Principles of RE I: Texas Real Estate License Act
Licenses
Licenses change and require maintenance. They can be active or inactive, and they require renewal.
Who gives out general criminal penalties that relate to violating license law?
No, while TREC does a lot of things to enforce TRELA, general criminal penalties are handled by local law enforcement, not by TREC.
Deb's claim was approved by TREC without contest.
Once Deb submitted all of her paperwork to TREC her claim was approved without contest.
TRELA Violations
Both TREC and the local government have the power to reprimand the violators of the License Act (TRELA). A person who violates TRELA could face: Administrative penalties (TREC can levy an administrative penalty up to $5,000 per violation per each day a violation continues.) Civil fines (License holders could be charged a penalty up to three times the amount of money they received on a transaction.) Criminal charges (Local government can charge license holders with a misdemeanor for violating TRELA.) If a license holder does receive notice of violation from TREC, they have 20 days to either accept the decision or ask for a hearing.
Errors and Omissions Insurance
Errors and omissions insurance protects license holders against financial loss they may face if they get sued. When thinking about violations, errors and omissions insurance can be an important safeguard. However, E&O policies cover mistakes a license holder might make in real estate transactions — NOT acts of fraud or other intentional misconduct.
Compensation Requirements
In this level, we went over a lot of requirements for compensation in real estate. Let's review: Salespersons can only accept compensation from their broker (and not from clients). License holders must be licensed in order to receive payment. In order to claim compensation in court, there must be an agreement in writing between the broker and the client. The license holder must have informed the buyer in writing before closing that they should obtain a title insurance policy.
What two documents were sent to TREC by Deb for her claim?
Deb sent the Writ of Execution and Abstract of Judgement along with all other necessary paperwork to TREC.
Where did Deb file the paperwork for her claim?
Deb sent the Abstract of Judgement and Writ of Execution along with all other necessary paperwork to TREC.
Continuing Education
Here are two facts to remember about continuing education: If a license holder will not complete their continuing education hours, they can apply for inactive status which will prevent their license from expiring. They must apply before the expiration date. A broker who got licensed before October 31, 1991, is not required to comply with the mandatory continuing education requirements.
Requesting a Hearing
If a license holder receives a notice of violation, they have 20 days to either accept the decision or ask for a hearing. If the broker or sales agent fails to respond within the 20 days, the commission will move forward with applying the penalty to the license holder. Ya snooze, ya lose.
Recovery Trust Account
The commission maintains a monetary fund to reimburse members of the public who have been financially harmed by the unlawful or unscrupulous practices of its license holders. This reimbursement fund is referred to as the Real Estate Recovery Trust Account or the Recovery Trust Account. Payments made from the Trust Account must be court-ordered and are limited to: $50,000 arising out of a single incident or $100,000 per license holder (unless the debt has been repaid with the accrued interest)
A license holder is facing three separate complaints. The license holder must pay $45,000 for the first complaint, $62,000 for the second complaint, and $21,000 for the third complaint. What is the amount that the Commission will pay on the license holder's behalf?
Yes, the maximum amount that can be paid out because of the actions of one license holder will not go above $100,000, no matter how many complainants there are.
Texas Real Estate License Requirements
Applicants need to meet a few requirements in order to be eligible to receive their license. Age Be at least 18 years old. Residency Have legal residence in the U.S. and be a Texas resident. Integrity Satisfy the commission (TREC) that the candidate meets and exceeds TREC's character standards of honesty, trustworthiness, and integrity. Competence Demonstrate competence by passing the licensing exam. Complete Pre-License Courses Complete all six required courses of study. (This course is one of 'em.) Note After a license application is filed, Texas applicants have one year to fulfill the examination requirement.
Who TREC Oversees
Because the Texas Real Estate Commission enforces the Texas Real Estate License Act, they oversee the following professions: Real estate inspectors 🔎 Easement/right-of-way agents 🛣 Education providers for real estate & inspection courses 📚 Developers of timeshares ⛱ Residential service companies 🏠 Real estate brokers and sales agents 🕵️
Timeline
In order for a consumer to receive payment from the Recovery Trust Account, the complaint must be filed within two years of the incident.
Active and Inactive Licenses
In order to practice real estate, all sales agents must have a sponsoring broker. When they get a sponsoring broker, the license holder and broker have to submit a request to TREC for the broker to change the license holder status to active and get a copy of the sales agent's license. The broker maintains custody of the license during the broker/agent relationship. If and when that relationship ends, the broker must immediately return the license to TREC. In the event, a sales agent or certificate applicant completes all necessary requirements for licensure but has no sponsoring broker, TREC issues an inactive license.
License Renewal
In order to renew their license, license holders must comply with continuing education requirements before the expiration of their license every two years. Here are the requirements: All license holders must take 8 hours of Legal Update I and II Newly licensed agents must take an additional 90 hours of qualifying real estate education (98 total) Experienced sales agents must take an additional 10 elective continuing education hours (18 total)
License Violation
It is illegal for a license holder to attempt to convince another party to terminate an agency agreement with another license holder. EXAMPLE Agent Tim met a seller at the local dog park. Tim convinced the seller to terminate his listing agreement with another license holder. The other license holder found out and successfully got Tim's license revoked by TREC.
The Broker-Lawyer Committee
Members: 13 (6 brokers appointed by TREC, 6 lawyers appointed by the president of the Texas Bar, 1 public member appointed by the governor.) Membership Term Length: 6 years Committee Purpose: Draft and revise contract forms for the approval and adoption by TREC. EXAMPLE The Broker-Lawyer Committee drafted a new version of the One to Four Family Residential Contract (Resale). The Texas Real Estate Commission then promulgated the form, requiring all Texas real estate license holders to use the new version. And this is how these two organizations work together!
Texas Real Estate Commission (TREC)
Members: 9 (All appointed by the governor and confirmed by at least 2/3 of Texas Senate.) Membership Term Length: 6 years Committee Purpose: Enforce the Texas Real Estate License Act
Texas Occupations Code
Remember, TRELA is part of a bigger piece of legislation known as the Texas Occupations Code. Here are two key facts regarding the Texas Occupations Code that we addressed in our TRELA discussion: Chapter 1101 of the Texas Occupations Code is the Real Estate License Act, also known as TRELA. Section 1101.106 of the code states that the executive director of TREC has to maintain a written policy to ensure the implementation of an equal opportunity employment program.
How does the Real Estate License Act require brokers to provide consumers with information for the purpose of filing complaints?
Sec. 1101.202 establishes consumers must be provided the name, mailing address, and telephone number of the Commission to direct complaints from the public. Such notice is provided in the Consumer Protection Notice TREC No. CN 1-2, required to be prominently displayed in each place of business.
Filing Complaints
Sec. 1101.202 of the Real Estate License Act establishes methods by which consumers are provided the name, mailing address and telephone number of the commission to direct complaints from the public. This notice is provided in the Consumer Protection Notice TREC No. CN 1-2, and is required to be prominently displayed in each place of business. This is what it looks like:
TREC and TRELA
TREC receives the power to oversee these professions through the Texas Real Estate License Act; their main function is to enforce TRELA.
Ethics
TREC requires real estate license holders to act in an ethical, competent, honest, and judicious manner throughout any real estate transaction. License holders are expected to put their clients' interests above their own. When TREC determines that a broker or sales agent has violated the law, it can fine the real estate license holder in addition to suspending or revoking their license.
How much will Deb get in total from TREC?
TREC will pay up to $50,000 for a single transaction, no matter the judgement price from the court.
Which of these is one of the primary functions of the Texas Real Estate Commission?
TREC's primary function is to protect the public from unscrupulous or illegal acts of real estate professionals by enforcing the laws of the occupations code and adopting new rules as necessary. The commission does not handle commission disputes nor generate revenue for the state.
Chapter 1101 of the Texas Occupations Code is known as:
The Real Estate License Act is a part of the Texas Occupations Code, Chapter 1101.
Exemptions (from license)
There are also exemptions to the license requirement. These roles do not require a license in order to practice their profession: A licensed attorney in Texas A public official while engaged in official duties An on-site manager of an apartment complex
Who Needs a License?
Who exactly needs a real estate sales agent or broker license? Anyone who helps another party (such as a client) complete a real estate activity (such as buying, selling, leasing, or listing to sell) for a fee ($$$) must have a real estate license. For example: A homeowner selling their own home would not need a real estate license as they are not helping another party. A friend helping a friend find a house for free would not need a real estate license as they are not getting paid. A friend helping a friend buy a house for 3% commission would need a real estate license as they are helping another party and are getting paid for doing so.