Licensing Law, TREC Rules, and Ethics
Licensing Law
Getting and keeping a license
TREC administers the Real Estate License Act. A sales agent applicant completes 180 qualifying education hours, passes the exam, and is fingerprinted. Critically, the agent must be sponsored by a licensed broker before performing any act requiring a license. A new sales agent then completes 90 hours of post-license (SAE) education within two years. A broker license requires additional qualifying education plus documented active experience. Licenses renew every two years with continuing education that includes legal update and ethics hours.
Money rules
- A sales agent is paid by, and only through, the sponsoring broker. Accepting a commission directly from a client or another broker is a violation.
- Paying a referral fee to an unlicensed person for a real estate lead is a violation.
- Trust funds go into a trust account and are never commingled with operating funds.
- The broker's licensed name must appear in advertising; assumed names must be registered with TREC.
Conduct
TREC may suspend, revoke, probate, or fine a license. Grounds include misrepresentation, failure to disclose, commingling, accepting a commission from an unauthorized source, and failing to provide required notices. Complaints go to TREC enforcement and may be heard by an administrative law judge. The Real Estate Recovery Trust Account can reimburse consumers harmed by a licensee's conduct.
Traps
A license may not be sponsored by two brokers at once, and no licensed activity may occur before the sponsorship is on file. The license belongs to the state, not the agent or the broker.
Worked example
An unlicensed marketing assistant tells a caller the seller would accept $20,000 less. That is negotiating - a licensing violation by the assistant and a supervision failure by the broker.
TREC Rules and Ethics
The two notices everyone forgets
The Information About Brokerage Services (IABS) notice must be delivered at the first substantive communication and, in most cases, before a party signs a contract. The Consumer Protection Notice must be posted in the brokerage office and on the firm's website. Questions turn on "first substantive communication" - discussing a specific property's price or terms qualifies; a general "what is my house worth" inquiry may not.
Advertising and supervision
Advertising must include the broker's licensed name. An agent may advertise only with the broker's permission, and team names must be registered. The broker must supervise. Unlicensed assistants may perform clerical and marketing work but may not negotiate, show property for compensation, or interpret contract terms.
Fair housing and ethics
Federal and Texas fair housing law prohibit discrimination based on race, color, religion, sex, national origin, familial status, and disability. Watch for steering, blockbusting, and refusals of reasonable accommodation. TREC's Canons of Professional Ethics and Conduct require fidelity, integrity, competency, and fairness. "The client's interests first" never authorizes misrepresentation to the other side.
Solicitation
The Do Not Call registry, CAN-SPAM, and TREC solicitation rules restrict cold outreach. Advertising a competitor's listing without permission, or implying a listing belongs to the agent, is a violation.
Traps
- Ethics rules apply even where no client relationship exists.
- Brokers must retain transaction records for the required period and produce them on TREC request.
- "Everybody does it" is not a defense: the standard is the statute, the TREC rules, and the contract.
Worked example
An agent emails ten specific listings to a new prospect with no IABS attached. Because the message discusses specific properties, the notice should have accompanied that first substantive communication.