(a) Application for approval.
  (1) Unless otherwise exempt under subsection (b) of this section, a person desiring to be approved by the Commission to offer real estate, easement or right-of-way, or real estate inspection qualifying courses shall:
    (A) file an application on the appropriate form approved by the Commission, with all required documentation;
    (B) submit the required fee under §535.101 of this chapter (relating to Fees) or §535.210 of this chapter (relating to Fees);
    (C) submit the statutory bond or other security acceptable to the Commission under §1101.302 of the Act; and
    (D) maintain a fixed office in the state of Texas or designate a resident of this state as attorney-in-fact to accept service of process and act as custodian of any records in Texas which the provider is required to maintain by this subchapter.
  (2) The Commission may:
    (A) request additional information be provided to the Commission relating to an application; and
    (B) terminate an application without further notice if the applicant fails to provide the additional information not later than the 60th day after the Commission mails the request.
  (3) An approved provider is permitted to offer courses in real estate, easement or right-of-way, and real estate inspection that have been approved by the Commission.
(b) Exempt Providers.
  (1) The following persons may submit real estate qualifying courses for approval for credit in §535.62(i) of this subchapter (relating to Approval of Qualifying Courses) without becoming an approved provider of qualifying courses:
    (A) a person approved by a real estate regulatory agency to offer qualifying real estate courses in another state that has approval requirements for providers that are substantially equivalent to the requirements for approval in this state;
    (B) an accredited college or university in accordance with §535.66 of this subchapter (relating to Credit for Courses Offered by Accredited Colleges or Universities) where courses are offered in accordance with national or regional accreditation standards;
    (C) a post-secondary educational institution established in and offering qualifying real estate courses in another state;
    (D) a United States armed forces institute; and
    (E) a nationally recognized professional designation institute or council in the real estate industry.
  (2) The following persons may submit real estate inspector qualifying courses for approval for credit under §535.62(i) of this subchapter without becoming an approved provider of qualifying courses:
    (A) a provider approved by an inspector regulatory agency of another state that has approval requirements for providers that are substantially equivalent to the requirements for approval in this state;
    (B) an accredited college or university in accordance with §535.66 of this subchapter where courses are offered in accordance with national or regional accreditation standards;
    (C) a United States armed forces institute;
    (D) a unit of federal, state or local government;
    (E) a nationally recognized building, electrical, plumbing, mechanical or fire code organization;
    (F) a professional trade association in the inspection field or in a related technical field; or
    (G) an entity whose courses are approved and regulated by an agency of this state.
  (3) The following persons may submit easement or right-of-way qualifying courses for approval for credit in §535.62(i) of this subchapter without becoming an approved provider of qualifying courses:
    (A) an accredited college or university in accordance with §535.66 of this subchapter where courses are offered in accordance with national or regional accreditation standards; and
    (B) a United States armed forces institute.
(c) Standards for approval. To be approved as a provider by the Commission, the applicant must meet the following standards:
  (1) the applicant must satisfy the Commission as to the applicant's ability to administer courses with competency, honesty, trustworthiness and integrity. If the applicant proposes to employ another person to manage the operation of the applicant, that person must meet this standard as if that person were the applicant;
  (2) the applicant must demonstrate that the applicant has sufficient financial resources to conduct its proposed operations on a continuing basis without risk of loss to students taking courses; and
  (3) that any proposed facilities will be adequate and safe for conducting courses.
(d) Financial review. An applicant shall provide the following information to enable the Commission to determine if an applicant has sufficient financial resources to conduct its proposed operations:
  (1) business financial statements prepared in accordance with generally accepted accounting principles, which shall include a current income statement and balance sheet;
  (2) a proposed budget for the first year of operation; and
  (3) a market survey indicating the anticipated enrollment for the first year of operation.
(e) Insufficient financial condition. The existence of any of the following conditions shall constitute prima facie evidence that an applicant's financial condition is insufficient:
  (1) nonpayment of a liability when due, if the balance due is greater than 5% of the approved provider's current assets in the current or prior accounting period;
  (2) nonpayment of three or more liabilities when due, in the current or prior accounting period, regardless of the balance due for each liability;
  (3) a pattern of nonpayment of liabilities when due, in two or more accounting periods, even if the liabilities ultimately are repaid;
  (4) a current ratio of less than 1.75 for the current or prior accounting period, this ratio being total current assets divided by total current liabilities;
  (5) a quick ratio of less than 1.60 for the current or prior accounting period, this ratio being the sum of all cash equivalents, marketable securities, and net receivables divided by total current liabilities;
  (6) a cash ratio of less than 1.40 for the current or prior accounting period, this ratio being the sum of cash equivalents and marketable securities divided by total current liabilities;
  (7) a debt ratio of more than .40 for the current or prior accounting period, this ratio being total liabilities divided by total assets;
  (8) a debt-to-equity ratio of greater than .60 for the current or prior accounting period, this ratio being total liabilities divided by owners' or shareholders' equity;
  (9) a final judgment obtained against the approved provider for nonpayment of a liability which remains unpaid more than 30 days after becoming final; or
  (10) the execution of a writ of garnishment on any of the assets of the approved provider.
(f) Approval notice. An applicant shall not act as or represent itself to be an approved provider until the applicant has received written notice of approval from the Commission.
(g) Period of initial approval. The initial approval of a provider of qualifying courses is valid for four years.
(h) Statutory bond or other security. An approved provider whose statutory bond or other security has been cancelled will be placed on inactive status until the bond or security is reinstated.
(i) Payment of an annual operation fee.
  (1) An approved provider shall submit the Commission approved form and pay an annual operation fee prescribed by §535.101 of this chapter no later than the last day of the month of each anniversary date of the provider's approval.
  (2) An approved provider who fails to pay the annual operation fee as prescribed shall be placed on inactive status and notified in writing by the Commission.
  (3) The approved provider will remain on inactive status and unable to offer courses until the annual fee is paid.
  (4) The Commission will not give credit for courses offered by a provider on inactive status.
(j) Denial of application.
  (1) If the Commission determines that an applicant does not meet the standards for approval, the Commission will provide written notice of denial to the applicant.
  (2) The denial notice, applicant's request for a hearing on the denial, and any hearing are governed by the Administrative Procedure Act, Chapter 2001, Texas Government Code, and Chapter 533 of this title (relating to Practice and Procedure).
(k) Renewal.
Cont'd...
(1) A provider may not enroll a student in a course during the 60-day period immediately before the expiration of the provider's current approval unless the provider has submitted an application for renewal for another four year period not later than the 60th day before the date of expiration of its current approval.
  (2) Approval or disapproval of a renewal shall be subject to:
    (A) the standards for initial applications for approval set out in this section; and
    (B) whether the approved provider has met or exceeded the exam passage rate benchmark established by the Commission under subsection (l) of this section.
  (3) The Commission will not require a financial review for renewal if the applicant has provided a statutory bond or other security acceptable to the Commission under §1101.302 of the Act, and there are no unsatisfied final money judgments against the applicant.
  (4) The Commission may deny an application for renewal if the provider is in violation of a Commission order.
(l) Exam passage rates and benchmark.
  (1) The exam passage rate for an approved provider shall be:
    (A) calculated for each license category for which the provider offers courses and an examination is required; and
    (B) displayed on the Commission website by license category.
  (2) A student is affiliated with a provider under this subsection if the student took the majority of his or her qualifying education with the provider in the two year period prior to taking the exam for the first time.
  (3) The Commission will calculate the exam passage rate of an approved provider on a monthly basis, rounded to two decimal places on the final calculated figure, by:
    (A) determining the number of students affiliated with that approved provider who passed the examination on their first attempt in the two-year period ending on the last day of the previous month; and
    (B) dividing that number by the total number of students affiliated with that provider who took the exam for the first time during that same period.
  (4) For purposes of approving a renewal application under subsection (j) of this section, the established exam passage rate benchmark for each license category is 80% of the average percentage of the total examinees for that license category who passed the examination on the first attempt in the two year period ending on the last day of the previous month.
  (5) If at the time the Commission receives a renewal application from the provider requesting approval for another four year term, the provider's exam passage rate does not meet the established benchmark for a license category the provider will be:
    (A) denied approval to continue offering courses for that license category if the provider's exam passage rate is less than 50% of the average percentage of the total examinees for that license category who passed the examination on the first attempt in the two year period ending on the last day of the previous month; or
    (B) placed on probation by the Commission if the provider's exam passage rate is greater than 50% but less than 80% of the average percentage of the total examinees for that license category who passed the examination on the first attempt in the two year period ending on the last day of the previous month.
  (6) The exam passage rate of a provider on probation will be reviewed annually at the time the annual operating fee is due to determine if the provider can be removed from probation, remain on probation or have its license revoked, based on the criteria set out in paragraph (5) of this subsection.

Source Note: The provisions of this §535.61 adopted to be effective January 1, 2015, 39 TexReg 9669; amended to be effective January 1, 2016, 40 TexReg 8226; amended to be effective March 6, 2017, 42 TexReg 1027; amended to be effective September 2, 2019, 44 TexReg 4735; amended to be effective December 11, 2019, 44 TexReg 7703; amended to be effective September 1, 2022, 47 TexReg 3053; amended to be effective June 11, 2023, 48 TexReg 2948