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                      The Attorney              General              of Texas
                                         December     6,      1978
JOHN L. HILL
Attorney General

                   Honorable Tom Creighton                           Opinion No. Ii- 1271
                   Chairman
                   Senate Economic Development                       Re: Whether telephone        solic-
                      Committee                                      itors for resort developments
                   State Capitol                                     must have a real estate license.
                   Austin, Texas 767U

                   Dear Senator Creighton:

                          You ask whether the Real Estate License Act, article 6573a, V.T.C.S.,
                   requires the licensing of telephone solicitors employed by resort developers.
                   These employees call persons from a list given them and read a statement
                   offering a visit to the development.     If the person called wishes to receive
                   additional information     or visit the development,     the telephone solicitor
                   arranges a meeting between him and the real estate agent representing the
                   development.    He receives ~JI hourly salary for this work.

                           Article 6573a, section l(b), requires that any person acting as a real
                   estate broker must be licensed by the Real Estate Commission. “Broker” is
                   defined expansively to include persons engaging in any of a number of
                   activities:

                               Sec. 2. As used in this Act:

                               . . . .

                               (2) ‘Real estate broker’ means a person who, for
                               another person and for a fee, commission, or other
                               valuable consideration, or with the intention~or in the
                               expectation or on the promise of receiving or collect-
                               ing a fee, commission, or other valuaP!e consideration
                               from another person:

                               . . . .

                                 (I) procures or assists ifi the procuring of prospects
                               for the purpose of effecting the sale, exchange, lease,
                               or rental of real estate. . . .




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Honorable Tom Creighton     -   Page 2     (RL1271)



     Section 4 provides as follows:

           A person who, directly or indirectly for another, with the
           intention or on the promise of receiving any valuable
           consideration,  offers, attempts, or agrees to perform, or
           performs, .a single act defined in Subdivisions 2 and 3,
           Section 2 of this Act, whether as a part of a transaction, or
           as an entire transaction, is deemed to be acting as a real
           estate broker or salesman within the meaning of this Act.
           The commission of a single such act by a person required to
           be licensed, under this Act and not so licensed shall
           constitute a violation of this Act.

        A Florida court in construing a similar statute determined that teleohone
solicitors took part in the procuring of prospects for a real estate sales pro&am.
Alligood v. Florida Real Estate Comm’n, 156 So.2d 705 (Fla. Dist. Ct. App. 1963).
The efforts of the telephone solicitors determined who was at least interested in
the project and bonstituted a first and very important step in the endeavor. The
Florida court found it a material factor that the solicitors received a bonus for
each prospect who agreed to visit the development. A New Jersey court, relying in
part on the Florida decision, determined that a similar licensing statute ‘applied to
salaried telephone solicitors even though they received no commissions.         Boise
Cascade Home & Land Corp. v. Division of the New Jersey Real Estate Comm’n,
296 A.2d 545 (N.J. Surer. Ct. Ch. Div. 1972). The New Jersev court stated that the
telephone callers played a significant part in the sales pro&am and were, the first
to make direct contact with the public. It not only agreed with the Florida court
that such employees assisted in the procuring of prospects, but also determined
that they were employed “to sell” lots, construing that term to include any act
intended to lead to completion of the transaction.          The Texas Real Estate
Commission has also concluded that telephone solicitors must be licensed under the
Act. Texas Real Estate Commission, Declaratory Ruling (Jcne 25, 1976). Corn are
Texas Real Estate Commission Rules 402.03.02.005, S 2(2)(c) 6 and 7 e--clermal
employees who answer telephone and do work of a secretarial nature are not
 required to be licensed when they engage in no solicitation work). We believe that
a Texas court would agree with the conclusion reached by the two courts that have
considered this matter and by the agency that administers the Act.

       You next ask whether the legislature     may constitutionally   prohibit such
telephone solicitations by persons who are not licensed under article 6573a. The
state may, in exercise of its police power, regulate a private business such as the
real estate business, which affects the public interest.   Hall v. Hard, 335 S.W.2d
584 (Tex. 1960); Gregory v. Roedenbeck, 174 S.W.2d 585 (Tex. 1943). The legislature
has considerable discretion to determine what the public interest requires and what
measures are necessary for its protection.   State v. Richards, 301 S.W.2d 597, 602
(Tex. 1957). Where no suspect categories are involved, a statute is unconstitutional
as an invalid exercise of the police power only when it arbitrarily interferes with




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Honorable Tom Creighton      -   Page 3     (H-1271)



legitimate activities in a manner that has no reasonable relation to the .public
welfare. State v. Spartan’s Industries, Inc., 447 S.W.2d 407, 414 (Tex. 1969), appeal
m,        397 U.S. 590 (1970). In enacting the original Real Estate License Act in
1939, the legislature expressed the purpose of preventing fraud in the sale of real
estate. Acts 1939, 46th Leg., S 24, at 576. In a more recent version of the statute,
 it noted that the complexities of real estate transactions require that only licensed
persons act as real estate brokers. Acts 1967, 60th Leg., ch. 272, S 8, at 602. We
cannot say that the licensing requirements have no reasonable relation to the public
interest as applied to telephone solicitors who contact people and attempt to
interest them in the purchase of land. In Gregory v. Roedenbeck, the Supreme
Court determined the predecessor of the Rex Estate License Act to be a valid
exercise of the police power and found its licensing requirements applicable to
someone who performed a single act in connection with the procurement of a
prospect.    In our opinion, the statute may also be constitutionally   applied to the
telephone solicitors.

        You next ask whether the legislature    may constitutionally   exempt from
licensing requirements salespersons who meet certain criteria.       Article 6573a,
 section 3, exempts a number of people from licensure, including the following:

               (f) a salesperson employed by an owner in the sale of
            structures and land on which said structures are situated,
            provided such structures are erected by the owner in the due
            course of his business. . . .

Thus, a salesperson employed by an owner-builder under the circumstances outlined
in section 3(f) may sell improved lots without a license. The salesperson employed
by the owner of unimproved lots must be licensed.      You wish to know whether this
discrimination    with respect to license requirements       is consistent with the
Constitution.   See
                -   U. S. Const. amend. 14; Tex. Const. art. 1, S 3.

        When economic legislation      is attacked   as inconsistent    with the equal
 protection clause, it will be upheld unless its classifications     have no reasonable
relation to the promotion of the general welfare. Ex parte Tigner, 132 S.W.2d 885
(Tex. Crim. App. 19391, eff’d, 310 U.S. 141 (1940). It will be presumed that the
legislative classifications  are reasonable.    Board of Insurance Comm’rs v. Great
Southern Life Insurance Co., 239 S.W.2d 803 (Tex. 1951). If any state of facts can
reasonably be conceived that would sustain the classification,    the existence of such
facts at the time of enactment will be presumed. Ex parte Tigner, m.           Applying
these standards, we cannot say that the classification you inquire about violates the
equal protection clause. The legislature might reasonably exempt the sellers of
improved lots under the circumstances described in section 3(f) on the ground that
the owner who improves lots has shown greater stability and commitment            to the
project than the owner of unimproved lots, whose sales may be more speculative.
Since one purpose of licensing is to protect the public from fraud, different facts
with respect to the possibility of fraud may justify different treatment.




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        Honorable Tom Creighton      -   Page 4    (H-1271)



              You also inquire whether the Real Estate Commission may constitutionally
        exempt from licensing telephone solicitors employed as rental agents by the
        property owner, while requiring licensure of telephone solicitors employed in
        connection with the sale of property.  Rule 402.03.02.005(5) promulgated by the
        commission provides:

                    Real estate licensure is required of rental agents doing all
                    solicitations by telephone unless such agents are employees
                    of the owner of the property concerned.

        The Real Estate Commission has express rule-making authority.           V.T.C.S. art.
         6573, S 5(e). The act exempts from licensure “an owner or his employees in renting
        or leasing his own real estate whether improved or unimproved... . .‘I V.T.C.S. art.
         6573a, S 3(i). We believe that neither the rule nor the exemption it is based on
        creates a constitutionally    impermissible classification. The legislature and the
        commission may reasonably exempt rental transactions by owners of the property
        on the grounds that they do not involve the same investment and long term
        commitment by the consumer as does the sale of .real estate, and hence, are less
        likely to injure the general welfare.

                We note that the Florida Supreme Court has held the Florida licensing
        requirement unconstitutional    on equal protection grounds as applied to the salaried
        employees of a corporation, where the requirement was particularly burdensome.
        Florida Real Estate Comm’n v. McGregor, 288 So.2d 529 (Fla. 1972). We believe
        this decision is inapplicable to the present question for a number of reasons. First,
        the Florida court objected to a provision exempting from licensure one officer of
        any corporation engaged in the sale of real estate.          There is no comparable
        provision in article 6573a. Second, the court felt the statute was designed to
        protect consumers from injury by independent brokers, since the consumer would
        generally have no recourse against the broker’s principal.     A consumer who dealt
        with a broker employed by a corporation            would have recourse against the
        corporation,   and thus, there was no need for the Real Estate Commission to
        regulate that broker.      The Texas statute, however, has the broader purpose of
        protecting the public from fraud and incompetence, and we feel we should defer to
        the legislative judgment as to the scope of protection needed by the public. See
        Board of Insurance Comm’rs v. Great Southern Life Insurance Co., m,             at 812.
         Finally, from the language used by the Florida Supreme Court and the authorities it
        cited, it appears that it may have applied the “compelling state interest” test
        against which classifications   involving a fundamental right or suspect category are
        tested, ,or in any event, a stricter test than the one applied by the Texas courts to
        economic legislation. See Ex parte Tigner, e.

                                           SUMMARY

                    We believe Texas courts will hold that, telephone solicitors
                    employed by resort developers to call people and offer visits




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Honorable Tom Creighton     -   Page 5     (H-1271)


           to the development must be licensed under the Real Estate
           License Act, that application of licensing requirements to
           such persons is within the police power of the state, and that
           exemptions from licensing for salespersons employed by the
           owner-builder of improved real property and for telephone
           solicitors employed as rental agents by the property owner
           do not violate the equal protection clause.




                                                   ey General of Texas




DAVID M. KENDALL, First Assistant




C. ROBERT HEATH, Chairman
Opinion Committee




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