Unit 7: Texas Real Estate License Act Flashcards
To get a real estate license in Texas, you must pass an exam.The exam tests your understanding of real estate principles and Texas laws.
The most important law on the exam is?
The most important law on the exam is the Real Estate License Act (RELA).
It’s found in Chapter 1101 of the Texas Occupations Code.
This law sets the rules for how real estate agents and brokers must operate and lists the penalties for noncompliance.
Do all states and provinces have real estate license laws?
Are they the same?
- YES all U.S. states, D.C., and Canadian provinces.
- No, they are not the same but they’re similar.
The details vary from place to place (like education requirements, fees, or procedures)
However, many states follow a similar structure because they use the “pattern law” created by the License Law Committee of the National Association of REALTORS® (NAR) as a guide.
Groups like ARELLO help states keep their rules consistent and fair.
What is the Pattern Law?
Pattern law is basically a template or model law that was created to help states write their own real estate license laws.
🔧 Here’s how it works:
The License Law Committee of the National Association of REALTORS® (NAR) created a sample law.
It includes rules, requirements, and standards for licensing real estate agents and brokers.
They called it a “pattern law” because it’s meant to be copied or followed as a pattern.
📍 Why is this important?
Every state writes its own real estate license laws, but instead of starting from scratch, they often use the pattern law as a starting point.
That’s why many state laws look similar — even though they’re technically different.
Think of pattern law like a template recipe:
The recipe tells you how to make a dish. Each chef (state) might add their own twist, but they all start with the same basic formula.
Pattern law = A model law created by NAR to help states write consistent, high-quality real estate license laws.
What is the role of ARELLO?
ARELLO (Association of Real Estate License Law Officials):
Helps promote consistent policies and standards in real estate license law enforcement and administration around the world
ARELLO is an international organization that helps make sure real estate license laws are:
Fair
Consistent
Properly enforced
It’s made up of real estate regulators — the people in charge of licensing and discipline in each state or country.
What is the purpose of real estate license laws?
The purposes of the law are to
- protect the public from dishonest or
incompetent brokers or sales agents,
- prescribe certain minimum standards and qualifications for licensing brokers and sales agents, - maintain high standards in the real estate profession,
- and protect licensed brokers and sales agents from unfair or improper competition.
summary: To protect the public, set standards for licensees, maintain professionalism, and prevent unfair competition.
What agency administers the Texas Real Estate License Act?
The Texas Real Estate Commission (TREC).
How many members are on TREC and how are they chosen?
9 members: 6 brokers and 3 public members with no affiliation with real estate brokerage, all appointed by the governor and confirmed by the state Senate.
Who appoints the TREC chair?
The governor.
What is the Sunset Act in Texas?
Every Texas agency is reviewed periodically to see if it should continue to exist. This review is done by the Sunset Commission.
What happens during a Sunset review?
The Sunset Commission evaluates the agency’s purpose, efficiency, and need, and makes a recommendation.
TREC has passed its Sunset reviews four times.
Last review: 2007
Next one: 2019
What are the BASIC PROVISIONS OF THE TEXAS REAL ESTATE LICENSE ACT?
Basic Provisions of the Texas Real Estate License Act (TRELA) :
-Broker vs. Sales Agent
-Licensing Procedure in Texas
-What a Real Estate License Allows You to Do
-Professionalism & Ethics
-Real Estate Brokers Do Not Give Legal Advice
-Who Does NOT Need a License (Exemptions)
What is a broker in Texas real estate?
A licensed professional who can run a real estate brokerage business and supervise agents.
What is a sales agent in Texas real estate?
Someone with an active license who must work under a broker to perform real estate brokerage transactions.
What must you do to get a real estate license in Texas?
Pass an examination to demonstrate knowledge of real estate principles and practices. In addition
to the examination, Texas licensing requirements relate to age, citizenship, education,
apprenticeship, and residency.
Summary: Pass an exam and meet age, residency, education, and other requirements.
In one of the basic provision of the TRELA, “Professionalism & Ethics”, Real estate agents should do what 3 things?
Adhering to licensing and fair housing laws
Pledging to comply with the Canons of Professional Ethics and Conduct
Taking advantage of every opportunity to expand
professional knowledge and ability.
What does a Texas real estate license allow you to do?
Sell, lease, rent, auction, or exchange property for others, for compensation.
How often must licenses be renewed?
Regulary. Real estate licenses are issued for definite terms and must be renewed within specified time limits
Each license is a personal right and terminates when?
On the death of the license holder or dissolution of the business entity.
The activities of each licensed person or entity are subject to control by whom?
of TREC as prescribed by the Real Estate License Act. For this reason, every licensed person
must be thoroughly familiar with the act.
Who is exmpt from needing a license?
You don’t need a license if you’re:
- Selling your own property
- A trustee, executor, or court-appointed rep
- A public official doing their job
- A licensed Texas attorney
Texas law prohibits who? from practicing law and giving legal advice in the state.
nonmembers of the state bar. they are not lawyers
No — it’s against the law unless they are also a licensed attorney.
If clients don’t understand a contract, the broker must say:
👉 “Talk to a lawyer.”
To ensure valid sales contracts, license
holders should advise sellers and buyers to _____ if they do not understand the
provisions of the various contract forms that the act requires license holders to use.
secure legal counsel
What can happen if a broker gives legal advice?
TREC can suspend or revoke their license for unauthorized practice of law.
What Is TRELA?
TRELA stands for the Texas Real Estate License Act.
It’s the main law that controls how real estate is practiced in Texas.
It tells agents and brokers what they can and can’t do.
When was TRELA originally passed?
1949
Where is TRELA now found in Texas law?
Title 7, Chapter 1101 of the Texas Occupations Code
Who can change TRELA?
Only the Texas Legislature with the governor’s signature
How often is the TRELA reviewed?
Every 2 years (each “biennial session”)
What did the 2017 amendments require for wholesalers?
“Wholesalers” (unlicensed persons who buy and sell options or equitable interests in real property)(unlicensed people who flip property contracts) must now disclose their role to buyers if they want to be exempt from needing a license. If a person engaging in such acts
fails to provide the disclosures to potential buyers, he is considered to be engaging in real
estate brokerage.
What are three key ad rules from the 2017 amendments?
Ads by license holders:
- Can’t be required to include the words “broker,” “agent,” or their license number.
-Must not suggest that a sales agent runs the business (only brokers can do that).
-Must include the name of the sponsoring broker.
What were some of the 2015 Amendments ?
Small changes, such as:
- Changed “salesperson” → “sales agent”
- Changed “core” education → “qualifying” education
- Gave TREC more power to:
- Decide how agents give the agency disclosure notice
- Raise continuing education requirements if needed
The Real Estate License Act is administered by whom?
The Real Estate License Act is administered by TREC, which is authorized to pass rules to
interpret, define, and enforce the act’s provisions.
Just helps explain what the law means in daily practice
What’s the difference between TRELA and TREC Rules?
TRELA is the law; TREC Rules explain how to follow it
The Rules expand on the law and have the effect of law; however, they are not “the
law.”
Just Helps explain what the law means in daily practice
The Rules of the Texas Real Estate Commission
may be amended by ____ and are subject to review by the _______.
- the Commission
- the Legislature.
It can be changed more easily than TRELA itself
According to the TRELA, what is a broker?
A broker is someone who (for pay or commission, or the expectation of it) does any of the following for someone else:
Examples of Broker Activities:
Sells, buys, leases, or exchanges property
Offers or negotiates real estate deals
Lists or tries to list a property
Auctions or offers to auction property
Works with options (like lease-to-purchase deals)
Helps find property for a buyer or tenant
Helps find buyers or tenants for a property
Accepts rent payments for someone
Gives written pricing estimates (NOT appraisals)
Advises owners on short sales
Also considered a broker:
Someone hired by a property owner to sell their land
Someone who charges upfront fees to list/promote real estate (like in magazines or referral websites)
🔑 Key Idea: A broker does real estate business on behalf of someone else and gets paid or expects to be paid.
According to the TRELA, what is a Sales agent?
A licensed person who works under a broker to perform the broker’s real estate duties
You Don’t Need a License If You Are:
Buying/selling real estate for yourself, even to resell it later
Working as an employee of a business that owns real estate (not as an independent contractor)
A Texas attorney (though they can’t get commission unless they’re a party to the deal)
A licensed auctioneer just auctioning property
A trade association running a listing platform (like MLS)
Doing clerical/admin/secretarial work — as long as you don’t pretend to be a broker or solicit deals
Do those who complete Short sales require a license?
If you help a homeowner negotiate or complete a short sale, you must have a real estate license.
That means you can’t advise a seller on how to deal with their bank to avoid foreclosure unless you’re licensed.
Both sales agents and brokers can perform the same real estate tasks. How are they different?
A sales agent must work under a broker.
The broker is legally responsible for what the sales agent does.
“Real Property”, “Property”, and “Real Estate” Are these the same thing or diffferent?
They are the same in this Law.
What Is “Valuable Consideration?
This means anything valuable that’s given in return for services, not just cash.
Examples:
Money
A gift worth more than $50
Rent bonuses
Discounts
So if you’re being paid or rewarded in any form to help someone with real estate, it could be considered acting as a broker — and you need a license.
TREC?
TREC is the state agency that enforces the Texas Real Estate License Act (TRELA) — they oversee licensing, discipline, rules, and real estate education.
Who’s On the Commission? (How many? Type of member? How much experience?)
9 total members
6 must be licensed brokers (with 5 years experience)
3 must be public members (regular citizens)
All are appointed by the Governor and confirmed by the Senate
Everyone must be a qualified voter in Texas
Who CANNOT Be a Public Member?
A public member (one of the 3) cannot:
Be licensed in real estate or related industries
Be employed by or manage a business regulated by TREC
Own 10% or more of a company regulated by TREC
Get significant benefits from TREC (like money or services)
👉 The idea is to prevent conflicts of interest. Public members should be neutral outsiders.
What is the Term Length for members of the Commission?
Members serve 6-year terms
Terms are staggered — every 2 years, 3 members rotate out
If someone leaves early, the Governor appoints a replacement
Who picks the Presiding Officer (must be a broker)?
The Governor
Every February, the Commission elects:
Assistant Presiding Officer
Secretary
What 3 positions form the Executive Committee?
Presiding Officer
Assistant Presiding Officer
Secretary
New members can’t vote or participate until they complete a?
Mandatory training program about:
TRELA laws
How TREC works
Budget and audits
Open meetings law, public info law, ethics, etc.
Even if they travel for this before being sworn in, they get reimbursed.
How much do members get paid daily? Do they get reimbursed for travel and necessary expenses
Members earn $75/day for official duties
- Yes they do
What is Quasi-Judicial Immunity?
Commission members are protected from lawsuits when doing their job legally.
This means if they make a decision as part of their TREC duties (like revoking a license) and someone sues — they’re legally protected.
