Sec. 1101.001-1101.002. Short Title and Definitions +12Texas · Real Estate · English

A broker is a person who, in exchange for or with expectation of commission or other valuable consideration, performs for another person acts such as selling, exchanging, purchasing, or leasing real estate; offering to do so; negotiating listings/sales; listing property; auctioning; dealing in options; aiding in locating real estate; procuring prospects or property; controlling acceptance of rent from single-family residential units; providing written price analyses (not called appraisals); or advising owners on short sales. Also includes persons employed to sell real estate or those charging advance fees to promote sales.

• ✓A broker acts for another person in exchange for or expectation of valuable consideration
• ✓Broker activities include selling, leasing, negotiating, listing, auctioning, and dealing in options on real estate
• ✓A written price analysis is a brokerage act only if not called an appraisal, provided in ordinary business, and related to management/acquisition/disposition
• ✓Advising an owner on a short sale is a brokerage act

Business entity means a domestic or foreign entity qualified to transact business in Texas. Commission means the Texas Real Estate Commission (TREC). License holder means a broker or sales agent licensed under this chapter. Real estate means any interest in real property including a leasehold, located in or outside Texas, but excludes an interest given as security for an obligation. Sales agent means a person sponsored by a licensed broker to perform brokerage acts.

• ✓'Commission' means the Texas Real Estate Commission (TREC)
• ✓'License holder' means a broker or sales agent
• ✓'Real estate' includes leasehold interests but excludes security interests
• ✓A 'sales agent' must be sponsored by a licensed broker

Chapter 1101 of the Texas Occupations Code may be cited as The Real Estate License Act. This is the governing statute for real estate brokers and sales agents in Texas.

• ✓Chapter 1101 is cited as 'The Real Estate License Act'
• ✓The Act governs real estate brokers and sales agents in Texas

A residential rental locator offers, for consideration, to locate an apartment complex unit for lease to a prospective tenant; an owner locating a unit in their own complex is excluded. Easement or right-of-way agent sells, buys, leases, or transfers easements/rights-of-way for compensation for telecom, utility, railroad, or pipeline service. Certificate holder means a person registered under Subchapter K.

• ✓A residential rental locator requires a license under the Act
• ✓An owner locating a unit in the owner's own complex is not a residential rental locator
• ✓An easement or right-of-way agent is defined for telecom, utility, railroad, or pipeline service

A license holder may face suspension or revocation for engaging in unlawful discrimination based on race, color, religion, sex, disability, familial status, national origin, or ancestry. This includes 'steering' - directing a prospective buyer or tenant interested in equivalent properties to a different area based on a protected characteristic.

• ✓Steering prospective buyers/tenants to different areas based on protected class is prohibited
• ✓Protected classes include race, color, religion, sex, disability, familial status, national origin, or ancestry

A license holder can be disciplined for disregarding or violating the chapter, or for failing to enter into a written agreement with a prospective buyer as required by Section 1101.563.

• ✓Disregarding or violating the chapter is grounds for discipline
• ✓Failing to enter a required written buyer agreement is a violation

Chapter 1102 defines three inspector categories. An apprentice inspector trains under direct supervision of a professional or real estate inspector. A real estate inspector works under indirect supervision of a professional inspector. A professional inspector represents to the public that they are trained and qualified and accepts employment to perform inspections for buyers or sellers. 'License' means any of these three license types.

• ✓Apprentice inspector requires DIRECT supervision of a professional or real estate inspector
• ✓Real estate inspector requires INDIRECT supervision of a professional inspector
• ✓Professional inspector needs no supervision and may represent qualifications to the public

A 'real estate inspection' is a written or oral opinion as to the condition of improvements to real property, including structural items, electrical items, mechanical systems, plumbing systems, or equipment. The 'core real estate inspection course' is a commission-approved course covering these topics plus business, law, standards of practice, report writing, appliances, or ethics.

• ✓A real estate inspection may be a written OR oral opinion on the condition of improvements
• ✓Core inspection courses cover structural, electrical, mechanical, plumbing, roofing, law, ethics, and report writing

The 'Commission' means the Texas Real Estate Commission (TREC). The 'Committee' means the Texas Real Estate Inspector Committee, an advisory body. Broker and salesperson have the meanings assigned by Section 1101.002.

• ✓The Texas Real Estate Commission (TREC) regulates inspectors
• ✓The Texas Real Estate Inspector Committee is advisory only

The chapter does not apply to persons who repair, maintain, or inspect improvements (electricians, plumbers, carpenters, pest control) IF they do not represent to the public through solicitation or advertising that they are in the business of inspecting. It also does not prevent persons from performing acts authorized under another license or registration.

• ✓Tradespersons are exempt unless they advertise or solicit as inspectors
• ✓The chapter does not restrict acts authorized under other state licenses or registrations

The commission by rule shall prescribe standard forms and require inspectors to use them to reduce discrepancies and create consistency in preparing real estate inspection reports.

• ✓Inspectors must use commission-prescribed standard forms
• ✓The purpose is consistency and reduced discrepancies in reports

Broker and sales agent applicants who are not subject to the standard education requirements must still show evidence of completing the continuing education hours that would have been required for a timely renewal under Section 1101.455 during the two years preceding the application date.

• ✓Applies to broker applicants not subject to Section 1101.356(a)(2) education requirements
• ✓Applies to sales agent applicants not subject to Section 1101.358 or 1101.454
• ✓Must show CE completion during the two years preceding filing of application

The commission may suspend or revoke a certificate of registration if the certificate holder engages in dishonest dealing, fraud, unlawful discrimination, a deceptive act, makes a misrepresentation, acts in bad faith, or demonstrates untrustworthiness.

• ✓Dishonest dealing, fraud, unlawful discrimination, or deceptive acts are grounds for revocation
• ✓Misrepresentation, bad faith, or untrustworthiness are grounds for discipline

A certificate holder must provide a party a written notice before the party is obligated to sell, buy, lease, or transfer a right-of-way or easement. The notice must contain the certificate holder's name, certificate number, name of the person represented, advice that the party may seek a lawyer or broker, and a statement that the easement may affect property value.

• ✓Notice must be given before the party is obligated to the transaction
• ✓Notice must include name, certificate number, person represented, right to seek lawyer/broker, and value impact statement

A certificate holder may not directly or indirectly accept a financial incentive to make an initial offer that the certificate holder knows or should know is lower than the adequate compensation required under the Texas Constitution.

• ✓Accepting incentive for a knowingly low offer is prohibited
• ✓Adequate compensation standard is set by the Texas Constitution

A certificate holder may be disciplined for failing to honor, within a reasonable time, a payment issued to the commission after the commission has mailed a request for payment to the certificate holder's last known address.

• ✓Payment must be honored within a reasonable time after mailed request
• ✓Notice is sent to the last known address in commission records

Qualifying real estate courses include: agency law, contract law, principles of real estate, property management, real estate appraisal, real estate brokerage, real estate finance, real estate investment, real estate law, real estate marketing, and real estate mathematics. The commission may designate equivalent courses and prescribe content and additional courses by rule.

• ✓There are 11 statutorily listed qualifying real estate course categories
• ✓The commission may designate equivalent courses and prescribe additional ones by rule

A daily course segment for a qualifying course may not exceed 12 hours. For alternative delivery or correspondence courses, completion may not be reported until the elapsed time between registration and completion reporting exceeds twice the number of credit hours claimed.

• ✓A daily course segment may not exceed 12 hours
• ✓Correspondence/alternative course completion cannot be reported until elapsed time exceeds twice the credit hours claimed

A nonresident applicant is subject to the same license requirements as a resident. The commission may refuse a license to a nonresident for the same reasons applicable to residents.

• ✓Nonresident applicants held to the same requirements as residents
• ✓Commission may refuse nonresident license for the same reasons as residents

A nonresident applicant must submit an irrevocable consent allowing legal actions against them in any Texas county where a cause of action arises or the plaintiff resides. Action may be commenced by service on the commission's executive director or deputy.

• ✓Consent must stipulate service of process is valid and binding as if personally served in Texas
• ✓Consent must be acknowledged, and if made by a corporation, authenticated by its seal
• ✓Service on the commission must be by duplicate copies (one filed, one mailed by registered mail to last known address)

A default judgment against a nonresident may not be granted unless the commission certifies the process copy was mailed to the defendant, and not until the 21st day after mailing.

• ✓Commission must certify a copy was mailed to the defendant
• ✓Default judgment not allowed until the 21st day after the process is mailed

The Texas Real Estate Inspector Committee is an advisory committee appointed by the commission. Several original membership subsections were repealed in 2007. It functions to advise TREC.

• ✓The Committee is appointed by the commission
• ✓The Committee serves in an advisory capacity

The committee recommends rules for licensing (education, experience, examinations, continuing education, granting/denying applications), the form of applications, reasonable fees, standards of practice, a code of professional conduct and ethics, and other actions to protect the public. The commission must consider committee recommendations on qualifications and licensing to assure a quality inspection system.

• ✓The Committee recommends rules on education, exams, fees, standards of practice, and ethics
• ✓The commission must consider committee recommendations regarding licensing qualifications

A person engages in real estate brokerage if, expecting valuable consideration, they directly or indirectly perform or offer/attempt/agree to perform for another any act described in Section 1101.002(1), whether part of or the entire transaction. A person is NOT engaged in brokerage based solely on constructing/remodeling/repairing buildings, investing as a principal/partner/financial manager, or entering an obligation secured by real property interest.

• ✓Brokerage requires expectation of valuable consideration and performing acts for another person
• ✓Constructing, remodeling, or repairing a building alone is not brokerage
• ✓Investing as a principal/partner and securing an obligation with real property are not brokerage

A person may acquire an option or interest in a contract to purchase real property and then sell or assign it WITHOUT a license if they: (1) do not use it to engage in real estate brokerage, and (2) disclose in writing the nature of the equitable interest to any seller or potential buyer. Failing to disclose the nature of that interest means the person IS engaging in real estate brokerage.

• ✓Selling/assigning an equitable interest requires written disclosure of its nature to avoid needing a license
• ✓Failure to disclose the nature of the equitable interest constitutes engaging in real estate brokerage

The commission shall issue a license to qualified applicants. It may issue an inactive sales agent license; the person cannot act as a sales agent unless sponsored by a licensed broker who notifies the commission. A license remains in effect if the holder complies and pays renewal fees.

• ✓Commission shall issue license to applicants meeting all requirements
• ✓Inactive sales agent may not act until sponsored by a licensed broker per Section 1101.367(b)
• ✓License remains valid while holder complies with chapter and pays renewal fees

The commission may, by rule, waive some or all license requirements for an applicant who was licensed under this chapter within the two years preceding the application date.

• ✓Waiver available only if applicant was licensed within the two preceding years
• ✓Waiver is discretionary and adopted by commission rule

The commission must immediately give written notice of a license denial. A person whose application is denied is entitled to a hearing under Section 1101.657.

• ✓Commission must immediately give written notice of denial
• ✓Denied applicant is entitled to a hearing under Section 1101.657

The commission may issue a probationary license and by rule shall adopt reasonable terms for issuing one.

• ✓Commission may issue probationary licenses
• ✓Commission must adopt reasonable terms by rule for probationary licenses

The commission SHALL (mandatory) suspend or revoke the license or certificate of a non-attorney who, for consideration, drafts an instrument (other than a promulgated form) that transfers or affects an interest in real property, or advises a person regarding the validity or legal sufficiency of an instrument or title.

• ✓Suspension/revocation is mandatory for unauthorized practice of law
• ✓Non-attorneys may not draft instruments affecting real property interests (except approved forms)
• ✓Non-attorneys may not advise on validity/legal sufficiency of instruments or title

A license holder who completes a contract form for sale, exchange, option, or lease incidental to acting as a broker is NOT engaged in unauthorized practice of law if the form was adopted by the commission, prepared and approved by a Texas-licensed attorney, or prepared by/required by the property owner.

• ✓Completing a commission-adopted form is not unauthorized practice of law
• ✓Attorney-prepared and approved forms are permitted
• ✓Property owner-prepared or required forms are permitted

A person may not act or attempt to act as an apprentice, real estate, or professional inspector for a buyer or seller unless they hold the appropriate license. Apprentices must be under direct supervision; real estate inspectors under indirect supervision of a professional inspector; professional inspectors require no supervision.

• ✓Acting or attempting to act without the proper license is prohibited
• ✓Apprentice requires direct supervision; real estate inspector requires indirect supervision of a professional inspector

Direct supervision means the supervising inspector is responsible for the person's actions, available to consult/assist, AND physically present at the time and place of inspection. Indirect supervision means the professional inspector is responsible and available to consult/assist, but NOT required to be physically present.

• ✓Direct supervision requires physical presence at the inspection
• ✓Indirect supervision requires responsibility and availability but NOT physical presence

Applicants for a license or renewal must submit a complete, legible set of fingerprints for criminal history checks by the Texas DPS and FBI. The commission must refuse to issue or renew a license for anyone who does not comply. TREC conducts a criminal history check using this information.

• ✓Fingerprints are required for both original licensing and renewal
• ✓The commission must refuse license issuance or renewal if fingerprints are not submitted

An applicant must be at least 18 years old, a U.S. citizen or lawfully admitted alien, be sponsored by a professional inspector, and satisfy the commission as to honesty, trustworthiness, and integrity.

• ✓Apprentice applicants must be at least 18 and sponsored by a professional inspector
• ✓Applicants must demonstrate honesty, trustworthiness, and integrity

An applicant must have held an apprentice license at least three months AND performed at least 25 inspections under direct supervision, complete at least 90 classroom hours of core courses, pass the exam, be sponsored by a professional inspector, and satisfy the commission as to honesty, trustworthiness, integrity, and competence.

• ✓Requires 3 months as apprentice and 25 inspections under direct supervision
• ✓Requires 90 classroom hours of core courses plus passing the exam and professional inspector sponsorship

An applicant must have held a real estate inspector license at least 12 months AND performed at least 175 inspections under indirect supervision, complete at least 40 additional classroom hours of core courses (beyond the 90 required for real estate inspector), pass the exam, and satisfy the commission as to honesty, trustworthiness, integrity, and competence.

• ✓Requires 12 months as real estate inspector and 175 inspections under indirect supervision
• ✓Requires 40 additional classroom hours beyond the 90 hours for the real estate inspector license

An inspector must maintain financial responsibility as a condition of licensure: either a liability insurance policy with a minimum limit of $100,000 per occurrence and $100,000 aggregate annual total (with professional liability coverage), OR a bond/other security accepted by the commission. A bond must be at least $100,000, continuous, and cancellable only after 90 days' written notice to the commission.

• ✓Minimum liability insurance of $100,000 per occurrence and $100,000 annual aggregate
• ✓A bond alternative must be at least $100,000 and require 90 days' written cancellation notice

An applicant who held a real estate or professional inspector license within the 24-month period preceding application may qualify without repeating full requirements, provided sponsorship (for real estate inspector), honesty/trustworthiness/integrity, and completion of the continuing education hours that would have been required to renew.

• ✓Previous holders within 24 months may re-qualify by completing required continuing education
• ✓Real estate inspector re-applicants must still be sponsored by a professional inspector

The commission by rule provides for substitution of relevant experience and additional education in place of the number of inspections and the ladder progression requirements. Rules may not require more than 320 additional hours of core courses, more than 40 hours of field work (for alternative/correspondence courses), or more than seven years of relevant experience.

• ✓Substitution rules cannot require more than 320 additional core course hours
• ✓Substitution rules cannot require more than 7 years of relevant experience or 40 hours field work

The commission may waive any license requirement for applicants licensed in another state with substantially equivalent requirements. A professional inspector may sponsor an apprentice or real estate inspector only if they prove they have completed at least 200 real estate inspections as a professional inspector.

• ✓Out-of-state applicants with substantially equivalent licenses may receive waivers
• ✓A professional inspector must have completed 200 inspections to be eligible as a sponsor

Security other than a bond must be convertible to cash by the commission for the benefit of a person who contracts with the inspector if the commission finds a Subchapter G violation, without court approval. Remaining amounts must be returned within 180 days after license expiration. Inspectors posting a bond must designate an unaffiliated third party to process claims.

• ✓Non-bond security is convertible to cash without court approval upon a Subchapter G violation
• ✓Remaining security must be returned within 180 days after license expiration

An inspector must provide TREC with a current mailing address, telephone number, and if available e-mail address. Any change must be reported to the commission (with any required fee) not later than the 30th day after the change.

• ✓Inspectors must keep current contact information on file with TREC
• ✓Changes must be reported within 30 days of the change

Denial of a license follows Section 1101.364. The commission may issue a probationary license under Section 1101.365. The commission by rule may adopt terms for applying for, renewing, or placing a license on inactive status and returning to active status.

• ✓License denial follows the procedures of Section 1101.364
• ✓Probationary licenses may be issued under Section 1101.365

The chapter does not apply to: attorneys licensed in Texas; attorneys-in-fact under a power of attorney conducting no more than three transactions annually; public officials in official duties; licensed auctioneers conducting real estate auctions (not performing other broker acts); persons acting under court order/will/trust; persons selling structures erected by an owner in the owner's business; on-site apartment managers; owners/employees leasing their own real estate; and specified mineral/timber/cemetery/hotel/deed-of-trust and limited partnership/LLC transactions.

• ✓A Texas-licensed attorney is exempt from the chapter
• ✓An attorney-in-fact may conduct no more than three real estate transactions annually to remain exempt
• ✓Owners and their employees leasing the owner's own real estate are exempt
• ✓Transactions in minerals, standing timber, cemetery lots, and hotel/motel leases are exempt

The Texas Real Estate Commission is subject to the Texas Sunset Act (Chapter 325, Government Code). Unless continued, the commission is abolished and Chapter 1101, Chapter 1102, and Chapter 221 of the Property Code expire September 1, 2033.

• ✓TREC is subject to the Texas Sunset Act
• ✓Unless continued, TREC and the relevant chapters expire September 1, 2033