Texas Real Estate Brokerage Flashcards
What is the correct term for the firm where real estate agents work?
A. Real estate office
B. Real estate agency
C. Real estate brokerage
D. Real estate firm
C
What additional service might some brokerages offer?
A. Construction supervision
B. Property management
C. Legal representation
D. Financial lending
B
What does “brokerage” generally involve?
A. Buying property directly
B. Renting property for a fixed rate
C. Selling something through an intermediary for payment
D. Managing real estate without a license
C
- Under Chapter 22, Section 535.2 of the Texas Administrative Code, which of the following is a sales agent permitted to do?
A. Independently advertise properties they list under the brokerage
B. Enter into listing agreements using their own name, with broker consent
C. Perform brokerage activities only with the consent and in the name of their sponsoring broker
D. Accept commission payments directly from clients, with broker approval
C
Which of the following statements accurately reflects the legal and functional role of a sales agent in Texas real estate practice?
A. A sales agent may act independently once they pass the state exam and receive their license
B. A sales agent may perform real estate services without the broker’s consent as long as they are licensed
C. A sales agent may represent clients, advertise, and close transactions in their own name
D. A sales agent operates under the authority and supervision of their sponsoring broker, who must authorize all actions
D
What is one key distinction between a licensed broker and a licensed sales agent in Texas?
A. A broker may represent clients without being affiliated with a firm, while a sales agent must always be sponsored
B. A broker must advertise all listings under their personal name, not the firm’s
C. A sales agent may collect commissions directly once licensed
D. A sales agent is legally allowed to create listing agreements under their name, unlike a broker
A
- Which of the following best explains why a sales agent cannot independently enter into contracts or receive commissions, even if fully licensed?
A. The sales agent has not yet completed their apprenticeship period under Texas law
B. The broker must first give power of attorney to the sales agent for them to act legally
C. The sales agent’s license grants authority only through the sponsoring broker, not independently
D. Only brokers can legally represent clients in residential transactions under Texas state law
C
Under IRS classification, how is a Texas real estate sales agent typically categorized for income tax purposes?
A. Traditional employee
B. Independent contractor
C. Statutory nonemployee
D. Statutory employee
C
Why is a licensed sales agent not considered a true independent contractor under IRS definitions?
A. Because they must work exclusively in the broker’s name and under the broker’s supervision
B. Because they are salaried and receive W-2 forms
C. Because they work for multiple brokerages at once
D. Because their broker pays their federal income tax directly
A
What could potentially void the statutory nonemployee classification for a sales agent under IRS rules?
A. The broker providing business cards and signs with their name
B. The broker supervising transaction procedures
C. The broker paying for the agent’s continuing education
D. The broker withholding income taxes and paying unemployment insurance on behalf of the agent
D
Which of the following correctly describes the tax responsibilities of a statutory nonemployee real estate sales agent?
A. The broker pays all employment-related taxes on their behalf
B. The sales agent is responsible for paying their own income tax, Social Security, and Medicare taxes
C. The broker deducts taxes and files them quarterly for the agent
D. The IRS exempts statutory nonemployees from self-employment tax
B
According to TREC Rule 535.2(i)(5), when must a sponsoring broker provide coaching and oversight to a sales agent?
A. During their first three total real estate transactions
B. Every time they conduct a real estate transaction involving legal documents
C. The first three times they perform any new type of real estate brokerage activity
D. Only when handling transactions valued over $500,000
C
What is the broker’s legal responsibility regarding a newly licensed agent’s actions in real estate transactions?
A. The broker shares responsibility only if they were directly involved
B. The broker is legally responsible for all actions of their sponsored agents
C. The broker is only responsible if there is a written contract between them
D. The broker is not responsible unless the agent violates federal law
B
Which of the following best describes a key expectation for all real estate sales agents, regardless of experience level?
A. They must complete monthly closings to stay in good standing
B. They should handle transactions independently after passing the exam
C. They are expected to continue training throughout their career
D. They must specialize only in residential sales or leasing
C
A broker receives funds from a client intended for holding during a property transaction. According to general responsibilities outlined for brokers, what is the broker required to do?
A. Deposit the funds into their personal business account within 5 business days.
B. Return the funds immediately to the client to avoid liability.
C. Place the funds into a client trust account and document the transaction.
D. Allow the sales agent handling the deal to manage and safeguard the funds.
C.
Which of the following scenarios would be a violation of a broker’s general responsibilities as outlined in the material?
A. broker allows a licensed sales agent to operate under the firm without checking if their license is current.
B. broker works from home in a residential area with proper zoning approval.
C. broker supervises their sponsored agents and maintains a client trust account.
D. broker makes themselves available to answer questions from agents during regular business hours.
A
Which of the following statements best describes a broker’s responsibility related to physical office locations?
A. A sales agent may open a branch office as long as their broker approves it.
B. A broker may operate multiple offices under one license without restriction.
C. Only a licensed broker may open branch offices, and each may require separate licenses.
D. TREC automatically inspects all broker offices every six months.
C
Which scenario violates the broker’s obligation to maintain sales agent licenses?
A. A broker monitors license expiration dates but doesn’t check for any violations during the term.
B. A broker renews their own license and assumes their agents are also in compliance.
C. A broker prevents a sales agent from working after their license expires.
D. A broker informs TREC when a sponsored agent leaves the brokerage.
B
Which of the following is the broker not required to do regarding office policies and procedures?
A. Provide a written manual, either in hard copy or online.
B. Make sure all license holders read and acknowledge the manual.
C. Submit the manual annually to TREC for approval.
D. Update the manual as laws and practices change.
C
If a sales agent’s license expires and enters the late renewal period, what is the agent allowed to do?
A. Continue conducting real estate activities while waiting for renewal.
B. Retake the license exam without any penalties.
C. Renew the license but must stop all real estate activities until it’s active again.
D. Immediately start working under a temporary extension.
C
Which of the following best defines trust funds in the context of real estate brokerage?
A. Broker’s commission held in a separate account
B. Money or value received by a broker on their own behalf
C. Client funds received by a broker on behalf of another party
D. Personal savings of a real estate agent
C. Client funds received by a broker on behalf of another party
Which of the following would most likely be classified as a trust fund in a real estate transaction?
A. A client’s payment for staging services
B. A broker’s personal investment in a listing
C. An earnest money check submitted with a purchase offer
D. A reimbursement for marketing costs
C
If a broker accepts trust funds, which of the following is a required step they must take?
A. Deposit funds into the brokerage’s operating account
B. Notify the Department of Real Estate within 10 days
C. Open a separate trust fund account in a federally insured institution located in the broker’s state
D. Immediately forward the funds to the seller
C
What is the primary purpose of designating a broker as a trustee of a trust account?
A. To give the broker authority to use the funds as needed
B. To protect the broker from liability
C. To ensure accountability for client funds
D. To authorize third-party vendors to access the account
C
Which of the following correctly identifies who can serve as a designated broker for a licensed business entity in Texas?
A. Any person with an inactive Texas real estate license
B. A licensed attorney authorized to act as a registered agent
C. A broker who is also an officer, manager, or general partner of the business entity
D. Any sales agent with at least four years of experience
Correct Answer: ✅ C
Explanation: A designated broker must have an active Texas broker license and be an officer (corporation), manager (LLC), or general partner (partnership) of the business entity they represent.
