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 onsite 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 Legislature added section 7A to the Real Estate License Act [hereinafter 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 mandatory 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 

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, 

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] provider. Audits shall be conducted without 

prior notice to the MCE provider, and commission 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. Specifically, 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 initiated 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 educational 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 provides the Commission the right to probate a 

license. 

Bill Analysis, S.B. 484, 67th Leg. (1981). 

There is no indication that the prohibition on undercover 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 

licensees upon the 

both allow investigations of 

commission's own motion or a 

written complaint. 

verified, 

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., prohibits 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 continuing 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