T. Commission Duties and Powers Flashcards
The Texas Real Estate Commission (TREC) does NOT have the right to do which of the following?
A. Impose fees it determines are necessary.
B. Prohibit a license holder from using a contract that has been drafted by an attorney.
C. Enforce the adopted rules concerning conduct and ethics.
D. Change the design of the TREC seal.
B. Prohibit a license holder from using a contract that has been drafted by an attorney.
TREC has a great deal of power and responsibility under TRELA. Since this question is asking which of these things TRELA can NOT do, let’s focus on that. (Note: You won’t see a lot of these “negative” questions in your licensing exam, but you may see a few. Make sure you read every word of each question so you catch words like “not” or “except,” which indicate a negative question.) Let’s start with answer option A. Can TREC impose fees? Definitely! They can and do impose and collect licensing and renewal fees, fines, and administrative penalties. Therefore, answer option A is incorrect. Let’s skip to answer option C. Can TREC enforce the adopted rules concerning conduct and ethics? Yes again. TREC is responsible for both adopting and enforcing those rules, which means answer option C is incorrect. Onto answer option D. While you haven’t heard a lot about TREC’s seal, TREC is also responsible for adopting and changing that seal. This leaves us with answer option B. TREC establishes a lot of rules surrounding real estate contracts, including the rule that Texas license holders must use promulgated forms. However, as you probably recall, there’s an exception to the rule about promulgated forms: TREC may not prohibit a real estate license holder from using a contract form for the sale, exchange, lease, or option of an interest in real property if that contract was prepared by a property owner or by an attorney. So, if you’re working with a client who prefers that his attorney writes the sales contract, TREC can’t legally prohibit that.
George is a member of the Texas Education Standards Advisory Committee (ESAC) and is currently reviewing a real estate program that administers courses of study to post-licensing students. The committee has received several complaints that these courses are of poor quality. What authority does the review committee have in these cases?
A. Shut down the program and the company that administers the courses of study.
B. Revoke the accreditation of the education program.
C. Recommend that TREC suspend the program and the company that administers the courses of study.
D. Fine the program for every day the courses perform poorly.
C. Recommend that TREC suspend the program and the company that administers the courses of study.
ESAC (also known as the review committee) has some authority with regard to courses of study, but it’s pretty limited. ESAC is responsible for reviewing and evaluating the performance of any educational program that is performing below TREC’s established standards. While ESAC doesn’t have the authority to suspend a program’s accreditation, it does make recommendations about the licensing and regulation of education providers, instructors, and courses to TREC. TREC has the authority to suspend the accreditation of any educational program that’s performing below TREC’s established standards.
TREC receives a signed, written complaint about licensee Noelle from a consumer. After considering the complaint, TREC determines there’s reasonable cause to look into the complaint to determine if Noelle is in violation of TRELA. What happens next?
A. TREC must initiate an investigation by obtaining statements from the licensee, complainant, and witnesses, and obtaining records and documentation.
B. TREC may hold an informal meeting with all relevant parties asked to attend.
C. TREC must promptly notify Noelle in writing that they’re received a complaint about her.
D. A formal hearing will be held in front of a judge, depending on the validity and seriousness of the complaint.
C. TREC must promptly notify Noelle in writing that they’re received a complaint about her.
Every answer option is accurate, but only one of these things is what happens “next.” These types of questions can be tricky, because you can’t easily look at the options and recognize a couple of answers that are clearly untrue. Again, if you miss the key words of the question, “what happens next?” then you could inadvertently choose the incorrect answer. So slow down and make sure you’re reading every word of the question. Just because an answer option is true, that doesn’t mean it’s the correct answer to the question being asked. Now let’s look at our answer options. These are all things that occur after a signed, written complaint is received from a consumer, and they happen after TREC determines that the complaint is a possible violation of TRELA. TREC must initiate an investigation and obtain supporting documentation. An informal hearing may be held. A formal hearing will be held. But the very next step after TREC determines there’s been a possible violation of TRELA is for TREC to inform the person who’s been accused. In other words, answer option C is correct.
Texas license holder Alan receives a notice of violation from TREC’s executive director. This notice summarizes the alleged violation, includes the executive director’s recommendation that an administrative penalty in the amount of $2,500 be imposed upon Alan, and tells Alan he has the right to a hearing to contest the alleged violation and/or the recommended penalty. Alan must submit the written notification for a hearing within 20 days of receiving the notice. Unfortunately, on day 22, he realizes he forgot to mail the written request for hearing. What happens now?
A. Alan can file an emergency late hearing request with TREC, provided he does so within 30 days of receiving the notice of violation.
B. By law, Alan must be given the opportunity the contest this determination, so TREC may not make any final determination or impose any penalty until Alan has waived this right in writing.
C. Alan’s license will be temporarily suspended until he schedules and attends the hearing. If he hasn’t contacted TREC within 90 days from the date of receiving the notice of violation, his license will be suspended until he’s paid the recommended penalty and any late fees and/or fines.
D. TREC will, by order, approve the determination and order payment of the recommended penalty, which Alan must pay.
D. TREC will, by order, approve the determination and order payment of the recommended penalty, which Alan must pay.
If the alleged violator wishes to have a hearing about the determination of the violation and/or recommended penalty, he must—no later than the 20th day after the date he receives the violation notice—submit a written request for a hearing. TREC isn’t going to beg an alleged violator to take advantage of his right to that hearing—or have him file an emergency late hearing request (which isn’t even a real thing) to get a hearing. That means answer options A and B are incorrect. On the other hand, neither is TREC going to go through all the trouble of forcing a hearing on someone, suspending his license, and so on, so we can exclude answer option C, which is also incorrect. If the violator doesn’t submit the written hearing request by the 20th day, TREC will approve the determination and order Alan to pay the recommended penalty.
Texas resident Sonny, who doesn’t hold a real estate license, helps his brother’s neighbor, Nicole, sell her house. He charges her a commission of $3,000, which she happily pays. Which of the following is true in this situation?
A. Nicole has committed a misdemeanor.
B. Sonny has committed a felony.
C. Nicole may have to pay a penalty of as much as $5,000 for paying an unlicensed person.
D. Sonny may have to pay administrative and civil penalties.
D. Sonny may have to pay administrative and civil penalties.
This is the type of question you’ll see frequently, in which none of the answers contradict each other, and you’re left to the process of elimination. Let’s start with the question. We know one thing: Someone’s done something wrong. Is it Nicole, the seller? No. She is a consumer, and presumably doesn’t know that unlicensed people may not receive a commission for performing real estate activities for another person. Considering that, we can quickly eliminate answer options A and C. Now let’s consider the type of crime this is. Performing acts of real estate brokerage without a license is a misdemeanor, not a felony. This means that answer option B is incorrect. A misdemeanor of this type is punishable by an administrative penalty of as much as $5,000 per violation, plus a civil penalty up to a maximum of three times the commission earned. This means that answer option D is correct—and that Sonny is about to be out several thousand dollars.
TREC has a great deal of authority. In addition to enforcing the provisions of TRELA, TREC also has the authority to ______.
A. Bring legal action and criminal penalties against a person who violated TRELA
B. Sentence those who violated TRELA to jail
C. Hire a bounty hunter to arrest a non-licensed person who violated TRELA
D. Banish a Texas resident from the state for violating TRELA
A. Bring legal action and criminal penalties against a person who violated TRELA
TREC has a great deal of authority. However, let’s first focus on what TREC doesn’t have the authority to do: Sentence people to jail. No. It can bring about charges, but TREC itself doesn’t sentence people to jail. So, answer option B is wrong. How about bounty hunters? Do you remember seeing any mention of TREC having bounty hunters on the payroll? No, because they don’t. That’s going a bit far. Therefore, answer option C is incorrect. Let’s look at answer option D. Does TREC have the authority to banish someone from the great state of Texas? That’s a big N-O. Don’t mess with Texas—or TREC—to be sure, but TREC’s not going to run an errant licensee out of town on a rail. As you can see, the only answer option left is A, and that’s the correct one. TREC has the authority to bring injunctive action and file criminal charges against those who violate TRELA if it determines such action is appropriate.
The Recovery Trust Account exists for the benefit of whom?
A. The account exists for the benefit of the public.
B. The account exists for the benefit of agents who didn’t sell any properties in the previous year to assist them with business expenses for the following year.
C. The account exists for the benefit of brokers and their commission payments.
D. The account exists to pay the members of TREC annual compensation.
A. The account exists for the benefit of the public.
Let’s begin by reviewing what you know about the Recovery Trust Account. TREC regulates and maintains the Recovery Trust Account, and TREC is responsible for charging and depositing fees into the account. Licensees and certificate holders pay into the Recovery Trust Account when their licenses/certificates are renewed and when original certificates are issued. The funds for the account are built through the administering of fees by the commission. Who is eligible to receive funds from this account? Texas license holders whose business has hit a downturn? Brokers, so they can make their commission payments? No to both of those. All Texas license holders are on their own to make ends meet, make their businesses successful, and yes, in the case of brokers, to pay the commissions they owe to their sponsored licensees and other brokers. Therefore, answer options B and C are incorrect. TREC members don’t earn an annual salary (and they only make a $75 daily stipend on the days they do commission work), so answer option D is incorrect. The Recovery Trust Account is there for the benefit of the public. Specifically, that account is there to reimburse individuals or consumers who suffer damages or loss at the hand of a sales agent, broker, certificate holder, or any of their employees.
