16 Texas State Law (TREC) Practice Questions & Answers

Every Texas State Law (TREC) practice question from the Real Estate License Practice Test, with the correct answer and a short explanation.

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1. Which agency is responsible for regulating real estate license holders in Texas?
- A.The Texas Real Estate Commission (TREC)✓ Answer
- B.The Texas Department of Housing and Community Affairs
- C.The U.S. Department of Housing and Urban Development (HUD)
- D.The National Association of Realtors (NAR)
TREC is the state agency created under the Texas Real Estate License Act (TRELA) to administer the licensing, education, and regulation of real estate brokers and sales agents in Texas. NAR is a private trade association, not a government regulator.
Source: Texas Real Estate License Act (TRELA), Tex. Occ. Code Ch. 1101Report a problem with this question
2. In Texas, a real estate sales agent must operate under the supervision of whom?
- A.No one; a sales agent works independently
- B.TREC directly
- C.A sponsoring licensed broker✓ Answer
- D.Any licensed attorney
Texas law requires a sales agent to be sponsored by an active licensed broker who is responsible for supervising the agent's real estate activities. A sales agent may not perform brokerage acts without an active sponsoring broker.
Source: TRELA, Tex. Occ. Code §1101.366; 22 Tex. Admin. Code §535.2Report a problem with this question
3. What is the primary purpose of the Information About Brokerage Services (IABS) form in Texas?
- A.To transfer title to the property
- B.To bind the buyer to a purchase
- C.To explain the types of representation a broker can provide and the duties owed to the parties✓ Answer
- D.To set the commission the broker will earn
The IABS is a disclosure that informs consumers, before or at the first substantive communication about a specific property, of the ways a broker can represent a party (as seller's agent, buyer's agent, intermediary, or subagent) and the duties owed. It is informational, not a contract.
Source: TRELA, Tex. Occ. Code §1101.558; 22 Tex. Admin. Code §531.20Report a problem with this question
4. Instead of dual agency, Texas uses which relationship when one broker represents both the buyer and the seller in the same transaction?
- A.Dual agency
- B.Subagency
- C.Intermediary✓ Answer
- D.Designated buyer's agency only
Texas does not recognize dual agency; instead, a broker who represents both parties acts as an intermediary. The intermediary relationship requires written consent from both parties, typically obtained through the listing and buyer representation agreements.
Source: TRELA, Tex. Occ. Code §1101.559–.560Report a problem with this question
5. When acting as an intermediary, how may a broker assign associated license holders to work with each party?
- A.By refusing to let any associate advise either party
- B.By requiring the same associate to advise both parties equally
- C.By appointing one associate to the buyer and another to the seller, with written authorization✓ Answer
- D.Only by having the broker personally represent both parties with no associates
With written authorization, the intermediary broker may make 'appointments'—designating one associated license holder to communicate with and advise the buyer and a different associate to communicate with and advise the seller. This lets each party receive advice while the broker remains impartial.
Source: TRELA, Tex. Occ. Code §1101.560Report a problem with this question
6. Which document must a seller of a single-family residence in Texas generally provide to a buyer regarding the property's condition?
- A.The IABS form
- B.A federal RESPA statement
- C.A TREC promulgated listing agreement
- D.The Seller's Disclosure Notice✓ Answer
Texas Property Code §5.008 requires a seller of residential real property comprising not more than one dwelling unit to deliver a written Seller's Disclosure Notice describing the property's condition and known defects. It is a statutory obligation of the seller, separate from agency disclosures like the IABS.
Source: Texas Property Code §5.008Report a problem with this question
7. In general, when must a license holder provide the IABS to a prospective client or party?
- A.At the first substantive communication about a specific property✓ Answer
- B.Only after a contract is signed
- C.Never, unless the client requests it
- D.Only at the closing table
The IABS must be provided at the time of the first substantive communication with a party about a specific property, so consumers understand representation options early. There are limited exceptions, such as transactions involving a residential lease under a year or when the party already has a written representation agreement.
Source: TRELA, Tex. Occ. Code §1101.558(c)Report a problem with this question
8. When are TREC promulgated contract forms required to be used by a Texas license holder?
- A.Only for commercial transactions
- B.Only when the buyer requests them in writing
- C.Never; license holders may draft their own contracts
- D.When a form is appropriate for a transaction, unless the parties are otherwise represented and a lawyer prepares the contract✓ Answer
License holders must use the appropriate TREC promulgated form when one exists for the transaction, because they are not licensed to practice law or draft contract language. The main exception is when a transaction is negotiated by an attorney who prepares the contract, or a form is drafted by a party's lawyer.
Source: 22 Tex. Admin. Code §537.11Report a problem with this question
9. A Texas license holder wants to add language to a TREC promulgated contract form. What is generally permitted?
- A.Filling in blanks and adding factual business details, but not drafting legal provisions✓ Answer
- B.Adding legal contingencies of the license holder's own drafting
- C.Deleting the mediation and default sections entirely
- D.Rewriting any clause to fit the deal
License holders may complete promulgated forms by filling in blanks and adding factual business details specific to the transaction, but drafting legal provisions or contract language constitutes the unauthorized practice of law. Custom legal language should be prepared by an attorney.
Source: 22 Tex. Admin. Code §537.11(b)Report a problem with this question
10. Which license level in Texas is authorized to sponsor sales agents and operate a brokerage independently?
- A.Apprentice
- B.Sales agent
- C.Inspector
- D.Broker✓ Answer
Only a licensed broker may operate independently and sponsor sales agents, because a broker has met higher experience and education requirements and assumes responsibility for supervising sponsored agents. A sales agent must always work under a sponsoring broker.
Source: TRELA, Tex. Occ. Code §1101.351, §1101.355Report a problem with this question
11. Under the Texas intermediary model, what must the broker do regarding fairness to the parties?
- A.Withdraw from the transaction entirely
- B.Advocate exclusively for the buyer
- C.Advocate exclusively for the seller
- D.Act fairly and impartially, and not favor one party over the other✓ Answer
An intermediary broker must act fairly and impartially and may not favor one party over the other; the broker also may not disclose confidential information such as one party's willingness to accept a different price without authorization. This preserves neutrality while both parties remain represented.
Source: TRELA, Tex. Occ. Code §1101.651(d), §1101.559Report a problem with this question
12. If a seller of a residential property has never occupied the property, what is true about the Seller's Disclosure Notice?
- A.The seller is never required to disclose anything under any circumstances
- B.The seller discloses based on actual knowledge; a statutory exemption may apply in certain cases such as some estate or trustee sales✓ Answer
- C.The notice is replaced by the IABS
- D.The buyer must complete the notice instead
The Seller's Disclosure Notice is based on the seller's actual knowledge of the property's condition, and Property Code §5.008 lists specific exemptions (for example, certain sales by an executor, administrator, or trustee, or a transfer to a spouse). A seller who never occupied the home still discloses what they actually know, unless an exemption applies.
Source: Texas Property Code §5.008(e)Report a problem with this question
13. For an intermediary relationship to be created in Texas, what is required?
- A.Approval from TREC for each transaction
- B.An oral agreement between the two sales agents
- C.Written consent from both parties authorizing the broker to act as intermediary✓ Answer
- D.Only the seller's verbal agreement
A broker may act as an intermediary only with the written consent of both parties, obtained through their respective representation agreements, which must state the source of any expected compensation. Without written consent from both, the broker cannot lawfully serve as intermediary.
Source: TRELA, Tex. Occ. Code §1101.559(b)Report a problem with this question
14. Under the Texas Real Estate License Act, when a single broker represents both the buyer and the seller in the same transaction with the written consent of both parties, this authorized arrangement is known as what?
- A.Intermediary relationship✓ Answer
- B.Subagency
- C.Dual agency
- D.Designated undisclosed agency
Texas does not permit traditional 'dual agency.' Instead, TRELA authorizes an 'intermediary' relationship, in which a broker who has written agreements with both buyer and seller may facilitate the transaction, provided the intermediary treats both parties fairly and obtains their written consent. The broker may also appoint different associated license holders to each party.
Source: Texas Real Estate License Act (TRELA), Tex. Occ. Code §1101.559–.561 (intermediary)Report a problem with this question
15. In a standard TREC One to Four Family Residential Contract (Resale), what does the buyer receive in exchange for paying the negotiated 'option fee' to the seller?
- A.A guarantee that the seller will make all requested repairs
- B.An unrestricted right to terminate the contract within a negotiated option period✓ Answer
- C.A refund of earnest money regardless of when the buyer terminates
- D.Ownership of the property once the fee is paid
The option fee buys the buyer a 'termination option': the unrestricted right to terminate the contract for any reason during the negotiated option period (typically used for inspections). If the buyer exercises this right within the period, the contract ends; the option fee itself is generally not refundable, but it is credited to the buyer at closing if the sale proceeds.
Source: TREC One to Four Family Residential Contract (Resale), Paragraph 23 (Termination Option)Report a problem with this question
16. Texas requires a seller of residential real property (of not more than one dwelling unit) to give the buyer which specific written disclosure about the property before the contract is binding?
- A.A title insurance policy paid for by the seller
- B.Seller's Disclosure Notice of the property's condition✓ Answer
- C.A certified appraisal of the property's market value
- D.A signed waiver of the buyer's inspection rights
Section 5.008 of the Texas Property Code requires a seller of a residential property comprising not more than one dwelling unit to deliver a written Seller's Disclosure Notice describing the property's condition and known defects. This statutory notice protects the buyer by disclosing material information; it is a disclosure of condition, not an appraisal, a title policy, or a waiver.
Source: Texas Property Code §5.008 (Seller's Disclosure of Property Condition)Report a problem with this question

Practice questions cover the uniform national portion of the real estate exam. Your state adds a state-law portion — study your state's official materials before testing. Licensing info (ARELLO) →

1. Which agency is responsible for regulating real estate license holders in Texas?

2. In Texas, a real estate sales agent must operate under the supervision of whom?

3. What is the primary purpose of the Information About Brokerage Services (IABS) form in Texas?

4. Instead of dual agency, Texas uses which relationship when one broker represents both the buyer and the seller in the same transaction?

5. When acting as an intermediary, how may a broker assign associated license holders to work with each party?

6. Which document must a seller of a single-family residence in Texas generally provide to a buyer regarding the property's condition?

7. In general, when must a license holder provide the IABS to a prospective client or party?

8. When are TREC promulgated contract forms required to be used by a Texas license holder?

9. A Texas license holder wants to add language to a TREC promulgated contract form. What is generally permitted?

10. Which license level in Texas is authorized to sponsor sales agents and operate a brokerage independently?

11. Under the Texas intermediary model, what must the broker do regarding fairness to the parties?

12. If a seller of a residential property has never occupied the property, what is true about the Seller's Disclosure Notice?

13. For an intermediary relationship to be created in Texas, what is required?

14. Under the Texas Real Estate License Act, when a single broker represents both the buyer and the seller in the same transaction with the written consent of both parties, this authorized arrangement is known as what?

15. In a standard TREC One to Four Family Residential Contract (Resale), what does the buyer receive in exchange for paying the negotiated 'option fee' to the seller?

16. Texas requires a seller of residential real property (of not more than one dwelling unit) to give the buyer which specific written disclosure about the property before the contract is binding?