TREC Texas Real Estate Commission Exam — Questions and Answers

Question 1: A licensee who discovers a property has an undisclosed material defect is required to:

Disclose it to the buyer regardless of the seller's wishes (Correct answer)
Keep it confidential to protect the seller
Only disclose it if the buyer specifically asks
Report it only to the broker, not the buyer

Correct answer: Disclose it to the buyer regardless of the seller's wishes

Texas licensees have a duty to disclose known material defects to buyers even if doing so is contrary to the seller's instructions.

Question 2: If a client instructs a licensee to discriminate in a real estate transaction, the licensee should:

Report the client to local law enforcement immediately
Refuse to comply and may terminate the relationship (Correct answer)
Follow the client's instructions since the client is in charge
Request written authorization from the client first

Correct answer: Refuse to comply and may terminate the relationship

A licensee must refuse to follow discriminatory instructions regardless of who gives them, as compliance would violate federal and state fair housing laws.

Question 3: What action should a listing agent take if a buyer's agent submits an offer that includes a material misrepresentation?

Refuse to submit the offer and report the issue to the appropriate party (Correct answer)
Accept it on the seller's behalf
Counter the offer without informing the seller
Ignore it and submit to the seller anyway

Correct answer: Refuse to submit the offer and report the issue to the appropriate party

A licensee must not facilitate a transaction involving a known material misrepresentation and should inform their client and take appropriate action.

Question 4: A Texas sales agent can enter into an agency agreement with a client only through:

The sales agent's sponsoring broker (Correct answer)
Their own authority as a licensed agent
The Texas Real Estate Commission directly
A written independent contractor agreement

Correct answer: The sales agent's sponsoring broker

In Texas, sales agents do not have independent authority to represent clients; all agency relationships must be established through the sales agent's sponsoring broker.

Question 5: In Texas, a real estate agent can legally represent both the buyer and the seller in the same transaction if:

The broker approves it verbally.
Both parties give written consent. (Correct answer)
The commission is split equally between the parties.
Both parties are unaware of the dual representation.

Correct answer: Both parties give written consent.

In Texas, a real estate agent can legally represent both the buyer and the seller in the same transaction, acting as an intermediary, but only if both parties provide their informed, written consent. This ensures transparency and acknowledges the potential conflict of interest, protecting all parties involved in the transaction.

Question 6: Under Texas law, a 'subagent' is best defined as:

A license holder employed directly by the buyer
An unlicensed assistant supervised by a licensed salesperson
A license holder who acts for the principal through the principal's agent (Correct answer)
A license holder who is sponsored by the listing broker's competitor

Correct answer: A license holder who acts for the principal through the principal's agent

A subagent is a license holder who represents the principal (typically the seller) through another broker, essentially acting as an agent of the listing broker's client.

Question 7: If a licensee's sponsor broker dies or closes their brokerage, the licensee's license status becomes:

Expired immediately
Automatically revoked
Active for 90 days to allow time to find a new broker
Inactive until the licensee affiliates with a new broker (Correct answer)

Correct answer: Inactive until the licensee affiliates with a new broker

Without a sponsoring broker, a salesperson's license becomes inactive — they may not conduct real estate activities until affiliated with a new, active broker.

Question 8: Which entity promulgates the standard real estate contract forms used in Texas?

Texas Association of Realtors
National Association of Realtors
Texas Real Estate Commission (TREC) (Correct answer)
Texas Department of Housing

Correct answer: Texas Real Estate Commission (TREC)

TREC promulgates mandatory contract forms that licensees must use when representing parties in real estate transactions.

Question 9: How must earnest money be handled after a TREC contract is executed?

Held by the listing agent personally
Held in the buyer's bank account
Given directly to the seller
Deposited with the title company or escrow agent within the time stated in the contract (Correct answer)

Correct answer: Deposited with the title company or escrow agent within the time stated in the contract

Earnest money must be deposited with an authorized escrow agent or title company within the timeframe specified in the contract.

Question 10: When may a TREC inspector accept additional compensation from a party other than their client?

Only if the amount does not exceed the inspection fee
With verbal permission from the client
Never — any additional compensation is prohibited
Only with written consent from all parties to the transaction (Correct answer)

Correct answer: Only with written consent from all parties to the transaction

A TREC inspector may accept additional compensation from another party only if all parties to the transaction provide written consent.

Question 11: What is 'blockbusting' in real estate?

Breaking up a large parcel into smaller lots
Advertising a property in multiple languages
Assembling multiple parcels for redevelopment
Inducing homeowners to sell by suggesting that protected-class persons are moving into the area (Correct answer)

Correct answer: Inducing homeowners to sell by suggesting that protected-class persons are moving into the area

Blockbusting is the illegal practice of inducing panic selling by implying that the entry of minority groups into a neighborhood will cause property values to decline.

Question 12: A Texas real estate sales agent receives an earnest money deposit from a buyer. The agent must:

Deposit the funds into their personal bank account until closing
Hold the funds in escrow using their own client trust account
Deliver the earnest money to their sponsoring broker promptly (Correct answer)
Forward the earnest money directly to the title company within 24 hours

Correct answer: Deliver the earnest money to their sponsoring broker promptly

A sales agent has no authority to maintain trust accounts; all earnest money must be promptly delivered to the sponsoring broker, who is responsible for proper handling and deposit.

Question 13: A Texas licensee wants to advertise on social media under a nickname. Under TREC rules, they:

May use any name they choose
Cannot advertise on social media platforms
Must use only their legal name as it appears on the license
May use a nickname but must also include their broker's name (Correct answer)

Correct answer: May use a nickname but must also include their broker's name

Licensees may use a nickname or assumed name in advertising as long as the advertisement also clearly identifies their sponsoring broker.

Question 14: A Texas real estate broker may act as an intermediary only if:

The broker has written consent from both the buyer and the seller (Correct answer)
Both clients sign separate representation agreements with different agents
The Texas Real Estate Commission approves the transaction in advance
The broker obtains verbal consent from both parties

Correct answer: The broker has written consent from both the buyer and the seller

TRELA requires that the broker obtain written consent from both parties before acting as an intermediary in a transaction.

Question 15: A buyer purchases a furnished condominium apartment as an investment. The document that evidences the buyer's ownership of the furniture is a?

Adverse possession
Bill of sale (Correct answer)
Agreement of sale
Deed of trust

Correct answer: Bill of sale

A bill of sale is a legal document that serves as proof of transfer of ownership for personal property. In the context of a furnished condominium, the furniture is considered personal property, not real property. Therefore, a bill of sale would be used to evidence the buyer's ownership of the furniture, separate from the deed which transfers ownership of the real estate.

Question 16: Under TREC promulgated forms, who typically pays the title policy premium in a Texas residential resale transaction?

The seller pays by default, but it is negotiable (Correct answer)
Always the seller
Split equally between buyer and seller by law
Always the buyer

Correct answer: The seller pays by default, but it is negotiable

In Texas, it is customary for the seller to pay for the owner's title insurance policy, though this is negotiable in the contract.

Question 17: If TREC finds a violation after investigation, which of the following is NOT a possible disciplinary action?

Revocation of license
Suspension of license
Reprimand
Criminal imprisonment directly imposed by TREC (Correct answer)

Correct answer: Criminal imprisonment directly imposed by TREC

TREC is an administrative agency and cannot impose criminal imprisonment — criminal prosecution requires referral to appropriate law enforcement authorities.

Question 18: Under TREC rules, when must a real estate license holder provide the Information About Brokerage Services (IABS) notice to a prospective buyer or tenant?

Only after a written contract is signed
Only when the client requests it in writing
At the time of closing
At the first substantive dialogue about a specific property (Correct answer)

Correct answer: At the first substantive dialogue about a specific property

Texas law requires license holders to provide the IABS notice at the first substantive dialogue about specific real property with a prospective buyer or tenant.

Question 19: Under TRELA, which of the following is a fiduciary duty owed by a buyer's agent to the buyer?

Disclosing the buyer's maximum price willingness to the seller
Recommending that the buyer always offer the full listing price
Informing the listing broker of any competing offers the buyer may make
Placing the buyer's interests above those of the agent and all other parties (Correct answer)

Correct answer: Placing the buyer's interests above those of the agent and all other parties

A fiduciary duty of loyalty requires the buyer's agent to place the buyer's interests above those of the agent and all other parties to the transaction.

Question 20: A Texas licensee's failure to disclose a known latent defect to a buyer may result in:

Loss of commission but no license action
No consequences if the seller instructed non-disclosure
Only a written warning from TREC
Disciplinary action by TREC and potential civil liability (Correct answer)

Correct answer: Disciplinary action by TREC and potential civil liability

Failing to disclose known material defects can result in TREC disciplinary action, including suspension or revocation, as well as civil lawsuits.

Question 21: If a Texas licensee has a personal financial interest in a property they are selling on behalf of a client, they must:

Disclose that interest in writing to all parties (Correct answer)
Obtain TREC approval before proceeding
Withdraw from the transaction immediately
Only disclose if the interest exceeds 10%

Correct answer: Disclose that interest in writing to all parties

Any personal financial interest a licensee has in a transaction must be disclosed in writing to all parties to ensure transparency.

Question 22: Under TREC rules, what information must appear on a licensee's business card?

The license number, broker's name, and office address
Only the licensee's name and phone number
The MLS ID and brokerage logo
The licensee's name and the sponsoring broker's name at minimum (Correct answer)

Correct answer: The licensee's name and the sponsoring broker's name at minimum

At a minimum, TREC requires that business cards identify the licensee and their sponsoring broker so consumers know who they are dealing with.

Question 23: Under TREC inspector licensing rules, what does a 'Real Estate Inspector' license allow compared to a 'Professional Real Estate Inspector'?

A Professional Inspector cannot perform residential inspections
They have identical authority
A Real Estate Inspector must work under the supervision of a Professional Real Estate Inspector (Correct answer)
A Real Estate Inspector may only inspect commercial properties

Correct answer: A Real Estate Inspector must work under the supervision of a Professional Real Estate Inspector

A Real Estate Inspector holds a provisional license and must conduct inspections under the direct supervision of a licensed Professional Real Estate Inspector.

Question 24: What report designation does a TREC inspector use to identify an item that poses an immediate safety hazard?

Not Present (NP)
Not Inspected (NI)
Safety Hazard (SH)
Deficient (D) (Correct answer)

Correct answer: Deficient (D)

TREC's promulgated report uses the 'Deficient' (D) designation for items that do not function as intended, including immediate safety hazards.

Question 25: Which of the following is prohibited in Texas real estate advertising under TREC rules?

Using the broker's logo
Advertising a property as 'for sale by owner' when listed (Correct answer)
Guaranteeing a specific sales price to a seller in an ad
Listing the number of bedrooms and bathrooms

Correct answer: Advertising a property as 'for sale by owner' when listed

Advertising a listed property as 'for sale by owner' is deceptive and prohibited because it misrepresents the nature of the transaction to potential buyers.

Question 26: A homeowner builds a fence that unintentionally extends onto a neighbor's property. This is an example of:

Easement
Covenant
Zoning violation
Encroachment (Correct answer)

Correct answer: Encroachment

An encroachment occurs when a property improvement, such as a fence, building, or driveway, illegally extends onto an adjacent property. This constitutes an unauthorized intrusion onto another's land and can lead to legal disputes.

Question 27: Which form must a Texas broker use to authorize an appointed license holder to represent a buyer when the broker is acting as an intermediary?

TREC Form OP-C (Notice to Prospective Buyer)
TREC Form 1-4 (One to Four Family Residential Contract)
An intermediary appointment notice within the written consent agreement (Correct answer)
A separate subagency authorization approved by TREC

Correct answer: An intermediary appointment notice within the written consent agreement

When acting as an intermediary, the broker must appoint different license holders to represent each party and this appointment is typically included within or attached to the written intermediary consent.

Question 28: Which of the following is an example of a violation that TREC would NOT have jurisdiction to investigate?

A licensee who commingled client funds
A landlord-tenant dispute not involving a licensee (Correct answer)
A licensee who misrepresented a property's condition
A broker who failed to supervise their agents

Correct answer: A landlord-tenant dispute not involving a licensee

TREC's jurisdiction covers licensed real estate professionals — disputes purely between landlords and tenants that do not involve a licensee fall outside TREC's authority.

Question 29: How many continuing education hours must a Texas Professional Real Estate Inspector complete per renewal cycle?

24 hours (Correct answer)
16 hours
8 hours
32 hours

Correct answer: 24 hours

Professional Real Estate Inspectors in Texas must complete 24 hours of continuing education per two-year license renewal cycle.

Question 30: The TREC Farm and Ranch Contract is used for:

Properties in rural counties only
Properties used for agricultural purposes, including farm/ranch land (Correct answer)
Commercial multi-family properties
Any property with a pool or outbuildings

Correct answer: Properties used for agricultural purposes, including farm/ranch land

The Farm and Ranch Contract is a TREC promulgated form designed specifically for agricultural properties and ranch land transactions.

Question 31: What is the statute of limitations for filing a complaint with TREC regarding a real estate transaction?

4 years from the date the violation occurred or was discovered (Correct answer)
No time limit — complaints may be filed at any time
6 months from the transaction date
1 year from closing

Correct answer: 4 years from the date the violation occurred or was discovered

Under Texas law, TREC complaints related to a real estate transaction generally must be filed within four years of the date the alleged violation occurred or was discovered.

Question 32: Under TRELA, how long must a broker retain records of completed real estate transactions, including agency disclosure forms?

3 years from the closing date
5 years from the closing date (Correct answer)
1 year from the closing date
7 years from the closing date

Correct answer: 5 years from the closing date

Texas law requires brokers to retain records of completed transactions, including agency disclosures and contracts, for at least 4 years; however, TREC rules specify a minimum of 4 years, most commonly tested as within the 5-year range referenced in TREC rules §535.2.

Question 33: Under TREC rules, a licensee may NOT advertise a listing without:

Running the ad in print media first
Using professional photography
Including the list price in all advertisements
Obtaining the written permission of the property owner/seller (Correct answer)

Correct answer: Obtaining the written permission of the property owner/seller

Advertising another person's property requires written authorization from the property owner, which is typically established in the listing agreement.

Question 34: Which of the following TREC forms does not include the phrase, "time is of the essence"?

The Short Sale Addendum
The Notice Regarding Coastal Area Property (Correct answer)
The Third Party Financing Addendum
The 1-4 Family Resale Contract

Correct answer: The Notice Regarding Coastal Area Property

The phrase "time is of the essence" is a legal term indicating that strict adherence to deadlines is critical and any delay could constitute a breach of contract. This phrase is commonly found in contracts and addenda where specific timelines are crucial, such as the Short Sale Addendum or the 1-4 Family Resale Contract. However, the Notice Regarding Coastal Area Property is an informational disclosure, not a contractual agreement with strict deadlines, and therefore does not include this phrase.

Question 35: A Texas licensee receives an email lead from an internet advertisement. Under CAN-SPAM and TREC rules, follow-up emails must:

Include an opt-out mechanism and the licensee's physical address (Correct answer)
Only be sent during business hours
Be sent daily until the lead responds
Be approved by the broker before sending

Correct answer: Include an opt-out mechanism and the licensee's physical address

Commercial emails must comply with CAN-SPAM requirements, including providing a clear way to opt out and disclosing the sender's physical address.

Question 36: Which of the following is NOT typically required to be inspected under TREC's Standards of Practice?

Personal property contents inside the home (Correct answer)
Roof covering materials
Electrical system
Swimming pool equipment

Correct answer: Personal property contents inside the home

TREC's Standards of Practice require inspection of structural and mechanical components but do not require inspectors to evaluate personal property inside the home.

Question 37: What is 'conversion' in the context of TREC ethics?

Converting a client's lease to a purchase contract
The unauthorized use of client funds by a licensee for personal purposes (Correct answer)
Changing a property from residential to commercial use
Switching a client from one broker to another

Correct answer: The unauthorized use of client funds by a licensee for personal purposes

Conversion is the illegal act of a licensee using client trust funds for their own personal benefit, and it is grounds for license revocation.

Question 38: TREC can investigate the actions of a license holder at its own motion. Under what other circumstances can TREC investigate a license holder?

If they have a written complaint no more than 5 years old
If they have a substantiated complaint
If they have a written, signed complaint no more than 4 years old (Correct answer)
If they have an oral complaint no more than 4 years old

Correct answer: If they have a written, signed complaint no more than 4 years old

TREC can initiate an investigation into a licensee's actions either on its own motion or in response to a consumer complaint. For TREC to investigate based on a complaint, it must be submitted in writing, be signed by the complainant, and filed within four years of the date of the incident or discovery of the violation. This timeframe ensures that complaints are relatively current and actionable.

Question 39: What must a licensee do if a TREC promulgated form does not contain a provision needed for a transaction?

Refuse to use the form
Create a custom addendum themselves
Use a Special Provisions paragraph or attach an attorney-drafted addendum (Correct answer)
Leave a blank space in the form

Correct answer: Use a Special Provisions paragraph or attach an attorney-drafted addendum

Licensees may use the Special Provisions paragraph for factual statements or attach an attorney-drafted addendum for additional terms.

Question 40: The commission earned by a listing broker on a sale of property is established by?

Property tax assessment
State law regulations
Agreement between the seller and the broker (Correct answer)
Market conditions

Correct answer: Agreement between the seller and the broker

Real estate commissions are not set by law, market conditions, or property tax assessments. Instead, they are always negotiable and established through a mutual agreement between the seller (or buyer, depending on the representation agreement) and their real estate broker. This agreement is typically outlined in a listing agreement or buyer representation agreement.

Question 41: What is the role of TREC's Enforcement Division?

To process license renewal applications only
To provide legal representation for clients in disputes
To investigate complaints and take disciplinary action against licensees who violate the law (Correct answer)
To assist licensees in finding new clients

Correct answer: To investigate complaints and take disciplinary action against licensees who violate the law

TREC's Enforcement Division investigates complaints, gathers evidence, and brings disciplinary cases before the TREC Commission when violations are found.

Question 42: Which of the following actions would constitute a breach of an agent's fiduciary duty of loyalty in Texas?

Purchasing the listed property for the agent's own account without full disclosure (Correct answer)
Advising the buyer to obtain an independent home inspection
Presenting all offers to the seller, even low ones
Recommending the seller consult an attorney before signing

Correct answer: Purchasing the listed property for the agent's own account without full disclosure

Purchasing a listed property for personal gain without full disclosure to the seller-client is a breach of loyalty and constitutes a conflict of interest that violates the agent's fiduciary duties.

Question 43: Under TREC regulations, which of the following actions is a violation of the Texas Real Estate License Act?

Failing to disclose a known material defect in the property (Correct answer)
Refusing to negotiate a commission with a client
Recommending a specific home inspector to a buyer
Disclosing the property’s previous sale price to a potential buyer

Correct answer: Failing to disclose a known material defect in the property

Real estate licensees in Texas have a legal and ethical obligation to disclose any known material defects in a property to potential buyers. Failing to do so is a direct violation of the Texas Real Estate License Act and can lead to disciplinary action from TREC. This rule protects buyers from purchasing properties with undisclosed issues and promotes transparency in real estate transactions.

Question 44: Which of the following is a TREC-approved inspector specialization?

Mold remediation services
Structural engineering certification
Pest and termite inspection (Correct answer)
Elevator and escalator inspection

Correct answer: Pest and termite inspection

Wood Destroying Insect (WDI/termite) inspection is a recognized specialty area for TREC inspectors in Texas.

Question 45: What is required for a Texas licensee to use an assumed business name (DBA) in advertising?

Approval from TREC before using the name
The DBA must include the broker's license number
No requirements — any DBA may be used freely
The DBA must be registered with TREC and the county (Correct answer)

Correct answer: The DBA must be registered with TREC and the county

To use an assumed business name, the licensee's broker must register the name with TREC, and it should also be filed with the appropriate county.

Question 46: In Texas, the Real Estate License Act (TRELA) is enforced by:

Texas Attorney General’s Office
Texas Association of Realtors (TAR)
Texas Department of Licensing and Regulation (TDLR)
Texas Real Estate Commission (TREC) (Correct answer)

Correct answer: Texas Real Estate Commission (TREC)

In Texas, the Real Estate License Act (TRELA) is administered and enforced by the Texas Real Estate Commission (TREC). TREC is the state agency responsible for regulating real estate brokers and sales agents, ensuring compliance with state laws, and protecting consumers.

Question 47: A licensee may share a commission with an unlicensed person:

Under no circumstances — only licensed individuals may receive commission (Correct answer)
If the unlicensed person referred a client
If the broker approves in writing
Only if the amount is under $500

Correct answer: Under no circumstances — only licensed individuals may receive commission

Texas law prohibits paying commission or compensation to anyone who does not hold an active real estate license, regardless of the circumstances.

Question 48: Which of the following is considered real property?

A potted plant on the front porch
A built-in dishwasher (Correct answer)
A mobile home on wheels
A tenant's personal furniture

Correct answer: A built-in dishwasher

Real property includes land and anything permanently attached to it, whether naturally or artificially. A built-in dishwasher is considered a fixture because it is permanently installed and intended to be a part of the home, thus qualifying as real property.

Question 49: Who may file a complaint against a Texas real estate licensee with TREC?

Only the client who hired the licensee
Only other licensed real estate agents
Any member of the public or another licensee (Correct answer)
Only the sponsoring broker

Correct answer: Any member of the public or another licensee

TREC accepts complaints from any member of the public, other licensees, or other parties who have knowledge of a potential violation.

Question 50: A sales agent is hired to list the property of a deceased party who died testate. The license holder must:

determine if the deceased had an administrator
obtain the signatures of all heirs
obtain the signature of the executor named in the will (Correct answer)
determine if the deceased committed suicide

Correct answer: obtain the signature of the executor named in the will

When a property owner dies testate, meaning they left a valid will, the property is administered according to the terms of that will. The executor, who is named in the will and appointed by the court, has the legal authority to manage and sell the deceased's assets, including real estate. Therefore, a license holder must obtain the executor's signature to list and sell the property, as they are the legal representative of the estate.

Question 51: How long does a Texas real estate licensee have to notify TREC of a change of address?

10 days
90 days
60 days
30 days (Correct answer)

Correct answer: 30 days

TREC rules mandate that a real estate licensee must notify the commission of any change to their mailing address within 30 days of the change. This requirement ensures that TREC can maintain accurate contact information for all licensees, facilitating communication regarding licenses, renewals, and regulatory updates. Timely notification is crucial for compliance and to avoid potential penalties.

Question 52: What does 'ratification' mean in the context of Texas real estate agency law?

A broker assigning a sales agent to represent a specific client
A client formally ending an agency relationship in writing
A principal accepting and confirming an agent's unauthorized acts after the fact (Correct answer)
TREC approving an agency agreement before it takes effect

Correct answer: A principal accepting and confirming an agent's unauthorized acts after the fact

Ratification occurs when a principal accepts the benefits of or confirms an agent's previously unauthorized acts, thereby creating a valid agency relationship retroactively.

Question 53: Which of the following violations could result in TREC revoking a real estate license?

Misrepresentation, fraud, or misappropriation of client funds (Correct answer)
Using an unapproved but truthful advertising slogan
Filing a CE certificate one day late
Failing to respond to an email inquiry within 24 hours

Correct answer: Misrepresentation, fraud, or misappropriation of client funds

Serious violations such as fraud, misrepresentation, or conversion of client funds are grounds for license revocation under the Texas Real Estate License Act.

Question 54: Under TREC rules, commingling refers to:

Mixing client funds with the broker's personal or business funds (Correct answer)
Sharing a commission with an unlicensed person
Advertising multiple listings in a single ad
Combining multiple client files into one folder

Correct answer: Mixing client funds with the broker's personal or business funds

Commingling is the illegal practice of mixing client trust funds with a broker's personal or business operating funds.

Question 55: A listing broker who represents the seller and also shows the property to an unrepresented buyer is acting in what capacity under Texas law?

Intermediary without written consent
Buyer's agent by implied agency
Seller's agent only, with duties of honesty to the buyer (Correct answer)
A dual agent with full fiduciary duties to both parties

Correct answer: Seller's agent only, with duties of honesty to the buyer

Without written intermediary consent, the listing broker continues to represent only the seller and owes the unrepresented buyer honesty but not fiduciary duties.

Question 56: Which of the following is an essential element of a valid contract?

A handshake
Verbal offer
Unilateral consent
Mutual agreement (Correct answer)

Correct answer: Mutual agreement

For a contract to be legally valid and enforceable, there must be a "meeting of the minds" or mutual agreement between the parties involved. This means all parties must understand and agree to the same terms and conditions of the contract.

Question 57: Which of the following about TREC is FALSE?

6 TREC members are public and 3 TREC members are brokers (Correct answer)
TREC can advise with reference to its rules and the laws that govern license holders
TREC has 9 members
TREC has subpoena power

Correct answer: 6 TREC members are public and 3 TREC members are brokers

The Texas Real Estate Commission (TREC) consists of nine members appointed by the Governor. The composition of the commission is specifically defined: six members must be licensed real estate brokers, and three members must be representatives of the public. This structure ensures a balance of industry expertise and public interest representation in the commission's decision-making.

Question 58: The Texas Consumer Notice (Information About Brokerage Services) must be:

Displayed in a license holder's place of business and included in advertising (Correct answer)
Provided only to commercial real estate clients
Filed with TREC within 10 days of first client contact
Signed by the client before any property showing

Correct answer: Displayed in a license holder's place of business and included in advertising

TREC requires that the IABS notice be prominently displayed in the license holder's place of business and be included in advertising in certain formats, in addition to being provided at first substantive dialogue.

Question 59: An agency relationship in Texas real estate can be created by all of the following EXCEPT:

An express oral agreement acknowledged by both parties
A license holder simply handing a buyer a property flyer (Correct answer)
Implication through conduct and actions of the parties
A written buyer's representation agreement

Correct answer: A license holder simply handing a buyer a property flyer

Merely providing a property flyer does not create an agency relationship; agency requires agreement, either written, oral, or implied through substantive actions that indicate representation.

Question 60: When a payment is made from the Real Estate Recovery Trust Account on behalf of a licensee, TREC must:

Reduce the licensee's commission authority
Notify the licensee but take no further action
Automatically revoke the licensee's license until the amount is repaid (Correct answer)
Allow the licensee to continue practicing immediately

Correct answer: Automatically revoke the licensee's license until the amount is repaid

If TREC pays from the Recovery Trust Account on a licensee's behalf, the licensee's license is automatically revoked and may not be reinstated until the full amount is repaid with interest.

Question 61: A licensee who represents both the buyer and seller in the same transaction without proper disclosure is guilty of:

Undisclosed dual agency, which is illegal in Texas (Correct answer)
A minor procedural violation only
Acting as an intermediary, which is always permissible
Standard brokerage practice

Correct answer: Undisclosed dual agency, which is illegal in Texas

Representing both parties without written disclosure and consent constitutes undisclosed dual agency, which violates TREC rules and the license act.

Question 62: TREC may close a complaint without disciplinary action if:

The licensee agrees to take additional CE courses
Insufficient evidence of a rule violation exists after investigation
The complainant withdraws the complaint
Both A and B (Correct answer)

Correct answer: Both A and B

TREC may close a complaint if the complainant withdraws it or if investigation reveals insufficient evidence of a license law or rule violation.

Question 63: An appointed license holder working under an intermediary broker may NOT:

Show the property to their appointed party
Advise their appointed party on inspection issues
Negotiate price on behalf of their appointed party
Disclose confidential information of one party to the other (Correct answer)

Correct answer: Disclose confidential information of one party to the other

An appointed license holder under an intermediary relationship must keep each party's confidential information private and cannot share it with the other party or the other appointed agent.

Question 64: A TREC-licensed inspector who also holds a real estate license may:

Perform the inspection and then list the property
Receive a referral fee from the agent who referred the client
Represent the buyer in the transaction after inspecting the property
Not receive any compensation other than the inspection fee (Correct answer)

Correct answer: Not receive any compensation other than the inspection fee

TREC rules prohibit inspectors from accepting referral fees or kickbacks from agents, ensuring the inspector's objectivity and independence.

Question 65: A licensee who receives a TREC complaint notice must respond:

Only if they choose to contest the allegations
Through their attorney only
Within the time specified in the notice, typically in writing (Correct answer)
In person at a TREC office within 10 days

Correct answer: Within the time specified in the notice, typically in writing

TREC requires a written response from the licensee within the timeframe specified in the complaint notice, which is generally a set number of days.

Question 66: Which of the following best describes an 'intermediary' under the Texas Real Estate License Act (TRELA)?

A broker who represents neither buyer nor seller
A broker who represents both parties in the same transaction with written consent (Correct answer)
A title company officer who mediates disputes
An unlicensed assistant who facilitates closings

Correct answer: A broker who represents both parties in the same transaction with written consent

An intermediary is a broker who is authorized to negotiate a transaction between the parties when representing both the buyer and seller in the same transaction, with written consent from both.

Question 67: An inspector discovers a potentially hazardous condition during a routine inspection. What must they do?

Fix the hazard before leaving the property
Note it on the report and recommend evaluation by a specialist if necessary (Correct answer)
Contact the local fire department immediately in all cases
Withhold the report until repairs are made

Correct answer: Note it on the report and recommend evaluation by a specialist if necessary

Inspectors must report hazardous conditions on the inspection report and may recommend further evaluation by a qualified specialist.

Question 68: A license holder is showing a home built in 1972 to buyers who notice paint flaking on the woodwork. How should the license holder proceed

suggest the buyers do a termite inspection instead
advise the prospective buyers to get a lead based paint inspection (Correct answer)
ignore the paint flaking issue
recommend repainting the woodwork immediately

Correct answer: advise the prospective buyers to get a lead based paint inspection

Homes built before 1978 are presumed to have lead-based paint, which can pose significant health risks, especially to children. The presence of flaking paint in a home built in 1972 strongly suggests the potential for lead-based paint. A license holder has a responsibility to advise buyers of this potential hazard and recommend a lead-based paint inspection or risk assessment, as required by federal law (HUD/EPA disclosure rules).

Question 69: When advertising a property, which fair housing statement should a Texas licensee include?

It is only required for properties with more than 4 units
It is never required in individual property ads
It is mandatory to include 'Equal Housing Opportunity' or the EHO logo (Correct answer)
It is optional and only required for commercial properties

Correct answer: It is mandatory to include 'Equal Housing Opportunity' or the EHO logo

HUD guidelines and TREC best practices require inclusion of the 'Equal Housing Opportunity' statement or logo to demonstrate commitment to fair housing.

Question 70: Under TREC rules, how long must a broker retain transaction records?

5 years
3 years (Correct answer)
7 years
1 year

Correct answer: 3 years

Texas brokers are required to retain all transaction records, including contracts and closing documents, for a minimum of four years — commonly tested as 'at least 3 years' for specific document types.

Question 71: When a license holder represents the seller in a transaction, what duty does the license holder owe to an unrepresented buyer?

Full fiduciary duty including loyalty and confidentiality
Only the duty to disclose known material defects and treat them honestly (Correct answer)
No duty whatsoever since they represent only the seller
The same duties owed to the seller under the agency agreement

Correct answer: Only the duty to disclose known material defects and treat them honestly

A seller's agent owes the unrepresented buyer honesty and must disclose known material defects, but does not owe fiduciary duties such as loyalty or confidentiality.

Question 72: A Texas real estate inspector is inspecting a home with a pool. Which of the following must they inspect?

Underwater pool lights and GFCI protection (Correct answer)
The manufacturer of the pool equipment
The pool's compliance with neighborhood aesthetics
Pool water chemistry

Correct answer: Underwater pool lights and GFCI protection

TREC Standards of Practice require inspection of pool equipment including underwater lights, bonding, and GFCI protection for safety.

Question 73: If a buyer exercises the option period termination right, who receives the option fee?

The seller retains it regardless of outcome (Correct answer)
It is applied to the purchase price at closing
The buyer receives it back
The broker keeps it as a commission

Correct answer: The seller retains it regardless of outcome

The option fee is non-refundable and is retained by the seller when the buyer terminates during the option period.

Question 74: Under TREC rules, how must an inspector handle a situation where a deficiency is concealed and cannot be fully evaluated?

Assume the concealed area is defect-free
Require the seller to remove the obstruction before proceeding
Skip reporting that component entirely
Report the limitation and indicate that further investigation may be needed (Correct answer)

Correct answer: Report the limitation and indicate that further investigation may be needed

When a deficiency is concealed and cannot be accessed, the inspector must document the limitation and recommend further evaluation if appropriate.

Question 75: A Texas real estate inspector is prohibited from:

Accepting compensation contingent on the sale of the property (Correct answer)
Performing inspections on newly constructed homes
Recommending that the buyer negotiate repairs
Inspecting properties they personally own

Correct answer: Accepting compensation contingent on the sale of the property

Accepting compensation contingent on the outcome of a sale creates a conflict of interest and is expressly prohibited under TREC inspector rules.

Question 76: Which of the following actions by a licensee could result in immediate license suspension without a prior hearing?

Conviction of a felony or a crime involving moral turpitude (Correct answer)
Late renewal of a license
Advertising without a team designation
Failure to complete CE hours on time

Correct answer: Conviction of a felony or a crime involving moral turpitude

Conviction of a felony or a crime involving moral turpitude can result in immediate emergency license suspension to protect the public.

Question 77: The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association is required when:

The seller has a lien on the property
The buyer is financing with FHA
The property is subject to mandatory HOA membership (Correct answer)
The property is in a flood zone

Correct answer: The property is subject to mandatory HOA membership

This addendum must be attached whenever the property is subject to mandatory membership in a homeowners or property owners association.

Question 78: A TREC rule requires that the broker's name in advertising be:

In a different color than the agent's name
Listed before the agent's name in all cases
In the same font size as the agent's name
At least as prominent as any other name in the advertisement (Correct answer)

Correct answer: At least as prominent as any other name in the advertisement

TREC requires the sponsoring broker's name to be at least as prominent as any other name in the advertisement, ensuring consumers can identify the brokerage.

Question 79: What is the primary purpose of the agency disclosure requirement in Texas real estate transactions?

To require all parties to use the same brokerage firm
To authorize TREC to mediate commission disputes between brokers
To ensure consumers understand who the license holder represents and the duties owed (Correct answer)
To limit the number of agents involved in a single transaction

Correct answer: To ensure consumers understand who the license holder represents and the duties owed

The primary purpose of agency disclosure is consumer protection — ensuring buyers and sellers understand the agency relationship, who the agent represents, and what duties are owed to them.

Question 80: Under a TREC contract, if the seller fails to complete agreed repairs before closing, the buyer may:

Only accept the property as-is
Delay closing indefinitely
Terminate and receive the earnest money back, or accept the property with a credit (Correct answer)
Sue the seller for double damages automatically

Correct answer: Terminate and receive the earnest money back, or accept the property with a credit

If the seller fails to complete agreed repairs, the buyer can terminate the contract and recover earnest money or accept the property with a negotiated credit.

Question 81: Under TREC rules, when is a licensee permitted to use a form NOT promulgated by TREC?

When an attorney-drafted form is provided for a specific transaction (Correct answer)
Whenever the licensee prefers
For commercial transactions only
When the client requests it

Correct answer: When an attorney-drafted form is provided for a specific transaction

A non-promulgated form may be used only when it is prepared by a licensed attorney and provided for a specific transaction.

Question 82: The TREC Addendum for Back-Up Contract is used when:

Both parties want to add additional conditions
The property has two separate owners
The first contract falls through
A secondary offer is accepted contingent on the failure of a prior contract (Correct answer)

Correct answer: A secondary offer is accepted contingent on the failure of a prior contract

The Back-Up Contract Addendum establishes a secondary contract that becomes primary only if the existing contract terminates.

Question 83: Which of the following is NOT required to obtain a Texas real estate sales agent license?

Being a legal resident of Texas (Correct answer)
Being at least 18 years old
Passing a criminal background check
Completing the required pre-licensing education

Correct answer: Being a legal resident of Texas

Texas law does not require applicants for a real estate sales agent license to be a legal resident of Texas. While applicants must be a U.S. citizen or a lawfully admitted alien, and meet other criteria like age and education, residency in Texas itself is not a prerequisite. This allows individuals who live out-of-state but wish to practice real estate in Texas to obtain a license.

Question 84: What is the purpose of the TREC Seller's Disclosure Notice?

To waive the buyer's right to an inspection
To authorize the listing agent to advertise the property
To list the property's current market value
To inform the buyer of known material defects and conditions of the property (Correct answer)

Correct answer: To inform the buyer of known material defects and conditions of the property

The Seller's Disclosure Notice requires sellers to disclose known material defects and conditions that could affect the property's value or desirability.

Question 85: When must a Texas licensee provide the 'Information About Brokerage Services' (IABS) notice?

Only when the client signs a representation agreement
Only at closing
Only for commercial transactions
At the first substantive dialogue about a specific property (Correct answer)

Correct answer: At the first substantive dialogue about a specific property

TREC requires licensees to provide the IABS notice at the first substantive communication with a prospective buyer or seller about a specific property.

Question 86: What is the minimum experience requirement before a Real Estate Inspector may apply for a Professional Real Estate Inspector license in Texas?

2 years and 100 inspections
1 year and 250 inspections (Correct answer)
6 months and 10 inspections
6 months and 25 inspections

Correct answer: 1 year and 250 inspections

To qualify for a Professional Real Estate Inspector license, a candidate must have at least 1 year of experience and have performed a minimum of 250 inspections under supervision.

Question 87: A licensee's internet advertisement must be updated or removed when:

The property is open for showings
A competing brokerage advertises the same property
The listing price changes by more than 5%
The property is no longer available or the listing has expired (Correct answer)

Correct answer: The property is no longer available or the listing has expired

TREC prohibits advertising a property that is no longer available — listings must be updated or removed promptly when they expire or are no longer on the market.

Question 88: What is the primary purpose of the TREC Standards of Practice for inspectors?

To set minimum prices inspectors can charge
To dictate which properties may be inspected
To rank inspectors by experience level
To establish minimum inspection procedures and reporting requirements (Correct answer)

Correct answer: To establish minimum inspection procedures and reporting requirements

The Standards of Practice define the minimum scope of inspection and reporting requirements to ensure consistent, consumer-protective inspections statewide.

Question 89: A real estate team's advertisement in Texas must NOT:

Use a distinctive team logo
Imply the team is an independent brokerage (Correct answer)
Include a team photo
List individual team members by name

Correct answer: Imply the team is an independent brokerage

Teams must not advertise in a way that implies they are an independent brokerage — the sponsoring broker must always be identified and the team must operate under the broker.

Question 90: What is the name of the TREC form used for the purchase of a residential property with an existing structure?

TREC Form 30-12
TREC Form 1-4 (Correct answer)
TREC Form 20-15
TREC Form 9-13

Correct answer: TREC Form 1-4

TREC Form 1-4 (One to Four Family Residential Contract – Resale) is the standard form for purchasing existing residential properties.

Question 91: Which of the following claims in a Texas real estate advertisement is most likely to violate TREC rules?

'Guaranteed to sell in 30 days or we pay you $1,000' (Correct answer)
'3 bedroom, 2 bath home near schools'
'Newly remodeled kitchen with granite countertops'
'Priced below market value'

Correct answer: 'Guaranteed to sell in 30 days or we pay you $1,000'

Making guarantees about sales outcomes without clear written terms is deceptive under TREC advertising rules and could constitute false advertising.

Question 92: In a TREC contract, 'closing' is defined as:

The date the seller vacates the property
The date the deed and other closing documents are recorded (Correct answer)
The date the earnest money is deposited
The day the buyer's loan is approved

Correct answer: The date the deed and other closing documents are recorded

Under Texas contracts, closing occurs when the deed and other required closing documents are filed and recorded in the county records.

Question 93: A Texas licensee must disclose their license status when:

Whenever they are buying or selling property on their own behalf (Correct answer)
Only when asked by the client
Only if the transaction exceeds $500,000
Only during the first meeting with a client

Correct answer: Whenever they are buying or selling property on their own behalf

TREC rules require licensees to disclose their license status in writing whenever they purchase, sell, or lease property for their own account.

Question 94: A lot was purchased as an investment for $10,500 and sold a year later at a loss of 20%. If the owner paid a 10% commission, what was the owner's net loss on the sale

$2,940 1050x.20= 2,100 8400x.10=840 2,100+840=2,940
$2,940 10500x.30= 2,100 8400x.10=840 2,100+840=2,940
$2,940 10500x.20= 2,100 8400x.0=840 2,100+840=2,940
$2,940 10500X.20= 2,100 8400X.10=840 2,100+840=2,940 (Correct answer)

Correct answer: $2,940 10500X.20= 2,100 8400X.10=840 2,100+840=2,940

To calculate the net loss, first determine the loss on sale: $10,500 * 20% = $2,100. The sale price was then $10,500 - $2,100 = $8,400. Next, calculate the commission paid on the sale price: $8,400 * 10% = $840. Finally, the total net loss is the sum of the loss on sale and the commission: $2,100 + $840 = $2,940.

Question 95: Which TREC sanction requires a licensee to complete specific educational courses as a condition of keeping their license?

Revocation
Probation with education requirements (Correct answer)
Reprimand
License suspension

Correct answer: Probation with education requirements

TREC may place a licensee on probation with mandatory education requirements, allowing them to keep their license provided they complete the required courses.

Question 96: What is 'steering' as prohibited by Texas fair housing laws?

Recommending a specific lender to a buyer
Directing buyers toward or away from neighborhoods based on protected class characteristics (Correct answer)
Advising a seller to list at a certain price
Referring clients to a preferred title company

Correct answer: Directing buyers toward or away from neighborhoods based on protected class characteristics

Steering is the illegal practice of guiding buyers toward or away from specific neighborhoods based on race, religion, national origin, or other protected class characteristics.

Question 97: What does the 'Option Period' in a Texas TREC contract allow the buyer to do?

Lock in the purchase price for 30 days
Extend the closing date automatically
Negotiate a lower earnest money deposit
Terminate the contract for any reason within an agreed timeframe (Correct answer)

Correct answer: Terminate the contract for any reason within an agreed timeframe

During the option period, the buyer pays an option fee for the unrestricted right to terminate the contract for any reason.

Question 98: What does the Texas Real Estate License Act prohibit regarding 'net listings'?

They are allowed if both parties consent
They must be approved by TREC in advance
They are only allowed for commercial properties
They are prohibited because they create a conflict of interest (Correct answer)

Correct answer: They are prohibited because they create a conflict of interest

Net listings are prohibited in Texas because they create a conflict of interest where the broker profits more by obtaining a higher price, regardless of the seller's needs.

Question 99: What is the primary purpose of the Texas Real Estate Commission (TREC)?

To support the real estate education industry
To assist real estate agents with marketing strategies
To promote real estate business growth in Texas
To protect consumers by regulating real estate professionals (Correct answer)

Correct answer: To protect consumers by regulating real estate professionals

The Texas Real Estate Commission (TREC) was established primarily to protect the public. It achieves this by regulating the real estate industry, including licensing real estate brokers and sales agents, enforcing the Texas Real Estate License Act, and investigating complaints. This oversight ensures that real estate professionals adhere to ethical standards and legal requirements, safeguarding consumers in real estate transactions.

Question 100: Which statement about TREC's advertising rules regarding teams is correct?

Team names must include the word 'team' or 'group' and the broker's name (Correct answer)
Teams may advertise without including the broker's name
Team advertising follows no specific TREC rules
Teams are prohibited from advertising separately from the broker

Correct answer: Team names must include the word 'team' or 'group' and the broker's name

TREC requires team names to include 'team' or 'group' in the name and all team advertising must include the sponsoring broker's name.

Question 101: What is the maximum administrative penalty that TREC can impose on a licensee for a single violation?

$1,000
$10,000
$25,000
$5,000 (Correct answer)

Correct answer: $5,000

Under the Texas Real Estate License Act, TREC has the authority to impose administrative penalties on licensees who violate the Act or TREC rules. For a single violation, the maximum administrative penalty that TREC can assess is $5,000. These penalties serve as a deterrent and a means of enforcing compliance within the real estate industry.

Question 102: If a licensee's advertisement contains an error, TREC rules require:

Correcting or removing the inaccurate advertisement promptly (Correct answer)
Leaving the ad up until the property sells
Filing an amendment with TREC within 30 days
Waiting until the next renewal to correct it

Correct answer: Correcting or removing the inaccurate advertisement promptly

TREC requires licensees to promptly correct or remove any advertisement that contains inaccurate information to protect consumers from being misled.

Question 103: In a TREC contract, the 'Third Party Financing Addendum' is used when:

The seller carries the note
A lease option is involved
The buyer pays cash
The buyer obtains a conventional, FHA, or VA loan (Correct answer)

Correct answer: The buyer obtains a conventional, FHA, or VA loan

The Third Party Financing Addendum is attached when the buyer plans to finance the purchase through a conventional, FHA, or VA loan.

Question 104: Who regulates real estate inspectors in Texas?

Texas Real Estate Commission (TREC) (Correct answer)
Texas Department of Insurance
Texas State Board of Plumbing Examiners
Texas Commission on Environmental Quality

Correct answer: Texas Real Estate Commission (TREC)

TREC licenses and regulates real estate inspectors in Texas, including establishing inspection standards and enforcing disciplinary rules.

Question 105: The Texas Real Estate Recovery Trust Account is funded by:

A portion of license fees paid by real estate licensees (Correct answer)
Fines collected from disciplined licensees
Federal HUD grants
Voluntary contributions from brokers

Correct answer: A portion of license fees paid by real estate licensees

The Real Estate Recovery Trust Account is funded by fees collected from licensees and is used to compensate consumers who suffer actual damages due to licensee fraud or misconduct.

Question 106: After a complaint is filed with TREC, what is the first step in the investigation process?

The complainant must attend a mandatory mediation session
The licensee's license is immediately suspended
TREC staff review the complaint to determine if it alleges a violation within TREC's jurisdiction (Correct answer)
A public hearing is scheduled automatically

Correct answer: TREC staff review the complaint to determine if it alleges a violation within TREC's jurisdiction

TREC staff first determine whether the complaint alleges a violation of the License Act or TREC rules before proceeding to full investigation.

Question 107: What is the criminal penalty for engaging in the real estate brokerage business in Texas without first becoming licensed by TREC?

A fine of not more than $4,000 (Correct answer)
Triple damages
Imprisonment for up to 2 years
A fine of up to $5,000 per day

Correct answer: A fine of not more than $4,000

Engaging in real estate brokerage activities in Texas without a valid license from TREC is a serious offense. This unauthorized practice is considered a Class A misdemeanor. The criminal penalty for such an offense includes a fine of not more than $4,000, and/or confinement in jail for up to one year.

Question 108: When a Texas license holder represents a seller, which of the following must the license holder disclose to a prospective buyer?

All material facts about the property known to the license holder (Correct answer)
The seller's reasons for selling
The license holder's commission arrangement with the seller
The seller's minimum acceptable price

Correct answer: All material facts about the property known to the license holder

A seller's agent has a duty of honesty to the buyer and must disclose all known material facts about the property that could affect the buyer's decision, even while representing the seller.

Question 109: Under TREC rules, before a licensee can advertise that they specialize in a particular type of real estate, they must:

Have at least 5 years of experience
Hold a special TREC-issued designation
Have a reasonable basis for the specialization claim (Correct answer)
Get broker approval in writing

Correct answer: Have a reasonable basis for the specialization claim

Claiming a specialty in advertising is permissible only if the licensee has a legitimate, substantiated basis for the claim to avoid misleading consumers.

Question 110: The appropriate time for a selling broker to explain the agency relationship to a prospective buyer is?

at their initial meting (Correct answer)
both parties
at the time of licensee's first contact
terminate the purchase contract with the seller

Correct answer: at their initial meting

In Texas, real estate licensees are required to provide the "Information About Brokerage Services" (IABS) form at the first substantive dialogue with a prospective buyer, seller, landlord, or tenant. This initial meeting is the appropriate time to explain the agency relationship, ensuring the client understands the roles and responsibilities of the agent and the various types of agency available before any confidential information is exchanged or specific services are provided.

Question 111: The concept of 'fiduciary duty' in real estate means a licensee must:

Always get the highest commission possible
Put the client's interests above their own (Correct answer)
Recommend only properties listed by their brokerage
Disclose all offers to both parties simultaneously

Correct answer: Put the client's interests above their own

Fiduciary duty requires a licensee to act in the client's best interest, placing the client's needs above the licensee's own financial gain.

Question 112: Under TREC rules, may an inspector recommend specific contractors to repair deficiencies they found?

Yes, always — it is part of their service
Yes, but only if they are also a licensed contractor
No, inspectors may never make any contractor recommendations
No, unless the inspector has no financial interest in the contractor (Correct answer)

Correct answer: No, unless the inspector has no financial interest in the contractor

Inspectors may suggest contractors only if they have no financial interest in recommending them, to preserve impartiality and avoid conflicts of interest.

Question 113: Under the Texas Real Estate License Act, what is the primary duty of a licensee acting as an intermediary?

To facilitate the transaction while treating both parties fairly and honestly (Correct answer)
To act solely in the broker's financial interest
To represent the seller exclusively
To represent the buyer exclusively

Correct answer: To facilitate the transaction while treating both parties fairly and honestly

An intermediary must treat both parties fairly and honestly and may not disclose confidential information of either party without consent.

Question 114: Under TREC advertising rules, all real estate advertisements must include:

The name of the licensee's sponsoring broker (Correct answer)
The MLS listing number of the property
The licensee's personal phone number
The license number of every agent featured

Correct answer: The name of the licensee's sponsoring broker

TREC requires that all advertising identify the sponsoring broker, ensuring consumers know which brokerage is responsible for the advertisement.

Question 115: Which statement about single-party representation in Texas is CORRECT?

A broker may represent both parties without any written disclosure if both verbally agree
A seller's agent owes the buyer loyalty and confidentiality as well as honesty
A buyer's agent must place the buyer's interests above all other parties including their own (Correct answer)
Single agency is only permitted in commercial transactions under TRELA

Correct answer: A buyer's agent must place the buyer's interests above all other parties including their own

In a single-party (buyer's) representation, the agent owes the buyer a fiduciary duty of loyalty, which includes placing the buyer's interests above those of all other parties, including the agent's own interests.

Question 116: A licensee who advertises properties on a website without TREC approval of the website is:

In violation if the site does not display broker name and contact information (Correct answer)
Required to register the website with TREC
Always in compliance since websites have no TREC requirements
In violation only if the site is paid advertising

Correct answer: In violation if the site does not display broker name and contact information

TREC advertising rules apply to all media including websites — the site must identify the sponsoring broker and comply with all standard advertising requirements.

Question 117: A consumer who obtains a judgment against a Texas licensee and cannot collect may apply to the Real Estate Recovery Trust Account for reimbursement up to:

$5,000 per transaction
$10,000 per transaction
$50,000 per transaction, up to $100,000 per licensee (Correct answer)
$25,000 per claim with no cap

Correct answer: $50,000 per transaction, up to $100,000 per licensee

The Recovery Trust Account will pay up to $50,000 per transaction and a maximum of $100,000 against any single licensee for valid unpaid judgments.

Question 118: What is an 'agreed order' in the TREC disciplinary process?

A court order requiring a licensee to appear before a judge
An order issued by TREC without the licensee's input
A negotiated resolution between TREC and the licensee that does not require a full hearing (Correct answer)
A requirement for the licensee to take additional CE courses only

Correct answer: A negotiated resolution between TREC and the licensee that does not require a full hearing

An agreed order is a settlement negotiated between TREC's enforcement staff and the licensee, resolving the disciplinary matter without a formal hearing.

Question 119: The 'Survey' section of a TREC residential contract typically requires:

No survey if the property is under 1 acre
Delivery of an existing survey or a new survey within a specified number of days (Correct answer)
The seller to always provide a brand-new survey
The buyer to pay for a new survey in all cases

Correct answer: Delivery of an existing survey or a new survey within a specified number of days

The contract allows parties to agree whether to use an existing survey or obtain a new one, with delivery required within the agreed timeframe.

Question 120: Under TREC Standards of Practice, how must an inspector report a component that cannot be inspected?

Mark it as 'Not Inspected' and provide a reason (Correct answer)
Only report it if the client specifically asks about it
Write 'pass' if it appears undamaged
Leave it blank on the report

Correct answer: Mark it as 'Not Inspected' and provide a reason

TREC requires inspectors to note any component that was not inspected, along with the reason it could not be inspected, on the official report.

Question 121: What is the TREC-required report format that inspectors must use in Texas?

TREC Promulgated Property Inspection Report form (Correct answer)
Free-form narrative report
ASHI inspection checklist
Standard HUD inspection form

Correct answer: TREC Promulgated Property Inspection Report form

Texas inspectors must use the TREC-promulgated Property Inspection Report form, which standardizes what must be inspected and how findings are reported.

Question 122: A licensee who disagrees with a TREC disciplinary order may:

File a complaint against the TREC commissioner personally
Only appeal after their license expires
Appeal the order through the State Office of Administrative Hearings (SOAH) (Correct answer)
Ignore the order if they believe it is unjust

Correct answer: Appeal the order through the State Office of Administrative Hearings (SOAH)

Licensees have the right to contest TREC disciplinary actions through the State Office of Administrative Hearings, where an Administrative Law Judge reviews the case.

Question 123: Under Texas law, a salesperson may receive compensation for real estate services only from:

Either the client or the broker
Their sponsoring broker (Correct answer)
The client directly
The title company

Correct answer: Their sponsoring broker

A salesperson may only receive compensation through their sponsoring broker — never directly from a client or third party.

Question 124: Which TREC form is used for the sale of unimproved (vacant) lots in a residential subdivision?

TREC Form 1-4
TREC Form 9-13
TREC Form 38-7
TREC Form 25-14 (Correct answer)

Correct answer: TREC Form 25-14

TREC Form 25-14 (Residential Condominium Contract) is for condos, while vacant lots in residential subdivisions use Form 9-13.

Question 125: A licensee who places a yard sign on a property they do not have a listing agreement for is:

In violation of TREC advertising rules (Correct answer)
Only in violation if the property sells
Engaging in permissible marketing
Following standard industry practice

Correct answer: In violation of TREC advertising rules

Placing a sign on a property without written authorization from the owner violates TREC advertising rules and could constitute unauthorized practice.

Question 126: What happens to the earnest money if a buyer defaults under a TREC contract?

It is automatically returned to the buyer
It is refunded minus inspection costs
It may be retained by the seller as liquidated damages (Correct answer)
It must be split equally between buyer and seller

Correct answer: It may be retained by the seller as liquidated damages

If the buyer defaults, the seller may be entitled to retain the earnest money as liquidated damages under the terms of the contract.

TREC Texas Real Estate Commission Exam

The TREC (Texas Real Estate Commission) Exam is the Texas state licensing exam for real estate agents and brokers. It covers real estate principles, regulations, contract forms, ethics, consumer protection, and education requirements under Texas law.

125

Questions

150 min

Time Limit

70%

To Pass

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