Texas Real Estate Broker Exam — All Questions

Under the TREC Canons of Professional Ethics and Conduct, a license holder acting as an agent for another must:

• a.Place no personal interest above the interest of the client✓
• b.Obtain the best price for whichever party is paying the commission
• c.Treat the client and the other party as equally owed loyalty
• d.Decline any transaction in which the other party is unrepresented

22 TAC § 531.2 (Fidelity) says a license holder acting as an agent for another is a fiduciary, and the special obligations "demand: that the primary duty of the license holder is to represent the interests of the client ... that, however, the license holder, in performing duties to the client, shall treat other parties to a transaction fairly ... and that the license holder place no personal interest above that of the client." Loyalty is fixed by who is represented rather than by who pays: Occupations Code § 1101.557(a) makes the broker the agent of the party represented, and a seller-paid fee does not make the buyer's broker the seller's agent. The canon also draws a line the third answer erases — fairness is owed to the other party, loyalty is not, and treating the two as the same duty would leave the client with nothing distinctive. Nothing bars working opposite an unrepresented party either; § 1101.558(b-1)(3), as amended effective 1 January 2026, now requires the written notice to describe what a broker owes a party it does not represent.

SB 1968 added a new ground for discipline to TRELA effective 1 January 2026. It is failing to:

• a.Register a team name with the Commission before using it in an advert
• b.Deliver the IABS notice to prospects at a public open house
• c.Notify the Commission of a felony conviction within thirty days
• d.Enter into a written agreement with a prospective buyer✓

Occupations Code § 1101.652(b)(34), added by SB 1968 (89th Legislature) section 11: the commission may act where a license holder "fails to enter into a written agreement with a prospective buyer as required by Section 1101.563." It sits in subsection (b), the list of grounds for conduct "while engaged in real estate brokerage," immediately after (b)(33). The felony-notification ground is real but is not new — it is § 1101.652(a)(7), which has long required notice "not later than the 30th day after the date of a final conviction." Team-name registration is a rule requirement under 22 TAC § 535.154 and is enforced through the existing advertising ground at § 1101.652(b)(23), not through anything SB 1968 wrote. And no IABS notice is owed at an open house at all: § 1101.558(c)(3) removes the duty there, so a failure that cannot occur cannot have become a ground for discipline.

A buyer instructs her agent in writing to strike a sentence from a promulgated contract form. Under the TREC rules the agent:

• a.Must refuse, because altering a promulgated form is practicing law
• b.May strike it if the deletion is made conspicuous, e.g. by striking through✓
• c.May strike it once the seller's broker has approved the change
• d.May instead rewrite the sentence to say what the buyer wants

22 TAC § 537.11(d)(2) says it is not the practice of law for a license holder to, "if specifically instructed in writing by a principal, add language to or strike language from a contract form, as long as any change is made conspicuous, including underlining additions, striking through deletions, or employing some other method which clearly indicates the change being made." A blanket refusal therefore overstates the rule. What the rule does forbid is the license holder supplying the words: § 537.11(b)(5) bars drafting or recommending "language to be included in a contract form defining or affecting the rights, obligations, or remedies of the principals ... including escalation, appraisal, or contingency clauses," which is exactly what rewriting the sentence would be. And the other side's broker is not the source of the authority: it comes from the agent's own principal's written instruction, and the seller still has to agree to the changed terms as a matter of contract, not of approval.

A sales agent takes a buyer's earnest money check on Friday afternoon. Under the TREC trust-money rule:

• a.The agent may hold it in her own trust account until closing
• b.The agent must deliver it to her sponsoring broker immediately✓
• c.The agent must forward it to the escrow agent within five working days
• d.The agent must deposit it in the brokerage operating account by Tuesday

22 TAC § 535.146(b)(2): "A sales agent shall not maintain a trust account. Any trust money received by a sales agent must be immediately delivered to the sales agent's sponsoring broker." So an agent's own trust account is the one arrangement the rule forbids outright. The operating account is worse: § 535.146(b)(5) makes "placing trust money in a broker's personal or operating account" prima facie evidence of commingling. The deadline attaches to the broker rather than the agent — § 535.146(b)(3) gives the broker until "not later than the close of business of the second working day after the date the broker receives the trust money" to deposit it or deliver it to an authorized escrow agent, unless the principals agree otherwise in writing — so a five-working-day answer states a longer period than the Commission has allowed and puts the clock on the wrong person.

A Texas broker wants to pay part of a commission to a broker licensed in Oklahoma who referred the buyer. This is:

• a.Permitted, if the Oklahoma broker conducted no negotiations in Texas✓
• b.Permitted, once the Oklahoma broker registers the fee with TREC
• c.Prohibited, because a commission may go only to a Texas license holder
• d.Prohibited, unless the seller consents to the split in writing

Occupations Code § 1101.651(a): "A licensed broker may not pay a commission to or otherwise compensate a person directly or indirectly for performing an act of a broker unless the person is: (1) a license holder; or (2) a real estate broker licensed in another state who does not conduct in this state any of the negotiations for which the commission or other compensation is paid." A flat Texas-only rule therefore reads subdivision (2) out of the statute, and 22 TAC § 535.4(b) confirms the section "does not prohibit cooperative arrangements between foreign brokers and Texas brokers." The condition the statute imposes is about where the negotiating happened, not about paperwork, so there is no fee to register with the Commission. And the seller's consent is directed at a different question: § 1101.651(a) governs who may lawfully be paid, while § 1101.652(b)(8) is what requires all parties' knowledge and consent before a license holder takes compensation from more than one of them.

A Texas sales agent wants to rebate part of her commission to the buyer she represents. She:

• a.May not, because a rebate to a party is an undisclosed commission
• b.May, provided the rebate is never mentioned in any advertisement
• c.May, with the written consent of her sponsoring broker and the buyer✓
• d.May only if the rebate is paid after closing by the title company

22 TAC § 535.147(d): "A license holder may rebate or pay a portion of the license holder's fee or commission to a party in the transaction when the sales agent has the written consent of the sales agent's sponsoring broker and the party represented by the license holder." Calling that an undisclosed commission inverts the rule: § 535.148(a) is about taking a fee "from a person other than the person the license holder represents" without telling the client, which is money flowing the other way. Advertising a rebate is allowed too — TREC's guidance is that the advertisement must disclose any restrictions and, where the rebate goes to a party the license holder does not represent, that it is subject to that party's consent. The rule turns on consent rather than on who writes the check or when, though the same subsection bars paying a rebate "in a manner that misleads a broker, lender, title company, or governmental agency."

A sponsored sales agent puts her team name on a billboard. The TREC advertising rule requires the broker's name to appear:

• a.In the same size as the team name, anywhere on the billboard
• b.Only where the team name does not itself include the broker's name
• c.In at least half the size of the largest contact information✓
• d.In the smallest print used, so that the team name stays the focus

22 TAC § 535.155 requires each advertisement to include, in a readily noticeable location, "the name of the license holder or team placing the advertisement; and the broker's name in at least half the size of the largest contact information for any sales agent, associated broker, or team name contained in the advertisement." Equal size is more than the rule asks, and putting it anywhere drops the separate requirement that the placement be readily noticeable. The obligation is unconditional, so it does not switch off according to what the team name happens to contain; § 535.154 governs what a team name may be in the first place. Deliberately shrinking the broker's name is the failure the rule exists to prevent: Occupations Code § 1101.652(b)(23)(C) makes disciplinable an advertisement that "implies that a sales agent is responsible for the operation of the broker's real estate brokerage business."

A Texas broker holding a buyer's earnest-money deposit must:

• a.Deposit it into the brokerage operating account to earn interest
• b.Hand it to the seller as soon as the contract is signed
• c.Keep it apart from the broker's own money and not convert it✓
• d.Divide it with the sponsored agent as that agent's commission

A broker who holds client money such as earnest money must keep it separate from the broker's own funds and must not commingle or convert it. 22 TAC § 535.146(b)(4) forbids the broker to "commingle trust money with the broker's personal money or other non-trust money" or to "deposit or maintain trust money in a personal account or any kind of business account," and (b)(5) makes placing trust money in the operating account prima facie evidence of commingling — so running it through the firm's account is the violation however the entry is labeled, and earning interest for the firm on someone else's deposit compounds it. Handing it straight to the seller gives away money whose destination still depends on performance of the contract; § 535.146(d)(1) permits disbursement only "in accordance with the agreement under which the money was received." Treating it as the agent's commission takes as pay what belongs to a party. Where a deposit is disputed, § 535.146(d)(5) lets the broker interplead the parties rather than decide between them.

Under Texas advertising rules, a sponsored sales agent generally must:

• a.Advertise as a business independent of the sponsoring broker
• b.Leave the broker's name out of the advertisement entirely
• c.Confine advertising to television and radio broadcasts
• d.Advertise truthfully and under the sponsoring broker's name✓

Texas advertising rules require truthful, non-misleading advertising that identifies the broker, so a sponsored sales agent advertises under the sponsoring broker's name and may not imply that she operates independently of that broker. Occupations Code § 1101.652(b)(23) makes disciplinable an advertisement that "implies that a sales agent is responsible for the operation of the broker's real estate brokerage business" or "fails to include the name of the broker for whom the license holder acts." An advertisement presenting the agent as a separate business does the first of those, and one naming no broker does the second, leaving the consumer unable to tell who stands behind the representation. The rule governs content rather than medium: 22 TAC § 535.155 defines an advertisement to include "all publications, brochures, radio or television broadcasts, all electronic media including email, text messages, social media, the Internet, business stationery, business cards, displays, signs and billboards," so the same standards follow the advertisement everywhere. The broker is responsible for the firm's advertising, including that of sponsored agents — 22 TAC § 535.2(g).