II. LICENSING (2 ITEMS) Flashcards
PERSONS/ACTIVITIES REQUIRING A LICENSE
- Attorneys that participate in a commission split.
- Auctioneers involved in any part of a real estate transaction.
- Apartment locators.
- Real Estate sales agents.
- Business entities that receive
compensation on behalf of a license holder
licensed as a broker. - The designated officer of a licensed real estate corporation, or the designated manager of a licensed Real Estate Limited Liability Company.
- less than 10% interest needs E&O of $1M
- 10% or more of the business, then the required amount of E&O insurance is $0.
- Third party who controls the acceptance or collection of rent from a single family residence (like a property manager).
- Any business entity that engages in real estate brokerage and is required to be registered to do business in Texas with the Secretary of State must be licensed as a broker.
PERSONS/ACTIVITIES EXEMPT FROM LICENSING
- Texas licensed attorneys that do not participate in broker to broker commission splits.
- Court appointed receivers, trustees, guardians, and sheriffs. Anyone engaged in or carrying out foreclosure sales.
- Administrators and executors of a will.
- On-site apartment managers.
- New home sales agents working for one builder or owner.
- Cemetery lot sales agents.
- A person selling his own property.
- An employee leasing or renting property for the owner.
- Corporate employees buying/selling/leasing or renting corporate property.
- Hotel/motel personnel.
- An attorney-in-fact.
- An auctioneer calling a real estate auction.
- Anyone selling mobile homes.
BUSINESS ENTITIES
Broker Assumed Business Name (DBA) is another name for the broker’s business that can be used by all sponsored sales agents and brokers associated with this broker.
ALTERNATIVE NAMES
- You must have the legal authority to use an assumed business name in the State of Texas before you can register the name with TREC.
- An individual broker can have an assumed business name.
- There is no provision under TREC Rules for a sales agent to have an individual assumed business name or “brand name”– any such name falls under the definition of team name and must meet those requirements.
- Nothing in TREC Rules prohibits a broker from using the word “team” or “group” anywhere in a broker’s licensed or assumed business name.
- A name used by an associated broker working under another broker that is not the associated broker’s licensed name must be a team name or alternate name.
- All three name types must be registered with TREC BEFORE you start to use them in
advertisements.
INSPECTORS AND APPRAISERS
- TREC has the authority to license real estate inspectors in Texas.
- TREC’s jurisdiction over real estate inspections is limited to inspections performed for a buyer or seller of real property in connection with a transaction.
- The Texas Appraisers Licensing and Certification board – TALCB - regulates real estate appraisers and administers the Texas Appraiser Licensing and Certification Act. TALCB is an independent subdivision of TREC with its own board.
STEPS IN OBTAINING A REAL ESTATE LICENSE:
- Meet the educational requirements.
- Submit an application with or without a sponsoring broker.
- Submit the required fees.
- Pass the state exam. Competency is determined solely by passing the state exam.
An applicant who fails the examination three consecutive times may not apply for reexamination or
submit a new license application unless the applicant submits evidence satisfactory to TREC that
the applicant has completed additional mandatory qualifying education listed in TRELA as follows,
after the date the applicant failed the examination for the 3rd time:
- Failing the national part of the exam must take 30 hours - Champions
recommends Principles 2 - Failing the state part of the exam must take 30 hours - Champions recommends
Principles 1 - Failing both parts of the exam must take 60 hours - Champions recommends
Principles 1 and 2 - Demonstrate Honesty, Integrity and Trustworthiness. An application for a license will be denied if an individual is unable to satisfy TREC as to their honesty, integrity and trustworthiness.
LICENSING REQUIREMENTS:
- Must be 18 years of age, or older.
- Be a citizen of the United States or a lawfully admitted alien.
- Comply with TREC requirements for a criminal background check.
A license will not be issued by TREC until this step is completed..
EDUCATIONAL REQUIREMENTS:
SALES AGENT’S LICENSE:
180 qualifying course hours from the 6 required classes.
BROKER’S LICENSE:
900 – classroom hours, including 30 hours of Real Estate Brokerage. The brokerage course must be taken within the 2 years prior to the broker application filing date.
4 years of active sales license holder experience, including at least one transaction per year, during
the 5 years preceding the date of the application.
360 points – 30 points per sale.
A 6-hour broker responsibility course is required for any sponsoring broker or designated broker of a business entity who sponsors one or more sales agents at any time during that broker’s current
license period.
LICENSE MAINTENANCE AND RENEWAL:
SUMMARY: At first renewal a sales license holder will have 278 total hours of education:
- 270 hours of QE and 8 hours of CE.
- 18 hours of CE is mandatory and all hours must be taken within the two year renewal period. CE must include:
4 hours of Legal 1,
4 hours of Legal 2,
3 hours of contract related coursework,
7 additional elective hours.
To summarize the above: an on time renewal with late education completed
within 60 days results in a $200 penalty.
An on time renewal with late education completed
after the 60-day period results in a $450 ($200 + $250) penalty.
(This summary describes an on-time renewal with late CE.)
ADDITIONAL POINTS:
- There is no time limit for TREC to deny an application.
- If the Commission denies an application for a license, the Commission shall send the applicant written notice of the denial.
An applicant may accept the denial or make a written request for a hearing on that denial.
If an applicant fails to request a hearing in writing not later than the 30th day after the date the notice denying an application is sent, the Commission’s denial is final.
- If an applicant applies without a broker and passes the test, there is no time limit for choosing a broker.
INACTIVE STATUS
TREC allows inactive status.
TREC will hold a broker or sales license for the licensed person.
- The license holder must still pay renewal fees and meet SAE requirements. Once past SAE
requirements, CE is not required for inactive status. - The time spent as inactive does not apply toward the four-year requirement for a broker’s
certification. - The inactive license holder may not engage in the real estate business.
- The inactive license holder does not need a sponsoring broker during this period.
- To activate an inactive sales license, apply through a broker and complete 18 hours of CE if
necessary.
To activate an inactive broker license, apply with a business address, pay $50 and
complete 18 hours of CE if necessary.
THE SALE OF EQUITABLE INTERESTS: WHOLESALE
A party who owns an option or sales contract on real property is said to have an equitable interest.
EQUITABLE INTERESTS IN REAL PROPERTY
- A person may acquire an option or enter into a contract to purchase real property and then
sell or offer to sell the option or assign or offer to assign the interest in the contract without
having a real estate license if the person: - does not use the option or contract to purchase to engage in real estate brokerage ; and
- discloses the nature of their equitable interest to any potential buyer.
- A person selling or offering to sell an option or assigning or offering to assign an interest
in a contract to purchase real property without disclosing the nature of that interest to a
potential buyer is engaging in real estate brokerage. - A license holder who is engaging in real estate brokerage by selling or buying or offering to
sell or buy an option or assigning or offering to assign an interest in a contract to purchase
real property must disclose to any potential seller or buyer that the principal is selling or
buying an option or assigning an interest in a contract and does not have legal title to the
real property.
TEAM NAMES
Team Name is a name used only by a team or group of one or more sponsored sales agents or brokers associated with this broker.
Team names must end in “team” or “group” and cannot contain the
words
“brokerage”, “company”, or “associates” or other similar terms.
