pass rate increased from 91.4% in FY03 to 94.2% in FY2007 while the salesperson pass rate went from 77.6% three years ago to a pass rate of 85.2% in FY 2007. This is a good sign for continuing a high level of service and competency among real estate professionals in Texas. The overall pass rate for professional inspector candidates has also increased from only 45.0% in FY03 to 63.5% last year. Inspector candidates are limited to three attempts in a six month period while there is no limit on salesperson and broker candidates.

License renewal rates remained in line with recent years with approximately nine of every ten brokers choosing to retain their license. Nearly as high a percentage of experienced salespersons (those with two-year licenses) renewed their licenses in FY2006 while nearly three-fourths of newer salespersons (those still under Salesperson Annual Education) applied to renew their real estate license. These percentages do not include the 10,975 individuals who filed a "late renewal" shortly after their license had expired. Given the number of possible reasons why an individual might not renew, these percentages are quite high and indicate a desire to retain licensure. Approximately 20% of all real estate licenses (30,538) are “inactive,” held by those who wish to retain a license for possible future use.

Online Services

The Texas Real Estate Commission has long been dedicated to offering as many services as possible on the Internet to increase the convenience and ease of use by licensees and the public. The Commission’s web site (www.trec.state.tx.us) is widely regarded as one of the better regulatory websites. In 2005, TREC received the outstanding web site award from the international Association of Real Estate License Law Officials (ARELLO), the second time it has been the recipient of this honor. From the wealth of forms and materials available to the “licensee lookup” function which includes all education records, to the online distribution of the TRECAdvisor newsletter, TREC’s web page provides a quick and handy reference to all aspects of real estate regulation.

More than 32 million Commission web pages were viewed by licensees and the public in the past fiscal year. Nearly one hundred and twenty thousand email addresses are now maintained on the TREC email notification system. Truly, the Internet has changed the means by which this state agency can communicate with the public - both in providing information and in receiving requests and transactions.

Since the year 2000, the Commission has provided a means by which individuals can renew their licenses online. Beginning first with salesperson renewals, this service now extends to virtually all license types. Additionally, license applications can be made over the Internet. In Fiscal Year 2007, thousands of transactions were conducted online by individuals seeking to apply or renew a license with the Texas Real Estate Commission. In Fiscal Year 2007, over 87% of all license renewals were made over the Internet and paid by credit card while more than 75% of all license applications come via the Internet and the TexasOnline system.

Enforcement Questions and Answers

Enforcement questions and answers (FAQs) may be found on TREC's web site at
http://www.trec.state.tx.us/questions/faq-enf.asp

Disciplinary Actions

October, November and December 2007

Brooks, Larry Wayne, Jr.
(Houston); license #497309
Revocation of broker license fully probated for five years, effective October 8, 2007; acted dishonestly and in bad faith in (1) preparing a lease for a buyer client to present to her lender to lead the lender to believe that a property she had deeded back in lieu of foreclosure (but was still appearing on her credit report) was actually an income-producing property and (2) suggesting to the client that she sign the lease and forward it to the lender as an authentic lease in order to improve her position in seeking financing for a new purchase, in violation of §§1101.652(b)(1) and 1101.652(b)(2) of the Texas Occupations Code

Alejos, George Limon
(San Antonio); license #420683
Agreed revocation of broker license fully probated for four years and two months effective October 8, 2007; payment of $46,733.55 made by the Texas Real Estate Recovery Trust Account toward satisfaction of a judgment against George Limon Alejos as provided by §1101.655(a) of the Texas Occupations Code

Urban, Marcy
(Georgetown); license #472864
Agreed reprimand of broker license, entered November 1, 2007; Agreed administrative penalty of $1500, entered November 1, 2007; acting negligently or incompetently by failing to monitor the brokerage activities of a sponsored salesperson, in violation of §1101.652(b)(1) of the Texas Occupations Code; allowing a sponsored salesperson who operated a leasing and property management business to commingle money that belongs to another person with the license holder’s own operating account money, in violation of §1101.652(b)(10) of the Texas Occupations Code; publishing or causing to be published an advertisement that misleads or is likely to deceive the public or tends to create a misleading impression by allowing a sponsored salesperson to make it appear that the salesperson and her unlicensed limited liability company were in charge of a brokerage business, in violation of §1101.652(b)(23) of the Texas Occupations Code; and allowing a sponsored salesperson, without broker’s involvement, to open and maintain an escrow account to hold monies belonging to others in connection with leasing and property management brokerage activities, in violation of 22 TAC §535.159(f)

Bullock, Glenda Raye
(Round Rock); license #398506
Agreed reprimand of salesperson license, entered November 1, 2007; Agreed administrative penalty of $1500, entered November 1, 2007; acting negligently or incompetently in real estate brokerage activities, in violation of §1101.652(b)(1) of the Texas Occupations Code; commingling money that belongs to another person with the brokerage firm’s operating account money, in violation of §1101.652(b)(10) of the Texas Occupations Code; publishing or causing to be published an advertisement that misleads or is likely to deceive the public or tends to cause a misleading impression by making it appear that the salesperson and her unlicensed limited liability company were in charge of a brokerage business, in violation of §1101.652(b)(23) of the Texas Occupations Code; and without the involvement of her sponsoring broker, opening and maintaining an escrow account to hold monies belonging to others in connection with leasing and property management brokerage activities, in violation of 22 TAC §535.159(f)

Robinson, Elton Ray
(Brenham); license #Unlicensed
Agreed assessment of administrative penalty in the amount of $2,500, entered November 2, 2007; Elton Ray Robinson acted, engaged in, and represented that he was a real estate broker or salesperson without first holding a license issued by the Texas Real Estate Commission by assisting in negotiations between sellers and buyers for the purchase of businesses that included some real property with the expectation or receipt of a consulting fee for his services, in violation of §1101.351 of the Texas Occupations Code

Cavazos, John B
(San Antonio); license #479882
Fully probated 36 month suspension of salesperson license, effective November 8, 2007; Plead guilty to the offense of engaging in organized criminal activity, a felony in which fraud is an essential element, in violation of §1101.652(a)(1) of The Texas Occupations Code

Shoff, William B.
(Pearland); license #446119
Agreed revocation of broker license, effective November 10, 2007; Broker entered a plea of guilty to a violation of 18 U.S.C. §287, a felony offense of filing a false claim, in violation of §1101.652(a)(1) of the Texas Occupations Code. The offense involved the broker charging commissions on the leasing of buildings on behalf of and as an employee of the United States of America even after being told by the USA’s Ethics Office that he could not charge commissions involving the USA. Said commissions totaled approximately $647,041.00

IDO Fort Worth, Inc.
(Fort Worth); license #502709
Agreed assessment of administrative penalty of broker license in the amount of $500, entered November 16, 2007; after the Texas Real Estate Commission's notification of a salesperson's license expiration, IDO Fort Worth, Inc. acted negligently by continuing to establish an association, by employment or otherwise, with the unlicensed person who acted as a real estate licensee, in violation of §§1101.652(b)(1) and (26) of the Texas Occupations Code

Shawn, Sharon Frances
(Waxahachie); license #248233
Agreed reprimand of broker license, entered November 27, 2007; Agreed administrative penalty of $500, entered November 27, 2007; Ms. Shawn was the sponsoring broker and/or the designated officer/manager of a sponsoring broker that received the Texas Real Estate Commission's notifications that salespersons' licenses were expired or placed on inactive status and/or a corporate broker's license had expired and she continued to establish an association, by employment or otherwise, with the unlicensed persons and inactive salesperson who acted as real estate licensees, in violation of §1101.652(b)(26) of the Texas Occupations Code; and Ms. Shawn failed to notify the Commission in writing of the use of a real estate business name, in violation of §1101.652(b)(1) of the Texas Occupations Code

Akbar, Shezad Tony
(Carrollton); license #553894
Agreed reprimand of salesperson license, entered November 27, 2007; Agreed administrative penalty of $250, entered November 27, 2007; after expiration of his sponsoring broker's license, Mr. Akbar's license was inactive and he continued to engage in the business of a real estate broker or salesperson, in violation of §1101.351(c) of the Texas Occupations Code; Mr. Akbar acted negligently when he continued to conduct real estate brokerage activities with a person as his partner whose salesperson license had expired, in violation of §1101.652(b)(1) of the Texas Occupations Code

Gonzalez, Roberto V.
(Carrollton); license #547072
Agreed reprimand of salesperson license, entered November 27, 2007; Agreed administrative penalty of $500, entered November 27, 2007; after expiration of his salesperson license, Mr. Gonzalez continued to engage in the business of a real estate broker or salesperson, in violation of §1101.351(a) of Texas Occupations Code; Mr. Gonzalez failed to answer "yes" to the question regarding unlicensed activity on his subsequent late renewal application whereby he procured a license by making a material misstatement of fact in his application, in violation of §1101.652(a)(2) of the Texas Occupations Code; and Mr. Gonzalez acted negligently when he continued to conduct real estate brokerage activities with a person as his partner whose salesperson license was inactive, in violation of §1101.652(b)(1) of the Texas Occupations Code

Davidson, Karen Jean
(Magnolia); license #493547
Agreed reprimand of salesperson license, entered November 28, 2007; acting negligently or incompetently when representing a buyer, by failing to timely deliver earnest monies to the escrow agent and failing to forward the option fee to a seller, and commingling earnest money with her own funds, in violation of § §1101.652(b)(1), (2), (9) and (10) of The Texas Occupations Code

Kelty, Timothy Micheal
(Sulphur Springs); license #331040
Agreed 1 month suspension of salesperson license fully probated for 2 years, effective November 29, 2007; acted negligently or incompetently in drafting multiple offers that included errors, such as indicating that farm and ranch accessories would be conveyed with the property, despite the seller not actually owning them, and failing to advise his seller client that certain terms of the contract were not as she desired, in violation of § 1101.652(b)(1) of the Texas Occupations Code; acted dishonestly or in bad faith in leading his seller client to believe that, despite the language of the contract, the contract did not require her to convey the farm and ranch accessories if she did not own them, in violation of § 1101.652(b)(1) of the Texas Occupations Code; worked in the name of the corporation while sponsored by the designated officer for a corporation (but not by the corporation itself), in violation of § 1101.351(c) of the Texas Occupations Code

Myrick, Kelly Diane
(Big Spring); license #513185
Agreed 3 month suspension of salesperson license fully probated for 2 years, effective November 30, 2007; failed to follow proper intermediary procedures and offered opinions and advice despite not having made appointments, in violation of §§ 1101.560, 1101.652(b)(1), 1101.652(b)(7), and 1101.652(b)(33) of the Texas Occupations Code; added to promulgated forms provisions for which addenda had been promulgated by the Commission for mandatory use and failed to use a temporary lease when the circumstances required one, in violation of 22 T.A.C. § 537.11(c); when the parties executed an amendment to advance the closing date by seven weeks, failed to take appropriate action to amend the date of the contingency for sale of the buyers’ other home, causing the contingency date to be seven weeks after the closing date, in violation of §1101.652(b)(1) of the Texas Occupations Code; used an outdated addendum, in violation of 22 T.A.C. § 537.46; when the buyers were unable to close by the amended closing date, told the seller, who had changed her mind about selling the property, that the original (later) closing date was still valid and that the seller would be in default if she refused to sell, in violation of §1101.654(a)(2) of the Texas Occupations Code and 22 TAC § 537.11(b)

Dawson & Chao Real Estate LLC
(Houston); license #467248
Agreed revocation of broker license, effective December 7, 2007; failure to repay the Real Estate Recovery Trust Fund in the amount of $50,000 in partial satisfaction of a civil judgment against Respondent for allegations of Deceptive Trade Practices Act and fraud, in violation of §1101.655(a) of the Texas Occupations Code

McGuire, Daniel Bruce
(Coppell); license #420938
Agreed reprimand of salesperson license, entered December 27, 2007; Agreed administrative penalty of $250, entered December 27, 2007; Mr. McGuire negligently wrote a false promise of a $10,000 reward at the closing of his principals’ transaction when the reward could not be redeemed at closing, in violation of §§ 1101.652(b)(1) & (2) of the Texas Occupations Code; Mr. McGuire, by not fully understanding the reward program, made a written false promise of a cash reward that was likely to have influenced his buyer principals to enter into a listing agreement when Mr. McGuire was unable and unwilling to keep the promise as he represented the reward in violation of § 1101.652(b)(5) of the Texas Occupations Code

Garcia, Johnny Joe
(Fort Worth); license #445437
Agreed reprimand of salesperson license, entered November 13, 2007 Administrative Complaint -
after filing a late renewal application, Mr. Garcia failed to timely respond to the Commission's request for required more information required pursuant to §535.91(c) of the rules and Mr. Garcia made a material misstatement of fact in his application by failing to answer "yes" the question "Are there any criminal charges pending against you?" in violation of §1101.652(a)(2) of the Texas Occupations Code and 22 TAC §535.91(c)

Renew your broker, salesperson or inspector license online at http://www.trec.state.tx.us/licenses

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 25, 2008 and April 28, 2008

Broker-Lawyer
Committee Meetings: June 19-20, 2008

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 19, Number 1
January/February 2008

Rick Perry
Governor

Commission Members:

TREC Administrator
Timothy K. Irvine

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