Texas Real Estate Sales Agent — All Questions

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.