TITLE 22.EXAMINING BOARDS

Part 15. TEXAS STATE BOARD OF PHARMACY

Chapter 281. ADMINISTRATIVE PRACTICE AND PROCEDURES

Subchapter A. GENERAL PROVISIONS

22 TAC §281.9

The Texas State Board of Pharmacy adopts amendments to §281.9, concerning Rules Governing Penalties Against a License. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8259).

The amendments update the rule in accordance with amendments made to the Texas Pharmacy Act, §568.0035 authorizing the Board to take the following disciplinary actions against a pharmacy technician registration: probation, reprimand, restrict, revoke, suspend, retire, or impose an administrative penalty. The amendments also clarify the administrative penalties for violations of the Texas Pharmacy Act or Board rules to ensure that the amount of administrative penalties imposed for pharmacists, pharmacies, and pharmacy technicians are appropriate to the violation. In addition, the amendments change the title of §281.9 from Rules Governing Penalties Against a License to Rules Governing Disciplinary Actions.

No comments were received regarding the proposal.

The amendments are adopted under §§551.002, 554.051, 566.002, and 568.0035 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §566.002 as authorizing the agency to adopt an administrative penalty schedule. The Board interprets §568.0035 as authorizing the agency to adopt rules regarding the disciplinary actions against pharmacy technicians.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600763

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

Chapter 283. LICENSING REQUIREMENTS FOR PHARMACISTS

22 TAC §283.6

The Texas State Board of Pharmacy adopts amendments to §283.6, concerning Preceptor Requirements. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8261).

The adopted amendments provide procedures and requirements to allow a preceptor in a Texas College of Pharmacy Internship Program to supervise up to two interns during an emergency situation.

No comments were received regarding the proposal.

The amendments are adopted under §551.002 and §554.051 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600764

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

22 TAC §283.7

The Texas State Board of Pharmacy adopts amendments to §283.7, concerning Examination Requirements. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8262).

The amendments clarify the NAPLEX and Texas Pharmacy Jurisprudence Examination are administered in compliance with the Americans with Disabilities Act.

No comments were received regarding the proposal.

The amendments are adopted under §§551.002, 554.051, and 558.058 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §558.058 as authorizing the agency to adopt rules to ensure that examinations are administered in compliance with the Americans with Disabilities Act.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600765

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

22 TAC §283.10

The Texas State Board of Pharmacy adopts amendments to §283.10, concerning Requirements for Application for a Pharmacist License Which Has Expired. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8262).

The amendments update the renewal fees required to renew an expired pharmacist license in accordance with amendments to §559.003 of the Texas Pharmacy Act.

No comments were received regarding the proposal.

The amendments are adopted under §§551.002, 554.051, and 559.003 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §559.003 as authorizing the agency to adopt rules regarding the renewal of a pharmacist.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600766

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

Chapter 291. PHARMACIES

Subchapter A. ALL CLASSES OF PHARMACIES

22 TAC §291.6, §291.14

The Texas State Board of Pharmacy adopts amendments to §291.6, concerning Pharmacy License Fees and §291.14, concerning Pharmacy License Renewal. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8263).

The amendments update the renewal fees to renew an expired pharmacy license in accordance with amendments to §561.003 of the Texas Pharmacy Act; clarify the amount of the pharmacy license renewal fee; and establish additional renewal requirements for Class E (non-resident) pharmacies.

No comments were received regarding the proposal.

The amendments are adopted under §§551.002, 554.051, 560.052, 561.003 and 561.0031 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §560.052 as authorizing the agency to establish standards for Class E pharmacies to meet in order to qualify for licensing as a pharmacy. The Board interprets §561.003 as authorizing the agency to adopt rules regarding the renewal of a pharmacy license. The Board interprets §561.0031 as authorizing the agency to establish additional renewal requirements for Class E pharmacies.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600768

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

22 TAC §291.13

The Texas State Board of Pharmacy adopts new §291.13, concerning Emergency Remote Pharmacy License. The new section is adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8264).

The adopted section provides procedures and requirements for the Board to grant the holder of a Class A (Community), Class C (Institutional), or Class D (Clinic) pharmacy the authority to operate a pharmacy and provide pharmacy services at a remote location during an emergency situation.

No comments were received regarding the proposal.

The new section is adopted under §§551.002, 554.051, and 560.053 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §560.053 as authorizing the agency to adopt rules establishing additional pharmacy classifications.

The statutes affected by the new section: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600769

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

Subchapter F. NON-RESIDENT PHARMACY (CLASS E)

22 TAC §291.104

The Texas State Board of Pharmacy adopts amendments to §291.104, concerning Operational Standards. The amendments are adopted with changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8265).

The amendments establish additional standards for Class E pharmacies to meet in order to qualify for licensure as a pharmacy; clarify patient counseling requirements for Class E pharmacies; and implement changes made by House Bill 836 to Chapter 562 of the Texas Pharmacy Act during the 79th Regular Session of the Texas Legislature regarding generic substitution.

One written comment was received from Medco Health Solutions, Inc. Medco commented that the requirement for a Class E pharmacy to submit proof of creditworthiness was only intended to apply to the initial licensure of a Class E pharmacy. The Board agrees with the comment and the adopted amendments reflect this change.

The amendments are adopted under §§551.002, 554.051, 560.052, and Chapter 562 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §550.052 as authorizing the agency to establish standards for Class E pharmacies to meet to qualify for licensing as a pharmacy. The Board interprets Chapter 562 of the Texas Pharmacy as authorizing the agency to adopt rules concerning the selection of generically equivalent drugs.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

§291.104.Operational Standards.

(a) Licensing requirements.

(1) A Class E pharmacy shall register annually or biennially with the board on a pharmacy license application provided by the board.

(2) On initial application, the pharmacy shall follow the procedures specified in §291.1 of this title (relating to Pharmacy License Application) and the provide the following additional information specified in §560.052(c) and (f) of the Act (relating to Qualifications):

(A) evidence that the applicant holds a pharmacy license, registration, or permit issued by the state in which the pharmacy is located;

(B) the name of the owner and pharmacist-in-charge of the pharmacy for service of process;

(C) evidence of the applicant's ability to provide to the board a record of a prescription drug order dispensed by the applicant to a resident of this state not later than 72 hours after the time the board requests the record;

(D) an affidavit by the pharmacist-in-charge which states that the pharmacist has read and understands the laws and rules relating to a Class E pharmacy;

(E) proof of creditworthiness; and

(F) an inspection report issued not more than two years before the date the license application is received and conducted by the pharmacy licensing board in the state of the pharmacy's physical location.

(i) A Class E pharmacy may submit an inspection report issued by an entity other than the pharmacy licensing board of the state in which the pharmacy is physically located if the state's licensing board does not conduct inspections as follows:

(I) an individual approved by the board who is not employed by the pharmacy but acting as a consultant to inspect the pharmacy;

(II) an agent of the National Association of Boards of Pharmacy;

(III) an agent of another State Board of Pharmacy; or

(IV) an agent of an accrediting body, such as the Joint Commission on Accreditation of Healthcare Organizations.

(ii) The inspection must be substantively equivalent to an inspection conducted by the board.

(3) On renewal of a license, the pharmacy shall complete the renewal application provided by the board and, as specified in §561.031 of the Act, provide an inspection report issued not more than three years before the date the renewal application is received and conducted by the pharmacy licensing board in the state of the pharmacy's physical location.

(A) A Class E pharmacy may submit an inspection report issued by an entity other than the pharmacy licensing board of the state in which the pharmacy is physically located if the state's licensing board does not conduct inspections as follows:

(i) an individual approved by the board who is not employed by the pharmacy but acting as a consultant to inspect the pharmacy;

(ii) an agent of the National Association of Boards of Pharmacy;

(iii) an agent of another State Board of Pharmacy; or

(iv) an agent of an accrediting body, such as the Joint Commission on Accreditation of Healthcare Organizations.

(B) The inspection must be substantively equivalent to an inspection conducted by the board.

(4) A Class E pharmacy which changes ownership shall notify the board within ten days of the change of ownership and apply for a new and separate license as specified in §291.4 of this title (relating to Change of Ownership).

(5) A Class E pharmacy which changes location and/or name shall notify the board within ten days of the change and file for an amended license as specified in §291.2 of this title (relating to Change of Location and/or Name).

(6) A Class E pharmacy owned by a partnership or corporation which changes managing officers shall notify the board in writing of the names of the new managing officers within ten days of the change, following the procedures in §291.3 of this title (relating to Change of Managing Officers).

(7) A Class E pharmacy shall notify the board in writing within ten days of closing.

(8) A separate license is required for each principal place of business and only one pharmacy license may be issued to a specific location.

(9) A fee as specified in §291.6 of this title (relating to Pharmacy License Fees) will be charged for the issuance and renewal of a license and the issuance of an amended license.

(10) The board may grant an exemption from the licensing requirements of this Act on the application of a pharmacy located in a state of the United States other than this state that restricts its dispensing of prescription drugs or devices to residents of this state to isolated transactions.

(11) A Class E pharmacy engaged in the centralized dispensing of prescription drug or medication orders shall comply with the provisions of §291.37 of this title (relating to Centralized Prescription Dispensing).

(12) A Class E pharmacy engaged in central processing of prescription drug or medication orders shall comply with the provisions of §291.38 of this title (relating to Central Prescription or Medication Order Processing).

(13) A Class E (Non-Resident) pharmacy engaged in the compounding of non-sterile pharmaceuticals shall comply with the provisions of §291.25 of this title (relating to Pharmacies Compounding Non-Sterile Pharmaceuticals).

(14) A Class E (Non-Resident) pharmacy engaged in the compounding of sterile pharmaceuticals shall comply with the provisions of §291.26 of this title (relating to Pharmacies Compounding Sterile Pharmaceuticals).

(b) Prescription dispensing and delivery.

(1) General.

(A) All prescription drugs and/or devices shall be dispensed and delivered safely and accurately as prescribed.

(B) The pharmacy shall maintain adequate storage or shipment containers and use shipping processes to ensure drug stability and potency. Such shipping processes shall include the use of packaging material and devices to ensure that the drug is maintained at an appropriate temperature range to maintain the integrity of the medication throughout the delivery process.

(C) The pharmacy shall utilize a delivery system which is designed to assure that the drugs are delivered to the appropriate patient.

(D) All Pharmacists shall exercise sound professional judgment with respect to the accuracy and authenticity of any prescription drug order they dispense. If the pharmacist questions the accuracy or authenticity of a prescription drug order, he/she shall verify the order with the practitioner prior to dispensing.

(E) Prior to dispensing a prescription, pharmacists shall determine, in the exercise of sound professional judgment, that the prescription is a valid prescription. A pharmacist may not dispense a prescription drug if the pharmacist knows or should have known that the prescription was issued on the basis of an Internet-based or telephonic consultation without a valid patient-practitioner relationship.

(F) Subparagraph (E) of this paragraph does not prohibit a pharmacist from dispensing a prescription when a valid patient-practitioner relationship is not present in an emergency situation (e.g. a practitioner taking calls for the patient's regular practitioner).

(2) Drug regimen review.

(A) For the purpose of promoting therapeutic appropriateness, a pharmacist shall prior to or at the time of dispensing a prescription drug order, review the patient's medication record. Such review shall at a minimum identify clinically significant:

(i) inappropriate drug utilization;

(ii) therapeutic duplication;

(iii) drug-disease contraindications;

(iv) drug-drug interactions;

(v) incorrect drug dosage or duration of drug treatment;

(vi) drug-allergy interactions; and

(vii) clinical abuse/misuse.

(B) Upon identifying any clinically significant conditions, situations, or items listed in subparagraph (A) of this paragraph, the pharmacist shall take appropriate steps to avoid or resolve the problem including consultation with the prescribing practitioner. The pharmacist shall document such occurrences.

(3) Patient counseling and provision of drug information.

(A) To optimize drug therapy, a pharmacist shall communicate to the patient or the patient's agent, information about the prescription drug or device which in the exercise of the pharmacist's professional judgment the pharmacist deems significant, such as the following:

(i) the name and description of the drug or device;

(ii) dosage form, dosage, route of administration, and duration of drug therapy;

(iii) special directions and precautions for preparation, administration, and use by the patient;

(iv) common severe side or adverse effects or interactions and therapeutic contraindications that may be encountered, including their avoidance, and the action required if they occur;

(v) techniques for self monitoring of drug therapy;

(vi) proper storage;

(vii) refill information; and

(viii) action to be taken in the event of a missed dose.

(B) Such communication:

(i) shall be provided with each new prescription drug order;

(ii) shall be provided for any prescription drug order dispensed by the pharmacy on the request of the patient or patient's agent;

(iii) shall be communicated orally in person unless the patient or patient's agent is not at the pharmacy or a specific communication barrier prohibits such oral communication; and

(iv) shall be reinforced with written information. The following is applicable concerning this written information:

(I) Written information designed for the consumer, such as the USP DI patient information leaflets, shall be provided.

(II) When a compounded product is dispensed, information shall be provided for the major active ingredient(s), if available.

(III) For new drug entities, if no written information is initially available, the pharmacist is not required to provide information until such information is available, provided:

(-a-) the pharmacist informs the patient or the patient's agent that the product is a new drug entity and written information is not available.

(-b-) the pharmacist documents the fact that no written information was provided; and

(-c-) if the prescription is refilled after written information is available, such information is provided to the patient or patient's agent.

(C) Only a pharmacist may orally provide drug information to a patient or patient's agent and answer questions concerning prescription drugs. Non-pharmacist personnel may not ask questions of a patient or patient's agent which are intended to screen and/or limit interaction with the pharmacist.

(D) If prescriptions are routinely delivered outside the area covered by the pharmacy's local telephone service, the pharmacy shall provide a toll-free telephone line which is answered during normal business hours to enable communication between the patient and a pharmacist.

(E) The pharmacist shall place on the prescription container or on a separate sheet delivered with the prescription container in both English and Spanish the local and toll-free telephone number of the pharmacy and the statement: "Written information about this prescription has been provided for you. Please read this information before you take the medication. If you have questions concerning this prescription, a pharmacist is available during normal business hours to answer these questions at (insert the pharmacy's local and toll-free telephone numbers)."

(F) The provisions of this paragraph do not apply to patients in facilities where drugs are administered to patients by a person required to do so by the laws of the state (i.e., nursing homes).

(G) Upon delivery of a refill prescription, a pharmacist shall ensure that the patient or patient's agent is offered information about the refilled prescription and that a pharmacist is available to discuss the patient's prescription and provide information.

(H) Nothing in this subparagraph shall be construed as requiring a pharmacist to provide consultation when a patient or patient's agent refuses such consultation. The pharmacist shall document such refusal for consultation.

(c) Generic Substitution. Unless compliance would violate the pharmacy or drug laws or rules in the state in which the pharmacy is located:

(1) a pharmacist in a Class E pharmacy may dispense a generically equivalent drug product if:

(A) the generic product costs the patient less than the prescribed drug product;

(B) the patient does not refuse the substitution; and

(C) the prescribing practitioner authorizes the substitution of a generically equivalent product; or

(D) the practitioner or practitioner's agent does not clearly indicate that the oral or electronic prescription drug order shall be dispensed as ordered; and

(2) Pharmacists shall use as a basis for the determination of generic equivalency as defined in the Subchapter A, Chapter 562 of the Act, the following.

(A) For drugs listed in the publication, pharmacists shall use Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) and current supplements published by the Federal Food and Drug Administration, within the limitations stipulated in that publication, to determine generic equivalency. Pharmacists may only substitute products that are rated therapeutically equivalent in the Orange Book and have an "A" rating. "A" rated drug products include but are not limited to, those designated AA, AB, AN, AO, AP, or AT in the Orange Book.

(B) For drugs not listed in the Orange Book, pharmacists shall use their professional judgment to determine generic equivalency.

(3) The pharmacy must include on the prescription order form completed by the patient or the patient's agent information that clearly and conspicuously:

(A) states that if a less expensive generically equivalent drug is available for the brand prescribed, the patient or the patient's agent may choose between the generically equivalent drug and the brand prescribed; and

(B) allows the patient or the patient's agent to indicate the choice of the generically equivalent drug or the brand prescribed.

(d) Therapeutic Drug Interchange. A switch to a drug providing a similar therapeutic response to the one prescribed shall not be made without prior approval of the prescribing practitioner. This subsection does not apply to generic substitution. For generic substitution, see the requirements of subsection (c) of this section.

(1) The patient shall be notified of the therapeutic drug interchange prior to, or upon delivery, of the dispensed prescription to the patient. Such notification shall include:

(A) a description of the change;

(B) the reason for the change;

(C) whom to notify with questions concerning the change; and

(D) instructions for return of the drug if not wanted by the patient.

(2) The pharmacy shall maintain documentation of patient notification of therapeutic drug interchange which shall include:

(A) the date of the notification;

(B) the method of notification;

(C) a description of the change; and

(D) the reason for the change.

(e) Transfer of Prescription Drug Order Information. Unless compliance would violate the pharmacy or drug laws or rules in the state in which the pharmacy is located, a pharmacist in a Class E pharmacy may not refuse to transfer prescriptions to another pharmacy who is making the transfer request on behalf of the patient.

(f) Prescriptions for Schedule II controlled substances. Unless compliance would violate the pharmacy or drug laws or rules in the state in which the pharmacy is located, a pharmacist in a Class E pharmacy who dispenses a prescription for a Schedule II controlled substance issued on a Texas Official Prescription Form shall:

(1) mail a copy of the form to the Texas Department of Public Safety, Electronic Prescription Section, P.O. Box 4087, Austin, Texas 78773 within 30 days of dispensing; or

(2) electronically send the prescription information to the Texas Department of Public Safety per their requirements for electronic submissions within 30 days of dispensing.

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 February 14, 2006.

TRD-200600770

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

Chapter 295. PHARMACISTS

22 TAC §295.5, §295.7

The Texas State Board of Pharmacy adopts amendments to §295.5, concerning Pharmacist License or Renewal Fees and §295.7, concerning Pharmacist License Renewal. The amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8267).

The amendments update the renewal fees required to renew an expired pharmacist license in accordance with amendments to §559.003 of the Texas Pharmacy Act and clarify the amount of the pharmacist license renewal fees.

No comments were received regarding the proposal.

The amendments are adopted under §§551.002, 554.051, and 559.003 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §559.003 as authorizing the agency to adopt rules regarding the renewal of a pharmacist license.

The statutes affected by the amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600771

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

22 TAC §295.6, §295.9

The Texas State Board of Pharmacy adopts new §295.6, concerning Emergency Temporary Pharmacist License and amendments to §295.9, concerning Inactive License. The new section and amendments are adopted without changes to the proposed text as published in the December 9, 2005, issue of the Texas Register (30 TexReg 8268).

The new §295.6 provides procedures and requirements for the Board to grant a pharmacist, who holds a license to practice pharmacy in another state, an emergency temporary pharmacist license to practice in Texas. The amendments to §295.9 provide procedures and requirements to allow Texas pharmacists whose licenses have been inactive for no more than two years to reactivate their license prior to obtaining the required continuing education during an emergency situation.

No comments were received regarding the proposal.

The new section and amendments are adopted under §§551.002, 554.051, and 558.155 of the Texas Pharmacy Act (Chapters 551 - 566 and 568 - 569, Texas Occupations Code). The Board interprets §551.002 as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets §554.051(a) as authorizing the agency to adopt rules for the proper administration and enforcement of the Act. The Board interprets §558.155 as authorizing the agency to issue temporary pharmacist licenses.

The statutes affected by the new section and amendments: Texas Pharmacy Act, Chapters 551 - 566 and 568 - 569, Texas Occupations Code.

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 February 14, 2006.

TRD-200600772

Gay Dodson, R.Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: March 6, 2006

Proposal publication date: December 9, 2005

For further information, please call: (512) 305-8037

Part 23. TEXAS REAL ESTATE COMMISSION

Chapter 537. PROFESSIONAL AGREEMENTS AND STANDARD CONTRACTS

22 TAC §§537.11, 537.20, 537.28, 537.30 - 537.32, 537.37, 537.43, 537.44, 537.46, 537.47

The Texas Real Estate Commission (TREC) adopts amendments to 22 TAC §§537.11, 537.20, 537.28, 537.30 - 537.32, 537.37, 537.43, 537.44, 537.46, and 537.47, concerning standard contract forms with changes to the proposed text and with changes to the forms adopted by reference as published in the December 23, 2005, issue of the Texas Register (30 TexReg 8585). The amendments adopt by reference ten revised contract forms to be used by Texas real estate licensees.

The contract forms are published by TREC and available at the TREC web site (www.trec.state.tx.us) or at the Texas Real Estate Commission, P.O. Box 12188, 1101 Camino La Costa, Austin, TX 78711-2188. The date for mandatory use of the adopted contract forms is May 1, 2006; however, the forms may be used by licensees on a voluntary basis prior to that date. The changes to the text of the rule as proposed include deletion of two subparagraphs that reference an obsolete control number that is no longer used in the distribution of the promulgated contract forms. Changes were also made to the text of the contract forms in response to comments as described further below.

The revisions to the rules and forms as adopted do not change the nature or scope so much that they could be deemed different rules. The rules as adopted do not affect individuals other than those contemplated by the rules as proposed. The rules as adopted do not impose more onerous requirements that the proposed versions and do not materially alter the issues raised in the proposed rules. Changes in the adopted rules and forms adopted by reference respond to public comments or otherwise reflect nonsubstantive variations from the proposed rules and forms to clarify their intent and improve style and readability.

Texas real estate licensees are generally required to use forms promulgated by TREC when negotiating contracts for the sale of real property. These forms are drafted by the Texas Real Estate Broker-Lawyer Committee, an advisory body consisting of six attorneys appointed by the President of the State Bar of Texas, six brokers appointed by TREC, and a public member appointed by the governor.

The amendments to §537.11 renumber the revised form promulgated by TREC and delete two subsections that reference obsolete control numbers.

The amendment to §537.20 adopts by reference Standard Contract Form TREC No. 9-6, Unimproved Contract Form. Paragraph 4A is reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender approving the buyer's financial condition pursuant to the Third Party Financing Condition Addendum. Paragraph 6C is reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6C(2) is revised to add a sentence that the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. The sentence in 6D regarding the time period under which the buyer must object is reformatted to make it clearer. Paragraph 6D is revised to clarify the provisions regarding buyer's right to object to any portion of the property lying in a special flood hazard area (Zone V or A) to parallel language in Federal Emergency Management Agency maps. Paragraph 6E is revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A is reformatted to be consistent with other TREC contract forms. Paragraph 7E is revised regarding seller's disclosures about flooding of the property and environmental hazards or conditions. Paragraph 12 is revised to be consistent with other TREC contract forms. A sentence is added to paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. Paragraph 18 is reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D is added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses is added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 is modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option is in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box is placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials are deleted from the signature page. The seller's receipt of the option fee on the last page is clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.28 adopts by reference Standard Contract Form TREC No. 20-7, One to Four Family Residential Contract (Resale). The form is revised to bold the phrase in Paragraph 2B to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A is reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender approving the buyer's financial condition pursuant to the Third Party Financing Condition Addendum. Paragraph 6C is reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6C(2) is revised to add a sentence that the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. The sentence in 6D regarding the time period under which the buyer must object is reformatted to make it clearer. Paragraph 6E is revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A is reformatted to be consistent with other TREC contract forms. Paragraph 12 is revised to be consistent with other TREC contract forms. A sentence is added to paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. Paragraph 18 is reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18 provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D is added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses is added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 is modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option is in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box is placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials are deleted from the signature page. The seller's receipt of the option fee on the last page is clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.30 adopts by reference Standard Contract Form TREC No. 23-6, New Home Contract (Incomplete Construction). The amendment to §537.31 adopts by reference Standard Contract Form TREC No. 24-6, New Home Contract (Complete Construction). Paragraph 4A of both forms is reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender approving the buyer's financial condition pursuant to the Third Party Financing Condition Addendum. Paragraph 6C of Form No. 24-6 is reformatted by moving the provision related to the existing survey to Paragraph 6C(1) and by adding a sentence in Paragraph 6C(1) that clarifies that if the seller fails to deliver the existing survey or an acceptable affidavit to the buyer and title company within the time required, the buyer may obtain a new survey no later than three days before the closing date at the seller's expense. If the seller delivers the existing survey and affidavit within the time required, but it is not acceptable to the title company or lender, the parties negotiate (by checking the appropriate box for which party pays for a new, acceptable survey). Paragraph 6C(2) is revised to add a sentence that the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. The sentence in 6D regarding the time period under which the buyer must object is reformatted to make it clearer. Paragraph 6E is revised to add two notices. The notice under Paragraph 6E(6) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6E(7) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A is reformatted to be consistent with other TREC contract forms. Paragraph 7D is revised to include a checkbox to indicate whether the insulation specifications are attached. Paragraph 12 is revised to be consistent with other TREC contract forms. A sentence is added to paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. Paragraph 18 is reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D is added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses is added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 is modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option is in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box is placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The notice required by Chapter 27 of the Texas Property Code adjacent to the signature lines is revised to reflect the current statutory language. The blanks for the parties' initials are deleted from the signature page. The seller's receipt of the option fee on the last page is clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.32 adopts by reference Standard Contract Form TREC No. 25-5 Farm and Ranch Contract. The form is revised to bold the phrases in Paragraph 2B(1) and (2) to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A is reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender approving the buyer's financial condition pursuant to the Third Party Financing Condition Addendum. Paragraph 6C is revised to rearrange the check boxes for consistency with other TREC contract forms. Paragraph 6C(2) is revised to add a sentence that the buyer is deemed to have received the survey on the date specified in Paragraph 6C(2) or the actual day he or she receives it, whichever date is earlier. The sentence in 6D regarding the time period under which the buyer must object is reformatted to make it clearer. Paragraph 6D is revised to clarify the provisions regarding buyer's right to object to any portion of the property lying in a special flood hazard area (Zone V or A) to parallel language in Federal Emergency Management Agency maps. Paragraph 6G is revised to add two notices. The notice under Paragraph 6G(5) is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. The notice under Paragraph 6G(6) is a statutorily required notice that a seller of property in a public improvement district (PID) must provide to a buyer. The notice cautions the buyer that a PID may make special assessments against property in the PID. Paragraph 7A is reformatted to be consistent with other TREC contract forms. Paragraph 12 is revised to be consistent with other TREC contract forms. A sentence is added to paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. Paragraph 18 is reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D is added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses is added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 is modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option is in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box is placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials are deleted from the signature page. The seller's receipt of the option fee on the last page is clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.37 adopts by reference Standard Contract Form TREC No. 30-5, Residential Condominium Contract (Resale). The form is revised to bold the phrase in Paragraph 2B to further emphasize that the list of items in Paragraph 2B are those items that are permanently installed or built in. Paragraph 4A is reformatted to clarify that the contract is made subject to the approval of the property and if Paragraph 4A(2)(a) applies, the contract is also subject to the lender approving the buyer's financial condition pursuant to the Third Party Financing Condition Addendum. The sentence in 6D regarding the time period under which the buyer must object is reformatted to make it clearer. Paragraph 6E is revised to add a notice as 6E(5) which is a statutorily required notice that a seller of property located in a certificated service area of a utility service provider must give to a buyer. The notice cautions the buyer that the property may be located in such a district and that special costs to obtain service may apply. Paragraph 7A is reformatted to be consistent with other TREC contract forms. Paragraph 12 is revised to be consistent with other TREC contract forms; paragraph 12A is revised to conform to similar provisions in other TREC forms. A sentence is added to paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. Paragraph 18 is reformatted to clarify obligations of the parties related to the earnest money and to provide for additional incentives for prompt release of the earnest money. Paragraph 18C provides that upon termination of the contract, either party may send a release to the other party and the escrow agent and the parties will execute the appropriate documents and return them to the escrow agent. If one party makes demand on the escrow agent for the return of the earnest money, the escrow agent should send the demand to the other party. If the other party does not object within 15 days (shortened from 30 days), the escrow agent may disburse the earnest money to the demanding party. Paragraph 18D is added to provide that if a party wrongfully refuses or wrongfully fails to sign a release, the party entitled to the earnest money is entitled to liquidated damages of three times the amount of the earnest money. A line for e-mail addresses is added under Paragraphs 21 and 24, and to the Broker Information and Ratification of Fee Box on the last page. Paragraph 23 is modified to provide that the option fee may be paid within two days after the effective date of the contract. If the buyer fails to timely pay the option fee, the buyer will not have an option under the contract. Consideration supporting the option is in two parts: the option fee and nominal consideration, receipt of which is acknowledged. A box is placed around the effective date to call more attention to the brokers to complete the effective date upon final acceptance of the contract. The blanks for the parties' initials are deleted from the signature page. The seller's receipt of the option fee on the last page is clarified so that the listing broker may acknowledge receipt of the option fee for a proper tendering of the fee.

The amendment to §537.43 adopts by reference Standard Contract Form TREC No. 36-4, Addendum for Property Subject to Mandatory Membership in an Owners' Association. The form is revised to delete the requirement in Paragraph A that the Subdivision Information not be more than three months as such is not required by the statute. Paragraph B is modified to change the title to "Fees" rather than "Transfer Fees" and to provide that the buyer will pay a certain amount of any fees resulting from the transfer and the seller will pay the remainder. The revisions will clarify that the fees at issue in the paragraph include any Owners' Association fees resulting from the transfer, which may also include initiation or other fees.

The amendment to §537.44 adopts by reference Standard Contract Form TREC No. 37-2, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in an Owners' Association. Paragraph K is revised to conform to similar provisions in other TREC forms and a line for an e-mail address is included for the managing agent of the subdivision.

The amendment to §537.46 adopts by reference Standard Contract Form TREC No. 39-6, Amendment. In Paragraph 6, the word "nonrefundable" is struck before the word "Option." A bold box is added around the execution date of the amendment to call the licensee's attention to the need to complete the date.

The amendment to §537.47 adopts by reference Standard Contract Form TREC No. 40-2, Third Party Financing Condition Addendum. The form is revised to include a provision concerning availability of the described loan terms to the definition of financing approval. Specifically, financing approval is obtained when the terms of the described loan are available; and the lender determines that the buyer has met the lender's financial requirements (creditworthiness, assets and income). This clarifies that the buyer may terminate the contract under the addendum, within the time specified in the addendum, if the described loan terms are not available (for example, interest rate increase over the stated amount). A note was added to the first paragraph to clarify that financing approval under the addendum does not include approval of the property.

Drafts of the contract forms were released for comment and displayed on the TREC web site during the notice and comment period after posting in the Texas Register . Approximately 47 comments were received and considered by the commission during this period, and several changes were made in the drafts as a result of the comments. The Metrotex Association of Realtors, the Houston Center for Independent Living, and the San Antonio Board of Realtors commented on the proposed forms.

The commission made typographical corrections to the forms adopted by reference and made other changes to the text of the forms in response to comments and further review and recommendation by the Broker Lawyer Committee. The following changes were made in response to comments: In all the contract forms except for the Residential Condominium form, the sentence regarding the date in which the buyer is deemed to receive the survey is moved from paragraph 6D to paragraph 6C(2); the sentence in paragraph 6D in all the contract forms regarding the time period under which the buyer must object is reformatted to make it clearer; paragraph 7D in Form Nos.23-6 and 24-6 is revised to include a checkbox to indicate whether the insulation specifications are attached; paragraph 12A in Form No. 30-5 is revised to conform to similar provisions in other TREC forms; paragraph K in Form No. 37-2, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in an Owners' Association, is revised to conform to similar provisions in other TREC forms; the last page of the contract form is rearranged for clarity and to include additional lines for addresses; an obsolete control number is removed from all forms; and the page number format is revised in all forms. A number of comments did not result in changes to the text of the forms. All comments regarding this adoption, including any not specifically referenced herein, were fully considered by the commission.

The comments and commission responses to those comments are summarized as follows.

Comment: One commenter suggested that the seller's disclosure should be revised to include a statement that reveals whether the seller holds a real estate license.

Response: The commission notes that the Seller's Disclosure Form is not currently under consideration. The commission will consider this comment if it decides to revise the Seller's Disclosure Form in the future.

Comment: One commenter recommended that the commission include a deemed objection of Schedule C items in paragraph 6 so that a buyer can recover earnest money and additional costs in cases where the seller fails to cure Schedule C items. The commenter believes that the remedies in the default paragraph are insufficient to compensate buyer in such cases.

Response: The commission respectfully disagrees and believes that the remedies in the default paragraph are sufficient to address the commenter's concerns in cases where the seller fails to timely cure Schedule C items.

Comment: Several commenters recommended that there should not be a two-day period in which to deliver the option fee in paragraph 23, that the term "nominal" should be deleted, and questioned whether a buyer may terminate within the two-day period never having tendered the option fee.

Response: The commission respectfully disagrees and believes that the best interest of the public is served by providing for a two day period after the effective date of the contract in which to deliver the option fee. Please note, however, a buyer cannot terminate under the option paragraph in that two-day period if the buyer has not paid the option fee. The buyer may terminate during that period only if he or she also pays the option fee.

Comment: Several commenters suggested that various items such as bathroom mirrors, playsets, and chandelier shades should be added, and satellite controls should be deleted in paragraph 2C as accessories.

Response: The commission respectfully disagrees and believes that the best interest of the public is served with the current list of accessories in paragraph 2C.

Comment: Two commenters suggested that additional lines for the broker's city, state and zip should be included on the last page of the contract forms.

Response: The commission agrees and has revised the forms accordingly.

Comment: One commenter requested that the Third Party Financing Condition Addendum should ask whether buyer's financing is contingent upon the sale of another property.

Response: The commission respectfully disagrees and believes that the best interest of the public is served by not requesting such information in the addendum.

Comment: Several commenters requested that the checkbox that indicates that the buyer does not require delivery of the Subdivision Information should be put back into Form No. 36-4, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in an Owners' Association.

Response: The commission agrees and has revised the form accordingly.

Comment: Several commenters suggested adding a line in the contract to require a response time from the seller.

Response: The commission respectfully disagrees and believes that the best interest of the public is served by not requesting such information in the forms.

Comment: One commenter suggested that the text of paragraph 20 regarding an affidavit stating that the seller is not a foreign person should be revised to not require an affidavit but to include a statement regarding perjury.

Response: The commission respectfully disagrees and believes that the best interest of the public is served by not changing paragraph 20.

Comment: One commenter suggested revising the list of addenda in paragraph 22 to put the most important ones first.

Response: The commission respectfully disagrees as the relative degree of importance is subjective.

Comment: One commenter suggested that paragraph 5 regarding earnest money should stipulate an exact number of days in which to tender the earnest money; that seller should be responsible for the cost of providing a copy of restrictive covenants rather than permitting the parties to negotiate who pays; that the buyer should be responsible for paying for the survey rather than permitting the parties to negotiate who pays; that the cost of turning on the utilities should be a buyer's expense under paragraph 7 rather than a seller's expense; that paragraph 7H regarding Residential Service Contracts should be rewritten; that paragraph 12 should be rewritten; and that the Third Party Financing Condition Addendum should be rewritten to provide that the buyer will be in default if he fails to timely provide a notice that he cannot obtain financing approval.

Response: The commission respectfully disagrees and believes that the best interest of the public is served by not revising the forms as suggested by the commenter. In each case, the commission believes that it is more appropriate to give the parties as much flexibility as possible to negotiate who pays for various expenses related to the transaction. Regarding the commenter's suggestions to rewrite various paragraphs, the commission believes that the paragraphs as written are sufficiently clear.

Comment: One commenter suggested various non-substantive formatting, punctuation, grammar, and typographical revisions to the forms.

Response: The commission respectfully disagrees with the suggestions.

Comment: One commenter suggested that the commission change the term "may" to "shall" in paragraph 18C to require the escrow agent to disburse the earnest money to the person making the demand if there is no written objection.

Response: The commission respectfully disagrees as the escrow agent is not a party to the contract and is therefore not bound by mandatory terms of the contract.

Comment: One commenter suggested that paragraph 13 should be revised to require the seller to provide the buyer and title company with a copy of any increase in tax notification to calculate tax proration accordingly.

Response: The commission respectfully disagrees and believes that the best interest of the public is served with the new sentence in paragraph 13 which provides that tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes.

Comment: One commenter suggested revising the lists of accessories and improvements in paragraph 2 to include disability features to indicate whether such features are present on the property. The commenter also suggested revising the Seller's Disclosure Form and temporary lease forms to disclose whether such features are present. At a meeting of the Broker Lawyer Committee, the commenter offered to provide to the Broker Lawyer Committee a draft "Disability Features Addendum" for consideration by the commission at a future date.

Response: The commission respectfully disagrees with the commenter's suggestion to revise paragraph 2 as the improvements and accessories subparagraphs are not a recitation of current improvements or accessories conveyed with the property. They are merely a non-exhaustive list of improvements and accessories that may usually be found in that type of property. Note that subparagraph 2B includes the phrases "All fixtures and improvements" and "if any." Thus, even if grab bars and ramps were added to the list that would not mean that the features were present on the property under contract. In the current and proposed forms, parties are free to use paragraph 11 or paragraph 7 to insert relevant information regarding disability features. The Seller's Disclosure Form and the temporary lease forms are not currently under consideration. The commission will consider the comments regarding such forms if it decides to revise the forms in the future.

Comment: One commenter suggested that the contract forms should have a default time period where there is a blank to be filled in with a set number of days. Also, when the effective date is not filled in, the effective date should be the date the earnest money is received by the escrow agent. The commenter also suggested a default delivery address to the agent if the parties neglect to fill in paragraph 21 regarding delivery addresses.

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revisions regarding default time periods and delivery addresses as it is more appropriate to give the parties as much flexibility as possible to negotiate such terms.

Comment: One comment suggested revising Form No. 37-2, Subdivision Information, Including Resale Certificate for Property Subject to Mandatory Membership in an Owners' Association, to state the cost of the Resale Certificate and whether the fee has already been paid.

Response: The commission respectfully disagrees because seller pays for the cost of providing the Subdivision Information under Form No. 36-4, Addendum for Property Subject to Mandatory Membership in an Owners' Association; therefore, information regarding the cost and whether it has been paid is not relevant.

Comment: One commenter noted that language in paragraph 6E2 appears to be redundant with language in paragraph 6B regarding restrictive covenants and suggests removing the statement in paragraph 6E2.

Response: The commission respectfully disagrees as the text of the notice in paragraph 6E(2) is required by statute to be given from the seller to the buyer and is not inconsistent with the promises that the seller makes to deliver certain documents in paragraph 6B.

Comment: Some commenters expressed concerns that the revisions in paragraph 18 give too much authority to the escrow agent to determine whether a party wrongfully fails or refuses to sign a release.

Response: The commission notes that the escrow agent does not decide whether a party has wrongfully failed or refused to release earnest money. The new liquidated damage clause in paragraph 18 allows a party to obtain additional damages if a lawsuit is filed regarding the transaction.

Comment: One commenter suggested changing the new language in the Third Party Financing Condition Addendum to require rather than permit the buyer to give written notice to the seller within a negotiated number of days that the buyer cannot obtain financing approval.

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revision. The notice is meant to be permissive as failure to timely give the notice is provided for in the addendum such that the contract will not longer be subject to financing approval. If the buyer gives timely notice, the contract will terminate and the earnest money will be refunded to the buyer.

Comment: One commenter pointed out a typographical error in the public improvement district notice in paragraph 6.

Response: The commission acknowledges the error and has revised the forms accordingly.

Comment: One commenter suggested that the commission modify paragraph 9 in Form No. 39-6, Amendment, to mirror the language in paragraph 11 of the contract forms.

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revision as paragraph 9 in the Amendment Form serves multiple purposes other than modification of paragraph 11.

Comment: One commenter suggested that the commission further modify paragraph 18D to provide for "release of earnest money" to mirror the Texas Association of Realtors (TAR) form entitled "Termination of Contract and Release of Earnest Money."

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revisions as not all persons have access to the TAR form and other types of releases can be used by the parties.

Comment: One commenter suggested revising paragraph 6E(7) regarding public improvement districts (PIDs) to make it clear to the buyer that the property is located in a PID and that the buyer will pay an assessment.

Response: The commission respectfully disagrees and believes that the paragraph as revised recites the appropriate notice as required by section 5.014 of the Property Code. Further, it is uncertain how the seller can determine whether the property is in fact located in a PID as there are very few PIDs in existence at this time.

Comment: One commenter suggested that paragraph 6 regarding the parties' agreement as to who pays for the survey under various circumstances continues to be ambiguous and suggests a revision to require that the seller pay for the survey in all cases.

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revisions as the current draft permits the appropriate flexibility for the parties to negotiate who pays for the survey under various circumstances.

Comment: One commenter suggested a new paragraph in all forms disclosing whether and what type of mineral rights are conveyed with the property.

Response: The commission appreciates the suggestion. However, given that a mineral rights paragraph or addendum requires additional research and major changes to the forms, the commission will consider the suggestion in future revisions of the forms.

Comment: One commenter suggested putting the names of all forms, the form numbers and page numbers on the bottom of each form promulgated by the commission.

Response: The commission respectfully disagrees as there is insufficient space at the bottom of the forms to add the name and page number because the space is currently used for initials of the parties and for licensees or companies to print their name and other identifying information outside the margins on pre-printed forms. The form number is currently on the bottom right hand side of the form and the page numbers are on the top of the form.

Comment: Several commenters recommended that a paragraph be added to the form regarding "evidence of presentation" to provide evidence of the date and time the offer is presented.

Response: The commission respectfully disagrees and believes that the best interest of the public is served without the suggested revisions regarding evidence of presentation as such information is not essential to the transaction.

Comment: One commenter suggested that check boxes should be added to paragraph 6A(8) to note whether the buyer elects coverage to have the exception amended to read "shortages in area" to alert the title company.

Response: The commission respectfully disagrees because to include such information would introduce complex issues on the contract form that are more appropriately discussed directly between the title company and the buyer.

The amendments are adopted under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to adopt and enforce rules necessary to administer Chapters 1101 and 1102; and to establish standards of conduct and ethics for its licensees to fulfill the purposes of chapters 1101 and 1102 and ensure compliance with Chapters 1101 and 1102.

The statute affected by this adoption is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the amendments.

§537.11.Use of Standard Contract Forms.

(a) Standard Contract Form TREC No. 9-6 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. 10-4 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. 11-5 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. 15-3 is promulgated for use as a residential lease when a seller temporarily occupies property after closing. Standard Contract Form TREC No. 16-3 is promulgated for use as a residential lease when a buyer temporarily occupies property prior to closing. Standard Contract Form 20-7 is promulgated for use in the resale of residential real estate. Standard Contract Form TREC No. 23-6 is promulgated for use in the sale of a new home where construction is incomplete. Standard Contract Form TREC No. 24-6 is promulgated for use in the sale of a new home where construction is completed. Standard Contract Form TREC No. 25-5 is promulgated for use in the sale of a farm or ranch. Standard Contract Form TREC No. 26-4 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. 30-5 is promulgated for use in the resale of a residential condominium unit 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. 34-1 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 Form No. 36-4 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. 37-2 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. 38-1 is promulgated for use as a notice of termination of contract. Standard Contract Form TREC Form No. 39-6 is promulgated for use as an amendment to promulgated forms of contracts. TREC Form No. 40-2 is promulgated for use as an addendum to be added to promulgated forms of contracts when there is a condition for third party financing. TREC Form No. 41-0 is promulgated for use as an addendum to be added to promulgated forms of contracts when there is an assumption of a loan. TREC Form No. 42-0 is promulgated for use as a notice that buyer cannot obtain financing pursuant to the Third Party Financing Condition Addendum.

(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.

(i) 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.

§537.20.Standard Contract Form TREC No. 9-6.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 9-6 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.28.Standard Contract Form TREC No. 20-7.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 20-7 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.30.Standard Contract Form TREC No. 23-6.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 23-6 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.31.Standard Contract Form TREC No. 24-6.

The Texas Real Estate. Commission adopts by reference standard contract form TREC No. 24-6 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.32.Standard Contract Form TREC No. 25-5.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 25-5 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.37.Standard Contract Form TREC No. 30-5.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 30-5 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.43.Standard Contract Form TREC No. 36-4.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 36-4 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.44.Standard Contract Form TREC No. 37-2.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 37-2 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.46.Standard Contract Form TREC No. 39-6.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 39-6 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

§537.47.Standard Contract Form TREC No. 40-2.

The Texas Real Estate Commission adopts by reference standard contract form TREC No. 40-2 approved by the Texas Real Estate Commission in 2005. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.

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 February 14, 2006.

TRD-200600783

Loretta R. DeHay

General Counsel

Texas Real Estate Commission

Effective date: May 1, 2006

Proposal publication date: December 23, 2005

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