THE ATTORSEI- GESERAL
OP TEXAS
October 18, 1990
Mr. Wallace Collins Opinion No. JM-1236
Administrator
Texas Real Estate Commission Re: Authority of the Texas
P. 0. Box 12188 Real Estate Commission to
Austin, Texas 78711-2188 adopt a rule permitting on-
site audits of Mandatory
Continuing Education
(RQ-2057)
Dear Mr. Collins:
You ask about the validity of a rule promulgated by the
Texas Real Estate Commission [hereinafter the commission]
concerning continuing education courses. The 71st Legisla-
ture added section 7A to the Real Estate License Act [here-
inafter the act] to require that, in order to renew or apply
for licenses, certain applicants for real estate licenses
and certain licensees provide the commission with proof of
having met statutory continuing education requirements.
Acts 1989, 71st Leg., ch. 169, 5 6, at 561, 568. Section 7A
becomes effective on August 31, 1991, and applies only to
licenses issued or renewed on or after that date. Id.
§ 17(b). Given the extensive duties, outlined below, that
have been conferred on the commission and the fact that
persons renewing or applying for licenses on or after August
31, 1991, must provide proof of having met the statutory
requirements, the commission must provide the means whereby
those licensees and applicants may fulfill the requirements.
Section 7A implicitly requires the commission to
approve- continuing education courses and providers of
those courses. It also grants the commission specific
authority to adopt rules to implement the section's manda-
tory continuing education requirements. V.T.C.S. art.
6573a, 5 7A(d). Subsection (a) details specific statutory
requirements regarding the content of required continuing
education courses (m, the rules of the commission, fair
housing laws, agency laws, antitrust laws) and requires the
commission to approve real estate related topics for the
remainder of the course work. Id. 5 7A(a). Subsection (a)
also establishes the minimum and maximum hours for daily
course work. The section also allows the commission to
provide for the substitution of commission approved
p. 6576
,
Wr. Wallace Collins - Page 2 (JM-1236)
correspondence courses for classroom work and prohibits it
from requiring examinations, except for correspondence
courses.
You ask whether the act permits the commission to adopt
the following rule concerning continuing education courses
offered pursuant to the act:
Commission employees may conduct on-site
audits of any course offered by an approved
MCE [mandatory continuing education] pro-
vider. Audits shall be conducted without
prior notice to the MCE provider, and com-
mission employees may enroll and attend an
MCE course without identifying themselves as
employees of the commission. An audit report
indicating noncompliance with these sections
shall be treated as a written complaint
against the provider or instructor concerned
and shall be referred to the enforcement
division for appropriate resolution.
22 T.A.C. 5 535.73(c).
When the rule was proposed, section 5(h) of the act was
cited as the authority for its adoption. 14 Tex. Reg. 5716
(Oct. 27, 1989). Section 5(h) gives the commission the
authority to make and enforce all rules necessary "to insure
compliance with the provisions of this Act." V.T.C.S. art.
6573a, 5 5(h).
The rule, which is only one of several, is aimed at
ensuring compliance with section 7A of the act. Specifi-
cally, you ask whether section 15B(a) of the act, which
restricts undercover investigations, precludes the adoption
of the rule. Section 15B(a) reads as follows:
Notwithstanding any other provision of the
Act, there shall be no undercover or covert
investigations conducted by authority of this
Act unless expressly authorized by the
commission after due consideration of the
circumstances and determination by the
commission that such measures are necessary
to carry out the purposes of this Act. No
investigations of licensees or any other
actions against licensees shall be initiated
on the basis of anonymous complaints whether
in writing or otherwise but shall be in-
itiated only upon the commission's own motion
or a verified written complaint. Upon the
P. 6577
Mr. Wallace Collins - Pagi 3 (JM-1236)'
adoption of such motion by the commission or
upon receipt of such complaint, the licensee
shall be notified promptly and in writing
unless the commission itself, after due
consideration, determines otherwise.
V.T.C.S. art. 6573a, 5 155(a).
It has been suggested that the proposed unannounced
audits violate the restriction on undercover investigations.
We read the prohibition found in section 158 to apply only
to investigations of licensees and not to assessments of the
course content of mandatory continuing education courses,
providers, or instructors. The prohibition found in section
15B was originally adopted along with revisions to educa-
tional licensinq requirements. Acts 1981, 67th Leg., ch.
71, 5 5, at 158, 161. The bill analysis for Senate Bill 484
describes the then new section 158 as:
Allow[ing] the Texas Real Estate Commission
to make a motion in a public meeting to
investigate a licensed real estate broker
or licensed real estate salesman. Also pro-
vides the Commission the right to probate a
license.
Bill Analysis, S.B. 484, 67th Leg. (1981).
There is no indication that the prohibition on under-
cover investigations applies to anyone other than licensees.
In fact, we believe that the proviso found in section 15B,
"Notwithstanding any other provision of this act," was
inserted in recognition of the commission's express
authority to investigate licensees, found in section 15(a).
Section 15B makes it clear that the section 15(a)
investigatory authority does not include authority to
conduct undercover investigations without "due consideration
of the circumstances and determination by the commission
that such measures are necessary to carry out the purposes
of this Act." V.T.C.S. art. 6573a, 5 lSB(a). Since the
state began regulating real estate dealers1 and salesmen,
the licensing authority has had express authority to
1. We use the generic term "dealers" because that was
the term used in the 1939 act. The statutory designation
was changed to "real estate brokers" by a 1955 amendment.
Acts 1955, 54th Leg., ch. 383, at 986.
P. 6576
Mr. Wallace Collins - Page 4 (JM-1236)
investigate the actions of licensed dealers and salesmen.
See Acts 1939, 46th Leg., 55 5(c), 11, at 560, 563, 569.
A comparison of sections 15(a) and 15B reinforces our
conclusion, inasmuch as both allow investigations of
licensees upon the commission's own motion or a verified,
written complaint. By contrast, the audit permitted under
the commission rule is an examination or review of the
course content or, possibly, the hours of courses offered to
satisfy statutory continuing education requirements.
We think, given the detailed requirements of section 7A
and the section 5(h) authority to ensure compliance with the
act, that it is reasonable for the commission to allow its
employees to audit, without notice, continuing education
classes to ensure that the requirements of section 7A of the
act are being met.
SUMMARY
Article 6573a, section 15B, V.T.C.S., pro-
hibits undercover and covert investigations of
licensees under the Real Estate License Act.
That section does not prohibit unannounced
audits of courses offered to satisfy the con-
tinuing education requirements of the act.
Very truly Y ,
J 4 ivik
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAELEY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Karen C. Gladney
Assistant Attorney General
p. 6579