Texas Real Estate Sales Agent — All Questions

The federal Fair Housing Act, as amended, protects seven classes. Which set correctly lists those protected classes?

• a.Sexual orientation, veteran status, and citizenship of the resident unless the parties specifically negotiate a written exception beforehand
• b.Race, color, religion, national origin, sex, disability, and familial status✓
• c.Race, color, religion, age, and marital status of the applicant
• d.Income level, occupation, and political affiliation of the buyer

The federal Fair Housing Act protects race, color, religion, national origin, sex, disability, and familial status. Some state and local laws add further protected classes, and requirements can change over time.

The Fair Housing Act's protection of 'familial status' may be lawfully set aside for:

• a.qualified housing for older persons, such as 55-and-older communities meeting HUD rules✓
• b.duplexes that happen to be located in a resort area
• c.any apartment complex that simply prefers to rent to adults as a matter of long-standing real estate custom and common-law tradition
• d.any single-family home that is sold directly by its owner

Housing that qualifies as 'housing for older persons' under HUD standards (for example, 55-and-older communities) may lawfully restrict families with children. Outside that exemption, discrimination based on familial status is prohibited.

Under fair housing law, a landlord generally must permit a tenant with a disability to make reasonable:

• a.requests to move in without paying any security deposit at all
• b.modifications to the unit, usually at the tenant's own expense✓
• c.reductions in the monthly rent to offset the tenant's medical costs
• d.demands that the landlord buy and install medical equipment for the tenant

Fair housing law requires landlords to allow reasonable physical modifications (generally at the tenant's expense) and to make reasonable accommodations in rules or policies. It does not require rent discounts or free medical equipment.

Which statement in a property advertisement would most likely violate fair housing law?

• a.'Ideal for a Christian family; no children preferred'✓
• b.'Recently renovated kitchen featuring brand-new stainless appliances'
• c.'Great starter home with a large, fully fenced backyard for pets'
• d.'Spacious three-bedroom home located near parks and public schools'

Advertising that expresses a preference or limitation based on religion or familial status (children) violates fair housing law. Describing the property's features is permissible; targeting or excluding protected classes is not.

The Texas Fair Housing Act is best described as a state law that:

• a.adds occupation and income level as protected classes statewide
• b.generally mirrors the federal Fair Housing Act's protected classes and prohibitions✓
• c.replaces and overrides the federal Fair Housing Act inside Texas
• d.applies only to commercial and industrial properties, not homes

The Texas Fair Housing Act closely tracks the federal Fair Housing Act, covering the same core protected classes and prohibited practices. It is enforced by the Texas Workforce Commission's civil rights division.

The Americans with Disabilities Act (ADA) differs from the Fair Housing Act mainly because the ADA focuses on:

• a.only single-family residences that are owner-occupied
• b.accessibility in places of public accommodation and commercial facilities✓
• c.prohibiting discrimination in mortgage lending decisions by banks regardless of the particular county in which the property is located
• d.setting the maximum rent landlords may charge disabled tenants

The ADA addresses access to public accommodations and commercial facilities, such as offices, stores, and hotels. The Fair Housing Act, by contrast, governs discrimination in residential housing, including reasonable accommodations for tenants.

A property owner who wants to build slightly closer to the lot line than the setback allows would typically seek a:

• a.nonconforming use permit that legalizes an already existing violation
• b.rezoning of the entire surrounding neighborhood to a new district
• c.variance✓
• d.restrictive covenant to be recorded against the owner's own property

A variance grants permission to deviate from a specific zoning requirement, such as a setback, because of a hardship unique to the property. It does not change the zoning of the area, only relaxes one requirement.

A lawful use that existed before a new zoning ordinance took effect, and is now allowed to continue, is a:

• a.variance that was granted for planned future construction
• b.spot zoning that benefits only one favored parcel
• c.conditional use permit that requires annual renewal
• d.nonconforming use (a grandfathered use)✓

A nonconforming use lawfully predates the current zoning and is 'grandfathered' so it may continue. Expansion or rebuilding of the use is often restricted, and the right can be lost if the use is abandoned.

A church or school allowed to operate within a residential zone through a special approval process holds a:

• a.nonconforming use that predated the zoning ordinance
• b.special (conditional) use permit✓
• c.deed restriction that was imposed by the original developer
• d.variance that merely excuses a dimensional requirement

A special or conditional use permit allows a use that the zoning ordinance permits only with specific approval, such as a school or place of worship in a residential zone. It is granted subject to conditions protecting the neighborhood.

Rezoning a single parcel in a way that is inconsistent with the surrounding area, often to benefit one owner, is criticized as:

• a.spot zoning✓
• b.a valid special use permit issued under the ordinance
• c.an easement by necessity created for landlocked land
• d.a legitimate variance based on individual hardship

Spot zoning singles out one parcel for treatment different from the surrounding area, usually benefiting the owner rather than the general public. Courts often strike it down when it is not part of a comprehensive plan.

A private deed restriction limits building height to two stories, but the zoning ordinance allows three. Which controls?

• a.The owner may freely choose whichever limit is more convenient
• b.Neither rule applies because the two limits cancel each other out
• c.The zoning ordinance always overrides any private deed restriction
• d.The more restrictive limit generally controls, so the two-story limit applies✓

When private deed restrictions and public zoning both apply, the more restrictive of the two normally governs. Here the two-story deed restriction is stricter than the three-story zoning, so it controls.

Acquiring title to real property by occupying it openly, exclusively, and continuously for the statutory period, without the owner's permission, is called:

• a.escheat to the state after the owner dies without heirs
• b.eminent domain that is exercised by the government
• c.a prescriptive easement that grants only a right to use
• d.adverse possession✓

Adverse possession can transfer ownership to a possessor whose use is open, notorious, exclusive, continuous, and hostile for the statutory period. Texas has several limitation periods (such as 3, 5, 10, and 25 years) with differing requirements.

The four public (governmental) limitations on private ownership are often remembered by the acronym 'PETE.' They are:

• a.possession, encumbrance, transfer, and enjoyment of land
• b.plat, entitlement, title, and encroachment of boundaries
• c.police power, eminent domain, taxation, and escheat✓
• d.prescription, easement, tenancy, and estate interests

PETE stands for police power (regulation such as zoning), eminent domain (taking for public use with compensation), taxation, and escheat (property passing to the state when an owner dies with no heirs). These are the government's inherent limits on private ownership.

Property taxes in Texas are 'ad valorem,' which means they are based on:

• a.the total square footage of the living area only
• b.the assessed value of the property✓
• c.a flat fee that is set equally for every property in the county
• d.the number of people who occupy the home each year

Ad valorem means 'according to value,' so the tax is based on the property's assessed value. Because Texas has no state personal income tax, local governments rely heavily on ad valorem property taxes.

For a Texas residence homestead, the appraised value used for property taxes generally may not increase more than:

• a.any amount, because there is no cap on annual increases
• b.10 percent per year, plus the value of any new improvements✓
• c.5 percent in any single tax year, with no exceptions allowed
• d.25 percent measured over every two-year period

Texas caps the annual increase in a homestead's appraised value for taxation at 10 percent per year (excluding the value of new improvements). This 'homestead cap' does not apply to non-homestead property.

Shelving and display counters a tenant installs to run a retail business, which the tenant may remove before the lease ends, are:

• a.emblements that are treated the same as annually planted crops
• b.trade fixtures that remain the tenant's personal property✓
• c.appurtenances that belong to the landlord after installation
• d.permanent fixtures that automatically transfer with the real estate

Trade fixtures are items a business tenant attaches to conduct business, and the tenant may generally remove them before the lease ends, repairing any damage. They are an exception to the usual rule that attached items become part of the realty.

Which of the following BEST defines an encumbrance?

• a.The physical act of recording a deed at the county courthouse
• b.A government grant transferring public land to a private citizen
• c.A claim, lien, or restriction held by someone other than the owner that affects the property✓
• d.The complete and fully unrestricted ownership of a parcel of land because the governing statute is generally understood to require that result

An encumbrance is any claim, lien, charge, or restriction on property held by a party other than the owner, such as a mortgage, easement, or deed restriction. Encumbrances can affect value or use but do not necessarily prevent transfer.

Ownership of real property by one individual or entity alone, with no co-owners, is called ownership in:

• a.tenancy in common that is held by multiple co-owners
• b.joint tenancy that is shared with a right of survivorship
• c.severalty✓
• d.community property that is shared between two spouses

Ownership in severalty means title is held by a single person or entity, 'severed' from all others. It is distinct from the various forms of co-ownership such as joint tenancy and tenancy in common.

The Texas Real Estate License Act (TRELA), which governs real estate licensing in Texas, is found in the:

• a.Texas Penal Code, in the provisions dealing with fraud
• b.Texas Occupations Code, Chapter 1101✓
• c.Internal Revenue Code, under the real property sections
• d.Texas Family Code, in the chapter on marital property

TRELA is codified in Chapter 1101 of the Texas Occupations Code, and TREC adopts implementing rules in Title 22 of the Texas Administrative Code. Together they govern licensing and conduct of Texas license holders.

The Texas Real Estate Commission (TREC) is composed of:

• a.members appointed by the Texas Association of Realtors
• b.twelve members who are elected directly by license holders regardless of the particular county in which the property is located
• c.nine members appointed by the Governor, including six brokers and three public members✓
• d.three members, all of whom must be licensed attorneys

TREC has nine members appointed by the Governor with Senate consent: six licensed real estate brokers and three members of the public. It administers TRELA and regulates license holders.

A Texas sales agent's license must be sponsored by:

• a.the county clerk in the county where the agent works
• b.another experienced sales agent in the same office
• c.the Texas Association of Realtors trade group
• d.a licensed Texas broker✓

A sales agent may act only when sponsored by an active Texas broker who is responsible for the agent's conduct. A sales agent cannot be sponsored by, or sponsor, another sales agent.

Which of the following persons generally does NOT need a Texas real estate license to sell real property?

• a.A person who lists other people's properties for a fee
• b.An owner selling their own property✓
• c.A person paid a fee to negotiate the sale of someone else's home
• d.An assistant who shows listed homes to buyers for a commission

Owners selling their own property are generally exempt from the licensing requirement. A license is required when a person, for compensation, brokers real estate transactions for others.

A licensed Texas attorney who handles a real estate transaction as part of providing legal services:

• a.must first obtain a separate broker license from TREC as a matter of long-standing real estate custom and common-law tradition
• b.may never be paid for handling any real estate matter
• c.is generally exempt from the real estate license requirement for that legal work✓
• d.must be sponsored by a broker just like a sales agent

Licensed attorneys acting in the course of their legal practice are exempt from the real estate licensing requirement. An attorney who wants to receive commissions as a broker, however, would still need a license.

To renew a Texas license, a license holder must generally complete 18 hours of continuing education every two years, which must include:

• a.a full college degree earned in a real estate field
• b.a one-time ethics seminar that is never required to repeat regardless of the particular county in which the property is located
• c.the 4-hour Legal Update I and the 4-hour Legal Update II courses✓
• d.40 hours of unrelated general business coursework

The 18-hour CE requirement includes the mandatory 4-hour Legal Update I and 4-hour Legal Update II courses (8 hours total), plus elective hours. Requirements can change, so license holders should confirm current rules with TREC.

A Texas real estate license must be renewed:

• a.annually on the license holder's own birthday
• b.once every six months without exception
• c.every two years✓
• d.only a single time, for a lifetime term

Texas real estate licenses are renewed on a two-year cycle, subject to continuing education and other requirements. Failure to renew on time can require reinstatement before the license holder may practice.

Before renewing a Texas sales agent license for the first time, the agent must complete:

• a.a four-year bachelor's degree in a real estate discipline
• b.four full years of active brokerage transaction experience
• c.nothing beyond the original pre-licensing courses already taken
• d.additional Sales Agent Apprentice Education (SAE) qualifying courses✓

First-time sales agent renewal requires completing Sales Agent Apprentice Education (SAE), additional qualifying courses on top of the original pre-license education. This ensures newer agents build competency early in their careers.

To qualify for a Texas broker license, an applicant must generally have:

• a.ten years of work as an unlicensed brokerage assistant even when the buyer and seller would clearly have preferred a different arrangement
• b.at least four years of active experience as a license holder plus additional education✓
• c.a current membership in a national trade association
• d.no prior experience at all, only a passing exam score

Broker applicants must generally show at least four years of active experience as a license holder (with a required amount of qualifying experience) and complete additional education. Exact point and hour requirements are set by TREC.

A Texas broker who sponsors sales agents is responsible for:

• a.personally attending and closing every one of the agents' transactions
• b.supervising the sponsored agents' real estate activities✓
• c.guaranteeing that every listing will sell within ninety days
• d.paying each agent a fixed monthly salary set directly by TREC

The sponsoring broker is responsible for supervising the real estate activities of sponsored sales agents and ensuring compliance with TRELA and TREC rules. The broker's oversight duty is a cornerstone of consumer protection.

When a business entity (such as an LLC) holds a Texas broker license, it must designate:

• a.an individual broker to act for the entity (the designated broker)✓
• b.a public member of TREC to personally oversee its files
• c.any available licensed sales agent to serve as its manager
• d.a private attorney to review and sign all of its contracts

A licensed business entity must designate an individual broker who meets the requirements to act on the entity's behalf. The designated broker is accountable for the entity's real estate activities.

The Texas Real Estate Recovery Trust Account exists to:

• a.reimburse consumers who win judgments against license holders that cannot otherwise be collected✓
• b.provide low-interest home loans to first-time Texas buyers
• c.pay for license holders' required continuing education courses
• d.fund the salaries and office expenses of TREC's staff

The Recovery Trust Account compensates aggrieved consumers who obtain a valid court judgment against a license holder for certain violations but cannot collect it. Payments are capped, and the license holder must repay the account.

Under TREC advertising rules, a sales agent's advertisement must:

• a.list the agent's home address and personal cell number
• b.include the name of the sponsoring broker✓
• c.be approved in writing by TREC before it is published
• d.state the exact commission the agent expects to earn

TREC rules require that a license holder's advertising include the sponsoring broker's name so consumers know who is responsible for the ad. Advertising must not be false, misleading, or deceptive.

TREC rules prohibit advertising that is:

• a.priced below the county's average listing amount
• b.false, misleading, or deceptive to the public✓
• c.written and displayed in more than one language
• d.placed on more than one website at the same time

TREC prohibits advertising that is misleading or likely to deceive the public, including inaccurate claims about a property or the license holder. Truthful multilingual or multi-platform advertising is permitted.

Which statement about representing both the buyer and the seller in Texas is correct?

• a.A single agent may secretly represent both parties without any disclosure so long as the transaction is closed through a licensed brokerage firm
• b.Only brokers licensed outside of Texas may practice dual agency here
• c.Dual agency is required whenever one firm holds both listings at once
• d.Traditional dual agency is not permitted in Texas; the broker instead acts as an intermediary with written consent✓

Texas abolished traditional dual agency; when one broker represents both parties, the broker acts as an intermediary with the written consent of both. This intermediary concept is a defining, Texas-specific feature of agency law.

When acting as an intermediary, a Texas broker may NOT:

• a.treat both the buyer and the seller honestly and fairly
• b.obtain written consent from both parties before beginning
• c.reveal that the seller will accept a price lower than the asking price without authorization✓
• d.appoint associated license holders to advise each party

An intermediary must remain impartial and may not disclose confidential information, such as a party's willingness to accept a different price, without written authorization. The intermediary must treat both parties fairly.

A Texas broker acting as an intermediary WITHOUT making appointments must:

• a.represent only the seller for the remainder of the transaction
• b.advise each party on how to gain an advantage over the other
• c.share each party's confidential bottom-line price with the other
• d.remain neutral and not favor one party over the other✓

Without appointments, the intermediary and the firm's license holders must stay neutral and not favor either party. With written consent, the broker may appoint different associates to work more closely with each party.

For a Texas intermediary broker to appoint one associate to the buyer and another to the seller, the broker must have:

• a.the transaction appraiser's signed written agreement
• b.written authorization from the parties in the representation agreements✓
• c.a court order that specifically permits the appointments so long as the transaction is closed through a licensed brokerage firm
• d.approval from the local Realtor board of directors

Appointments require the written authorization of the parties, typically obtained in the listing and buyer representation agreements. Appointed license holders may then advise and communicate with the party to whom they are appointed.

The Information About Brokerage Services (IABS) notice must generally be provided:

• a.at the first substantive communication about a specific property✓
• b.after the buyer has already signed a purchase contract
• c.no earlier than thirty days after the sale has closed
• d.only later, at the closing table on the day of funding even when the buyer and seller would clearly have preferred a different arrangement

The IABS notice must generally be given at or before the first substantive discussion about a specific property. It explains the types of representation and duties, helping consumers understand who a license holder represents.

Providing the IABS notice is generally NOT required when:

• a.an agent meets an unrepresented buyer at a showing
• b.a seller signs a listing agreement with a listing broker in essentially every residential and commercial transaction alike
• c.a buyer first calls a listing agent to ask about a home
• d.the transaction is a residential lease for one year or less and no sale is being considered✓

The IABS is not required when the transaction is a residential lease of one year or less with no sale contemplated, or when the other party is already represented by a license holder. Otherwise it must be provided at first substantive communication.

A Texas license holder who buys property for their own account must:

• a.first resign or inactivate their license before making an offer
• b.route the purchase through an unlicensed relative to avoid disclosure
• c.keep their license status secret in order to get a better price
• d.disclose in writing that they are a licensed real estate agent✓

TREC rules require a license holder buying or selling for their own account to disclose their license status in writing to the other party. This prevents license holders from using superior knowledge unfairly.

Paying part of a real estate commission to an unlicensed person for helping find a buyer is:

• a.always allowed as long as the amount paid is small
• b.generally prohibited; commissions may be shared only with licensed persons✓
• c.encouraged by TREC as a good source of new marketing
• d.permitted whenever the seller agrees to it verbally

A broker may share commissions only with licensed persons; paying an unlicensed person a fee for brokerage services is prohibited. This rule protects the public by keeping brokerage activity within the licensing system.

In Texas, an agreement to pay a real estate commission is generally enforceable only if it is:

• a.announced verbally in front of at least two witnesses
• b.approved and stamped by the county appraisal district
• c.posted publicly on the listing broker's own website
• d.in writing and signed by the party to be charged✓

Under the Texas statute of frauds for commissions, a person cannot sue to collect a real estate commission unless the agreement is in writing and signed by the party to be charged. This is why written listing agreements are essential.

An unlicensed assistant working for a Texas brokerage may lawfully:

• a.perform clerical tasks such as scheduling and data entry✓
• b.negotiate the terms of a contract on the agent's behalf
• c.show listed homes and answer buyers' questions about price
• d.host an open house alone and discuss the property to solicit buyers

Unlicensed assistants may handle administrative and clerical work but may not perform activities that require a license, such as negotiating, showing property, or discussing terms with prospects. Crossing that line risks unlicensed activity violations.

Which of the following is a ground for TREC to suspend or revoke a license?

• a.Advertising a listing in a language other than English
• b.Making a material misrepresentation or engaging in fraud✓
• c.Charging a commission that is higher than three percent
• d.Selling more than ten homes within a single calendar year

Fraud, material misrepresentation, dishonest dealing, and other violations of TRELA are grounds for disciplinary action, including suspension or revocation. High sales volume or lawful commission rates are not violations.

If TREC and a license holder cannot resolve a serious complaint informally, a contested case is typically heard by:

• a.the State Office of Administrative Hearings (SOAH)✓
• b.the county tax assessor-collector's office
• c.a federal grand jury convened for the county
• d.the local Realtor association's private ethics panel

Contested disciplinary cases that are not settled are heard by an administrative law judge at the State Office of Administrative Hearings (SOAH). TREC then acts on the judge's proposal for decision.

A Texas broker who deposits a client's earnest money into the broker's personal operating account has committed:

• a.a required step mandated under the statute of frauds
• b.commingling, a violation of TREC rules✓
• c.a lawful and completely standard business practice
• d.an act that is protected by the homestead exemption

Mixing client or trust funds with the broker's own funds is commingling, a serious violation. Trust money such as earnest money must be kept separate from the broker's operating accounts.

In most Texas residential transactions, earnest money is commonly held by:

• a.the buyer's own personal bank account until closing
• b.the listing agent's wallet or desk drawer until closing
• c.the county clerk's office in the county of the sale
• d.the title company (escrow agent) named in the contract✓

In Texas, earnest money is typically deposited with the title company acting as escrow agent under the contract. The escrow agent holds the funds neutrally and disburses them according to the contract and the parties' instructions.

The Texas Deceptive Trade Practices Act (DTPA) protects consumers by:

• a.setting the maximum commission a broker is allowed to charge
• b.providing remedies for false, misleading, or deceptive business practices✓
• c.requiring every home to be professionally inspected before sale regardless of the particular county in which the property is located
• d.licensing and regulating Texas real estate appraisers

The DTPA gives consumers legal remedies against false, misleading, or deceptive acts in trade, which can include misrepresentations in real estate. License holders must be careful that statements to consumers are accurate.

Two competing brokerages agree to charge all sellers the same 6% commission. This is most likely:

• a.illegal price fixing under antitrust law✓
• b.a practice required by TREC to standardize brokerage fees
• c.a lawful and customary professional courtesy between firms
• d.an example of permissible cooperation among competitors

Agreements among competing brokerages to fix commission rates are illegal price fixing under antitrust law. Commissions are always negotiable between a broker and client and must be set independently by each firm.

Competing brokers agreeing to divide a city so each avoids the other's territory is an antitrust violation known as:

• a.procuring cause of a completed sale
• b.market allocation✓
• c.cooperative subagency between brokers
• d.a lawful referral network among firms

Dividing markets or customers among competitors is an illegal 'market allocation' under antitrust law. Like price fixing and group boycotts, it restrains competition and is prohibited.

Several brokerages agree to refuse to cooperate with a new discount brokerage in town. This is an illegal:

• a.net listing that is prohibited by TREC rules
• b.exclusive right-to-sell listing arrangement
• c.group boycott under antitrust law✓
• d.intermediary relationship between the firms

An agreement among competitors to refuse to deal with a particular firm is an illegal group boycott under antitrust law. Each brokerage must independently decide whether to cooperate.