TREC - FAQ Study Guide Flashcards
Texas Real Estate Exam
Does TREC consider a sign on a building to be an advertisement?
Yes. If a sales agent’s name or team name is on a building sign, the broker’s name must also be present (in at least half the size). A broker’s name alone is okay. [Rule 535.155(b)(1)]
When can an agent say that they “sold” a property in an advertisement?
Any agent who worked with the seller or the buyer in a transaction that resulted in the sale of a property may correctly state in an advertisement that they “sold” the property. If the license holder did not participate in that specific transaction, he cannot state or imply that his actions resulted in the sale of that property. An example of a misleading advertisement of this nature would be if a license holder sent out “Just Sold” postcards with her contact information and a picture of a recently sold property that she did not help to sell. She didn’t state that she sold it but an average person reading the card could surely and reasonably imply an erroneous claim of involvement. Another potential example of a misleading advertisement is a license holder who included a list of “Recently Sold Homes” in his advertisement that included many properties where he had no role in the transaction, but he failed to make it clear in the ad which – if any – of those transactions he was involved in. Under Texas law, a license holder may not “create a misleading impression” in their advertisement. A broker must review all ads to ensure this result is avoided.
Does TREC consider promotional items and sponsorships to be advertising?
Yes. If a sales agent’s name or team name is on them, the broker’s name must also be present (in at least half the size). A broker’s name alone is okay. [Rule 535.155(b)(1)]
Does TREC consider a license holder’s URL or domain name or email address to be advertising?
TREC does not consider URLs or email addresses to be advertisements in and of themselves. However, an advertisement that contains a URL or email address of a sales agent that includes a title that implies responsibility for a brokerage violates TREC Rule 535.155(d)(4). Further, TREC will consider all advertisements in their entirety and if an email address or URL] makes the advertisement misleading or deceptive, it violates the law. [Rule 535.155(b)(4) and TRELA §1101.652(b)(23)]
Is a license holder required to put their license number on a sign or other advertising?
No.
Can the team name used by an associated broker be the same as the assumed name used by the associated broker when he or she is not associating with another broker?
Yes, if the assumed business name of the associated broker meets the requirements for a team name since a team name must be used when the associated broker is associating with another broker. Keep in mind that the associated broker registers the assumed business name that is used when they are not associating with another broker and the broker that they are associating with registers the team name being used when associating with that broker. [Rule 535.154(a)(5)]
Note on Exclusive Name Use: TREC does not, and is not, required to vet names submitted for registration as an assumed name or team name for exclusivity. A brokerage should decide whether it makes good sense from a liability exposure standpoint to allow an associated broker (or a sales agent who owns a business entity) to use the same name for a team name under the brokerage that they have registered as an assumed name under their own licensed business entity.
May a license holder who is a rental locator advertise that they will pay a prospective tenant a portion of their fee received from an apartment complex if the tenant uses the locator’s services?
Yes, as long as the ad complies with Rule 535.155 (effective May 15, 2018), which requires the consent of the party the license holder represents in a transaction. When a rental locator represents an apartment complex, the locator needs the consent of the apartment complex. When the rental locator represents a tenant and not an apartment complex, as demonstrated by a written representation agreement or other evidence of representation, the locator is not required to obtain the consent of the apartment complex because the complex is not his client. Regardless of representation, however, it is misleading advertising to advertise a rebate for an apartment complex that the locator knows has a “no rebate” policy.
A residential service company is paying me a fee to advertise for it. Do I have to disclose that fee to my client and use a TREC form?
Yes and yes. You must also provide the client with the TREC Disclosure of Relationship with Residential Service Company form (RSC-2).
Can an associated broker use his or her own assumed business name in advertising?
No. A name used in advertising by an associated broker that is not the associated broker’s licensed name must be registered as a team name by the broker he or she is associated with and meet all the requirements for a team name. [TRELA §1101.652(b)(23) and Rule 535.154(a)(5)]
Can an associated broker refer to himself or herself as a “broker” in an advertisement?
No. This could “tend to mislead” the public that the associated broker is in charge of the brokerage operation. The public needs to know the broker with whom they will have a legal agreement (remember listing agreements, etc. are taken in the name of the broker, not the sales agent or the associated broker). The associated broker could use “associated broker”, “broker associate” or “associate broker”, since that distinguishes his or her role. [TRELA §1101.652(b)(23)]
What is an associated broker?
Associated broker means a broker who associates with and is paid through another broker under a relationship that is intended to be a continuous relationship, including but not limited to, an employment or ongoing independent contractor relationship. [Rule 535.154(a)(3)]
Can I advertise a service provider such as an inspector, moving company, or repair contractor on my website?
Yes, but if you offer, recommend, or promote the use of a service provider and expect to receive compensation from the service provider when a party uses the service, the ad must disclose that you may receive the compensation. [Rule 535.155 (effective May 15, 2018)] You may advertise an inspector’s services, however, an inspector may not pay a fee or other valuable consideration for (1) a referral, (2) inclusion on a list of inspectors or preferred providers, or a similar arrangement; or (3) inclusion on a list of inspections contingent on other financial agreements. [Rule 535.220(e)(3)] Also, acceptance of a fee from a service provider may violate the Federal Real Estate Settlement Procedures Act (RESPA), which prohibits certain referral fees and kickbacks.
If a sales agent’s last name is contained in the broker’s licensed or assumed business name, how can the sales agent let the consumer know the agent is not the broker?
To avoid an advertisement that implies the sales agent is responsible for the operation of the brokerage in this situation, the sales agent should make sure that the ad clearly indicates that the sales agent is not the broker. One simple way to accomplish this is to put “sales agent” next to the agent’s name. Using “REALTOR” or “agent” is insufficient to distinguish the license status of sales agent. [TRELA §1101.652(b)(23) and Rule 535.155(d)(7)]
Who registers an assumed business name, team, or alternate name?
Assumed Business Name: Broker [Rule 535.154(d)(1)]
Team Name: Broker [Rule 535.154(c)(3)]
Alternate Name: Individual License Holder [Rule 535.154(b)(1)]
Remember – all these types of names must be registered with TREC before use in advertising.
I only represent buyers. Can I advertise that I will rebate a part of my compensation to the buyer?
Yes, as long as the advertisement complies with Rule 535.155 (effective May 15, 2018) regarding any restrictions that might apply. However, a rebate to a buyer from a license holder may be subject to restrictions by the buyer’s lender. You should contact your broker or private attorney to find out how you should notify and obtain the consent of the buyer’s lender to address any impact the rebate may have on the determination regarding the buyer’s credit worthiness.