THE ATTOWNEY GENERAL 

OF ??lEXAS 

November 1, 1972 

Hon. Andy James Opinion Ho. M-1256 

Administrator 

Texas Real Estate Commission Re: Whether the Texas Real 

P. 0. Box 12188, Capitol Station Estate Commission may 

Austin, Texas 78711 require real estate 

licensees to use only 

a specific contract 

form in negotiating 

Dear Mr. James: real estate contracts. 

You have asked for the opinion of this office on the 

following questions: 

" 1 . Is the Texas Real Estate Commission 

authorized to require that real estate licensees use only a specific contract form 

when acting as a real estate licensee in 

negotiating such real estate contracts? 

” 2 . What disciplinary action would the 

Texas Real Estate Commission be authorized 

to take against a licensee who, knowingly, 

used a contract form other than the one 

specified by the Commission in negotiating 

a real estate contract as agent for another 

or others?" 

The controlling issue presented by your first question 

is whether the Board would exceed its delegated powers in promulgating a rule or regulation requiring the use of some presumably legal and proper contract form to be used by real estate 

licensees in their professional conduct of real estate negotiation 

between buyers and sellers. We do not understand that such a 

rule would require either the buyer or seller to use such a form, 

since they are free to prepare their own legal instrument or to 

cause it to be prepared by the attorney of their choice. Nor do 

we understand that such a rule would prevent a licensee, who may 

be licensed to practice law, from preparing the legal instrument 

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. . 

Hon. Andy James, page 2 (M-1256) 

for the parties should they desire him to do so. We are not here faced 

with the situation in which a licensee may, for his own protection, 

prepare a legal instrument to cover the transaction to the extent 

of securing his own commission or other consideration but rather 

the use of a legal instrument by a licensee to cover the substantive 

legal contract as between the buyer and the seller. 

In determining the controlling question, we must examine 

the general puposes of the Real Estate License Act, Article 6573a, 

Vernon's Civil Statutes, as well as certain specific provisions 

of the act. One of the Legislature's primary purposes in passing 

the Act was to assure and protect the personal and professional 

business relationship between a real estate licensee and his buyer 

or seller client. To make certain that such purpose is carried out, 

the Act requires the real estate salesman or broker to be licensed 

before he may practice within the state. He must apply for a license, 

evidence his ability and qualifications, pass an examination, and 

make bond under Sections 8 through 11 of the Act prior to the 

issuance of his license under Section 12. 

In this statutory context of fixing personal identification 

and personal responsibility, certain powers are delegated to the 

Commission in connection with its authority to promulgate the rule 

or regulation inquired about. In 1967, the Act was amended by the 

Legislature by S.B. No. 215 (ch. 272, pgs. 598-602, 60th Legis., 

R.S.), giving substantially more detailed powers to the Commission 

thenhad previously been conferred. Section 2 of the present Act 

was amended in its entirety and now provides, in part, that: 

"The Commission is authorized to employ an 

Administrator, an Assistant Administrator, and 

such other employees and officers as shall be 

necessary to effectively administer and enforce 

this Act and regulate the real estate brokerage 

business in the State of Texas. . . The Commission shall adopt such rules and regulations, not 

inconsistent with this Act, as shall be necessary 

or appropriate to effectively administer and enforce this Act, regulate the real estate brokerage 

business, and establish canons of professional 

ethics and conduct for its licensees . . ." 

(Emphasis added.) 

Section 8 of S.B. 215 evidences the legislative intent 

for enactment of the 1967 amendments, reciting: 

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Hon. Andy James, page 3 (M-1256) 

"The fact that interests in real property 

are of vital importance to a sound economy and 

that the intracacies and complexities of contracting for sales and leases of interest in 

real estate require that only persons trained 

and qualified in real estate brokerage matters 

be permitted to act as Real Estate Brokers and 

Real Estate Salesmen; and the further fact that 

Texas citizens annually entrust millions of 

dollars of their funds to Real Estate Brokers 

Section 16 of the Act provides that the Commission may 

refuse or suspend any license it grants for numerous enumerated 

reasons involving professional business conduct and ethics concerning the negotiation of sales and contracts, including illegal 

or dishonest dealings, bad faith, untrustworthiness, incompetancy, 

and disregarding or violating any provision of the Act. 

Section 17 likewise provides for cancellation by the 

Commission of any license, 

"upon proof that the licensee, not being 

licensed and authorized to practice law in this 

State, for a consideration, reward, pecuniary 

benefit, present or anticipated, direct or indirect, or in connection with or as a part of 

his employment, agency, or fiduciary relations, 

as licensee, draws any deed, note, deed of trust 

or will, or q other written instrument that 

may transfer or anywise affect the title or 

interest in land, or advises or counsels any 

person as to the validity or legal sufficiency 

of any such instrument above mentioned, or as 

to the validity of title of real estate." 

(Emphasis added.) 

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Hon. Andy James, page 4 (M-1256) 

In Kee v. Baber, 157 Tex. 387, 303 S.W.2d 376 (1957), 

the court held that Article 4556, Vernon's Civil Statutes, which 

incidentally gave the Optometry Board the same type of powers 

as given the Real Estate Commission under Article 6573a, was a 

broad delegation of regulatory powers to the Board to adopt such 

rules as are necessary for "the regulation of the practice of 

optometry." See also Texas State Board of Examiners inoptometry 

F412 S.W.2d.307 309-310 (Tex.Sup. 1967), cert.den. 88 S.Ct. 

41, 389 U.S. 52. Furthermore, it is well established in this 

state that a state regulatory agency may make reasonable rules 

and regulations, related to the performance of the specific 

statutory duty placed upon that agency by the Legislature, whenever the authority to make such rules and regulations is expressly 

or impliedly conferred upon the agency by statute. Gulf Land Co.- 

v. Atlantic Refining Company, 134 Tex. 59, 131 s.w.2'73 )39) : 

Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1622 

(1942); Texas Liquor Control Board v. Super Savings Stamp Co., 303 

S.W.2d 536 (Tex.Civ.App. 1937, error ref. n.r.e.); Gulf C&SF Ry. 

Co. v. State, 120 S.W.2d 1002 (Tex.Civ.App. 1909, error ref.); and 

'1 Tex.Jur.2d 656-657, Administrative Law, Sec. 11. 

It is an equally settled principle of jurisprudence that 

when a statute grants the authority or power to do a thing, such 

as to regulate, it impliedly authorizes whatever is reasonably 

necessary and proper to the execution of the power expressly granted. 

53 Tex.Jur.2d 204, Statutes, Sec. 141, and many cases there cited. 

The word "regulate" is a common one of generally recognized 

meaning and is defined as meaning "to govern or direct according 

to rule" and "to reduce to.order, method or uniformity." Its 

synonyms are "direct, regulate, order, rule, govern, and control." 

Webster's New International Unabridged Dictionary (1954). 

The means and methods of regulation are here left to the 

broad discretion of the Commission and our research fails to reveal 

any case authority which would deny the right to regulate through 

the required use of a specific contract form. 

If the Commission, in its discretion, should make findings 

to the effect that the required use of the approved form is a necessary and appropriate means of regulation to administer effectively 

and enforce strictly the Act and the real estate brokerage business, 

and that without the use of such a form substantial numbers of 

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Hon. Andy James, page 5 (M-1256) 

licensees will engage in doubtful or possibly illegal contractural 

transactions involving the illegal practice of law in violation of 

the statutes, resulting in confusion and reflecting upon the professional conduct of the licensees in this unclear and uncertain 

field, it is our opinion the courts will uphold the proposed regulation as within the delegated powers of the Commission. 

The weight of authority in this county appears to be 

that the filling in the blanks on a sales contract by a licensed 

broker or salesman prepared by an attorney, which conduct requires 

only the use of common knowledge regarding information to be inserted 

in such blanks and general knowledge concerning legal consequences?, 

does not constitute the practice of law. See State v. Dinger, 109 

N.W.2d 685 (Wis.Sup. 1961); Ingraham County Bar Assoc. v. Miller 

co., 69 N.W.2d 713 (1955), 

Einlan & Tyson, Inc., 

53 A.L.R.2d 777; Chicago Bar Assn. v. 

214 N.E.Zd 771 (Ill.Sup. 1966). However, 

Texas courts have not decided the precise question, and the foregoing authorities appear to be limited to the preliminary or earnest 

money contract form only, the reasoning not being applied or extended 

to include subsequent legal instruments, such as deeds, mortgages, 

and other instruments which become recorded muniments of title. 

The drawing or filling in of these instruments require the special 

skill of an attorney and would constitute the practice of law. See 

State v. Indiana Real Estate Assn. Inc., 191 N.E.2d 711 (Ind.Sup. 

1963). Pioneer Title Ins. ti Trust Co. v. State Bar of Nevada, 326 

P.2d 408 (Nev.Sup. 1958), and other authorities cited at 53 A.L.R.Zd 

788, et seq. 

It is our opinion that in the absence of a clear sanction 

by the Commission, the drawing up or supplying of any preliminary 

or earnest money contract form and the filling in of the blanks 

for the parties by a real estate dealer may reasonably be deemed 

suspect and possibly in violation of Section 17 of Article 6573a 

under the existing state court decisions in this field. See 

v. Grievance Committee, 742 Tex. 506,ikin 

Title Co. v. Grievance Committee, 

However, ' 

272 S.W.2d 948 (Tex.Civ.App. 1955). 

it is our oplnron that the Commission sanctioned use of a 

form as above indicated that has been duly promulgated by the Commission would not constitute a violation of the statute or the illegal 

practice of law. 

We therefore answer your first question in the affirmative. 

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Hon. Andy James, page 6 (M-1256) 

In answer to your second question, it is our opinion 

that a violation of the proposed rule or regulation promulgated 

by the Texas Real Estate Commission, in accordance with Section 

2 of the Act, by a licensee engaged in the real estate brokerage 

business, would constitute a "violation of any of the provisions 

of this Act" within the purview of Section 16(c) (23) of the Act, 

and upon proof of such, the Texas Real Estate Commission would 

be authorized to suspend or revoke a license theretofore issued 

to such broker or salesman. Attorney General's Opinion No. 

O-2869 (1940). 

SUMMARY 

The Texas Real Estate Commission is authorized 

to require its licensees to use a specified contract 

form when acting as real estate brokers or salesmen. 

Upon proof that a licensee knowingly uses 

a contract form, other than as specified by the 

Commission in negotiating a real estate contract 

as agent for another, the Commission may suspend 

or revoke the license theretofore issued to such 

licensee. 

Prepared by Bill Campbell 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

J. C. Davis 

Bill Craig 

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Hon. Andy James, page 7 

SAMUEL D. MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

(M-1256) 

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