Principles of Real Estate Ch. 7

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  1. ARELLO
    the Association of Real Estate License Law Officals--promotes uniform policies and standards in the fields of license law administration enforcement.
  2. Administration of the Texas Real Estate License Act (TRELA) is vested in the _________________, which by statute is composed of _____ members.
    • -Texas Real Estate Commission (TREC)
    • -nine; 3 members of the public who may have no affiliation with real estate brokerage, and 6 are real estate broker-members.
    • -staggered terms of six years
  3. The commissioners are appointed by the ________ with confirmation by the state senate.
    governor
  4. In Texas, a license is required to sell, purchase, rent, lease, auction, or exchange real estate for others and for compensation. Who is exempt from the license law?
    Owners dealing with their own property, trustees, executors, receivers, and others operating under court orders, public officials, and Texas attorneys at law.
  5. The License Act authorizes the Texas Real Estate Commission to suspend or revoke a broker's or salesperson's license for the unlawful practice of law.
    true
  6. The License Act can be changed or amended only by the action of....
    the state legislature and with the governor's signature.  It has been amended in almost every biennial session of the Texas Legislature; 2011
  7. In addition to rules, TREC website has a "question and answer" section from the Enforcement Division, which can provide interpretations from many questions left unanswered  by the License Act itself.
    true
  8. What is the Sunset Act in Texas?
    A periodic review of each state agency, commission, and board to evaluate its purpose, efficiency and need.
  9. Subchapter A contains?
    -section 1101.003?
    -section 1101.005
    • -official definitions of most terms used in the act
    • -describes 11 core courses 
    • -lists the exemptions from licensing requirements
  10. Subchapter B contains what info?
    • establishes the composition of the Texas Real Estate Commission, which oversees the administration of The Real Estate License Act.
    • -requirements for commissioners, length of membership terms, grounds for removal, training.
  11. Subchapter C contains what info?
    • provides for the employment of personnel fro the day-to-day administration of the License Act.
    • -1101.101(c); is the law that regulates real estate inspectors and establishes the educational and examination requirements for licensing of professional inspectors, real estate inspectors, and apprentice inspectors.
  12. Subchapter D contains what info?
    • outlines the duties of the Texas Real Estate Commission, among them to adopt and enforce rules necessary to administer the License Act and to establish standards of conduct and ethics for persons licensed under the act .  
    • -TRELA Section 1101.152 lists the fees that can be charged by TREC, and Rule 535.101 specifies the amount for each fee.
  13. Subchapter E contains what info?
    the procedures for notifying the public about filing complaints. The statue of limitations for investigating a complaint is four years.
  14. Subchapter F contains what info?
    provides for the creation of the Texas Real Estate Broker-Lawyer Committee; outlines the duties of the committee for drafting and revising standardized contract forms to be used by licensees.
  15. Subchapter G contains what info?
    Accreditation and approval of real estate educational programs and courses of study
  16. Subchapter H contains what info?
    • License Requirements; lists the privileges and rules of obtaining a license, what a you must to in order to obtain and keep your real estate license.
    • -criminal history of license applicant or renewal; submit fingerprints, criminal history check.
    • -eligibility requirements for license
    • -license renewal requirements
    • -inactive license causes
  17. All salesperson and broker license applicants must be fingerprinted and submit to a criminal history check.
    true
  18. Subchapter I contains what info?
    • examination; the applicant must satisfy the examination requirement within one year from the date the application is filed.
    • -exam
  19. Subchapter J contains what info?
    license renewal requirements and procedures.  -time for renewal, fees, another background check
  20. A person may renew a license that has been expired for six months..
    false, a person may not renew a license that has been expired for six or more months.  They would have to meet the original license requirements and retake the state exam.
  21. You need mandatory continuing education classes as prerequisites to renew your license. In what subchapters can you find this info?
    H and J
  22. Subchapter K contains what info?
    requires a right-of-way agent to register with the Texas Real Estate Commission unless a person is licensed as a real estate broker or salesperson.
  23. A right-of-way agent is....
    a person who sells, buys, leases, or transfers an easement or right-of way for another for compensation.
  24. What is an easement?
    A right to use the land of another for a specific purpose, such as for a right-of-way or utilities. 

    -there are several types of easements, but that is what it is.
  25. Right-of-way
    the right or privilege, acquired through accepted usage or contract, to pass over a designated portion of the property of another.
  26. Subchapter L contains what info?
    • describes requirements for a broker's maintaining a fixed office address and mandates title notice and property disclosures.
    • -defines the agency relationships that may exist  between brokers and buyers, sellers, landlords, or tenants.
  27. Subchapter M contains what info?
    Provides for a real estate recovery trust account.
  28. What is a real estate recovery trust account?
    • This fund is to be used to reimburse members of the public who have been financially injured or damaged by the actions of a real estate broker or salesperson, a certificate holder, or an employee or agent of the licensee.
    • -established by a $10 deposit from each broker and salesperson licensee to reimburse aggrieved persons who suffer actual damages by reason of acts committed by a licensed.  Limits are $50,000 for claims arising out of the same transaction and $100,000 for claims against any one licensed.
  29. License and certificate holders must inform the public of the availability of payment from the real estate recovery trust account.
    true
  30. Subchapter N contains what info?
    lists possible actions by a licensee that can result in the revocation or suspension of a broker's or salesperson's license or right-of-way agent's certificate of registration.
  31. Violation of other state laws could also result in license revocation.
    true
  32. Licensees are required to provide a mailing address, phone number, and email address to TREC and to report any change in the listed contract information within ___ days after change occurs.  No fee is charged of mailing address.
    10
  33. A renewal notice is emailed ______ days before expiration of the current license. Unexpired licenses may be renewed with a credit or debit card on the TREC website, or mailed with an extra $20 processing fee.
    60-90 days
  34. It is a licensee's responsibility to know the license expiration date and to...
    complete the required SAE or MCE courses, and to ensure that TREC has a correct email address.
  35. What are the three additional laws, that are not part of TRELA, but relate to real estate promotional practices?
    • -the National DO Not Call Registry
    • -the CAN-SPAM Act,
    • -the Junk Fax Prevention Act.
  36. A licensed broker cannot pay a commission or compensate a person for performing an act of a broker unless the person is licensed.
    true
  37. A broker can compensate or share a commission with an attorney for helping out the broker.
    False, a broker can only compensate if a person is licensed.
  38. An unlicensed person may share in the income earned by a real estate broker if that person engages in no acts for which a license is required and does not lead the public to believe that the person is in the real estate brokerage business.
    true; this Rule would apply to a broker's sharing his commission with a buyer or a seller in a transaction.
  39. Subchapter O and P contains what info?
    • address penalties for violating the provisions of the Real Estate License Act--both for licensees and nonlicensees. 
    • -Subchapter O outlines the procedures for TREC to assess an administrative penalty against anyone who violates the License Act or a TREC rule, and that penalty may be as much as $5,000 for each day a violation occurred.  The commission may also suspend or revoke a license.
    • -Subchapter P provides that an unlicensed person who receives a commission or other consideration for performing acts requiring a license is liable to the state for a civil penalty of not less than the amount of money received or more than three times the amount of money received. 
    • -a violation of the License Act by an unlicensed person is a Class A misdemeanor and is fined up to $4,000 and/or imprisionment for up to one year.
  40. The complete Schedule of Administrative Penalties is set forth in
    Rule 535.191
  41. Subchapter Q contains what info?
    addresses a real estate agent's liability regarding a variety of disclosure topics; AIDS, sales price in a competitive market analysis, and misrepresentation or concealment by a buyer, seller, or subagent.
  42. Why was the Texas Real Estate License Act created by the Texas Legislation?
    • to protect the public from dishonest brokers, salespersons, and registrants
    • -prescribe certain licensing and registration standards
    • -maintain high standards in the real estate profession
    • -protect licensed brokers from unfair or improper competition
  43. How many semester hours are required for an active salesperson license?
    • 12
    • -4 of principles of real estate
    • -2 law of agency
    • -2 law of contracts
    • -2 contracts, forms, and addendums
    • -2 real estate finance
  44. All brokers and salespersons must complete ___ hours of MCE during the 2 year license renewal period.
    15
  45. How many semester hours are required for an active broker license?
    60
  46. When was the Texas Real Estate License Act originally passed?
    1949
  47. What real estate activities require a license?
    • -auction; if performing an act of a broker or salesperson in addition to conducting the auction sale
    • -sell
    • -exchange
    • -purchase
    • -rent
    • -assist in finding listings
    • -collect rent; if for a single-family residential unit
    • -serve as a hostess at an open house; if engaging in any activity for which a license is required
    • -trade
    • -lease
    • -buy
    • -locate renters
    • -performing for someone else for a fee.
  48. What is a broker?
    any person who or business entity that for another person and in expectation of receiving compensation performs any action listed in section 1101.002 (1).
  49. What is a salesperson?
    Any person employed by or engaged by a licensed real estate broker to do any of the actions that a broker is licensed to perform.
  50. What persons or transactions are exempt from licensure in Texas?
    • -a property owner buying and selling for himself
    • -an owner and his regular employees who do not conduct a real estate brokerage business
    • -an attorney-in-fact under a power of attorney
    • -an attorney at law licensed in Texas
    • -an escrow holder; receiver; trustee in bankruptcy; administrator; executor; person actin under order of court; trustee under trust agreement, deed of trust, or will, or the regular salaried employee thereof; or public officer or employee while performing duties as such
    • -on-site manager of an apartment complex
    • -sale of cemetery lots
    • -transactions involving mining and mineral interests
    • -a person who conducts a real estate auction
    • -transactions involving leasing or managing a hotel or motel
    • -a builder's employees selling structures erected by the owner
  51. What provisions and/or requirements are made for the discharge or termination of employment of a real estate salesperson by a broker?
    A broker shall immediately return the salesperson's license to the commission.  Notice of termination must be in writing-from broker or from salesperson.  It may be reactivated by filing a request for new broker sponsorship with TREC along with a transfer fee.
  52. The purpose of the real estate laws are to...
    • -protect the public from dishonest or incompetent brokers or salespersons,
    • -prescribe certain minimum standards and qualifications for licensing brokers and salespersons,
    • -maintain high standards in the real estate profession, and 
    • -protect licensed brokers and salespersons from unfair or improper competition
  53. When was the Texas Real Estate License Act originally passed?
    1949
  54. In Texas, a license is required to sell, purchase, rent, lease, auction, or exchange real estate for others and for compensation. Who is exempt from the license law?
    • -owners dealing with their own property (licensees must disclosure they are a real estate agent even if they are selling their own house)
    • -trustees, executors, receivers, and others operating court order;
    • -public officials
    • -Attorneys
  55. The License Act authorizes the Texas Real Estate Commission to suspend or revoke a broker's or salesperson's license for the unlawful practice of law.
    true
  56. What are the requirements for broker's license and salesperson license in Texas?

    a. minimum age
    b. length of residence
    c. apprenticeship (years)
    d. education
    e. examination required
    f. amount of payment into recovery trust account
    Salesperson                  Broker

    • a. 18 yrs                       18yrs
    • b. day of filing               same
    • c.                                 four yrs
    • d. 180 hrs                    900 hrs
    • e.  yes                            yes
    • f. $10                           $10
  57. Which real estate activities require a license?
    • -auction
    • -sell
    • -exchange
    • -purchase
    • -rent
    • -assist in procuring prospects
    • -assist in finding listings
    • -collect rent; for single-fam unit
    • -serve as a hostess at an open house
    • -trade
    • -lease
    • -buy
    • -locate renters
    • ***performing from someone else for a fee; remember those who are exempt
  58. State the definition of broker as given by state law. Know this definition and be able to list the activities that it includes.
    A real estate broker includes any person or business entity that for another person and in expectation of receiving compensation performs any action listed in section 1101.002(1).
  59. State the definition of salesperson as given by state law. Learn this definition.
    Any person employed by or engaged by a licensed real estate broker to do any of the actions that a broker is licensed to perform.
  60. What persons or transactions are exempt from licensure in Texas?
    -A property owner buying and selling for himself

    -An owner and his/her regular employee who do not conduct or appear to conduct a real estate brokerage business. 

    -An attorney-in-fact under the power of attorney

    -An attorney at law licensed in Texas

    -An escrow holder; receiver; trustee in bankruptcy; administrator; executor; person acting under order of court; trustee under trust agreement, deed of trust, or will or the regular salaried employee thereof; or public officer or employee while performing duties as such.

    -On-site manager of apartment complex

    -Sale of cemetery lots

    -Transactions involving mining and mineral interests

    -A person who conducts a real estate auction

    -Transaction involving leasing or managing a hotel or motel

    -A builder's employee selling structures erected by the owner
  61. Sections 1101.651 and 1101.652 of the act. List at least nine reasons why the Texas Real Estate Commission may discipline a broker or a salesperson, refuse to issue a license, or revoke or suspend a license.
    1. Accepting an undisclosed rebate or profit on an expenditure for a principal

    2. Acting in the dual capacity of broker and an undisclosed principal in any transaction

    3. Pursing a continued and flagrant course of misrepresentation 

    4. Making false promises

    5. Failing to make clear to all parties for whom the licensee is acting

    6. Failing to remit or account for funds belonging to others

    7. Using misleading advertising or an ad without the broker's name

    8. Failing to use a contract form required by the commission

    9. Procuring a license by fraud

    10. Willfully disregarding or violating any provisions of the act

    11. Paying a commission to any unlicensed person in violation of the act

    12. Inducing a party to break a sales contract or lease to substitute a new one

    13. Being convicted of a felony

    14. Displaying a For Sale sign without the seller's proper written authority

    15. Knowingly preparing an inaccurate statement or invoice

    16. Dishonest dealings, bad faith, untrustworthiness, or incompetency in conduct

    17. Employing unlicensed salesperson

    18. Discriminating on the basis of race, color, religion, sex, disability, familial status, or national origin

    19. Soliciting, selling, or offering for sale by means of a deceptive practice

    20. Commingling funds of others with his/her own

    21. Failing to deposit the money of others in an escrow or trustee account within a reasonable time

    22. Failing to advise a purchaser in writing to have the abstract examined or obtain a title insurance policy

    23. Accepting compensation from someone other than the agent's broker

    24. Violating the intermediary statute
  62. Acting as a broker or salesperson without first obtaining a license is a Class ___ misdemeanor, which is punishable by ________________.
    Class A misdemeanor; Punishable by a fine up to $4,000 or imprisonment for up to one year or both
  63. The Texas Real Estate Commission consists of how many members? How long are their terms?
    9 members appointed by the governor with the advice and consent  of the senate; staggered terms  of six year.
  64. What are the requirements in regard to a broker's maintaining an office?
    Maintain a definite place of business in this state; section 1101.553 requires that a residential rental locator display the locator's license
  65. What provisions and/or requirements are made for the discharge or termination of employment of a real estate salesperson by a broker?
    The broker shall immediately return the salesperson's license to the commission. Notice of termination of sponsorship must be in writing--from the broker or from the salesperson. It may be reactivated by filing a request for new broker sponsorship with TREC along with a transfer fee.
  66. What constitutes the unauthorized practice of law by a licensee?
    For consideration, reward, or monetary benefit, a licensee drew a deed, note, deed of trust, or other written instrument that may transfer or affect title of real estate; does not include completion of promulgated contract forms.
  67. What is the Real Estate Recovery Trust Account?  What are the dollar limits on claims?
    When is it used?
    Is established by a $10 deposit from each broker and salesperson licensee to reimburse aggrieved persons who suffer actual damages by reason of acts committed by a licensed broker or salesperson, provided recovery is ordered by a court of competent jurisdiction. Limits are $50,000 for claims arising out of the same transaction and $100,000 for claims against any one licensee.

    -When recovery is ordered by a court against a licensed broker or salesperson and the licensee cannot pay the full amount of the judgment ordered by the court, the aggrieved person may apply to the court in which the judgment was entered for an order directing payment out of the real estate recovery trust account of the amount unpaid on the judgment.
  68. What is the composition of the Broker-Lawyer Committee?  What is its purpose?
    The Broker-Lawyer Committee has 13 members: 6 appointed by the Texas Real Estate Commission, 6 appointed by the president of the State Bar of Texas, and one public member appointed by the governor. The primary function of the committee is to prepare contract forms, including special addenda, which are presented to the Commission for possible approval or promulgation.
  69. Sections 1101.454 and 1101.455 outline the requirements for continuing education for licensees. What are the requirements for Salesperson Annual Education (SAE)?

    What are the requirements for Mandatory Continuing Education (MCE)?
    As a condition for the first renewal of a salesperson license (SAE requirement), the applicant shall furnish proof of completing at least 6 additional semester hours (60 classroom hours) of real estate core during the two-year initial license period, effective on or after September 1, 2012. Real estate core requirements for SAE are 18 total hours, including the prelicense core requirements. 

    -Persons who have completed SAE requirements must furnish proof of completing at least 15 classroom hours of Mandatory Continuing Education (MCE) during the two-year period preceding license renewal. MCE hours must include TREC-approved non-elective 3-hour legal update and 3-hour legal ethics courses. In some instances, exemptions from MCE requirements apply to persons holding a broker's license for at least ten years as of September 1, 1991. For licenses issued or renewed on or after September 1, 2012, a broker who sponsors a salesperson or a broker or salesperson who supervises another licensee must take at least 6 hours of broker responsibility education each two years, which may be used to meet MCE requirements.
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Principles of Real Estate Ch. 7
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Principles of Real Estate Ch. 7
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