The 88th Texas Legislature, Regular Session, began January 10, 2023, and ends May 29, 2023. This session opened with the Texas Real Estate Commission (TREC) and Texas Appraiser Licensing Board (TALCB) following 358 bills relevant to the administration of the agency.  A much smaller number will become law, one of relevance to Texas real estate license holders.

Senate Bill 1577: Texas Real Estate Research Center, Real Estate Research Advisory Committee, TREC, TALCB

Changes Impacting TREC License Holders

Broker Education Experience

Currently, the education hours required to become a broker are specified in statute, which means any edits to the hours to address changes in the market or to modernize the education needs must be made by the legislature. SB 1577 grants rule-making authority to the Commission, so that these changes can be made through a simpler, more nimble process.  License holders can easily follow the rule making process and comment on changes.

Wholesaling

Wholesaling is described as anyone who does not own a property for sale but is marketing an option or an equitable interest in a contract to purchase that property. Current law requires that this be disclosed to any potential buyer.

A person engaged in wholesaling who does not provide notice is engaged in unlicensed brokerage activity.

SB 1577 requires that the notice be provided to a potential buyer in writing, and that the same written notice be given to the seller of the property.

Real Estate Recovery Trust Account

SB1577 grants the Commission rulemaking authority to set and collect fees to cover maintenance of the Real Estate Recovery Trust Account. This law also increases the statutory amounts for the Trust Account related to claims to account for inflation and increased claim costs. Those amounts had not been updated since 2003. They have been raised from $50,000 to $125,000 per claim; and $100,000 to $250,000 cap per license holder.

Licensure Exemption for Certain Business Entities

SB 1577 exempts a business from licensure if it is an LLC or S Corporation; established for the sole purpose of receiving compensation earned by a license holder while engaged in real estate brokerage and is at least 51% owned by the license holder on whose behalf the entity receives compensation.

This type of business is not required to be licensed unless engaged in any other brokerage activity. This type of business, however, is required to register with TREC. SB 1577 grants TREC authority to develop the registration process for these types of businesses.

Texas A&M Real Estate Research Center Fee

This change clarifies the statute to ensure the agency collects the pass-through fee for the Texas A&M Real Estate Research Center for both initial and renewal applications.​

Remove Statutory Language Establishing Requirements for Non-Residents

SB 1577 conforms with a previous sunset requirement and removes statutory language pertaining to non-resident applicants. ​

TREC and TALCB Study Guides for Licensing Exams

SB 1577 repeals the requirement that TREC and TALCB publish study guides for the licensing exam.  This requirement is duplicative of exam prep courses already offered by many education providers, who are better equipped to prepare prospective students to take the exam. Additionally, the agency does not have input in creation of the national portion of the TREC exam and the entire TALCB exam is developed of the federal level.

Effective January 1, 2024

SB 1577 was made law when signed by Texas Governor Greg Abbott on May 19 and will go into effect January 1, 2024. TREC will begin the process of implementing the changes over the next several months, to include seeking stakeholder input.

The entirety of the bill’s language can be found online.