Chapter 8: The Purpose of Licensing Laws - What a License Holder Can and Cannot Do

The following section of the License Act defines the minimum level of service a Texas broker can offer their sellers:

(a) A broker who represents a party in a real estate transaction or who lists real estate for sale under an exclusive agreement for a party is that party's agent. (b) A broker described by Subsection (a): (1) may not instruct another broker to directly or indirectly violate Section1101.652(b)(22); (2) must inform the party if the broker receives material information related to a transaction to list, buy, sell, or lease the party's real estate, including the receipt of an offer by the broker; and (3) shall, at a minimum, answer the party's questions and present any offer to or from the party. (c) For the purposes of this section: (1) a license holder who has the authority to bind a party to a lease or sale under a power of attorney or a property management agreement is also a party to the lease or sale; (2) an inquiry to a person described by Section 1101.005(6) about contract terms or forms required by the person's employer does not violate Section 1101.652(b)(22) if the person does not have the authority to bind the employer to the contract; and 3) the sole delivery of an offer to a party does not violate Section 1101.652(b)(22) if: (A) the party's broker consents to the delivery; (B) a copy of the offer is sent to the party's broker, unless a governmental agency using a sealed bid process does not allow a copy to be sent; and (C) the person delivering the offer does not engage in another activity that directly or indirectly violates Section 1101.652(b)(22).

Sec. 1101.652. Grounds for Suspension or Revocation of License

(a) The commission may suspend or revoke a license issued under this chapter or or Chapter 1102 or take other disciplinary action authorized by this chapter or Chapter 1102 if the license holder: (1) enters a plea of guilty or nolo contendere to or is convicted of a felony or a criminal offense involving fraud, and the time for appeal has elapsed or the judgment or conviction has been affirmed on appeal, without regard to an order granting community supervision that suspends the imposition of the sentence; (2) procures or attempts to procure a license under this chapter or Chapter 1102 for the license holder by fraud, misrepresentation, or deceit or by making a material misstatement of fact in an application for a license; (3) fails to honor, within a reasonable time, a check issued to the commission after the commission has sent by certified mail a request for payment to the license holder's last known business address according to commission records; (4) fails to provide, within a reasonable time, information requested by the commission that relates to a formal or informal complaint to the commission that would indicate a violation of this chapter or Chapter 1102; (5) fails to surrender to the owner, without just cause, a document or instrument that is requested by the owner and that is in the license holder's possession; (6) fails to notify the commission, not later than the 30th day after the date of a final conviction or the entry of a plea of guilty or nolo contendere, that the person has been convicted of or entered a plea of guilty or nolo contendere to a felony or a criminal offense involving fraud; or (7) disregards or violates this chapter or Chapter 1102.

What is the difference between a client and a customer?

A client has an agency relationship with you or your broker and a customer does not.

What License Holders CANNOT Do

Commit fraud or misrepresentation Practice without a real estate license or a sponsoring broker Fail to inform TREC of a convicted felony Fail to notify TREC of address or email change Fail to do any of the items under what a license holder must do

Section 1101.558 addresses the need for license holders to properly disclose representation when dealing with others. Since we will breakdown that section in detail later in this course, for now, I'll just tell you that it does the following:

It indicates that a license holder representing a party in a proposed real estate transaction must provide either oral or written disclosure of that representation upon first contact with a party to the transaction or to another license holder representing another party to the transaction. It identifies the content and format of the written communication required when a substantive dialogue relating to a proposed transaction regarding a real property occurs with a party. (The commission provides the guidelines for the text, format, and manner of presentation of that written notice.) It lists the few exceptions to the written notice requirement.

What License Holders SHOULD Do

Quote the source of all information you share Give that information in writing or, at least, back up verbal statements in writing