Texas Real Estate Sales Agent — All Questions

In an agency relationship, the client who hires and authorizes a broker to act on their behalf is the:

• a.Principal✓
• b.Subagent
• c.Customer
• d.Agent

The principal (client) is the party who employs and delegates authority to the agent. The agent owes fiduciary duties to the principal, while a customer is a party the agent deals with but does not represent.

A broker who represents the seller in a transaction owes the seller fiduciary duties. The customer (buyer) in that same transaction is owed:

• a.Honesty, fair dealing, and disclosure of material defects✓
• b.A duty of undivided loyalty
• c.No duties whatsoever
• d.The same fiduciary duties as the seller

Even when a broker does not represent the buyer, the law still requires honesty, fair dealing, and disclosure of known material defects to the customer. Full fiduciary duties such as loyalty and confidentiality are owed only to the client.

Which of the following is NOT one of the traditional fiduciary duties an agent owes to a principal?

• a.Loyalty
• b.Guaranteeing the property will appraise at the sales price✓
• c.Obedience to lawful instructions
• d.Confidentiality

Fiduciary duties commonly include loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care and diligence. An agent cannot guarantee an appraisal outcome, which depends on an independent appraiser and market data.

In Texas, before a license holder may substantively discuss a real estate transaction, TREC rules generally require providing the consumer with the:

• a.Information About Brokerage Services (IABS) form✓
• b.Appraisal report
• c.Seller's Disclosure Notice
• d.Closing Disclosure

The IABS notice explains the types of representation and the duties license holders owe, and it must generally be provided at first substantive communication. The seller's disclosure and closing documents are provided later and serve different purposes. Exact form and timing requirements can change.

An 'intermediary' relationship in Texas arises when:

• a.One broker's firm represents both the buyer and the seller in the same transaction✓
• b.A buyer works with two competing brokers
• c.The seller lists with an out-of-state broker
• d.A broker refuses to represent either party

In Texas, intermediary status occurs when the same broker (firm) represents both the buyer and the seller in one transaction, with the parties' written consent. The broker may appoint different associated license holders to each party, subject to strict rules.

For a Texas broker to act as an intermediary between a buyer and seller, the broker must obtain:

• a.Approval from TREC for each transaction
• b.Written consent from both parties, typically in the listing and buyer agreements✓
• c.An appraisal of the property
• d.A court order

Intermediary status requires the written consent of both the buyer and seller, usually obtained in advance through the representation agreements. The intermediary must act fairly and may not disclose certain confidential information such as one party's willingness to accept a different price.

When a broker acts as an intermediary and appoints one associated agent to the buyer and another to the seller, this is commonly called:

• a.Dual agency with no disclosure
• b.Subagency
• c.Designated brokerage by TREC
• d.Appointment (making appointments)✓

Under intermediary rules, the broker may, with the parties' written permission, appoint separate associated license holders to communicate with and advise each party. This allows each party to receive more individualized advice while the broker remains the intermediary.

A seller instructs the listing agent to conceal a known foundation problem from prospective buyers. The agent should:

• a.Disclose the problem only to buyers who ask directly
• b.Follow the instruction because of the duty of obedience
• c.Refuse, because the duty of obedience does not extend to unlawful acts✓
• d.Cancel the listing and tell no one

The duty of obedience applies only to lawful instructions; an agent may not follow directions to commit fraud or conceal material defects. Knowingly hiding a known material defect can expose both the agent and seller to liability.

Confidential information the agent learns about the principal, such as the seller's willingness to accept less than list price, must generally be:

• a.Disclosed to all prospective buyers
• b.Reported to TREC
• c.Shared with the buyer's lender
• d.Kept confidential even after the agency relationship ends✓

The duty of confidentiality protects the principal's private information, including motivation and bottom-line price, and it typically survives the end of the relationship. Disclosing such information would harm the principal's negotiating position.

The duty of 'accounting' in an agency relationship requires the agent to:

• a.Properly handle and report on money and property entrusted to them, such as earnest money✓
• b.Prepare the client's income tax returns
• c.Personally guarantee the loan
• d.Set the listing price

Accounting means the agent must safeguard and accurately report all funds and documents belonging to the client or third parties, such as earnest money. Commingling client funds with the broker's own operating account is prohibited.

Placing client or earnest money funds into a broker's personal or general business account instead of a proper trust or escrow account is called:

• a.Commingling (or conversion if used)✓
• b.Novation
• c.Estoppel
• d.Subrogation

Commingling is improperly mixing client funds with the broker's own funds, and using those funds is conversion. Both are serious violations that can lead to license discipline.

A listing agreement that gives one broker the right to sell but allows the seller to sell on their own without owing a commission is a(n):

• a.Open listing
• b.Exclusive agency listing✓
• c.Net listing
• d.Exclusive right to sell listing

Under an exclusive agency listing, one broker is the sole agent, but the seller reserves the right to sell independently without paying a commission. By contrast, an exclusive right to sell earns the broker a commission regardless of who finds the buyer.

Under an 'exclusive right to sell' listing, the broker earns a commission:

• a.Only if the seller finds the buyer
• b.Only if the broker personally finds the buyer
• c.Only after the property is rented
• d.Regardless of who procures the buyer during the listing period✓

An exclusive right to sell listing entitles the broker to a commission if the property sells during the term, no matter who brings the buyer, including the seller. This provides the strongest commission protection for the broker.

A 'net listing,' where the broker keeps any amount above a price set by the seller, is:

• a.Discouraged and heavily restricted because of conflict-of-interest concerns✓
• b.The standard listing type in Texas
• c.Always the best option for sellers
• d.Required for all commercial listings

Net listings create a conflict of interest and potential for the broker to take advantage of the seller, so they are restricted and must be handled carefully where allowed. Most agents avoid them to prevent claims of overreaching.

The concept of 'procuring cause' is most relevant when determining:

• a.The market value of a home
• b.Whether a deed is valid
• c.The amount of property tax owed
• d.Which broker is entitled to a commission in a disputed sale✓

Procuring cause analysis identifies the agent whose efforts actually led to the ready, willing, and able buyer, and it is used to resolve commission disputes. It focuses on an unbroken chain of events leading to the sale.

Which of the following actions by an agent would MOST likely breach the fiduciary duty of loyalty?

• a.Advising the client to obtain legal counsel
• b.Recommending a licensed home inspector
• c.Presenting all written offers to the seller
• d.Secretly buying the client's property through a relative at a low price✓

The duty of loyalty requires the agent to put the client's interests first and avoid undisclosed self-dealing. Secretly acquiring the client's property for personal gain is a classic breach of loyalty.

An agent must present to the seller:

• a.Only offers at or above the list price
• b.Only offers from pre-approved buyers
• c.All written offers received, even low ones, unless the seller instructs otherwise in writing✓
• d.Only the highest offer received

The duty of disclosure and diligence generally requires presenting all written offers to the seller promptly so the seller can decide. A seller may waive this in writing, but the agent cannot unilaterally screen out offers.

'Puffing' differs from misrepresentation because puffing:

• a.Is an opinion or exaggeration, not a statement of material fact✓
• b.Is a written guarantee of value
• c.Must be disclosed on the seller's disclosure notice
• d.Always constitutes fraud

Puffing is a subjective opinion or sales exaggeration, such as calling a home 'the best deal in town,' and is not actionable. Misrepresentation involves a false statement of a material fact that the other party reasonably relies on.

A single agent who represents the buyer in a transaction owes the buyer the duty to:

• a.Disclose the buyer's maximum price to the seller
• b.Always recommend the highest-priced property
• c.Keep the buyer's confidential information private and negotiate in the buyer's best interest✓
• d.Represent the seller equally

A buyer's agent owes the buyer fiduciary duties, including confidentiality and loyalty, and must advocate for the buyer's interests. Revealing the buyer's top price to the seller would breach confidentiality.

An agency relationship between a broker and client is typically created by:

• a.Recording a deed
• b.The buyer simply attending an open house
• c.A verbal comment from a neighbor
• d.A written representation agreement authorizing the broker to act✓

Agency is generally established through an express agreement, such as a written listing or buyer representation agreement, that authorizes the broker to act. Merely showing a property to a customer does not by itself create a client relationship.

If a listing broker fails to disclose to their seller-client a material fact that harms the seller, the broker may be liable for:

• a.Nothing, since disclosure is optional
• b.Only a small administrative fee
• c.A federal antitrust violation only
• d.Breach of fiduciary duty✓

Failing to disclose material facts to a client can constitute a breach of the fiduciary duty of disclosure and may expose the broker to liability and license discipline. Agents must communicate information relevant to the client's decision.

A broker holds earnest money as escrow agent. If a dispute arises between buyer and seller over who is entitled to the funds, the broker should generally:

• a.Automatically give the funds to the seller
• b.Keep the funds as a fee for the trouble
• c.Release the funds to whichever party asks first
• d.Hold the funds until the parties agree in writing or a court directs disbursement✓

An escrow agent holding disputed funds must not favor either side and should retain the money until the parties provide written agreement or a court orders disbursement. Improperly releasing disputed earnest money can create liability for the broker.

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.

A seller instructs the listing agent not to show the home to families with children. The agent should:

• a.quietly comply in order to keep the client satisfied
• b.show the home only to prospective buyers without children
• c.refuse, because complying would violate fair housing law✓
• d.raise the asking price to discourage families from applying

Refusing to show or sell to families with children is discrimination based on familial status. An agent may not follow an unlawful instruction, and doing so would expose both the agent and the seller to liability.

Under Texas law, a death on a property that resulted from natural causes, suicide, or an accident unrelated to the property's condition is generally:

• a.always required to be disclosed on the Seller's Disclosure Notice
• b.not a required disclosure✓
• c.a federal Fair Housing Act violation if it is ever concealed
• d.grounds for automatic revocation of the agent's license if mentioned

Texas law provides that a seller or license holder is not required to disclose a death by natural causes, suicide, or an accident unrelated to the property's condition, nor that a prior occupant had HIV/AIDS. Known material defects, however, must still be disclosed.

Even when representing the seller, a Texas license holder must disclose to a buyer:

• a.known material defects in the property✓
• b.the seller's personal reasons for moving away
• c.the details of the seller's private financial hardship
• d.the seller's lowest acceptable sale price

A license holder must disclose known material defects to a buyer even while representing the seller. The seller's confidential information, such as bottom-line price or motivation, must not be revealed.

When a buyer asks a Texas agent about registered sex offenders in the area, the agent should generally:

• a.refuse to discuss the topic and terminate the relationship
• b.guess based on the agent's personal knowledge of the neighbors so long as the transaction is closed through a licensed brokerage firm
• c.direct the buyer to the publicly available sex-offender registry✓
• d.promise the buyer that there are none nearby to reassure them

Rather than risk inaccurate statements, an agent should refer buyers to the public sex-offender registry so they can research the information themselves. Making unverified assurances could create liability.

An agency relationship between a broker and a client may terminate by all of the following EXCEPT:

• a.the expiration of the term stated in the agreement
• b.the mutual agreement of the broker and the client
• c.the completion of the transaction the agency was created for
• d.the buyer simply attending another agent's open house✓

Agency ends by expiration, mutual agreement, completion of purpose, revocation, or operation of law (such as death). A client's casual visit to an open house does not, by itself, end an existing agency relationship.

A written buyer representation agreement in Texas primarily serves to:

• a.establish the agency relationship and the broker's authority to represent the buyer✓
• b.transfer legal title of a home to the buyer immediately
• c.waive the buyer's right to have the property inspected
• d.guarantee the buyer a specific fixed mortgage interest rate regardless of the particular county in which the property is located

A buyer representation agreement creates the agency relationship, defines the broker's authority and duties, and addresses compensation. It clarifies that the broker represents the buyer's interests.

A sales agent whose license has expired and has not been renewed may:

• a.continue working for six months under the expired license according to the standard practice followed throughout the industry
• b.operate independently without a sponsoring broker at all
• c.sponsor and supervise other newly licensed sales agents
• d.not perform brokerage activities or be paid a commission until it is reinstated✓

An expired license means the agent cannot lawfully perform brokerage activities or be compensated for them until the license is renewed or reinstated. Acting without an active, sponsored license is a violation.

TREC rules on team names generally require that a team advertisement:

• a.omit the broker's name entirely in order to save space
• b.include the sponsoring broker's name and not imply the team is a separate brokerage✓
• c.use the word 'realty' or 'brokerage' within the team name
• d.be registered with the state as its own independent company because the governing statute is generally understood to require that result

A team may advertise under a team name, but the ad must include the sponsoring broker's name and must not mislead the public into thinking the team is a separate brokerage. This keeps responsibility with the broker.

A title company offers a Texas agent a cash bonus for every client the agent refers to it. Accepting this is:

• a.acceptable as long as the amount is disclosed only to TREC
• b.a standard and completely lawful marketing arrangement
• c.likely a prohibited kickback under RESPA and TREC rules✓
• d.permissible whenever the individual bonus is under five hundred dollars

Paying or receiving a fee simply for referring settlement-service business is a prohibited kickback under RESPA, and TREC rules also restrict such arrangements. Referral relationships must comply with these anti-kickback laws.

The fiduciary duties a Texas agent owes a client are sometimes remembered as 'OLD CAR.' Which set correctly reflects those duties?

• a.Ownership, leasing, deeds, closing, appraisal, and recording unless the parties specifically negotiate a written exception beforehand
• b.Obedience, listing, deed, care, advertising, and referral
• c.Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care✓
• d.Offer, listing, disclosure, contract, agency, and referral

The common 'OLD CAR' memory aid stands for Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care (diligence). These are the core fiduciary duties an agent owes a principal.

When a Texas license holder lists and sells their own home, they must:

• a.disclose their status as a licensed real estate agent to prospective buyers✓
• b.obtain special written permission from the Governor first
• c.hide the license status in order to obtain a higher sale price
• d.hire an unlicensed friend to handle the entire sale instead

A license holder acting on their own account must disclose in writing that they hold a real estate license. This informs the other party that they are dealing with someone who has professional knowledge.

An advertisement that fails to disclose that the person placing it is a real estate broker or agent is called a:

• a.net listing agreement with the seller
• b.comparative market analysis of the listing
• c.blind ad, which is prohibited✓
• d.procuring-cause notice to other brokers

A 'blind ad' conceals that a license holder placed it, which is prohibited because consumers must know they are dealing with a real estate professional. Ads must identify the broker.

TREC generally requires Texas brokers to keep transaction and trust-account records for at least:

• a.one week following each completed transaction
• b.the entire life of the broker's license only
• c.four years✓
• d.thirty days after each closing occurs

TREC rules require brokers to retain relevant records, including trust account records and transaction files, for at least four years. Proper recordkeeping supports audits and dispute resolution.

A Texas agent's social media post states, 'Buy now, this neighborhood is guaranteed to double in value in two years.' This claim is:

• a.a required disclosure under the Truth in Lending Act
• b.improper because it is a misleading, unsubstantiated guarantee✓
• c.acceptable sales puffing that has no limits at all
• d.protected commercial speech that TREC has no power to address

Guaranteeing future value increases is a misleading, unsubstantiated claim that violates TREC's prohibition on false or deceptive advertising. Agents must not promise investment results they cannot support.