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 touse only a specific contract form innegotiating 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 innegotiating a real estate contract as agent for another or others?" The controlling issue presented byyour first question iswhether the Board would exceed itsdelegated powers inpromulgating a rule or regulation requiring the use of some presumably legal andproper contract form tobe used by real estate licensees in their professional conduct of real estate negotiation between buyers and sellers. We do not understand that such a rulewould require either the buyer or seller touse such a form, since they are free toprepare their own legal instrument or to cause it tobeprepared by the attorney of their choice. Nor do we understand that such a rulewould prevent a licensee, whomay be licensed topractice law, frompreparing the legal instrument

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for theparties should they desire him todo so. We arenot here faced with the situation inwhich a licensee may, forhis ownprotection, 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 asbetween the buyer and the seller.

Indetermining the controlling question, we must examine the general puposes of the Real Estate License Act, Article 6573a, Vernon's Civil Statutes, aswell as certain specific provisions of the act. One of the Legislature's primary purposes inpassing theAct was to assure andprotect thepersonal andprofessional business relationship between a real estate licensee andhis buyer or seller client. Tomake certain that suchpurpose is carried out, theAct requires the real estate salesman orbroker to be licensed before hemay practice within the state. Hemust apply for a license, evidence his ability and qualifications, pass an examination, and make bond under Sections 8through 11of theAct prior to the issuance ofhis license under Section 12.

In this statutory context of fixing personal identification andpersonal responsibility, certain powers are delegated to the Commission in connection with its authority topromulgate the rule or regulation inquired about. In 1967, theAct 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 2of thepresent Act was amended in its entirety andnow provides, inpart, that:

"TheCommission is authorized toemploy an Administrator, anAssistant Administrator, and such other employees and officers as shall be necessary toeffectively administer and enforce thisAct and regulate the real estate brokerage business in the State of Texas.
. .The Commission shall adopt such rules and regulations, not inconsistent with thisAct, as shall be necessary or appropriate to effectively administer and enforce thisAct, regulate the real estate brokerage business, and establish canons ofprofessional ethics and conduct for its licensees

. . ." (Emphasis added.) Section 8of S.B. 215 evidences the legislative intent for enactment of the 1967 amendments, reciting:

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"The fact that interests in real property are ofvital 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 andqualified in real estate brokerage matters bepermitted 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 toReal Estate Brokers

Section 16of theAct provides that the Commission may refuse or suspend any license it grants fornumerous enumerated reasons involving professional business conduct and ethics concerning the negotiation of sales and contracts, including illegal ordishonest dealings, bad faith, untrustworthiness, incompetancy, and disregarding orviolating anyprovision of theAct.

Section 17 likewise provides for cancellation by the Commission of any license,

"uponproof that the licensee, not being licensed and authorized topractice law in this State, for a consideration, reward, pecuniary benefit, present or anticipated, direct or indirect, or in connection with or as apart of his employment, agency, or fiduciary relations, as licensee, draws any deed, note, deed of trust orwill, 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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InKee v. Baber, 157Tex. 387, 303 S.W.2d 376 (1957), the court held thatArticle 4556,Vernon's Civil Statutes, which incidentally gave the Optometry Board the same type ofpowers as given the Real Estate Commission underArticle 6573a, was a broad delegation of regulatory powers to the Board to adopt such rules as are necessary for "the regulation of thepractice 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, 389U.S. 52. Furthermore, it iswell 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 tomake 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., 139Tex. 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 '1Tex.Jur.2d 656-657, Administrative Law, Sec. 11.

It is an equally settled principle of jurisprudence that when a statute grants the authority orpower todo a thing, such as to regulate, it impliedly authorizes whatever is reasonably necessary andproper to the execution of thepower expressly granted. 53Tex.Jur.2d 204, Statutes, Sec. 141, andmany cases there cited.

The word "regulate" is a common one of generally recognized meaning and isdefined asmeaning "to govern or direct according to rule" and "toreduce to.order, method or uniformity." Its synonyms are "direct, regulate, order, rule, govern, and control." Webster's New International Unabridged Dictionary (1954).

Themeans andmethods 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 anecessary and appropriate means of regulation to administer effectively and enforce strictly theAct and the real estate brokerage business, and that without the use of such a form substantial numbers of

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licensees will engage indoubtful orpossibly illegal contractural transactions involving the illegal practice of law inviolation of the statutes, resulting in confusion and reflecting upon theprofessional conduct of the licensees in this unclear and uncertain field, it is our opinion the courts will uphold the proposed regulation aswithin thedelegated powers of theCommission.

The weight of authority in this county appears tobe 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 tobe inserted in such blanks and general knowledge concerning legal consequences?, does not constitute thepractice of law. See State v. Dinger, 109 N.W.2d 685 (Wis.Sup. 1961); Ingraham County BarAssoc. v.Miller co., 69N.W.2d 713 (1955), Einlan &Tyson, Inc., 53A.L.R.2d 777; Chicago BarAssn. v. 214N.E.Zd 771 (Ill.Sup. 1966). However, Texas courts have not decided theprecise question, and the foregoing authorities appear tobe limited to thepreliminary or earnest money contract form only, the reasoning not being applied or extended to include subsequent legal instruments, such asdeeds, 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 andwould constitute thepractice of law. See State v. Indiana Real Estate Assn. Inc., 191N.E.2d 711 (Ind.Sup. 1963). Pioneer Title Ins. tiTrust Co. v. State Bar ofNevada, 326 P.2d 408 (Nev.Sup. 1958), and other authorities cited at 53A.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 anypreliminary or earnest money contract form and the filling in of theblanks for theparties by areal estate dealer may reasonably be deemed suspect andpossibly inviolation of Section 17ofArticle 6573a under the existing state court decisions in this field. See

v. Grievance Committee, 742Tex. 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 Commissionwould not constitute aviolation of the statute or the illegal practice of law.

We therefore answer your first question in the affirmative.

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Inanswer toyour second question, it isour opinion that aviolation of theproposed rule or regulation promulgated by the Texas Real Estate Commission, in accordance with Section 2of theAct, by a licensee engaged in the real estate brokerage business, would constitute a "violation of any of theprovisions of thisAct" within thepurview of Section 16(c)(23)of theAct, 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 touse a specified contract formwhen acting as real estate brokers or salesmen. Upon proof that a licensee knowingly uses acontract form, other than as specified by the Commission innegotiating 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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SAMUEL D.MCDANIEL Staff Legal Assistant
ALFRED WALKER Executive Assistant
NOLA WHITE First Assistant (M-1256)

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