Subchapter H. License Requirements (Sec. 1101.351-1101.358) +3Texas · Real Estate · English

Unless a person holds a license under this chapter, they may not act as or represent themselves as a broker or sales agent, or act as a residential rental locator. A business entity must be licensed to act as a broker. Applicants may not act until they receive the license. A licensed sales agent may not engage in brokerage unless sponsored by and acting for a licensed broker.

• ✓A license is required to act as or represent oneself as a broker or sales agent
• ✓A residential rental locator must be licensed
• ✓A sales agent must be sponsored by and act for a licensed broker
• ✓Applicants cannot act until the license is actually received

The commission requires applicants for a license or renewal of an unexpired license to submit a complete legible set of fingerprints to obtain criminal history records from DPS and the FBI. The commission must refuse to issue or renew an active license for a person who does not comply. The commission conducts criminal history checks and may contract with DPS to administer them.

• ✓Applicants and renewal applicants must submit fingerprints for a criminal history check
• ✓The commission must refuse to issue/renew for non-compliance with fingerprinting
• ✓Criminal history checks use DPS and FBI information

To receive a license, a person must at the time of application be at least 18 years old and a U.S. citizen or lawfully admitted alien; satisfy the commission as to honesty, trustworthiness, and integrity; demonstrate competence by examination; and complete required qualifying courses. A person may request a fitness determination before applying (with fee); the commission decides and notifies within 30 days and may issue a provisional determination.

• ✓Applicants must be at least 18 and a U.S. citizen or lawfully admitted alien
• ✓Applicants must satisfy the commission on honesty, trustworthiness, and integrity
• ✓Applicants must pass an examination and complete required qualifying courses
• ✓A pre-application fitness determination is available, decided within 30 days

A business entity seeking a broker license must designate a managing officer as its broker and provide proof of errors and omissions insurance ($1 million minimum per occurrence) if the designated broker owns less than 10% of the entity. The entity cannot act as broker unless its designated broker is in active status and good standing. Certain LLCs or S corporations at least 51% owned by a license holder that only receive compensation and are registered are not required to be licensed.

• ✓A business entity broker must designate a managing officer as its broker
• ✓E&O insurance of at least $1 million per occurrence is required if the designated broker owns under 10%
• ✓The designated broker must be in active status and good standing
• ✓A 51%+ owned LLC/S corp only receiving compensation may register instead of licensing

A broker applicant must show at least four years of active experience as a license holder during the 60 months preceding application, complete required qualifying/related course hours (not exceeding 60 semester or equivalent classroom hours), and attend the approved broker responsibility course. This does not apply to applicants licensed as brokers in another state with comparable requirements.

• ✓Broker applicants need four years of active experience within the preceding 60 months
• ✓Broker applicants must complete required courses (up to 60 semester/classroom hours)
• ✓Broker applicants must attend the broker responsibility course
• ✓The experience/education requirement is waived for comparable out-of-state brokers

A sales agent applicant must provide satisfactory evidence of completing at least 12 semester hours (or equivalent classroom hours) of qualifying real estate courses required by commission rule. The commission waives the education requirement if the applicant has been previously licensed in this state (as continued in later sections).

• ✓Sales agent applicants must complete at least 12 semester hours of qualifying courses
• ✓Education requirements may be waived for prior Texas licensure

Each broker/sales agent applicant submits a commission-prescribed application and must disclose whether they entered a plea of guilty/nolo contendere to a felony or were convicted of a felony (appeal time elapsed or affirmed). Disclosure is required even if community supervision suspended the sentence. Applicants must provide current mailing address, phone, and business e-mail (if available) and notify the commission of changes while pending.

• ✓Applicants must disclose felony pleas or convictions
• ✓Felony disclosure is required even if community supervision suspended the sentence
• ✓Applicants must provide and update contact information while the application is pending

A licensed broker may not pay a commission to or compensate any person for a broker's act unless the person is a license holder or a broker licensed in another state who does not conduct negotiations in Texas. A sales agent may not accept compensation from anyone other than their sponsoring broker and may pay a commission only through the sponsoring broker.

• ✓Broker may only compensate license holders or qualifying out-of-state brokers
• ✓Sales agent may only accept compensation from their sponsoring broker
• ✓Sales agent may pay a commission only through the sponsoring broker

A broker or appointed license holder acting as intermediary under Subchapter L may not disclose that the seller/landlord will accept less (or buyer/tenant will pay more) than stated unless separately instructed in writing; disclose confidential information unless permitted, court-ordered, or materially related to property condition; treat a party dishonestly; or violate the chapter.

• ✓May not disclose seller/landlord will accept a lower price without separate written instruction
• ✓May not disclose buyer/tenant will pay a higher price without separate written instruction
• ✓May not disclose confidential information except as instructed, required by law/court, or if materially related to property condition
• ✓May not treat any party dishonestly or otherwise violate the chapter

The commission may discipline a license holder who is convicted of or pleads guilty/nolo to a felony or fraud offense; procures a license by fraud or material misstatement; fails to honor a payment; fails to provide requested complaint information; fails to surrender documents without just cause; fails to consider market conditions; fails to notify the commission of a conviction within 30 days; or otherwise disregards/violates the chapter.

• ✓Felony or fraud conviction/plea is grounds for discipline
• ✓Procuring a license by fraud or material misstatement is grounds for discipline
• ✓Must notify commission within 30 days of a final conviction or plea of guilty/nolo
• ✓Failure to provide requested complaint-related information is grounds for discipline

The commission may discipline a license holder who acts negligently/incompetently, engages in dishonest or bad-faith conduct or untrustworthiness, misrepresents or fails to disclose known significant/latent defects, makes false promises, pursues a flagrant course of misrepresentation, fails to make clear who they represent, or receives compensation from more than one party without full knowledge and consent of all.

• ✓Negligence, incompetence, dishonesty, or untrustworthiness is grounds for discipline
• ✓Failing to disclose known significant or latent structural defects is grounds for discipline
• ✓Receiving compensation from multiple parties requires full knowledge and consent of all parties
• ✓Must make clear to all parties which party the license holder represents

The commission may discipline a license holder who fails to properly account for or remit money belonging to another within a reasonable time, commingles others' money with their own, or pays/divides a commission with an unauthorized person. Escrow/trust funds must be deposited within a reasonable time with a title company or in a proper custodial/trust/escrow account, and may not be disbursed before completion or termination of the transaction.

• ✓Must timely account for and remit money belonging to another
• ✓May not commingle others' money with the license holder's own funds
• ✓Escrow/trust funds must be deposited timely with a title company or proper account
• ✓May not disburse escrow funds before the transaction is completed or terminated

Grounds include failing to specify a definite termination date in a service contract (other than property management), undisclosed profits, using lotteries or deceptive practices, guaranteeing future resale profits, offering property without owner consent, publishing misleading advertising, failing to name the broker in ads, inducing contract breach, negotiating with someone bound by an exclusive agency, and discriminating against owners/buyers/landlords/tenants based on protected classes.

• ✓Service contracts must specify a definite termination date not subject to prior notice
• ✓Advertising must not mislead and must include the broker's name
• ✓May not offer property for sale/lease without the owner's knowledge and consent
• ✓May not discriminate on the basis of race, color, or other protected classes

The commission may discipline a license holder who engages in misrepresentation, dishonesty, or fraud when dealing in real property in the name of the holder, their spouse, or a first-degree relative; fails to produce records relating to a real estate transaction on request; or fails to use a commission-required contract form under 1101.155.

• ✓Misrepresentation/fraud in personal, spousal, or first-degree relative property transactions is grounds for discipline
• ✓Failure to produce transaction records on request is grounds for discipline
• ✓Failure to use required contract forms under Section 1101.155 is grounds for discipline

A person who receives compensation for acting as a broker or sales agent without holding a license/certificate is liable to the state for a civil penalty of not less than the amount received nor more than three times that amount. An aggrieved person may also file a private cause of action for the same penalty range.

• ✓Civil penalty ranges from the amount received up to three times the amount received
• ✓The state (via commission) and aggrieved persons may both recover penalties
• ✓Commission may recover civil penalty, court costs, and reasonable attorney's fees

A person commits a Class A misdemeanor for willfully violating the chapter or a commission order, for engaging in business as a residential rental locator without a license, or for acting as a broker/sales agent or certificate-required activity without proper credentials.

• ✓Willful violation of the chapter or a commission order is a Class A misdemeanor
• ✓Acting as an unlicensed broker, sales agent, or rental locator is a Class A misdemeanor

The commission may bring an action in its name to enjoin a violation of the chapter or rule, without proving that an adequate remedy at law does not exist or that substantial/irreparable damage would result. Acting through the attorney general, it may also bring actions to abate or enjoin actual or potential violations.

• ✓Commission need not prove inadequate legal remedy or irreparable damage to obtain injunction
• ✓Actions may be brought where the violation occurred or where the defendant resides
• ✓Commission is not required to give a bond and court costs cannot be recovered from it

If it appears a person is violating Chapter 1101 or Chapter 1102 (or their rules), the commission, after notice and opportunity for a hearing, may issue a cease and desist order. Violation of such an order is grounds for an administrative penalty under Subchapter O.

• ✓Cease and desist orders require notice and opportunity for a hearing
• ✓Violating a cease and desist order supports an administrative penalty

Notwithstanding Section 1101.801, a person is not civilly or criminally liable for failing to inquire about, disclose, or release information regarding whether a previous or current occupant had AIDS, an HIV-related illness, or HIV infection as defined by the CDC.

• ✓No liability for failing to disclose an occupant's HIV/AIDS status
• ✓This provision overrides the general liability rule in Section 1101.801

A licensed broker is liable to the commission, the public, and the broker's clients for any conduct engaged in under the chapter by the broker or by a sales agent associated with or acting for the broker.

• ✓Broker is liable for their own conduct and that of associated sales agents
• ✓Broker liability extends to the commission, the public, and clients

A party is not liable for a misrepresentation or concealment of a material fact made by a license holder unless the party knew of the falsity and failed to disclose it. Likewise, a license holder is not liable for a party's misrepresentation/concealment unless the license holder knew and failed to disclose. This section prevails over other law and does not diminish a broker's responsibility for an associated sales agent.

• ✓Liability for another's misrepresentation requires both knowledge of falsity and failure to disclose
• ✓This section prevails over any other law, including common law
• ✓It does not diminish a broker's responsibility for a sales agent's acts

A person may not maintain an action to collect compensation for broker/sales agent acts performed in Texas unless they allege and prove they were a license holder when the act commenced or an attorney licensed in any state. Actions to recover a commission require a written, signed agreement or memorandum. A license holder who fails to advise a buyer under Section 1101.555 may not recover the agreed commission.

• ✓Must be a license holder (or licensed attorney) to sue for compensation
• ✓Commission recovery requires a written agreement/memorandum signed by the party charged
• ✓Failure to advise the buyer under 1101.555 forfeits the commission

Disciplinary action taken against a person under Section 1101.652 does not relieve the person from civil or criminal liability. Disciplinary and legal liabilities are separate.

• ✓Disciplinary action does not relieve a person from civil or criminal liability
• ✓Disciplinary and legal consequences are independent

A license holder or nonprofit real estate board/association that provides real property sales price or sale-terms information to facilitate listing, selling, leasing, financing, or appraisal is not liable to another person unless disclosure is specifically prohibited by statute.

• ✓No liability for providing sales price/terms information for legitimate purposes
• ✓Exception applies only when disclosure is specifically prohibited by statute