25 Texas State Law (TREC) Practice Questions & Answers

1. 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.

   Ref QB-H39EZWSource: Texas Real Estate License Act (TRELA), Tex. Occ. Code Ch. 1101Report a problem with this question

2. 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 licensed sponsoring 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.

   Ref QB-ZJ39EWSource: TRELA, Tex. Occ. Code §1101.366; 22 Tex. Admin. Code §535.2Report a problem with this question

3. 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 representation types and duties owed✓ 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.

   Ref QB-G3W3UVSource: TRELA, Tex. Occ. Code §1101.558; 22 Tex. Admin. Code §531.20Report a problem with this question

4. 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.

   Ref QB-4K59XZSource: TRELA, Tex. Occ. Code §1101.559–.560Report a problem with this question

5. 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 a different associate to each party, 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.

   Ref QB-K3Y3CZSource: TRELA, Tex. Occ. Code §1101.560Report a problem with this question

6. 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.

   Ref QB-3KSWRYSource: Texas Property Code §5.008Report a problem with this question

7. 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 in writing
   • 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.

   Ref QB-J3MR6YSource: TRELA, Tex. Occ. Code §1101.558(c)Report a problem with this question

8. 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 fits the deal, unless a party's lawyer drafts it✓ 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.

   Ref QB-WJZ8WSSource: 22 Tex. Admin. Code §537.11Report a problem with this question

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

   • A.Filling in blanks and business details, not 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.

   Ref QB-D3U3BSSource: 22 Tex. Admin. Code §537.11(b)Report a problem with this question

10. 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.

    Ref QB-UAG6YZSource: TRELA, Tex. Occ. Code §1101.351, §1101.355Report a problem with this question

11. 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.Treat both parties fairly and impartially✓ 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.

    Ref QB-CTNBJ2Source: TRELA, Tex. Occ. Code §1101.651(d), §1101.559Report a problem with this question

12. 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 still discloses based on actual knowledge, unless exempt✓ 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.

    Ref QB-TA5USYSource: Texas Property Code §5.008(e)Report a problem with this question

13. 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✓ 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.

    Ref QB-BTAZCZSource: TRELA, Tex. Occ. Code §1101.559(b)Report a problem with this question

14. 14. 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.

    Ref QB-ATXN7YSource: TREC One to Four Family Residential Contract (Resale), form 20-18, Paragraph 5.B (Termination Option)Report a problem with this question

15. 15. Each person below is paid for the activity described. Under the Texas Real Estate License Act, which person needs a TREC license?

    • A.A Texas attorney handling a client's sale
    • B.A friend paid to negotiate a neighbor's home sale✓ Answer
    • C.An apartment owner's salaried on-site manager
    • D.An owner who sells a rental house she owns herself

    Negotiating the sale of another person's real property for compensation is brokerage, so the friend must be licensed. The owner selling her own property, a licensed Texas attorney acting for a client, and an on-site apartment manager employed by the owner all fall within the Act's express exemptions, which is why the attorney choice, though tempting, does not require a TREC license.

    Ref QB-9TKB2XSource: Tex. Occ. Code 1101.002(1), 1101.351 (license required) and 1101.005 (exemptions)Report a problem with this question

16. 16. A sales agent's sponsoring broker ends the sponsorship, and the agent has not yet found a new broker. What is the status of the agent's license?

    • A.Active; the agent may close existing deals independently
    • B.Inactive; no brokerage acts until a new broker sponsors✓ Answer
    • C.Revoked; the agent must reapply and pass the exam again
    • D.Active for a grace period while the agent seeks a broker

    A Texas sales agent may act only on behalf of a sponsoring broker, so when sponsorship ends the license is placed on inactive status and the agent may not perform brokerage until a new broker's sponsorship is filed with TREC. The license is not revoked, so the agent does not need to reapply or retest, and there is no grace period of independent activity.

    Ref QB-QA3U9VSource: Tex. Occ. Code 1101.351(c) (sales agent acts only for sponsoring broker); 22 TAC 535.121 (inactive status when sponsorship terminates)Report a problem with this question

17. 17. What is the main purpose of the Texas Real Estate Recovery Trust Account?

    • A.Insuring buyers' earnest money held by title companies
    • B.Covering commissions that sellers refuse to pay brokers
    • C.Paying the legal defense costs of accused licensees
    • D.Paying uncollected court judgments against licensees✓ Answer

    The account is a fund of last resort for consumers: a person who wins a court judgment against a license holder for fraud or a violation of the Act, and cannot collect it, may apply for payment. It does not insure earnest money held by title companies, and it never protects licensees; when it pays on a licensee's behalf, that license is revoked until the account is repaid with interest.

    Ref QB-TXQ9FBSource: Tex. Occ. Code ch. 1101, Subchapter M (Real Estate Recovery Trust Account), 1101.602; TREC Real Estate Recovery Fund pageReport a problem with this question

18. 18. A Texas sales agent meets a prospective residential buyer for coffee and plans to tour homes that afternoon. Under the Real Estate License Act, what must the agent do before showing the first property?

    • A.Enter into a written agreement with the buyer✓ Answer
    • B.Obtain a mortgage preapproval letter from the buyer
    • C.Get the buyer's verbal consent to representation
    • D.Give the buyer the IABS form, which alone suffices

    The Act now requires a broker or agent working with a residential buyer to enter into a written agreement with that buyer before showing property (or before presenting an offer if no property is shown). The IABS notice is still required, but delivering it alone no longer satisfies the law, and a verbal consent is not a written agreement; a lender preapproval is a business practice, not a licensing requirement.

    Ref QB-AFJ4VASource: Tex. Occ. Code 1101.562-.563 (written agreement with buyer, added by SB 1968); TREC article 'What changes about buyer/tenant representation in Texas'Report a problem with this question

19. 19. A buyer wants to see one home but is not ready to hire a representative, so the agent uses a written agreement to show property without representing the buyer. Which statement about that agreement is correct?

    • A.It may be exclusive if the buyer initials that paragraph
    • B.It needs no term because it ends when a home is bought
    • C.It lets the agent advise the buyer on price and terms
    • D.It may not be exclusive; the buyer can use other agents✓ Answer

    A showing agreement that does not create representation must be non-exclusive and is limited to a short statutory term, so the buyer stays free to work with other agents. Because the agent does not represent the buyer, the agent may not give advice or opinions on price or terms; initialing a paragraph cannot convert it into an exclusive agreement, and every agreement must state when it ends.

    Ref QB-9F7SP9Source: Tex. Occ. Code 1101.563 (non-representation showing agreements, SB 1968); TREC article 'Brokers: what SB 1968 means for you'Report a problem with this question

20. 20. Under the TREC One to Four Family Residential Contract (Resale), to whom does the buyer deliver the earnest money?

    • A.The escrow agent named in the contract✓ Answer
    • B.The buyer's agent, who holds it until closing
    • C.The listing broker's trust account
    • D.The seller, as a down payment toward price

    The promulgated resale contract directs the buyer to deliver the earnest money to the escrow agent identified in the contract, usually a title company, which holds it until closing or a release. A broker holds escrow funds only if named as escrow agent, so the listing broker's trust account is not the default, and neither the seller nor the buyer's agent personally keeps the deposit.

    Ref QB-VXEXSDSource: TREC One to Four Family Residential Contract (Resale), Paragraph 5 (Earnest Money and Termination Option); 22 TAC 537.11Report a problem with this question

21. 21. A Texas broker's trust account is named to hold a buyer's earnest money. Unless the principals agree otherwise in writing, when must the broker deposit the funds?

    • A.By close of business on the 2nd working day after both sign✓ Answer
    • B.By the end of the month in which the contract was signed
    • C.Within 5 calendar days after the agent first receives it
    • D.Any time before closing, as long as the check is kept safe

    TREC's trust-money rules require escrow funds held by a broker to be deposited in the trust account no later than the close of business on the second working day after the principals execute the contract, unless they agree otherwise in writing. Holding the check until closing invites loss and commingling problems, and a five-calendar-day window is a rule from other states, not Texas.

    Ref QB-CF9S7DSource: 22 TAC ch. 535, Subchapter N (Trust Money), Rule 535.146 (broker's trust account and deposit timing)Report a problem with this question

22. 22. Two sales agents sponsored by the same broker want to advertise as a team. Which approach complies with TREC advertising rules?

    • A.Using "Lone Star & Associates" with the broker's name shown
    • B.Using "Lone Star Realty" with the broker's name shown
    • C.Using "Lone Star Team" with the broker's name shown✓ Answer
    • D.Using "Lone Star Team" with the broker's name left off

    TREC rules require a team name to end in 'team' or 'group' and forbid terms such as 'associates', 'company' or 'brokerage' that suggest a separate brokerage, so 'Lone Star Realty' and 'Lone Star & Associates' both fail; every advertisement must also show the sponsoring broker's name. Only the 'Team' name with the broker's name shown meets both conditions; leaving the broker's name off violates the rule even though the team name itself is acceptable.

    Ref QB-UX3MMCSource: 22 TAC 535.154 (advertising; broker name and team names) and 535.155 (misleading advertising)Report a problem with this question

23. 23. Before marrying Ana, Ben bought a Texas house in his name alone. The couple now lives there as their homestead, and Ben wants to sell it. Whose signatures does the deed require?

    • A.Ben's and Ana's, because it is their homestead✓ Answer
    • B.Ben's, plus a court order approving the sale
    • C.Ben's, plus Ana's written waiver filed with TREC
    • D.Ben's alone, because the house is his separate property

    Texas law bars a spouse from selling, conveying, or encumbering the homestead without the other spouse joining, whether the home is separate or community property. Ben's ownership before marriage makes the house his separate property, but that does not remove Ana's homestead right, so both must sign; no court order or TREC filing replaces her joinder.

    Ref QB-BFWE2CSource: Tex. Fam. Code 5.001 (spousal joinder to convey homestead); Tex. Const. art. XVI, 50; Tex. Prop. Code ch. 41Report a problem with this question

24. 24. A Texas homeowner's residence qualifies as a homestead. Which unpaid debt can lawfully lead to a forced sale of the home?

    • A.A judgment from a car accident lawsuit the owner lost
    • B.Delinquent property taxes owed on the home itself✓ Answer
    • C.A court judgment for unpaid credit card balances
    • D.A judgment for unpaid hospital and medical bills

    The Texas Constitution protects the homestead from forced sale except for a short list of debts tied to the home itself, such as purchase money, taxes on the property, and valid home equity or improvement liens. Ordinary judgment creditors, including credit card, medical, and accident-lawsuit judgments, cannot force a sale of the homestead.

    Ref QB-PXAXR6Source: Tex. Const. art. XVI, 50 (homestead protected from forced sale; listed exceptions); Tex. Prop. Code 41.001Report a problem with this question

25. 25. A Texas renter believes a landlord refused to rent to her because she has children. Which state agency enforces the Texas Fair Housing Act and investigates her complaint?

    • A.Texas Real Estate Commission's Enforcement Division
    • B.Texas Attorney General's Consumer Protection Division
    • C.Texas Workforce Commission Civil Rights Division✓ Answer
    • D.Texas Department of Housing and Community Affairs

    The Texas Fair Housing Act, which bans discrimination based on familial status among other protected classes, is administered by the Civil Rights Division of the Texas Workforce Commission, which receives and investigates complaints. TREC can discipline a license holder for discriminatory conduct, but it is not the agency that enforces the Fair Housing Act against landlords generally.

    Ref QB-6F5S66Source: Tex. Prop. Code ch. 301 (Texas Fair Housing Act), 301.002 and 301.081 (administration and complaints by TWC Civil Rights Division)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) →