Department of State Division of Publications 312 Rosa L. Parks Avenue, 8th Floor Snodgrass/TN Tower Nashville, TN 37243 Phone: 615-741-2650 Email: publications.information@tn.gov

Proposed Rule(s) Filing Form

For Department of State Use Only

Sequence Number: 03-!0-/~ Rule ID(s): (Qt--//o I File Date: :?J/ IO / Ir

Effective Date: -1o.} '8/ / '7

Proposed rules are submitted pursuant to Tenn. Code Ann. §§ 4-5-202, 4-5-207, and 4-5-229 in lieu of a rulemaking hearing It is the intent of the Agency to promulgate these rules without a rulemaking hearing unless a petition requesting such hearing is filed within ninety (90) days of the filing of the proposed rule with the Secretary of State. To be effective. the petition must be filed with the Agency and be signed by ten (10) persons who will be affected by the amendments. or submitted by a municipality which will be affected by the amendments. or an association of ten (10) or more members. or any standing committee of the General Assembly, The agency shall forward such petition to the Secretary of State.

Pursuant to Tenn. Code Ann. § 4-5-229, any new fee or fee increase promulgated by state agency rule shall take effect on July 1. following the expiration of the ninety (90) day period as provided in § 4-5-207. This section shall not apply to rules that implement new fees or fee increases that are promulgated as emergency rules pursuant to§ 4-5-208(a) and to subsequent rules that make permanent such eme1gency rules. as amended during the rulemal<ing process. In addition, this section shall not apply to state agencies that did not, during the preceding two (2) fiscal years. collect fees in an amount sufficient to pay the cost of operating the board, commission or entity in accordance with § 4-29-121 (b) .

Agency/Board/Commission: Division:

Contact Person: Address:

Zip: Phone: Email:

Real Estate Commission Regulatory Boards Sarah Mathews 500 James Robertson Parkway 37243 615-532-6303 Sarah .Mathews@tn.gov

Revision Type (check all that apply): X Amendment

New Repeal

Rule(s) (ALL chapters and rules contained in filing must be listed here. If needed, copy and paste additional tables to accommodate multiple chapters. Please make sure that ALL new rule and repealed rule numbers are listed in the chart below. Please enter only ONE Rule Number/Rule Title per row)

1

Ch~p!_er~ umber j Chapter Title 1260-01 Licensing Rule Number Rule Title

~ 01 - - - - Applications for Examination : I r

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Rules of Tennessee Real Estate Commission Chapter 1260-0 I Licensing Rule 1260-01-.01 Applications for Examination

Chapter 1260-01 Licensing

Amendments

Ru le 1260-01 -. 01 [Applications for Examination] is amended by adding a new paragraph (6) which shall read as follows:

(6) If within the past ten (10) years, an applicant has been convicted of or pied nolo contendere or guilty to any felony or a misdemeanor involving the theft of services , money or property, or had disciplinary sanctions imposed on them by any local, state or federal occupational licensing body, the applicant shall :

(a) Complete and submit a form prescribed by the Commission containing information relevant to the conviction , plea or disciplinary sanction.

(b) Submit certified copies of the court disposition or other document acceptable to the Commission for each conviction, plea of guilty or nolo contendere or a copy of the order or other document which shows the disciplinary action taken by the local, state or federal agency and the factual and legal basis for the action , whichever is applicable.

1. If the background check produced pursuant to T.C.A. § 62-13-303(1) does not reveal the disposition of any arrest or charge related to a felony or a misdemeanor involving theft of services, money or property and the charge has been dismissed, nolle prosequi or otherwise disposed of without conviction or a plea of guilty or nolo contendere, the applicant shall submit certified copies of the court disposition or other document acceptable to the Commission for each such arrest or charge.

2. If the court has no record of the arrest, charge, or conviction due to age of the record or any other reason , the applicant shall submit a letter from the court clerk stating the absence of the record(s) .

(c) Appear before the Commission for the purpose of determining if the conviction , plea or disciplinary sanction constitutes grounds for denial of a license and, if so, whether or not the applicant may move forward with the licensing process. The applicant shall ensure the presence of his or her principal broker (or intended principal broker) in accordance with Tenn. Comp. R. & Regs. 1260-01-.19.

Authority: T.C.A. §§ 62-13-112, 62-13-203, 62-13-301 , 62-13-303, 62-13-312, and 40-29-207.

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Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

* If a roll-call vote was necessary, the vote by the Agency on these rules was as follows:

Board Member Aye No Abstain Absent Signature (if required)

John Griess X

Diane Hills X

Marcia Franks X

Bobbv Wood X

Fontaine Taylor X

Johnny Horne X

Garv Blume X

Austin McMullen X

Rick DouQlass X

I certify that this is an accurate and complete copy of proposed rules, lawfully promulgated and adopted by the Tennessee Real Estate Commission on 12/12/2016, and is in compliance with the provisions of T.C.A. § 4-5-222. The Secretary of State is hereby instructed that, in the absence of a petition for proposed rules being filed under the conditions set out herein and in the locations described, he is to treat the proposed rules as being placed on file in his office as rules at the expiration of ninety (90) days of the filing of the proposed rule with the Secretary of State.

Signature:

,,, 111111,:1.,,, Name of Officer: ,,, ~UNis,it,~,. _ ,,__<..LJ-t=.L..>J'4-------'-.::..__,_- ---'--"'---".!....>-L.LL=-iL.=......._ ____ _

~flJ;,~ ········~~-!~······ ~ 0;··· ••• \. Title of Officer: .A.sSlSfANC ~ C.VUNSE:L ~.:s:. 5""1\"'\'t;. ~~ • -- • · ',... ssf;,~ • = ~ r ,.~~~if>.~" J ~ ~~~R· \ \ "1~ue\.\.C / /Jubscribed and sworn to before me on . .._~ ;.,,,,,.a.,"""-.....:....L-=-=--'~+ - ~-------~ .... .... ~~ ~,,1.§fii.i.;ER ~,,,~~~ Notary Public Signature: ',A/J(...L/.Y...llil!

Q:l',,""m"'\'~ ¢, I l ~ISSIO'l~ My commission expires on: \'"'" ~I _,,,2.......,..\~~d'~ )~\<'J_,___ ______ _

All proposed rules provided for herein have been examined by the Attorney General and Reporter of the State of Tennessee and are approved as to legality pursuant to the provisions of the Administrative Procedures Act, Tennessee Code Annotated, Title 4, Chapter 5.

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latery Ill Attorney General and Reporter

,1/~j,,017 ~I Date

RDA 1693

Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

Department of State Use Only

Filed with the Department of State on: .3/ 10 /1, Effective on: ----~(o--1/~:B~ll-'l,_1~ -----

~'1/ Tre Hargett Secretary of State

LU

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Rules of Tennessee Real Estate Commission Chapter 1260-0 I Licensing Rule 1260-01-.0 I Applications for Examination

Regulatory Flexibility Addendum

Pursuant to T.C.A. §§ 4-5-401 through 4-5-404, prior to initiating the rule making process, all agencies shall conduct a review of whether a proposed rule or rule affects small business.

1. The type or types of small business and an identification and estimate of the number of small businesses subject to the proposed rule that would bear the cost of. or directly benefit from the proposed ru le;

This rule will affect individuals who seek to obtain a license and affiliate as an independent contractor with a licensed real estate firm who have criminal convictions that are felonies or are misdemeanors involving theft of services, money or property or prior disciplinary action by any federal, state or local government regulatory agency that have occurred within the last ten (10) years. While it is difficult to predict the number of applicants who will fall into this category, this rule will reduce the number of applicants that have to appear before the Commission.

2. The projected reporting . recordkeeping and other administrative costs required for compliance with the proposed rule. including the type of professional skills necessary for preparation of the report or record :

The Tennessee Real Estate Broker Act requires a TBI/FBI report generated by a set of fingerprints submitted by the applicant. Applicants are required to disclose on the license application if they have had prior disciplinary action by a federal, state, or local government regulatory agency. This report/disclosure, along with the supporting documentation requested by the Commission, are reviewed by program staff and maintained as part of the applicant's file. This is the current practice used by the Commission to carry out T.C.A. § 62-13-303(a)(1) and, thus, no additional reporting, recordkeeping administrative costs will result from the implementation of this process in rule form.

3. A statement of the probable effect on impacted small businesses and consumers:

The affect will be that the process currently used by the Commission to ensure applicants meet the requirements of T.C.A. § 62-13-303(a)(1) will be clearly outlined in the law and accessible to applicants and their potential Principal Brokers. The Commission foresees no effect on consumers.

4. A description of any less burdensome, less intrusive or less costly alternative methods of achieving the purpose and objectives of the proposed rule that may exist, and to what extent the alternative means might be less burdensome to small business:

The Commission knows of no other alternative method to achieve the goals exhibited by these rules.

5. A comparison of the proposed rule with any federal or state counterparts:

Other state real estate commissions are expected to, in many cases, have similar laws and rules regarding applicants with criminal convictions. For instance, Georgia Code Annotated § 43-40-15 is substantially similar to T.C.A. § 62-13-303(a)(1 ). The corresponding rule requires the applicant to provide a certified copy of the citation, accusation, or indictment and a certified copy of the sentence/final disposition of any conviction other than a single DUI as well as a detailed statement; and/or a certified copy of the final order from the licensing agency and a detailed statement for prior disciplinary action taken on a license. The Commission then makes a determination as to whether the individual should be allowed to obtain a license and, if denied, the applicant can request a hearing. Kentucky Code Annotated § 324.045 also has a provision substantially similar to. T.C.A. § 62-13-303(a)(1) . The corresponding rule requires the Commission to scrutinize applicants whose criminal history report reveals any felony conviction regardless of when it took place or any misdemeanor conviction in the past five years. The Commission then determines whether to approve the individual for licensure or have a hearing to determine the same.

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Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

6. Analysis of the effect of the possible exemption of small businesses from all or any part of the requirements contained in the proposed rule:

An exemption for small businesses to this rule would not be beneficial as it is essential to screen the criminal history of applicants in order to comply with T.C.A. § 62-13-303(a)(1).

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Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

Impact on Local Governments

Pursuant to T.C.A. §§ 4-5-220 and 4-5-228 "any rule proposed to be promulgated shall state in a simple declarative sentence, without additional comments on the merits of the policy of the rules or regulation, whether the rule or regulation may have a projected impact on local governments." (See Public Chapter Number 1070 (http://state.tn .us/sos/acts/106/pub/pc1070.pdf) of the 2010 Session of the General Assembly)

The Real Estate Commission foresees no impact on any local governments.

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Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

Additional Information Required by Joint Government Operations Committee

All agencies, upon filing a rule, must also submit the following pursuant to T.C.A. § 4-5-226(i)(1 ).

(A) A brief summary of the rule and a description of all relevant changes in previous regulations effectuated by such rule;

This rule puts into rule form a longstanding process used by the Commission to carry out the requirements of TC.A § 62-13-303(a)(1) and also limits it to convictions and disciplinary actions occurring within the past ten (10) years. It requires any applicant with any type of felony conviction or a misdemeanor conviction involving theft of services, money, or property to submit official court records showing the disposition of the case and a personal statement regarding the conviction(s) . Applicants who have prior disciplinary action by a federal , state, or local regulatory agency must disclose that fact on the application for licensure and submit supporting documentation. The rule also requires the applicant and their potential principal broker to appear at a meeting of the Commission to present their case as to why the Commission should allow the individual to move forward with the licensure process .

(B) A citation to and brief description of any federal law or regulation or any state law or regulation mandating promulgation of such rule or establishing guidelines relevant thereto ;

I There is no known federal or state law mandating promulgation of this rule.

(C) Identification of persons, organizations, corporations or governmental entities most directly affected by this rule, and whether those persons, organizations, corporations or governmental entities urge adoption or rejection of this rule ;

Any applicant or potential applicant for licensure with criminal history or prior disciplinary action from a regulatory agency within the past ten (10) years, as well as principal brokers who wish to affil iate such applicants with thei r firm , will be affected by this rule. There are no known objections to the amended rule. The rule codifies the current applicant screening process used by the Commission and also limits it to convictions and disciplinary actions occurrinq within the past ten (10) years.

(D) Identification of any opinions of the attorney general and reporter or any judicial ruling that directly relates to the rule or the necessity to promulgate the rule ;

There are no known opinions of the Attorney General and Reporter or any judicial ruling that directly relates to this rule.

(E) An estimate of the probable increase or decrease in state and local government revenues and expenditures, if any, resulting from the promulgation of this rule , and assumptions and reasoning upon which the estimate is based. An agency shall not state that the fiscal impact is minimal if the fiscal impact is more than two percent (2%) of the agency's annual budget or five hundred thousand dollars ($500,000) , whichever is less;

This rule is not expected to create a probable increase or decrease state and local government revenues and ex enditures.

(F) Identification of the appropriate agency representative or representatives, possessing substantial knowledge and understanding of the rule;

Malcolm Young , Executive Director 500 James Robertson Parkway Davy Crockett Tower, 4th Floor Nashville, TN 37243 615-741-3321

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Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

Sarah Mathews, Assistant General Counsel 500 James Robertson Parkway Davy Crockett Tower, 5th Floor Nashville, TN 37243 615-741-3072

(G) Identification of the appropriate agency representative or representatives who will explain the rule at a scheduled meeting of the committees;

Malcolm Young, Executive Director, Real Estate Commission Sarah Mathews, Assistant General Counsel

(H) Office address, telephone number, and email address of the agency representative or representatives who will explain the rule at a scheduled meeting of the committees; and

Malcolm Young, Executive Director 500 James Robertson Parkway Davy Crockett Tower, 4th Floor Nashville, TN 37243 615-741-3321 Malcolm.young@tn.gov

Sarah Mathews, Assistant General Counsel 500 James Robertson Parkway Davy Crockett Tower, 5th Floor Nashville, TN 37243 615-741-3072 Sarah. Mathews®tn. qov

(I) Any additional information relevant to the rule proposed for continuation that the committee requests.

I There is no known additional relevant information.

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Department of State Division of Publications 312 Rosa L. Parks Avenue, 8th Floor SnodgrassfTN Tower Nashville, TN 37243 Phone: 615-741-2650 Email: publlcatlons. informatlon@ln.gov

For Department of State Use Only

Sequence Number:

Rule ID(s):

File Date:

Effective Date:

Proposed Rule(s) Filing Form - REDLINE Proposed rules are submitted pursuant to Tenn. Code Ann. §§ 4-5-202, 4-5-207, and 4-5-229 in lieu of a rulemaking hearing. It is the intent of the Agency to promulgate these rules without a rulemaking hearing unless a petition requesting such hearing is filed within ninety (90) days of the filing of the proposed rule with the Secretary of State. To be effective, the petition must be filed with the Agency and be signed by ten (10) persons who will be affected by the amendments, or submitted by a municipality which will be affected by the amendments, or an association of ten (10) or more members, or any standing committee of the General Assembly. The agency shall forward such petition to the Secretary of State.

Pursuant to Tenn. Code Ann. § 4-5-229, any new fee or fee increase promulgated by state agency rule shall take effect on July 1, following the expiration of the ninety (90) day period as provided in § 4-5-207. This section shall not apply to rules that implement new fees or fee increases that are promulgated as emergency rules pursuant to § 4-5-208(a) and to subsequent rules that make permanent such emergency rules, as amended during the rulemaking process. In addition, this section shall not apply to state agencies that did not, during the preceding two (2) fiscal years, collect fees in an amount sufficient to pay the cost of operating the board, commission or entity in accordance with § 4-29-121 (b).

Agency/Board/Commission: Real Estate Commission Regulatory Boards Sarah Mathews

Division: Contact Person:

Address: Zip:

Phone: Email:

500 James Robertson Parkway 37243 615-532-6303 Sarah. Mathews@tn.gov

Revision Type (check all that apply): X Amendment

New __ Repeal

Rule(s) (ALL chapters and rules contained in filing must be listed here. If needed, copy and paste additional tables to accommodate multiple chapters. Please make sure that ALL new rule and repealed rule numbers are listed in the chart below. Please enter only ONE Rule Number/Rule Title per row)

Chapter Number Chapter Title 1260-01 Licensing Rule Number Rule Title .01 Aoolications for Examination

Rules of Tennessee Real Estate Commission Chapter 1260-01 Licensing Rule 1260-01-.01 Applications for Examination

Redline Chapter 1260-01

Licensing Amendments

Rule 1260-01-.01 [Applications for Examination] is amended by adding a new paragraph (6) which shall read as follows:

(6) If with in the past ten (10) years, an applicant has been convicted of or pied nolo contendere or guilty to any felony or a misdemeanor involving the theft of services. money or property. or had disciplinary sanctions imposed on them by any local. state or federa l occupational licensing body, the applicant shall:

(a) Complete and submit a form prescribed by the Commission contain ing information relevant to the conviction, plea or discipl inary sanction.

(bl Submit certi fied copies of the court disposition or other document acceptable to the Commission for each conviction. plea of guilty or nofo contendere or a copy of the order or other document which shows the disciplinary action taken by the local, state or federal agency and the factual and legal basis for the action. whichever is applicable.

1. If the background check produced pursuant to T.C.A. § 62-13-303(1) does not reveal the disposition of any arrest or charge related to a felony or a misdemeanor involving theft of services. money or property and the charge has been dismissed, nolle prosegui or otherwise disposed of without conviction or a plea of guilty or nolo contendere, the applicant shall submit certified copies of the court disposition or other document acceptable to the Commission for each such arrest or charge.

2. ff the court has no record of the arrest, charge, or conviction due to age of the record or any other reason . the applicant shall submit a letter from the court clerk stating the absence of the record{s).

(c) Appear before the Commission for the purpose of determining if the conviction. plea or disciplinary sanction constitutes grounds for denial of a license and, if so. whether or not the applicant may move forward with the licensing process. The appl icant shall ensure the presence of his or her principal broker (or intended principal broker) in accordance with Tenn. Comp. R & Regs. 1260-01 -.19.

Authority: T.C.A. §§ 62-13-112, 62-13-203, 62-13-301, 62-13-303, 62-13-312, and 40-29-207.

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