Texas Real Estate License Act

Applicants for a real estate license must be how many years of age, at a minimum?

18

Aside from a criminal background check, what other check may the Commission make—even before someone applies for a license?

Moral character, to make sure the prospective license holder has satisfied any outstanding conflicts with the law

Under which circumstances would a broker's license be required?

Selling, exchanging, purchasing, or leasing real estate for another person for compensation

Sally wants to enter the hotel/motel management business. She recognizes that the properties are classified as real estate. Which of the following applies?

The answer is Sally will not be required to hold a real estate broker's license. Among other persons not required to have a real estate license is (1) an onsite manager of an apartment complex; (2) an owner or the owner's employee who leases the owner's improved or unimproved real estate; and (3) a party to a transaction involving (a) the sale, lease, or transfer of a mineral or mining interest; (b) the sale, lease, or transfer of a cemetery lot; (c) the lease or management of a hotel or motel; or (d) the sale of real property by a trustee under a power-of-sale clause in a deed of trust.

Are the actions of former real estate license holders addressed and available for compensation from the trust fund?

Yes, if the former real estate license holder held a license when the act was committed.

To begin working in the real estate industry, a person must initially obtain

a sales agent's license.

When an aggrieved person brings an action for a judgment that may result in an order for payment from the real estate recovery trust account, the registrant or license holder must notify which entity in writing at the time the action begins?

The answer is Texas Real Estate Commission. No action for a judgment that may result in an order for payment from the recovery trust account may be started later than two years after the cause of action accrues. (§ 1101.605)

Obtaining a license through the use of fraud is just cause for

The answer is a broker's license to be revoked or suspended. After a hearing or other settlement procedure, the Commission will render a decision. If the evidence establishes a violation of the Real Estate License Act, the Commission may impose disciplinary action, which may include a reprimand, suspension of the license, revocation of the license, probation of the license, an administrative penalty, or a combination of possible actions. In addition, the Texas Real Estate Commission (TREC) can order a license holder to pay a refund to a consumer, may issue a cease and desist order, may seek an injunction, and may recover civil penalties on behalf of the state. TREC may file a complaint with law enforcement officials; the decision of the courts could be a fine and possible imprisonment for a Class A misdemeanor.

If a real estate brokerage is organized as a business entity, it must be licensed as

The answer is a broker. If a real estate brokerage is organized as a partnership, corporation, or limited liability company, the Rules of the Commission require that an officer, manager, or general partner who is an active Texas real estate broker be designated to act for it. The business entity would be required to obtain a broker's license in the name of the business entity and to maintain errors and omissions insurance with a minimum annual limit of $1 million if the designated broker owns less than 10% of the entity.

Which person is NOT required to hold a real estate broker's license?

The answer is an onsite manager of an apartment complex. Neither an onsite manager of an apartment complex nor an owner's employee who leases the owner's real estate is required to hold a real estate license. A license is required for residential rental locators; persons who procure prospects for the sale, exchange, or lease of real estate; and persons who control the acceptance or deposit of rent from a resident of a single-family residential real property unit.

To be eligible for a license, an applicant must be a resident of Texas

The answer is at the time of filing the application. To be eligible to receive a license, an applicant must be at least 18 years of age, a citizen of the United States or a lawfully admitted alien, and a resident of Texas. Applicants must also satisfy the Commission as to their honesty, trustworthiness, integrity, and competency (as measured by the state exam). (§ 1101.354)

The Commission may NOT prohibit a license holder from using for the sale, exchange, option, or lease of an interest in real property a contract form that is prepared by an attorney and required by the property owner or prepared

The answer is by the property owner. In addition, TREC Rule 537.11(a) sets forth three additional exceptions to the requirement that license holders use forms prepared by the Texas Real Estate Broker-Lawyer Committee and adopted (promulgated) by the Texas Real Estate Commission: (1) transactions in which the license holder is functioning solely as a principal, not as an agent; (2) transactions in which an agency of the U.S. government requires a different form to be used; and (3) transactions for which no standard contract form has been promulgated by TREC.

Brokers are required to maintain, and to place all money received from clients in, which of the following?

The answer is escrow or trust account. Brokers are not allowed to commingle or mix their own money with the client's money. Conversion, using escrow money for purposes other than disbursement of escrow funds, is also illegal. (§ 1101.652(b)(10), (30), (31)). The License Act contains a list of approximately 50 reasons TREC can suspend or revoke a license or discipline a license holder.

It is permissible for a real estate agent to

The answer is fail to specify a definite termination date in a contract to perform property management services. Failure to specify a definite termination date that is not subject to prior notice in a contract is generally grounds for license suspension or revocation. However, lease contracts and contracts to perform property management services do not require definite termination dates.

How many members are appointed to the Texas Real Estate Commission (TREC)?

The answer is nine members: six real estate professionals and three public members. All nine members of TREC are appointed by the governor with the advice and consent of the senate. They serve staggered six-year terms, with the terms of three members expiring January 31 of each odd-numbered year. A person is not eligible for appointment as a public member if the person or the person's spouse is registered, certified, or licensed by a real estate‒related occupational regulatory agency or is employed by or receives funds from TREC. In addition, an officer, employee, or paid consultant of a Texas real estate industry trade association cannot be a member of TREC.

Can an aggrieved consumer collect from the real estate recovery trust account if the person posing as a sales agent or broker was not actually licensed to practice real estate nor affiliated with real estate‒related business?

The answer is no, aggrieved consumers may only collect from the fund if they did business with license holders. The general courts, however, are available to victims of fraud, and consumers can seek relief there.

Which is NOT a violation for which the Texas Real Estate Commission (TREC) may suspend or revoke a license or take other disciplinary action?

The answer is requesting a moral character determination from the Commission. A moral character determination is requested before a person applies for a license. When requested, TREC determines whether a potential applicant's moral character complies with the Commission's moral character requirements for licensing.

The responsibility for ensuring that a sales agent license is timely renewed belongs to

The answer is sales agent. TREC sends a renewal notice to each license holder 60 to 90 days before the expiration of a license. It is a license holder's responsibility to know the license expiration date, to complete required SAE (sales agent annual education) or CE ( continuing education) courses before that date, and to make a timely renewal. Failure to do so will result in an increased renewal fee—up to two times the normal fee. If a license has been expired for six months or longer, the person may be required to obtain a new license by submitting to reexamination and complying with any additional education requirements.

The Texas Real Estate Commission's powers and duties include all EXCEPT

The answer is setting commission or compensation rates for sales transactions in Texas. Commission or compensation rates are negotiated between a real estate broker and a seller or a buyer. Among the other duties and powers of the Real Estate Commission are adopting rules to establish a fee schedule, promulgating or approving contract forms prepared by the Texas Real Estate Broker-Lawyer Committee, subpoenaing witnesses and records for examination, and developing policies to encourage alternative dispute resolution.

Which is an aggrieved person NOT required to show at a Texas Real Estate Commission (TREC) hearing on an application for payment from the real estate recovery trust account?

The answer is that the judgment debtor (license holder) filed for bankruptcy before the hearing. The real estate recovery trust account reimburses members of the public who have been financially injured or damaged by the actions of a real estate broker or sales agent, a certificate holder, or an employee or agent of a license holder. Persons desiring to benefit from the trust account first must obtain a final money judgment against the offending license holder. Then, to receive payment from the account, they must appear at a TREC hearing and show that they are not a spouse of the license holder and not a license holder seeking to recover a commission. Those seeking reimbursement from the recovery trust account must also be able to show the amount of money that might be realized from the sale of assets of the license holder and the balance remaining on the judgment after the sale of assets. The license holder is not required to file for bankruptcy before the hearing for a recovery from the trust account.

If the Commission proposes to deny, suspend, or revoke a person's license or certificate of registration, the person is entitled to a hearing conducted by

The answer is the State Office of Administrative Hearings. A license holder is entitled to appeal the ruling, order, or decision to a district court in the county in which the hearing was held. (§ 1101.657-.658)

The Texas Real Estate License Act is administered by

The answer is the Texas Real Estate Commission. The Texas Real Estate Commission consists of nine members appointed by the governor with the advice and consent of the senate—six broker-members and three public members.

An aggrieved person may only be reimbursed from the real estate recovery trust account if the reimbursement is ordered by

The answer is the court that entered the judgment. The fund is used to reimburse aggrieved persons who suffer actual damages by reason of certain acts committed by a duly licensed real estate broker or sales agent, a duly registered person under the Real Estate License Act, or an unlicensed employee or agent of a broker or sales agent, provided the registrant, broker, or sales agent was registered or licensed in the State of Texas at the time the act was committed and the recovery was ordered by the court that entered the judgment. (§ 1101.606; 1101.609)

If a sponsoring broker's real estate license is revoked, which of the following statements is TRUE?

The answer is the license of a sales agent immediately becomes inactive. The license of a sales agent (and the sponsoring broker) immediately becomes inactive upon each of the following circumstances: (1) the death of the sponsoring broker; (2) the expiration, suspension, revocation, or inactivation of the sponsoring broker's license; (3) the dissolution or forfeiture of charter or the loss of the license of a designated broker, if the sponsoring broker is a business entity; or (4) broker notification in writing to the Commission that the broker no longer sponsors a sales agent. Whether from a broker to a sales agent or from a sales agent to a broker, termination of sponsorship must be in writing. Until a new sponsorship form for the sales agent is mailed or delivered to the Texas Real Estate Commission (TREC) and continuing education (CE) requirements are met, the sales agent's license is inactive.