In AUSTIN and throughout Texas

Avoid Misrepresentation to Protect Your Texas Real Estate License

Negligent and fraudulent failures to disclose are a fast track to license revocation

Some real estate agents throughout Texas find themselves in trouble every day for misrepresentation, ambiguity, exaggeration and omissions - in other words, lying.

The Texas Occupations Code establishes misrepresentation, dishonesty and fraud as clear grounds for license suspension or revocation. Being dishonest, or merely having the appearance of being dishonest, is enough to bring about an investigation from the Texas Real Estate Commission (TREC).

Most commonly, it's a failure to disclose information that the buyer or seller has a right to know that leads to issues. For instance, your real estate license could be in jeopardy if you do not share information about the condition of the property or environment.

Certain features of many homes - namely, foundations and structural issues - tend to trip agents up, leading to failures to disclose. While failing to share information about a home's foundation may seem like an honest mistake, that defense may not necessarily hold up before the TREC. According to the Commission, failing to disclose out of ignorance is a form of negligence.

In some cases, it's features of the transaction itself rather than the property that lead to license suspensions or revocations. For instance, if you are a principal in the transaction, you need to disclose that fact.

Money mistakes also a quick way to lose your license

Much like mishandling information, mishandling money is an easy way to have your license suspended or revoked. Licensees who handle clients' money can find themselves in trouble for commingling it with their own money, often without even meaning to do so.

Money mistakes are especially common for property managers, who have to handle much more accounting than most brokers. Managers need to comply with Texas laws to reconcile their books in order to avoid licensing issues.

Finally, there's mortgage fraud, an act that includes both misrepresentation and mismanaging money - and an act so common that many people involved don't even realize it's illegal. Essentially, mortgage fraud involves tricking a lender into lending too much money against an overvalued property, perhaps because the buyer is short on the down payment.

In most cases, investigators from TREC look for patterns of wrongdoing. That is, a single instance of misrepresentation or mishandling isn't likely to cost you your license - although if it is sufficiently egregious, it might.

To protect yourself from accusations that could threaten your license, make sure you disclose all necessary information throughout a transaction - and put it in writing. Make sure third-party information is attributed appropriately; for instance, say that "According to the seller, the windows were replaced last summer."

If you do need to handle a client's money, place it immediately in an escrow account, in a trust account, or with a title company. Don't deduct commissions or expenses until after a transaction closes, and don't do anything with a client's money without his or her knowledge and consent.

Honest mistakes and false accusations of wrongdoing can easily put a real estate agent's license in jeopardy. If you're facing a license suspension or revocation, contact a real estate license defense attorney at BERTOLINO LLP today.

Categories: Articles

Attorney Tony R. Bertolino is the Managing Partner with Bertolino LLP. Our Law Firm has been able to help people across the state of Texas through our offices in Austin, Houston and San Antonio. If you need an experienced lawyer to represent you, contact Bertolino LLP today.

Super Lawyers Rising Star American Bar Association Defending Liberty Pursuing Justice State Bar of Texas Pro Bono College Super Lawyers New York State Bar Association Houston Bar Association Austin Bar Association American Center for Law and Justice Law Firm 500 10.0Tony Ray Bertolino

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