Texas Real Estate Sales Agent Exam - State Portion

Key Concepts

Commission composition. The Texas Real Estate Commission consists of nine members appointed by the governor with the advice and consent of the senate: six members who have been engaged in the brokerage business as licensed brokers as their major occupation for the five years preceding appointment, and three members who represent the public. Each member must be a qualified voter (TRELA §1101.051).

Public member eligibility. A person is ineligible as a public member if the person or the person's spouse is licensed by an occupational regulatory agency in the real estate industry, is employed by or participates in management of a regulated entity, owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization regulated by or receiving funds from the commission, or uses/receives a substantial amount of goods, services, or funds from the commission (TRELA §1101.052).

Terms and vacancies. Members serve staggered six-year terms, with the terms of three members expiring January 31 of each odd-numbered year. If a vacancy occurs during a term, the governor appoints a person to fill the unexpired term (TRELA §1101.055).

Texas Real Estate Sales Agent Exam

Key Concepts

Who must be licensed. A person may not act as or represent that the person is a broker or sales agent, or act as a residential rental locator, without a license (§1101.351(a)). A "residential rental locator" is a person who offers for consideration to locate a unit in an apartment complex for lease to a prospective tenant; the term excludes an owner locating a unit in the owner's own complex (§1101.002(6)).

Statutory exemptions (§1101.005). The chapter does not apply to, among others: an attorney licensed in Texas (§1101.005(1)); an attorney-in-fact authorized under a power of attorney to conduct not more than three real estate transactions annually (§1101.005(2)); an on-site manager of an apartment complex (§1101.005(7)); and an owner or the owner's employee who leases the owner's real estate (§1101.005(8)). TREC's rule adds that the power of attorney must be recorded in the county where the property is located and specifically describe the property, and the person may not use powers of attorney for more than three transactions per calendar year (22 TAC §535.32). Attorneys are exempt but cannot sponsor sales agents or serve as designated broker unless also licensed as a broker (§535.31).

Key Concepts

Canons of Professional Ethics and Conduct (22 TAC Ch. 531) - Fidelity (§531.2): a license holder acting as agent is a fiduciary; the primary duty is to represent the client's interests, treat other parties fairly, and place no personal interest above the client's. - Integrity (§531.3): requires "employment of prudence and caution so as to avoid misrepresentation, in any way, by acts of commission or omission." - Competency (§531.4): be informed on local market issues and conditions in the geographic area served; be informed on national, state, and local industry issues and developments; exercise judgment and skill in brokerage activities; be educated in the characteristics of the specific type of real estate brokered. - Discriminatory practices (§531.19(a)): no preference, limitation, or discrimination based on race, color, religion, sex, national origin, ancestry, familial status, or disability (disability includes AIDS, HIV-related illness, HIV infection, §531.19(b)).

Duty to convey offers (22 TAC §535.156(a)): all known information affecting the principal's decision to make, accept, or reject offers must be conveyed — the sole exception is where the principal agreed in writing that offers are not to be submitted after entering into a contract. §535.156(c) adds an affirmative duty to keep the principal informed of significant information.

Key Concepts

Written buyer agreements. A license holder who performs any act of brokerage for a prospective buyer of residential real property must enter into a written agreement before showing any residential real property, or, if none will be shown, before presenting an offer (§1101.563(b)). The agreement must state the services provided, termination date, whether it is exclusive or non-exclusive, whether the license holder represents the buyer, and the amount or rate of compensation — and must disclose in conspicuous language that broker compensation is not set by law and is fully negotiable (§1101.563(c)). A showing-only agreement under §1101.562 may not be exclusive and may not state a termination date more than fourteen days out (§1101.563(e)); a separate agreement is required if additional brokerage acts follow the showing (§1101.563(d)).

Showing without representation. Permitted only if the broker has no oral or written agreement to represent the party, is not otherwise acting as agent, gives no opinions or advice, and performs no other brokerage act (§1101.562(a)). The broker may still confirm size, price, and terms of the property (§1101.562(c)).

Key Concepts

When TREC forms must be used. A license holder negotiating the sale, exchange, option or lease of any interest in real property must use only Commission forms approved for mandatory use, except: (1) the license holder acts solely as a principal; (2) a U.S. government agency requires a different form; (3) the form was prepared by the property owner, or prepared by an attorney and required by a property owner; or (4) no form is approved for mandatory use and an attorney/trade-association or Broker-Lawyer Committee form is used (22 TAC §537.11(a)).

Unauthorized practice of law. A license holder may not practice law, give legal advice, draft or recommend language defining or affecting rights, obligations or remedies — "including escalation, appraisal, or contingency clauses" (§537.11(b)(5)); add informational items to a form when another form is approved for mandatory use for that purpose (§537.11(b)(6)); or obtain legal advice from an attorney for a principal when acting as agent (§537.11(b)(8)). A license holder may explain the meaning of informational items or choices, employ an attorney for the license holder only, and reimburse a principal's attorney's fees (§537.11(c)). Adding or striking language on a principal's written instruction is not practice of law if the change is made conspicuous (§537.11(d)(2)). Reproduced forms must be identical in text, format, sizing, spacing and pagination, except a business name or logo may appear outside the form's border (§537.11(h)(1)).…

Key Concepts

Homestead: tax exemption vs. constitutional protection - "Residence homestead" for tax purposes = the structure together with the land, not to exceed 20 acres, and improvements, if structure, land, and improvements have identical ownership, and the property is owned, designed for human residence, used as a residence, and occupied as the owner's principal residence (Tax Code Sec. 11.13(j)(1)). - County exemption under Art. VIII, Sec. 1-a: $3,000 of assessed value (Sec. 11.13(a)). School district: $140,000 of appraised value (Sec. 11.13(b)), plus $60,000 for an adult who is disabled or 65 or older (Sec. 11.13(c)). - Optional percentage exemption: if the percentage produces less than $5,000 in a tax year, the individual gets $5,000 of appraised value; the adopted percentage may not exceed 20 percent (Sec. 11.13(n)). - Constitutional rural homestead: not more than 200 acres, which may be in one or more parcels, with improvements; urban homestead is a lot or contiguous lots of not more than 10 acres (Tex. Const. Art. XVI, Sec. 51). - A purchaser or lender for value without actual knowledge may conclusively rely on an affidavit designating other property as the homestead and stating the property conveyed is not the affiant's homestead (Art. XVI, Sec. 50(d)). - The homestead may not be partitioned among heirs during the surviving spouse's lifetime, so long as the survivor elects to use or occupy it, or so long as…