Part 23. TEXAS REAL ESTATE COMMISSION

Chapter 537. PROFESSIONAL AGREEMENTS AND STANDARD CONTRACTS

22 TAC §§537.11, 537.30, 537.31

The Texas Real Estate Commission (TREC) adopts an amendment to §537.11, concerning use of standard contract forms, with changes to the proposed text as published in the May 5, 2000, issue of the Texas Register (25 TexReg 3907). The amendments to §537.30 and §537.31, which adopt by reference revised standard contract forms for the sale of new homes, are being adopted without changes from the proposed text. The amendments to §537.33, concerning a proposed seller financing addendum, §537.42, concerning a proposed agreement for mediation, and §537.46, concerning a proposed amendment form, have been withdrawn for further consideration of public comments TREC received on the text of the proposed forms.

The amendment to §537.11 renumbers two revised contract forms for the sale of new homes in the list of forms promulgated by the commission and deletes a reference to a repealed addendum regarding new home insulation. The amendment to §537.30 adopts by reference a revised form TREC No. 23-4, New Home Contract (Incomplete Construction). The form has been revised to include a notice from Texas Property Code, Chapter 27, that builders will be required to provide to buyers beginning September 1, 2000. The notice advises the buyer that the buyer must notify the builder by certified mail at least 60 days prior to filing suit to recover damages from the builder and must provide the builder with an opportunity to inspect the property and cure a construction defect. The form also has been revised to clarify that the seller is responsible for any " rollback" taxes or penalties imposed after closing due to denial of a special use valuation on the property or a change in the use of the property by the seller for periods prior to closing. Information about insulation in the home has been transferred to the new home contract form from a TREC addendum, TREC No. 13-1, which has been repealed.

The amendment to §537.31 adopts by reference a revised form TREC No. 24-4, New Home Contract (Completed Construction). The form has been revised to include the Chapter 27 Property Code notice and the information about insulation which was added to TREC No. 23-4.

No comments were received regarding the proposed amendment to §537.11. One comment on §537.30 and §537.31 pointed out a typographical error in the new home contract forms that obligated both parties to pay for tax certificates and statements. The final version of the forms will obligate only the seller to pay for tax certificates and statements, consistent with the division of costs provided in the other TREC contract forms. Comments received on the forms proposed for adoption in §§537.33, 537.42, and 537.46 have been referred to the Texas Real Estate Broker-Lawyer Committee for consideration, and those proposed sections have been withdrawn so as not to delay the approval and distribution of revised new home contract forms containing the new Property Code notices. This action should ensure that copies of the new home forms are available for use by licensees when the Property Code changes become effective on September 1, 2000.

The amendments are adopted under Texas Civil Statutes, Article 6573a, §5(h), which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties.

§537.11.Use of Standard Contract Forms.

(a)

Standard Contract Form TREC No. 9-4 is promulgated for use in the sale of unimproved property where intended use is for one to four family residences. Standard Contract Form TREC No. 10-3 is promulgated for use as an addendum concerning sale of other property by a buyer to be attached to promulgated forms of contracts. Standard Contract Form TREC No. 11-3 is promulgated for use as an addendum to be attached to promulgated forms of contracts which are second or " back-up" contracts. Standard Contract Form TREC No. 12-1 is promulgated for use as an addendum to be attached to promulgated forms of contracts where there is a Veterans Administration release of liability or restoration entitlement. Standard Contract Form TREC No. 15-2 is promulgated for use as a residential lease when a seller temporarily occupies property after closing. Standard Contract Form TREC No. 16-2 is promulgated for use as a residential lease when a buyer temporarily occupies property prior to closing. Standard Contract Form 20-4 is promulgated for use in the resale of residential real estate where there is all cash or owner financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 21-4 is promulgated for use in the resale of residential real estate where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 23-4 is promulgated for use in the sale of a new home where construction is incomplete. Standard Contract Form TREC No. 24-4 is promulgated for use in the sale of a new home where construction is completed. Standard Contract Form TREC No. 25-3 is promulgated for use in the sale of a farm or ranch. Standard Contract Form TREC No. 26-2 is promulgated for use as an addendum concerning seller financing. Standard Contract Form TREC No. 28-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where reports are to be obtained relating to environmental assessments, threatened or endangered species, or wetlands. Standard Contract Form TREC No. 29-1 is promulgated for use as an addendum to be attached to promulgated forms of contracts where an abstract of title is to be furnished. Standard Contract Form TREC No. 30-2 is promulgated for use in the resale of a residential condominium unit where there is all cash or seller financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 31-2 is promulgated for use in the resale of a residential condominium unit where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 32-0 is promulgated for use as a condominium resale certificate. Standard Contract Form TREC No. 33-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property adjoining and sharing a common boundary with the tidally influenced submerged lands of the state. Standard Contract Form TREC Form No. 34-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property located seaward of the Gulf Intracoastal Waterway. Standard Contract Form TREC No. 35-1 is promulgated for use as an addendum to be added to promulgated forms of contracts as an agreement for mediation. Standard Contract Form TREC Form No. 36-1 is promulgated for use as an addendum to be added to promulgated forms in the sale of property subject to mandatory membership in an owners' association. Standard Contract Form TREC Form No. 37-1 is promulgated for use as a resale certificate when the property is subject to mandatory membership in an owners' association. Standard Contract Form TREC Form No. 38-0 is promulgated for use as a notice of termination of contract. Standard Contract Form TREC Form No. 39-1 is promulgated for use as an amendment to promulgated forms of contracts.

(b)

When negotiating contracts binding the sale, exchange, option, lease or rental of any interest in real property, a real estate licensee shall use only those contract forms promulgated by the Texas Real Estate Commission for that kind of transaction with the following exceptions:

(1)

transactions in which the licensee is functioning solely as a principal, not as an agent;

(2)

transactions in which an agency of the United States government requires a different form to be used;

(3)

transactions for which a contract form has been prepared by the property owner or prepared by an attorney and required by the property owner;

(4)

transactions for which no standard contract form has been promulgated by the Texas Real Estate Commission, and the licensee uses a form prepared by an attorney at law licensed by this state and approved by the attorney for the particular kind of transactions involved or prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by licensees with the consent of the Texas Real Estate Commission.

(c)

A licensee may not practice law, offer, give nor attempt to give advice, directly or indirectly; the licensee may not act as a public conveyancer nor give advice or opinions as to the legal effect of any contracts or other such instruments which may affect the title to real estate; the licensee may not give opinions concerning the status or validity of title to real estate; and the licensee may not attempt to prevent nor in any manner whatsoever discourage any principal to a real estate transaction from employing a lawyer. However, nothing herein shall be deemed to limit the licensee's fiduciary obligation to disclose to the licensee's principals all pertinent facts which are within the knowledge of the licensee, including such facts which might affect the status of or title to real estate.

(d)

A licensee may not undertake to draw or prepare documents fixing and defining the legal rights of the principals to a transaction. In negotiating real estate transactions, the licensee may fill in forms for such transactions, using exclusively forms which have been approved and promulgated by the Texas Real Estate Commission or such forms as are otherwise permitted by these rules. When filling in such a form, the licensee may only fill in the blanks provided and may not add to or strike matter from such form, except that licensees shall add factual statements and business details desired by the principals and shall strike only such matter as is desired by the principals and as is necessary to conform the instrument to the intent of the parties. A licensee may not add to a promulgated earnest money contract form factual statements or business details for which a contract addendum, lease or other form has been promulgated by the commission for mandatory use. Nothing herein shall be deemed to prevent the licensee from explaining to the principals the meaning of the factual statements and business details contained in the said instrument so long as the licensee does not offer or give legal advice. It is not the practice of law as defined in this Act for a real estate licensee to complete a contract form which is either promulgated by the Texas Real Estate Commission or prepared by the Texas Real Estate Broker-Lawyer Committee and made available for trial use by licensees with the consent of the Texas Real Estate Commission. Contract forms prepared by the Texas Real Estate Broker-Lawyer Committee for trial use may be used on a voluntary basis after being approved by the commission. Contract forms prepared by the Texas Real Estate Broker-Lawyer Committee and approved by the commission to replace previously promulgated forms may be used by licensees on a voluntary basis prior to the effective date of rules requiring use of the replacement forms.

(e)

Where it appears that, prior to the execution of any such instrument, there are unusual matters involved in the transaction which should be resolved by legal counsel before the instrument is executed or that the instrument is to be acknowledged and filed for record, the licensee shall advise the principals that each should consult a lawyer of the principal's choice before executing same.

(f)

A licensee may not employ, directly or indirectly, a lawyer nor pay for the services of a lawyer to represent any principal to a real estate transaction in which the licensee is acting as an agent. The licensee may employ and pay for the services of a lawyer to represent only the licensee in a real estate transaction, including preparation of the contract, agreement, or other legal instruments to be executed by the principals to the transactions.

(g)

A licensee shall advise the principals that the instrument they are about to execute is binding on them.

(h)

Forms approved or promulgated by the commission may be reproduced only from the following sources:

(1)

numbered copies obtained from the commission, whether in a printed format or electronically reproduced from the files available on the commission's Internet site;

(2)

printed copies made from copies obtained from the commission;

(3)

legible photocopies made from such copies; or

(4)

computer-driven printers following these guidelines.

(A)

The computer file or program containing the form text must not allow the end-user direct access to the text of the form and may only permit the user to insert language in blanks in the forms or to strike through language at the direction of the parties to the contract.

(B)

Typefaces or fonts must appear to be identical to those used by the commission in printed copies of the particular form.

(C)

The text and number of pages must be identical to that used by the commission in printed copies of the particular form.

(D)

The spacing, length of blanks, borders and placement of text on the page must appear to be identical to that used by the commission in printed copies of the form.

(E)

The name and address of the person or firm responsible for developing the software program must be legibly printed below the border at the bottom of each page in no less than six point type and in no larger than 10 point type.

(F)

The text of the form must be obtained from a copy of the form bearing a control number assigned by the commission.

(i)

The control number of each copy must appear on all forms reproduced from the copy, including forms reproduced by computer-driven printers.

(j)

Forms approved or promulgated by the commission must be reproduced on the same size of paper used by the commission with the following changes or additions only.

(1)

The business name or logo of a broker, organization or printer may appear at the top of a form outside the border.

(2)

The broker's name may be inserted in any blank provided for that purpose.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 26, 2000.

TRD-200004452

Mark A. Moseley

General Counsel

Texas Real Estate Commission

Effective date: September 1, 2000

Proposal publication date: May 5, 2000

For further information, please call: (512) 465-3900

22 TAC §537.24

The Texas Real Estate Commission (TREC) adopts the repeal of §537.24, concerning the TREC new home insulation addendum, without changes to the proposed text as published in the May 5, 2000, issue of the Texas Register , (25 TexReg 3909). The form the section adopts by reference, TREC No. 13-1, has been used by licensees to specify the amount and kind of insulation installed or to be installed in a new home in compliance with Federal Trade Commission requirements. The form is no longer needed, because TREC has adopted revised contract forms for the sale of new homes containing the same information. Adoption of the repeal is necessary to decrease the number of promulgated forms that licensed real estate brokers and salespersons would be required to use in negotiating the sale of new homes.

No comments were received regarding the proposal.

The repeal is adopted under Texas Civil Statutes, Article 6573a, §5(h), which authorize the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 26, 2000.

TRD-200004456

Mark A. Moseley

General Counsel

Texas Real Estate Commission

Effective date: September 1, 2000

Proposal publication date: May 5, 2000

For further information, please call: (512) 465-3900

Chapter 573. RULES OF PROFESSIONAL CONDUCT

Subchapter G. OTHER PROVISIONS

22 TAC §573.73

The Texas Board of Veterinary Medical Examiners adopts new §573.73 concerning Management Services Organizations. The new section is adopted with changes to the proposed text as published in the March 10, 2000 issue of the Texas Register (25 TexReg 1939). Changes were made in response to comments received from interested parties who attended a public hearing on the new section on April 19, 2000 and from written comments received by the Board.

The section is drafted to respond to the increasing involvement of business entities in providing management services to veterinary practices. The rule delineates those activities of management services organizations that are permitted and those that are not permitted as being too closely related to the practice of the veterinary medicine which is the sole province of the veterinarian. Adoption of the new section will provide clear guidance to the business organizations and veterinarians as to what does and does not constitute the practice of veterinary medicine and acceptable management services.

The following entities and individuals appeared at the hearing and presented comments: Pet's Choice, Inc.; National Pet Care Centers (NPCC); Veterinary Centers of America (VCA); Texas Veterinary Medical Association (TVMA); Texas IVA; and Ellis Gilleland. Pet's Choice, Inc. and VCA supported the section as published in the Texas Register , but were amenable to additional changes. The TVMA and Pet's Choice, NPCC and VCA jointly requested a revision of the definition of management services to include activities, as well as services, related to the operation of a veterinary practice exclusive of the practice of veterinary medicine. The Board agrees with this revision in §573.73(a)(3).

Pet's Choice, Inc., NPCC, VCA, and The TVMA jointly requested that the list of prohibited practices by management services organizations be expanded to include mandating compliance with specific professional standards, protocols or practice guidelines relating to the practice of veterinary medicine; placing limitations or conditions upon communications that are clinical in nature with the veterinarian's clients; requiring a veterinarian to make referrals in violation of the Texas Occupations Code §801.402(11); and penalizing a veterinarian for reporting violations of a law regulating the practice of veterinary medicine. The Board agrees with these revisions in §573.73(c).

TVMA expressed concern that the rule as published was unduly restrictive with regard to the right of any veterinarian at a veterinary clinic to control the procedures and duties of the veterinary medical personnel. Pet's Choice, NPCC, and VCA spoke in favor of having the veterinarian in charge of the clinic at which the veterinary medical personnel work be responsible for controlling the medical personnel. Texas IVA commented that veterinarians with mobile practices are not usually on the clinic premises. The commentators on this point reached agreement that the section should be revised to state that the veterinarian at the practice location, whether it be mobile or stationary, who is in charge of veterinary medicine at that practice location, has the right to control the procedures and duties of the medical personnel. This compromise provides flexibility and the Board agrees with this change to §573.73(e)(16).

Ellis Gilleland commented against the new section, stating that allowing veterinarians to contract with management service organizations will increase costs to clients. The Board has no evidence that costs will increase and indeed believes that costs for services may be lowered by increased efficiencies made available by the organizations in providing business services so that the veterinarian can concentrate on the practice of veterinary medicine.

The following individuals and organizations provided written comments: J. Michael Godin, D.V.M.; Texas A&M University Veterinary Medical Teaching Hospital; and William H. Eikenhorst, D.V.M. Dr. Godin commented that the section is reasonable in its scope and limitations, and that veterinarians should not be pressured by the management services organization to disregard the patient's needs in favor of maintaining high revenues. The Board agrees with this observation. The section carefully delineates the duties of the business organization and the veterinarians so that veterinarians are free to practice veterinary medicine as they choose.

Texas A&M University Veterinary Medical Teaching Hospital commented that the wording of the proposed section is reasonable, and that medical decisions based solely on the generation of income without regard for science are not in the best interest of the patient. The Board agrees with these comments and believes that the section minimizes corporate interference with the practice of veterinary medicine.

Dr. Eikenhorst commented that the section appears acceptable and should not allow any group providing business services to the veterinarian to force the veterinarian to practice in a specific manner. The Board agrees with this comment and believes that the section accomplishes this goal.

Mr. Gilleland provided additional comments at the June 8, 2000 Board meeting prior to adoption of the section. He suggested that §573.73(c) be amended to include a prohibition against the management services organization owing "controlled substances" in addition to drugs, unless the drugs are owned in compliance with applicable Texas or federal law. He also suggested that the prohibition include "controlling, ordering and purchasing" drugs. The Board notes that the definition of controlled substances includes drugs, and the possession and control of controlled substances is governed by the United States Drug Enforcement Agency under controlled substances certificates issued to individual veterinarians. The section contemplates that management services organizations are not prohibited from placing orders for and maintaining inventories of drugs under the direction and on behalf of the veterinarian. Thus, the Board will not make the requested change. The commentator also suggested that a management services organization be prohibited from "owning or controlling" patient records instead of "owning and controlling" those records. The Board feels that the existing language is adequate to cover both owning and controlling or either individually, and declines to change the language.

Mr. Gilleland also commented on §573.73(e) pertaining to permitted practices of management services organizations. He suggested that the service of providing consulting and providing business advice be limited to "non-veterinary" consulting "if requested by the veterinarian." The Board responds that the definition of management services in §573.73(a) makes it clear that any service provided by a management service organization is exclusive of the practice of veterinary medicine; thus, the distinction need not be repeated in subsection (e). The language "if requested by the veterinarian" is not necessary because it is assumed that the service provided by the management services organization will be spelled out in its contract with the veterinarian.

Mr. Gilleland also commented that the permitted practice of employing and controlling persons in subsection (e) who are veterinarians employed to perform management services but not to engage in the practice of veterinary medicine should be amended to add a prohibition against these persons "owning " or "purchasing" drugs and controlled substances. As noted above, §573.73(c) prohibits management services organizations from owning drugs but does not prohibit them from ordering drugs on behalf of the veterinarian or with the veterinarian's authorization. Thus, no change to the section will be made.

Mr. Gilleland also suggested that under the permitted practices in §573.73(e), the veterinarian be able to "permanently" suspend veterinary medical and other personnel. The Board feels that the addition of "permanently" is unnecessary since by definition a suspension can be temporary, indefinite or permanent. The ability of the veterinarian to suspend personnel should not be restricted to a permanent suspension.

The changes to the section do not change the nature or scope of the section and thus the section will not be republished as a proposed rule.

The new section is adopted under the authority of the Texas Occupations Code, §801.151(a). The Board interprets §801.151 as authorizing it to adopt rules necessary to administer Chapter 801, including rules for management services organizations.

§573.73.Management Services Organizations in Veterinary Practice.

(a)

Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:

(1)

Control--The ability to order or dictate the delivery or the manner of delivery of any services or tasks. Consulting with another person regarding a service or task, or assisting in the performance of a service or task, does not constitute control.

(2)

Intervene--Directly altering the practice of veterinary medicine. Recommending or providing a service or supply or performing management services under this section does not constitute intervention.

(3)

Management services--Those services and activities relating to the operation of a veterinary practice exclusive of the practice of veterinary medicine.

(4)

Management services organization--A person or entity that provides management services.

(5)

Veterinary medical personnel--Persons under the direct or general supervision, as defined by the Veterinary Licensing Act, Texas Occupations Code, §801.002, of a veterinarian who perform duties directly related to the practice of veterinary medicine,

(b)

Management Services Contracts. A veterinarian or group of veterinarians, whether or not incorporated, may contract with a management services organization to provide management services.

(c)

Prohibited Practices. A management services organization shall not control or intervene in a veterinarian's practice of veterinary medicine. Prohibited activities by a management services organization, whether or not authorized by contract, include but are not limited to:

(1)

employing a veterinarian to practice veterinary medicine;

(2)

determining the compensation of a veterinarian for the practice of veterinary medicine;

(3)

controlling or intervening in a veterinarian's diagnosis, treatment, correction, change, manipulation, relief, or prevention of animal disease, deformity, defect, injury or other physical condition, including the prescription or administration of a drug, biologic, anesthetic, apparatus, or other therapeutic or diagnostic substance or technique;

(4)

controlling or intervening in a veterinarian's selection or use of type or quality of medical supplies and pharmaceuticals to be used in the practice of veterinary medicine;

(5)

determining the amount of time a veterinarian may spend with a patient;

(6)

owning drugs, unless the drugs are owned in compliance with applicable Texas or federal law;

(7)

owning and controlling the records of patients of the veterinarian;

(8)

determining the fees to be charged by the veterinarian for the veterinarian's practice of veterinary medicine;

(9)

mandating compliance with specific professional standards, protocols or practice guidelines relating to the practice of veterinary medicine;

(10)

placing limitations or conditions upon communications that are clinical in nature with the veterinarian's clients;

(11)

requiring a veterinarian to make referrals in violation of Texas Occupations Code §801.402(11); or

(12)

penalizing a veterinarian for reporting violations of a law regulating the practice of veterinary medicine.

(d)

Veterinarians, and entities in which veterinarians are the sole owner, shareholders or partners, are not prohibited from performing the activities set out in subsection (c)(1)-(10) of this section.

(e)

Permitted Management Services. Permitted activities by a management services organization include but are not limited to:

(1)

providing by lease, ownership or other arrangement:

(A)

the facility used by the veterinarian in the practice of veterinary medicine;

(B)

the medical equipment, instruments and supplies used by the veterinarian in the practice of veterinary medicine; and

(C)

the business, office and similar non-medical equipment used by the veterinarian.

(2)

providing for the repair, maintenance, renovation, replacement or otherwise of any facility or equipment used by the veterinarian in the practice of veterinary medicine;

(3)

providing accounting, financial, payroll, bookkeeping, budget, investment, tax compliance and similar financial services to the veterinarian;

(4)

providing information and information systems and services for the veterinarian so long as any patient records in these systems are clearly owned and freely accessed by the veterinarian;

(5)

providing the services of billing and collection of the veterinarian's fees and charges;

(6)

arranging for the collection or sale of the veterinarian's accounts receivable;

(7)

providing advertising, marketing and public relations services in compliance with §§573.30-573.37 of this title pertaining to the practice of veterinary medicine;

(8)

providing contract negotiation, drafting and similar services for the veterinarian;

(9)

providing receptionist, scheduling, messaging and similar coordination services for the veterinarian;

(10)

obtaining all licenses and permits necessary to operate a practice of veterinary medicine that may be obtained by a non-veterinarian, and assisting veterinarians in obtaining licenses and permits necessary to operate a practice of veterinary medicine that may be obtained only by a veterinarian, provided that the Executive Director of the Board approves the method of payment for veterinary license renewals paid by the management services organization;

(11)

assisting in the recruiting, continuing education, training and legal and logistical peer review services for the veterinarian;

(12)

providing insurance, purchasing and claims services for the veterinarian, and including the veterinarian and veterinary medical personnel on the same insurance policies and benefit plans as the management services organization;

(13)

providing consulting, business and financial planning and business practice and other advice;

(14)

establishing the price to be charged to the veterinary client for the goods and supplies provided or managed by the management services organizations;

(15)

employing and controlling persons who:

(A)

perform management services; or

(B)

are veterinarians employed by a management services organization to perform management services but not the practice of veterinary medicine; or

(C)

perform management, administrative, clerical, receptionist, secretarial, bookkeeping, accounting, payroll, billing, collection, boarding, cleaning and other functions; or

(16)

employing veterinary medical and other personnel, if a veterinarian present at the practice location who is in charge of veterinary medicine for that practice location at which the veterinary medical and other personnel work has the right to:

(A)

control the medically related procedures, duties, and performance of the veterinary medical and other personnel; and

(B)

suspend for medically related reasons the veterinary medical and other personnel unless the suspension is contrary to law, regulation or other legal requirements.

(f)

Transition Period. Veterinarians and management services organizations shall have six months from the date of final adoption of this section to fully comply with its terms.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 29, 2000.

TRD-200004534

Ron Allen

Executive Director

Texas Board of Veterinary Medical Examiners

Effective date: July 19, 2000

Proposal publication date: March 10, 2000

For further information, please call: (512) 305-7555