TREC Texas Real Estate Commission Exam — Questions and Answers

Question 1: 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)
Ignore it and submit to the seller anyway
Counter the offer without informing the seller
Accept it on the seller's behalf

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

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

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

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

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 4: 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
Allow the licensee to continue practicing immediately
Notify the licensee but take no further action
Automatically revoke the licensee's license until the amount is repaid (Correct answer)

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

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

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 6: 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)
Presenting all offers to the seller, even low ones
Advising the buyer to obtain an independent home inspection
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 7: The 'Survey' section of a TREC residential contract typically requires:

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

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 8: 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 9: When a Texas license holder represents a seller, which of the following must the license holder disclose to a prospective buyer?

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

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

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

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

Delay closing indefinitely
Only accept the property as-is
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 12: TREC may close a complaint without disciplinary action if:

Insufficient evidence of a rule violation exists after investigation
The licensee agrees to take additional CE courses
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 13: A sales agent is hired to list the property of a deceased party who died testate. The license holder must:

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

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

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

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

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

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 16: Under TREC rules, commingling refers to:

Advertising multiple listings in a single ad
Mixing client funds with the broker's personal or business funds (Correct answer)
Sharing a commission with an unlicensed person
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 17: What report designation does a TREC inspector use to identify an item that poses an immediate safety hazard?

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

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

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

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

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

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 20: Which of the following is considered real property?

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

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 21: 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 22: 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 20-15
TREC Form 9-13
TREC Form 1-4 (Correct answer)

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

An express oral agreement acknowledged by both parties
Implication through conduct and actions of the parties
A license holder simply handing a buyer a property flyer (Correct answer)
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 24: What is the TREC-required report format that inspectors must use in Texas?

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

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 25: 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
No duty whatsoever since they represent only the seller
The same duties owed to the seller under the agency agreement
Only the duty to disclose known material defects and treat them honestly (Correct answer)

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

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

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

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 28: 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 29: What action can TREC take against an inspector who violates the Standards of Practice?

Only issue a letter of reprimand
Suspend or revoke the inspector's license and impose fines (Correct answer)
Require the inspector to retake the licensing exam only
Refer the matter to local courts only

Correct answer: Suspend or revoke the inspector's license and impose fines

TREC has the authority to suspend or revoke an inspector's license and impose administrative penalties for violations of the Standards of Practice.

Question 30: A Texas licensee wants to advertise on social media under a nickname. Under TREC rules, they:

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

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

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

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

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

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 33: 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)
Advertising without a team designation
Late renewal of a license
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 34: How many continuing education hours must a Texas Professional Real Estate Inspector complete per renewal cycle?

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

Correct answer: 24 hours

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

Question 35: 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.20= 2,100 8400x.0=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.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 36: 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:

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

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

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

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

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

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

Seller's agent only, with duties of honesty to the buyer (Correct answer)
Intermediary without written consent
Buyer's agent by implied agency
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 40: If a Texas licensee has a personal financial interest in a property they are selling on behalf of a client, they must:

Withdraw from the transaction immediately
Disclose that interest in writing to all parties (Correct answer)
Obtain TREC approval before proceeding
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 41: Which of the following is NOT typically required to be inspected under TREC's Standards of Practice?

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

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

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

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

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

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

Agreement of sale
Bill of sale (Correct answer)
Adverse possession
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 45: If a licensee's sponsor broker dies or closes their brokerage, the licensee's license status becomes:

Active for 90 days to allow time to find a new broker
Automatically revoked
Expired immediately
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 46: What is 'conversion' in the context of TREC ethics?

Switching a client from one broker to another
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

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 47: Under TREC rules, a licensee advertising in Spanish must:

Ensure the broker's name appears in the advertisement in both languages (Correct answer)
Use only TREC-approved Spanish translations of required disclosures
Also publish the same ad in English in the same publication
Obtain special TREC approval for non-English advertising

Correct answer: Ensure the broker's name appears in the advertisement in both languages

Non-English advertising must still include all required disclosures, including the broker's name, in a way that is clear to the target audience.

Question 48: Which of the following is a TREC-approved inspector specialization?

Structural engineering certification
Pest and termite inspection (Correct answer)
Mold remediation services
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 49: In a TREC contract, 'closing' is defined as:

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

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

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

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 51: 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 represent the buyer exclusively
To represent the seller exclusively
To act solely in the broker's financial interest

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

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

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

It is automatically returned to the buyer
It may be retained by the seller as liquidated damages (Correct answer)
It is refunded minus inspection costs
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.

Question 54: What is 'blockbusting' in real estate?

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

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 55: 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 title company officer who mediates disputes
An unlicensed assistant who facilitates closings
A broker who represents both parties in the same transaction with written consent (Correct answer)

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

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

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 57: 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 58: When may a TREC inspector accept additional compensation from a party other than their client?

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

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

Being at least 18 years old
Passing a criminal background check
Being a legal resident of Texas (Correct answer)
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 60: If a licensee's advertisement contains an error, TREC rules require:

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

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

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)
Yes, always — it is part of their service

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

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

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

Their sponsoring broker (Correct answer)
The client directly
Either the client or the broker
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 64: A TREC-licensed inspector who also holds a real estate license may:

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

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

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

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

A court order requiring a licensee to appear before a judge
A negotiated resolution between TREC and the licensee that does not require a full hearing (Correct answer)
An order issued by TREC without the licensee's input
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 67: Which entity promulgates the standard real estate contract forms used in Texas?

Texas Association of Realtors
Texas Real Estate Commission (TREC) (Correct answer)
National Association of Realtors
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 68: Who may file a complaint against a Texas real estate licensee with TREC?

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

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

Follow the client's instructions since the client is in charge
Report the client to local law enforcement immediately
Refuse to comply and may terminate the relationship (Correct answer)
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 70: 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 71: Under TREC rules, how long must a broker retain transaction records?

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

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 72: A Texas real estate inspector is prohibited from:

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

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

'3 bedroom, 2 bath home near schools'
'Guaranteed to sell in 30 days or we pay you $1,000' (Correct answer)
'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 74: What is the purpose of the TREC Seller's Disclosure Notice?

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

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

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

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

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

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

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

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

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

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

A competing brokerage advertises the same property
The property is open for showings
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 80: Under TREC enforcement, a 'reprimand' is:

A requirement to take additional education only
The most severe sanction TREC can impose
An official written censure that becomes part of the licensee's public record (Correct answer)
A private warning with no public record

Correct answer: An official written censure that becomes part of the licensee's public record

A reprimand is a formal written censure that is placed in the licensee's public disciplinary record, even though the license remains active.

Question 81: The commission earned by a listing broker on a sale of property is established by?

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

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

Require the seller to remove the obstruction before proceeding
Skip reporting that component entirely
Assume the concealed area is defect-free
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 83: In a TREC contract, the 'Third Party Financing Addendum' is used when:

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

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

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

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 85: A licensee may share a commission with an unlicensed person:

Under no circumstances — only licensed individuals may receive commission (Correct answer)
If the broker approves in writing
If the unlicensed person referred a client
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 86: 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
At the first substantive dialogue about a specific property (Correct answer)
Only when the client requests it in writing
At the time of closing

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

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

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

Use a Special Provisions paragraph or attach an attorney-drafted addendum (Correct answer)
Leave a blank space in the form
Create a custom addendum themselves
Refuse to use 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 89: In Texas, a real estate agent can legally represent both the buyer and the seller in the same transaction if:

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

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 90: 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)
In violation only if the site is paid advertising
Required to register the website with TREC
Always in compliance since websites have no TREC requirements

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 91: 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
A Real Estate Inspector may only inspect commercial properties
A Real Estate Inspector must work under the supervision of a Professional Real Estate Inspector (Correct answer)
They have identical authority

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

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

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

Imprisonment for up to 2 years
A fine of not more than $4,000 (Correct answer)
Triple damages
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 94: What does the 'Option Period' in a Texas TREC contract allow the buyer to do?

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

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

A license holder who acts for the principal through the principal's agent (Correct answer)
A license holder employed directly by the buyer
An unlicensed assistant supervised by a licensed salesperson
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 96: The TREC Addendum for Property Subject to Mandatory Membership in a Property Owners Association is required when:

The property is subject to mandatory HOA membership (Correct answer)
The buyer is financing with FHA
The seller has a lien on the property
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 97: A real estate team's advertisement in Texas must NOT:

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

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 98: 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?

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

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

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

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

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

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

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

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

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

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

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

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

To rank inspectors by experience level
To set minimum prices inspectors can charge
To dictate which properties may be inspected
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 105: What is the primary purpose of the Texas Real Estate Commission (TREC)?

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

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 106: A Texas licensee must disclose their license status when:

Only during the first meeting with a client
Only if the transaction exceeds $500,000
Whenever they are buying or selling property on their own behalf (Correct answer)
Only when asked by the 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 107: A TREC rule requires that the broker's name in advertising be:

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

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 108: A licensee who disagrees with a TREC disciplinary order may:

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

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 109: Who regulates real estate inspectors in Texas?

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

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 110: 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)
Any property with a pool or outbuildings
Commercial multi-family properties

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

A broker may represent both parties without any written disclosure if both verbally agree
Single agency is only permitted in commercial transactions under TRELA
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)

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

6 months from the transaction date
4 years from the date the violation occurred or was discovered (Correct answer)
No time limit — complaints may be filed at any time
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 113: Under TREC Standards of Practice, how must an inspector report a component that cannot be inspected?

Only report it if the client specifically asks about it
Write 'pass' if it appears undamaged
Mark it as 'Not Inspected' and provide a reason (Correct answer)
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 114: A homeowner builds a fence that unintentionally extends onto a neighbor's property. This is an example of:

Zoning violation
Encroachment (Correct answer)
Covenant
Easement

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 115: The Texas Real Estate Recovery Trust Account is funded by:

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

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

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

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 117: 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

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

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

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

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

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

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

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

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

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

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

Keep it confidential to protect the seller
Only disclose it if the buyer specifically asks
Disclose it to the buyer regardless of the seller's wishes (Correct answer)
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 123: When must a Texas licensee provide the 'Information About Brokerage Services' (IABS) notice?

Only at closing
Only when the client signs a representation agreement
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 124: A Texas licensee receives an email lead from an internet advertisement. Under CAN-SPAM and TREC rules, follow-up emails must:

Be sent daily until the lead responds
Include an opt-out mechanism and the licensee's physical address (Correct answer)
Only be sent during business hours
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 125: Under Texas law, an agent's duty of confidentiality to a former client generally:

Applies only during the active listing period
Is waived once the buyer and seller sign a final contract
Ends automatically 90 days after the transaction closes
Survives the termination of the agency relationship indefinitely (Correct answer)

Correct answer: Survives the termination of the agency relationship indefinitely

The duty of confidentiality to a client survives termination of the agency relationship and continues indefinitely, meaning a former client's confidential information cannot be disclosed even after the transaction is complete.

Question 126: Which of the following about TREC is FALSE?

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

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.

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

Checking for saved progress...

Exam Rules

You can skip questions and return to them later
Flag questions for review before submitting
No feedback shown until you submit the entire exam
Unanswered questions count as wrong — answer everything
10 pretest questions are mixed in and don't affect your score
Timer auto-submits when time runs out
Your progress is auto-saved every 30 seconds