TREC Ethics and Professional Conduct Flashcards

A licensee may share a commission with an unlicensed person:

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.

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

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.

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

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.

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

Answer: Their sponsoring broker

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

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

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.

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

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.