Trust Accounts and Advertising in Texas
The Texas broker is responsible for handling other people's money properly and for the firm's advertising. This chapter covers trust/escrow handling and Texas advertising rules.
Handling Trust Money
A Texas broker who holds client money, such as an earnest-money deposit, must keep it separate from the broker's own funds and must not commingle or convert it. Trust money must be accounted for and disbursed only as the transaction and the parties' agreement allow. When parties dispute a deposit held by a broker, the broker acts as a neutral stakeholder and should not release the funds unilaterally. Mishandling trust money is a serious violation.
Advertising Rules
Texas advertising rules require that a license holder's advertising be truthful and not misleading and that it clearly identify the broker. A sponsored sales agent generally must advertise under the sponsoring broker's name, and the broker is responsible for the firm's advertising, including that of sponsored agents. Prohibited practices include misleading claims and advertising in a way that implies the agent is operating independently of the broker.
Broker Responsibility and Recordkeeping
The broker must keep required transaction and financial records and maintain adequate supervision of the firm's activity. Because the broker is accountable for trust handling, advertising, and the conduct of sponsored agents, the broker exam tests these office-management responsibilities more heavily than the sales agent exam. Good records and clear policies protect both consumers and the broker.