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229 Cards in this Set

  • Front
  • Back
What year was TREC created?
Why was TREC created?
to administer the provisions of the License Act (TRELA)
What is TREC's authority?
to make rules and regulations
What can TREC advise?
can advise with reference to its rules and the laws that govern licensees
Who makes up the TREC board?
It has 9 commission members. 3 members of the general public and 6 are real estate brokers. Appointed by the governor and approved by the senate.
How long do members serve on the TREC board?
6 years
What are TREC's subpoena powers?
TREC has the power to subpoena books, records, and witnesses.
What if a licensee fails to respond to a subpoena?
TREC can file suit with the AG to enforce the subpoena
Who issues or revokes Real Estate Licenses?
Where do hearings held by TREC occur?
a hearing for the revocation or suspension is held at TREC in Austin unless a licensee requests the hearing be held in his county
If a licensee fails to respond to a summons?
If a licensee, in violation, fails to respond to a summons from TREC, TREC will automatically schedule the hearing in Austin
What happens if your license is revoked by TREC?
if your license is revoked by TREC, you may appeal the desicion to the district court
What does the Broker-Lawyer Committee do?
They write the promulgated contract forms
Who makes up the BL Committee?
It has 13 members. 6 are brokers appointed by TREC. 6 are lawyers appointed by the President of the State Bar Association. 1 is a public member appointed by governor.
What is the penalty for practicing real estate without a license?
A Class A Misdemeanor and subject to a fine of not more than $4000 or imprisonment in the county jail for not more than one year
Where would a trial for practicing real estate without a license be held?
in a county court
What civil penalties are available against a person who violates TRELA?
persons guilty of a violation of the license act and whoever profited there from are liable for additional civil penalties of up to 3 times the amount of money received `
What administrative penalties may TREC assess?
TREC may assess an administrative penalty of $5000 per day for violation of the license act by any person either licensed or unlicensed
How long does a violator have to pay a penalty?
if TREC assesses a penalty, a licensee has 30 days to pay the penalty
Why was Real Estate Recovery Trust Account created?
it was created by TREC to pay aggrieved person who suffered a monetary loss due to unscrupulous acts of the licensees
How much can an aggrieved person receive from the Trust Account?
these persons can receive up to 3 times the amount of money lost
What is the minimum amount the trust account can have?
$1 million
What happens if the trust account falls belong he minimum amount?
the commission is authorized to assess each real estate broker and salesman on renewal of his license during the following calendar year a fee of $10 or pro rata share of the amount necessary to bring the balance to $1.7 million
What happens to the fees when the trust account is above the statutory minimum?
TREC invests the fees that have been deposited when the recovery account is above the statutory minimum, to offset future claims
What does TREC invest in?
TREC only invests in Treasury Bills or notes, or in the same manner as the employees retirement system of Texas
What happens if the trust account exceeds $3.5 million?
The excess goes into the state's general fund
What happens if the trust account is not below a $1 million?
TREC simply continues to invest the funds
What happens to the license of the person who requires TREC to pay out of the trust account?
the license of the individual can be revoked or suspended
When can the person recover their license?
this license may never be recovered until the account has been repaid with interest
What are the max payments of trust account that state law allows?
State law limits the max payments, which is $100,000 per license and $50,000 per transaction
What role does TREC play in resolving conflicts between licensees?
TREC plays no part in resolving conflicts between licensees
Are attorneys allowed to sell real estate?
Yes, if they do not participate in broker to broker commission splits
Can court appointed receivers, trustees, guardians, and sheriffs sell real estate?
Can administrators and executors of a will sell real estate?
Do on-site apartment managers need a real estate license?
Do new home salesmen working for one builder or owner need a real estate license?
Do cemetery lot salesmen need a real estate license?
Does a person selling his own house need a license?
Does an employee leasing or renting property for the owner need a license?
Does a corporate employee selling corporate property need a license?
Do hotel/motel personnel need a license?
Does an attorney-in-fact need a license?
Does an auctioneer calling a real estate auction need a license?
Does anyone selling mobile homes need a license?
Does anyone engaging in or carrying out foreclosure sales need a license?
Does an attorney participating in a commission split need a license?
Does an auctioneer involved in any part of a real estate transaction need a license?
Does an apartment locator need a license?
Do real estate salespeople need a license?
Does a designated officer of a licensed real estate corporation, or a designated manager of a licensed Real Estate Limited Liability Company where the designated one is a broker need a license?
Does a person selling a 1-4 need a broker?
How does the person selling a 1-4 receive commission?
from his broker
How does one obtain a real estate license?
1. meet the educational requirements
2. submit an application with or without a sponsoring broker
3. submit the required fees
4. pass the state exam which determines competency
5. demonstrate integrity
What are two reasons that TREC would deny an individual's application?
1. unable to satisfy honesty, integrity, and trustworthiness
2. individual has defaulted on TX state student loans
What are the licensing requirements in TX?
1. must be 18 years of age or older
2. resident of TX at time of application
3. legal resident, not illegal alien
4. pass the exam within 6 months of authorization letter
What are the educational requirements for a salesman's license?
210 classroom hours with a minimum of 150 hours in core real estate courses. 60 hours in principles or real estate, 30 hours in law of contracts, and 30 hours in law of agency are mandatory
What are the educational requirements for a broker's license?
900 classroom hours, including 30 hours of real estate brokerage, and an active salesperson license for any 24 months out of the past 96 months or any 2 years out of the past 8 years
How does one renew their salesperson license?
SAE - Salesperson Annual Education - a minimum of 60 core hours in the first year must be submitted to TREC before a salesman's license will be renewed
- otherwise renewal will be rejected
What is MCE?
Mandatory Continuing Education is taken after the agent has completed his first renewal and has a total of 270 core hours. It must be taken every 2 years to renew a salesman or broker license and is a 15 hour course including 6 hours of legal update. It must be taken within the renewal period.
What happens if you do not complete MCE before the expiration date on the license?
if renewal is overdue a late renewal application form must be submitted along with renewal along with renewal fees an proof of continuing education. the licensee who does not renew by their expiration date is considered expired. If an on time renewal does not include the required education, the licensee will be required to pay a $200 deferral fee and will have 60 days to complete the education. The license will be active for those 60 days. After 60 days, TREC moves the license to inactive status
How does one reactivate their license?
1. pay the $200 late fee
2. take the required education
3. pay an additional $250 penalty
4. testify on the renewal form "they did not engage in real estate while they were inactive
5. submit the required form to return to active status, along with the $20 fee
Can you hold a broker license and salesman license at the same time?
Can a broker act as a salesman and broker at the same time?
What requirements must an inactive salesman fulfill even though they are inactive?
the salesman must still meet yearly fees and core education requirements. Once past core requirements, MCE is not required for inactive status
Does inactive status apply toward the 2 year broker requirement?
Can an inactive salesman engage in real estate business?
Does an inactive salesman need a sponsoring broker?
How do you activate an inactive license?
apply through a broker, pay $20, and complete 15 hours of MCE if necessary
When can an applicant who has passed the test engage in business?
when the license is received in the broker's office
What happens if the broker dies or is declared illegally insane?
The broker's license is suspended and the salesperson must change to another broker immediately
What must a broker do if he has more than one place of business?
He must obtain a branch office license for each additional office at a cost of $20 dollars per office. Do not need a licensed broker at each location.
What is the time limit for TREC to deny an application?
there is no time limit
When must TREC notify the applicant that the application is denied?
they must notify the applicant within 30 days after the application is disapproved
What can the applicant do if the application is denied?
the applicant can make an appeal within 10 days after notice of denial
What happens if a licensee defaults on student loans?
TREC will refuse to renew the license
What must a broker do if he is using a DBA or assumed name?
He must file with the county clerk in every county where he has an office
What is the time limit for a salesperson to choose a broker?
there is no time limit
What does the TREC Consumer Information Form notify?
notifies the public of the recovery trust account
Who does the TREC Consumer Information Form apply to?
applies to both real estate licensees and inspectors
Where is the TREC Consumer Information form displayed?
must be displayed in the broker's office
What is the purpose of TRELA?
TRELA was passed by legislation to protect the public against unscrupulous brokers and salesmen
How are the rules construed?
the rules are construed liberally with a view toward their purpose, and have the full force and effect of the law
Will guaranteeing future profits cause suspension or revocation of a license?
Will salesmen receiving commissions directly from selling, leasing, negotiating, appraising, or auctioning real estate result in a suspension or revocation of a license?
Will failing to specify a definite termination date in a Buyer's Rep Agreement or a Listing contract that is not subject to prior notice result in suspension or revocation of a license?
Will selling real estate by lottery result in the suspension or revocation of one's license?
Will giving legal advice result in a suspension or revocation of one's license?
Is preparing a contract addendum practicing law?
Is not advising a purchaser in writing to get an attorney's opinion of title on the abstract or to obtain an Owner's Title Policy a reason for suspension or revocation of a license?
When must an agent advise a client to get an attorney's opinion of title on the abstract or to obtain an Owner's Title Policy?
prior to the closing on a property
Is placing a sign offering to sell, rent, or lease real estate without first obtaining the written permission of the owner a reason for suspension or revocation of one's license?
Is acting in dual capacity of broker and undisclosed principal a reason for suspension or revocation of one's license?
Does a licensee have to disclose he is representing his spouse, parent or child?
Is knowingly making a substantial misrepresentation a reason for suspension or revocation of one's license?
Is puffing a reason for suspension or revocation of one's license?
Is advertising without first identifying the person advertising as an agent or broker a reason for suspension or revocation of one's license?
Is commingling of funds a reason for suspension or revocation of one's license?
What must an agent do with earnest money?
earnest money must be placed in an escrow account, not in with broker personal or operating accounts
Is threatening to sue for a commission you have not earned a reason for suspension or revocation of one's license?
Is not furnishing copies of a document to one of the signatories, upon demand a reason for suspension or revocation of one's license?
Is steering of prospective buyers a reason for suspension or revocation of one's license?
If one commits steering is he subject to federal and state prosecution?
Is being convicted of a felony in which fraud is an essential element a reason for suspension or revocation of one's license?
How long does a licensee who is convicted of a felony have to notify TREC?
he has 30 days to notify TREC of this conviction
Is disbursing money deposited in a trust account before the transaction concerned has been consummated or finally otherwise terminated a reason for suspension or revocation of one's license?
How is the broker responsible for the salesperson?
the broker is responsible for all professional acts of the salesmen he sponsors including advertising, use of promulgated forms, proper disclosure, etc...
How does a broker terminate sponsorship of a salesman?
he must notify the salesman in writing and return the salesperson's license certificate to the commission immediately
May a licensee give a referral gift?
a licensee may give a referral gift up to $50 in value (not cash) to an unlicensed individual who provides a referral
How do nonresident brokers operate in Texas?
Nonresident brokers must work through resident brokers. A foreign broker, or a broker from another state may collect a commission from a Texas broker, as long as that broker does not negotiate in TX. A commission may be paid in the form of cash or a gift.
Who may sue to recover a commission?
Only a broker may sue to recover a commission. He may sue the seller who has signed a listing agreement, and then defaults, or a buyer who has signed a Buyer's Rep Agreement and then defaults
Is telemarketing allowed?
Telemarketing for listings is legal in TX, however, a real estate license is required.
What must one observe when cold calling?
When cold calling, one must observe the federal "Do Not Call' list and state "No Call" list. The federal list regulates interstate and international calls. The TX list regulates interstate and intrastate calls.
What must a broker include on his website?
He must include his name or company name on each page of the website
What must a licensee include on his website?
A licensee with a website must include the name of his sponsoring broker or company
What must a licensee include in his phone book listing?
if a licensee lists himself as a real estate sales person in the phone book he must include the name of his broker or company in the information
What must be included in a real estate ad for a listed property?
when advertising a listed property, the broker or company name must be included in the ad
What is Senate Bill 489?
allows a broker to act as an intermediary in a transaction where he represents both the seller and the broker and has written permission of both parties including how the broker will be paid
Who can act as an intermediary?
only the broker can be the intermediary
Intermediary v. dual agency?
Statutory intermediary takes precedence over common law dual agency
When must a broker act as an intermediary?
a broker who agrees to represent both the buyer and the seller must do so as an intermediary
Should a broker appoint associates to work with parties to the transaction when the broker is an intermediary?
What if a broker who is an intermediary does not have any associates or only has one associate?
then the broker has to work as an intermediary without appointments
What actions may an appointed associate take?
he may give advice and or opinions to one party to a transaction
What actions may a broker intermediary take?
a broker may never give advice and or opinions to either party. he may only disclose facts about the property
When is a secondary notice intermediary used?
When a buyer client wants to purchase an in house listing
When must a licensee give Information About Brokerage Services form to a prospect?
at the first substantive dialogue
What is a first substantive dialogue?
a face to face meeting where substantive discussion of real estate takes place or any mailing with a substantial amount of information about a particular property
What are exceptions to substantive dialogues?
open houses, when meeting with a party represented by another licensee, or when the proposed transaction is for a residential lease for no more than a year
How must the IABS be given?
using TREC wording and in at least 10 pt. font
When and how must one disclose that they are representing a licensee?
at first contact with another party or licensee either orally or in writing
What is a subagent?
is a licensee who represents the seller, while being sponsored by a broker other than the listing broker.
Who does the subagent work for?
he is working with the buyer customer rather than the buyer client
How does Senate Bill 489 limit liability of a licensee for the acts or misrepresentations of a party or subagent?
489 limits the liability of a licensee for the acts or misrepresentations of a party or subagent as long as the licensee was unaware of the misrep or concealment of material fact
When must the Seller's Disclosure of Property Condition must be given to the buyer?
it must be given to the buyer before he signs an offer to make that offer binding on the buyer
What if the buyer does not receive the Seller's Disclosure before signing?
the buyer has 7 days to terminate his offer after receiving the disclosure
Who is responsible for the accuracy for the Seller's Disclosure?
the seller
When is the seller's disclosure not required?
in a foreclosure sale, tax sale, sale by guardian, executor, or administrator, or sale by builder of a new home
How long does a licensee have to enter a new listing into the MLS?
5 days
How long is the length of the protection period on the listing agreement?
the length of the period is negotiable
What level of service by a broker to a client is required by the license act?
the minimum level of service
What must a broker do who has a listing under an exclusive agreement?
1. inform the party of material info related to the transaction, including the receipt of an offer by he broker
2. answer the party's questions and present any offer to or from the party
3. refrain from telling another broker to negotiate directly with the broker's client
What forms must licensees use?
standard contract forms
What are some exceptions to standard contract forms?
contracts prepared by attorneys, contracts specified by governmental agencies, property owners, or their lawyers
Does TREC have forms?
TREC has promulgated sales contract forms for most residential properties including farm and ranch
What forms does TREC not have?
forms for commercial transactions, forms for the sale of Co-ops
Who writes the promulgated forms?
the Broker-Lawyer Committee
Who promulgates the forms?
Where can you find "time is of the essence" clauses?
in the Sales Contract in the Termination/Option paragraph

in the Addendum for Sale of Other Property by Buyer or in 3rd Party
When do you use The Seller's Temporary Lease Addendum TREC 15-3 and the Buyer's Temporary Lease Addendum TREC 16-3?
When the lease is for a period of 90 days or less
Do backup offers have to be presented to the seller
yes, always
When can a backup offer become effective?
When the previous contract is terminated and the backup buyer pays an option fee, names an option period, and the earnest money is deposited with an escrow agent
Can an option fee be paid with other consideration?
no, an option fee must be paid independently of any other consideration
Who is the last party to sign the contract?
the last party to sign the contract is the party accepting the final change
Who fills in the effective date on the contract?
the broker fills in the effective date.
Can the option period have an effective date?
there is an effective date of the option period
What is a contingency clause?
a clause in a contract requiring a condition to be met
What if a contingency cannot be met?
the buyer is generally entitled to a refund of his earnest money
How long does someone have to file a complaint with TREC against a licensee?
the individual has four years from the effective date of a contract or the date of the incident to file a complaint with TREC regarding the licensee involved. After 4 years, TREC will no longer investigate a complaint.
What form must the complaint take?
the complaint must be written and signed
How long does a party have to sue for non performance?
parties to a contract also have 4 years to sue for non performance
What offers must a broker present and in what order?
a broker must present all offers but there is no required order of presentation
What happens when a broker accepts an earnest money deposit?
the broker acts as an escrow agent, the money must be deposited in a trust account by the close of business of the second business day after the execution of the contract. A broker must keep record of this account for 4 years
How is division of the commission determined?
it is at the discretion of the broker
What is the Statute of Frauds?
SOF requires that all contracts that relate to the transfer of any interest in real estate must be in writing to be enforceable. This also applies to compensation/employment contracts such as listing and buyer rep agreements. Verbal agreements make you a volunteer in the eyes of the court.
Do real estate inspectors have promulgated forms?
What happens if the lender required repairs exceed 5% of the sale price?
the buyer can terminate the contract
Does the sales contract encourage mediation?
What is mediation?
a mediator hears both sides and tries to help the parties come to an agreement
What requirements must a commission mediator meet?
a commission mediator will have at least 40 hours of formal training in ADR procedures
What is arbitration?
in arbitration, the arbitrator hears both sides and then tells the parties what to do
What can an injured party do?
sue for specific performance, seek such other relief as may be permitted by law, or both
What type of disclosure is required for a property located in a Certified Service Area of a Utility Service Provider?
disclose to the buyer that there may be a charge for turning on or connecting water and sewer services is required by the TX water code
What can a buyer do if he is unhappy with the Title Commitment or survey?
the buyer has the previously negotiated number of days to address his concerns with the seller
When must the title company provide the Title Commitment?
the title company has 20 days to provide the title commitment after they receive the sales contract
How does TREC define a reasonable amount of time?
2 days
What type of estate is community property in TX?
it is a statutory estate
What does community property include?
all property acquired after marriage, including property acquired with labor, income on separate property
What happens when you use community funds on a separate property?
community property rights accrue
How can a spouse waive community property rights?
with a written agreement
What is separate property?
property acquired prior to marriage, or during marriage by inheritance, or gift
What type of estate is Homestead in TX?
it is a statutory estate
How does one get homestead protection and can it be waived?
homestead protection is automatic and it cannot be waived
What is homestead protection?
a home is protected from forced sale
What are the exceptions to homestead protection?
creditors for: mortgage, property taxes, mechanics and materialman's lien, homeowner's association
How long does a homeowner have to redeem a property that is foreclosed on for default on property taxes?
2 years
How long does a homeowner have to redeem a house foreclosed on because of nonpayment of homeowner's association fees?
6 months
How big is an urban homestead?
10 acres
How big is a rural homestead?
200 acres
How many homesteads can one have?
one homestead per person or family
What is the homestead exemption?
a tax benefit
must apply for exemption and must occupy the home on January 1st
you can back file for 2 years if you have failed to claim the exemption
What does not apply to DTPA?
does not apply to commercial properties over $500,000
Why does a person want to use the DTPA?
because you can recover treble damages
What is the statute of limitations for a DTPA claim?
an individual has 2 years from the discovery of the deception to file a complaint
Can a broker be a tax consultant?
a broker who is a registered property tax consultant may still legally perform property tax consulting services for single family residences for a fee or for free
How does one become an Appraisal Review Board Arbitrator?
a 30 hour class is required to become an arbitrator
the max fee for this service is $500
What must a seller of coastal property abutting tidally influenced water provide?
the "Notice Regarding Coastal Area Property"
What does the "Notice Regarding Coastal Area Property" notify buyers?
tells buyers that owners may gain or lose portions of the land due to the actions of water
What must a seller who sells property located seaward of the Gulf Intercoastal Waterway disclose?
he must disclose that structures must not be erected seaward of the vegetation line
if a structure is erected seaward of that line, or becomes seaward as a result of natural causes, the structure would be subject to a lawsuit by the State of Texas for removal
What is the purpose of a Municipal Utility District?
it is to provide flood control or drainage, water, and sewer to residents of the district
Does a MUD have to be disclosed?
yes, the seller must deliver and the buyer must sign the MUD disclosure
What other MUD info has to be disclosed?
the bonded indebtedness, the tax rate, the standby fees of the MUD TX legislation allows a buyer to back out of an offer if the bonded indebtedness is not disclosed prior to closing
What is intestate succession?
the laws that govern how property passes when a person dies without a will or with a will that makes only a partial distribution of his or her property
What is an administrator?
in the event that a person dies intestate the courts will appoint an administrator to settle the estate
What laws govern how a property will be distributed if a person dies intestate?
the law of descent and distribution
What do the owners of a property who are heirs of someone who dies intestate own?
the will have title by descent
Who are the heirs?
they are kindred
spouse and children have priority under the law of descent
When does title transfer to heirs?
after probate
At what rate do security deposits earn interests?
security deposits earn interest at a rate contractually agreed upon by the parties
Can tenants waive interest on security deposits?
tenants may sign an agreement waiving a right to interest on the security deposit
When must the landlord return the security deposit?
the landlord must account for the security deposit 30 days after the tenant leaves
What happens if the tenant installs an alarm in a rented property?
if a tenant installs a burglar alarm in a rented property he must notify the landlord and supply instructions and passwords to that landlord
When must the landlord change the locks for the new tenant?
landlords must provide new locks on rental property no later than 7 days after a new occupant takes possession of a leasehold premise. Keyless deadbolts are required but not double cylinders locks.
When must the smoke detectors be operational?
at the time the occupant takes possession of a leasehold premise
What can the tenant do if the landlord has not cleared the rented storage space?
if a tenant cannot gain access to storage space because the landlord has not emptied it and the tenant has to rent additional storage space he has two years to sue the landlord to recover the expense for the rented storage space
What is the legal term for eviction by a landlord?
forcible entry and detainer, or an action of forcible detainer
What if a tenant abandons a property without paying rent and leaves personal possessions behind?
the property is considered abandoned
the landlord can dispose of the tenant possessions, sell them, or pack and store them
the landlord must give notice before he does anything
Are title companies permitted to provide food an beverage for a picnic or party for a single firm?
When are title companies allowed to provide continuing education classes?
if they charge the market rate for those classes
Can a title company provide an annual party for all the firms who might use their services?
What are some of the tokens a title company can provide?
pens and pads
they cannot provide anything that a business person would normally consider an expense of doing business or a tax deduction
Is testing mold necessary to determine if it should be remove?
How does one know if mold should be removed?
if it is visible
What is mold removal called?
Do mold assessors and remediators have to be licensed?
Is testing after remediation required?
When must the remediator give you a Certificate of Mold Remediation?
no later than 10 days after the work is complete
What is the purpose of the Certificate of Mold Remediation?
the certificate verifies that the mold has been removed and certifies with a reasonable certainty that the underlying cause of the mold has been corrected
How is the Certificate of Mold Remediation an advantage for a homeowner?
it prevents an insurer from making an underwriting decision on the property based on previous mold damage or claims
What happens to the Certificate of Mold Remediation when the owner sells the home?
the law requires the owner to provide the buyer with copies of all Certificate of Mold Remediation that he has for the property within the past 5 years