TRELA & TREC Rules — Cheatsheet

TREC Board Composition

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TREC vs. TALCB

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TREC vs. TAR

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License Types at a Glance

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Education Requirements

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Recovery Fund

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Element	Detail
Total members	9 commissioners
Licensee members	6 — must be licensed real estate brokers
Public members	3 — no financial interest in real estate industry
Appointed by	Governor of Texas
Confirmed by	Texas Senate
Term length	6 years, staggered
TREC	TALCB
Full name	Texas Real Estate Commission	Texas Appraiser Licensing & Certification Board
Governs	Brokers, sales agents, inspectors	Real estate appraisers
Relationship	Separate agencies sharing some admin staff	Same
Common trap	Don't confuse — appraisers = TALCB
TREC	TAR
Type	State government licensing agency	Voluntary trade association
Membership	Mandatory to hold license	Optional (REALTOR® members only)
Forms	Promulgated (mandatory)	Optional supplemental forms
Website	TREClicense.texas.gov	TexasRealtors.com
License	Key Rule
Sales Agent	Must always be under sponsoring broker
Broker	May operate independently; may sponsor agents
Broker-Associate	Holds broker license; voluntarily works under another broker
Designated Broker	Individual broker responsible for licensed business entity
License	Pre-License Hours	Key Courses
Sales Agent	180 hours (6 × 30-hr courses)	Principles I & II, Law of Agency, Law of Contracts, Promulgated Forms, RE Finance
Broker upgrade	270 additional hours + 3,600 exp pts in 24 months	Brokerage management, RE law, investment
First renewal (SA)	98 hrs SAE + Legal Update I & II
Subsequent renewals	18 hrs CE including Legal Update I & II (4 hrs each)
Expired >6 months	Must retake licensing exam
Element	Amount/Rule
Max per transaction	$50,000
Triggered by	Fraud, misrepresentation, conversion by licensee
Requirement	Final court judgment + exhausted remedies
Consequence to licensee	Automatic suspension until fund repaid with interest

Promulgated Forms — Mandatory

• Agents must use TREC promulgated forms for covered transactions

• Cannot modify forms — fill in blanks only

• Custom provisions = unauthorized practice of law (unless attorney-drafted for client)

• Attorney exception: attorneys drafting for their own clients are exempt

Key forms: 1-4 Family Residential Contract (Resale), New Home Contract, Farm and Ranch Contract, Unimproved Property Contract, Third Party Financing Addendum

IABS Notice Requirements

• Required at first substantive dialogue about a specific property

• Must be on broker's website if advertising online

• Informational only — NOT an agency agreement

• Failure = TREC violation, but does NOT void contracts

Disciplinary Sanctions (Least → Most Severe)

Written reprimand

Probation

Suspension

Revocation

Max fine: $5,000 per violation per day (ongoing violations)

Trust Account Rules

• Client funds → separate trust account ONLY (never operating account)

• Commingling = client funds in operating account → disciplinary violation

• Conversion = personal use of client funds → criminal + disciplinary

• Earnest money deposit deadline: 2nd business day after contract execution

• Disputed earnest money: broker holds; requires mutual written agreement OR court order to release

• TREC cannot adjudicate earnest money disputes

Common Exam Traps

• TREC = 6 licensees + 3 public (not 6 public + 3 licensees)

• TALCB ≠ TREC — two separate boards

• Inactive license = valid but unsponsored ≠ expired

• 10-day rule: when broker's license terminates, sponsored agents have 10 days to find new sponsorship

• Recovery Fund payment = automatic suspension (not just a fine)

• TREC cannot order earnest money disbursement