Texas Real Estate License Act (TRELA)
Passed in 1939. The Texas Real Estate Commission was created to enforce and administer the act in 1949. The purpose
... [Show More] of the Act is to protect the public against unscrupulous brokers and sales agents. Makes it illegal to practice any act of real estate brokerage without a license.
Fiduciary
Based on trust.
Indemnification
Protection against damage or loss. Means that the principal will protect the agent from suffering a loss due to the agent's reliance on information received from the principal. For example, if a seller gave a broker false information, which the broker passed on to a prospective buyer, the broker would be justified in expecting indemnification from the seller. For example, if the seller misrepresented the property in a Seller's Disclosure, the agent will be indemnified if the agent was unaware of the misrepresentation.
Agency
A relationship between two parties, the principal and an agent. The relationship the agent has with his or her principal, or his or her broker.
Customer
A person who receives limited brokerage services without establishing an agency relationship.
Client
Also known as the principal. A person who engages the professional advice or services of another, called an agent, and whose interests are protected by the specific duties and loyalties of an agency relationship. Many of these duties are outlined in a listing or buyer/tenant representation agreement.
Two Types of Licenses
A broker license and a sales agent license. No one may hold both licenses at the same time; however, a licensed broker may act as a broker and as a sales agent.
Sales Agent License
May only be issued under the sponsorship of a licensed broker. A broker is responsible for all of their professional acts. They must receive all compensation through his or her sponsoring broker. In addition, they are prohibited from splitting fees with anyone, except through the sponsoring broker. They are not considered licensed, and therefore may not engage in the business until his or her license is received in the sponsoring broker's office.
Broker License
They must maintain a fixed place of business in the state. If they have more than one place of business, a branch office license is required for each location. It is not necessary to have a licensed broker at each location.
Terminating a Sale Agent's Sponsorship
If a broker wishes to terminate a sales agent's sponsorship, it must be done in writing, and the license must be returned to the Texas Real Estate Commission immediately. A sales agent whose license has been returned to the Commission may not engage in the business until he or she has found a new sponsoring broker. A sales agent license holder who wishes to terminate his or her association with a broker must notify the broker in writing.
1101.353. Moral Character Determination
(a) If before applying for a license under this chapter a person requests that the commission determine whether the person's moral character complies with the commission's moral character requirements for licensing under this chapter and pays the fee prescribed by Section 1101.152, the commission shall make its determination of the person's moral character.
(b) Not later than the 30th day after the date the commission makes its determination, the commission shall notify the person of the determination.
(c) If a person applies for a license after receiving notice of a determination, the commission may conduct a supplemental moral character determination of the person. e supplemental determination may cover only the period after the date the person requests a moral character determination under this section.
(d) The commission may issue a provisional moral character determination. The commission by rule shall adopt reasonable terms for issuing a provisional moral character determination.
Section 1101.557 of TRELA
Specifes that a broker who represents a party in a real estate transaction or who lists real estate for sale under an exclusive agreement for a party is an agent of the party. Therefore, to ensure compliance with TRELA, a good understanding of agency relationships is a requirement for any practicing sales agent or broker. e act does not provide for any other relationship between the broker and a principal to the transaction.
TRELA Section 1101.558. Representation Disclosure
Mandates the disclosure of representation and that potential buyers and sellers be provided with an agency information form (discussed elsewhere). Agency relationships are often confusing to buyers and sellers, as well as the license holders themselves. e Commission's intent is clear that all parties to a transaction must understand their relationship with the broker.
TRELA Sec. 1101.651 Certain Practices Prohibited
Lists 30 specific violations that can result in the suspension or revocation of a real estate license. Many of these violations relate to the license holder's conduct in agency relationships. [Show Less]