Texas Real Estate Broker Exam — All Questions

A distinctive feature of Texas real estate practice is that license holders generally must:

• a.Draft each contract from scratch for every client
• b.Use the appropriate TREC-promulgated contract form for a transaction✓
• c.Have every contract written by the buyer's lender
• d.Avoid using written contracts entirely

TREC promulgates standard contract forms, and Texas license holders are generally required to use the appropriate promulgated form for a transaction rather than drafting their own. Using the standard forms protects consumers and keeps licensees from practicing law. A broker is responsible for ensuring sponsored agents use the correct current forms.

When completing a TREC-promulgated contract form, a Texas license holder may:

• a.Add custom clauses that change the legal effect of the contract
• b.Provide legal advice about the contract's enforceability
• c.Fill in the blanks to reflect the parties' business terms, but not draft language that alters the contract's legal effect✓
• d.Sign the contract on the client's behalf without authorization

A license holder may complete the blanks on a promulgated form to reflect the parties' agreed business terms, but may not add clauses or draft language that changes the legal effect of the contract, which would be the unauthorized practice of law. When custom legal provisions are needed, the parties should consult an attorney.

A Texas broker's supervisory role with respect to contract forms includes:

• a.Reviewing that sponsored agents use the correct current forms and addenda and that changes are properly documented✓
• b.Guaranteeing that no contract will ever be disputed
• c.Preparing legal opinions on each contract
• d.Choosing forms that are no longer promulgated by TREC

The broker's supervisory duty includes making sure sponsored agents use the correct current promulgated forms and addenda and that any agreed changes are documented with amendments. Errors in form use can create liability, so the broker exam emphasizes proper handling of the promulgated forms as a management responsibility.