Ways to Jeopardize Your Real Estate License

The Texas Real Estate Commission (TREC) licenses real estate professionals and ensures that they follow the TREC rules and Texas laws that pertain to them. If you violate any of these rules or laws, you can face disciplinary sanctions by TREC that endanger your real estate license. A real estate license defense lawyer can assist you and represent your interests before TREC. 

Like most professionals, real estate agents are subject to a long list of rules and laws that they must follow to avoid allegations of misconduct and potential disciplinary action against their licenses. While various situations can lead to disciplinary complaints against real estate agents and other real estate professionals, some situations lead to complaints before TREC more commonly than others. Here are some examples of common situations that may place your real estate license in jeopardy.

Misrepresentations and Breaches of Fiduciary Duty

Real estate agents must act professionally and truthfully during real estate transactions. This duty includes refraining from making any misrepresentations, engaging in fraud, or making false promises under 22 Tex. Admin. Code §535.15, which includes both written and oral promises. 

Real estate agents also act as fiduciaries in real estate transactions, as per 22 Tex. Admin. Code §535.156. In other words, a real estate agent must disclose all known information to the principal that would affect their decision whether to make, reject, or accept offers. They also must disclose all significant information throughout the transaction. Agents must put the principal’s interest ahead of their own interest and demonstrate a duty of fidelity to the principal. 

Misuse of Client Funds

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As part of real estate agents’ jobs, they may sometimes handle funds for clients, such as receiving earnest money as part of offers to purchase real estate. However, sales agents are not to establish or maintain trust accounts, as provided in 22 Tex. Admin. Code §535.146. Real estate agents also must refrain from:

  • Misusing client funds;
  • Commingling client funds with personal or other clients’ funds;
  • Splitting fees with individuals who are not actively licensed as brokers or sales agents; or
  • Receiving commissions, rebates, or fees from persons other than the person whom the realtor represents without first disclosing it to them and obtaining their consent.

Advertising Violations

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22 Tex. Admin. §535.155 outlines the rules concerning advertising by real estate agents. For example, all advertisements must contain the name of the license holder or team in a readily noticeable location and the broker’s name in at least half the size of the largest contact information for any sales agent, associated broker, or team name contained in the advertisement. 

For social media ads or those sent via text message, this required information can be on a separate page or the account user profile, so long as it is readily accessible via a direct link from the social media ad or text and readily noticeable on the page or account user profile.

Real estate agents must also refrain from using misleading advertisements, likely to deceive the public, create a misleading impression, or imply that a sales agent is responsible for operating the broker’s real estate brokerage business. Some examples of advertisements prohibited for this reason include those that are inaccurate in any material fact or representation, identify a sales agent as a broker, or contain the name or likeness of an unlicensed person who is not identified as not having a license. Likewise, advertisements that create confusion about the permissible use of a property, give the value of a property (unless it is based on a disclosed appraisal that is readily available upon request), or about a property ten days or more after the closing of a transaction, unless the current status of the property is included in the advertisement or is prohibited by state law as misleading or deceptive.

Criminal Offenses

Conviction of or deferred adjudication for certain criminal offenses that directly relate to the duties and responsibilities of real estate agents and brokers can be the basis for disciplinary action. TREC has determined that these offenses affect these professionals’ ability to represent others’ interests with honesty, trustworthiness, and integrity, which are required by the professional rules of conduct. 

The offenses designated as directly related to the duties of real estate professionals include the following under 22 Tex. Admin. §541.1:

  • Offenses involving fraud or misrepresentation;
  • Offenses involving forgery, falsification of records, or perjury;
  • Offenses involving the offering, paying, or taking of bribes, kickbacks, or other illegal compensation;
  • Offenses against real or personal property belonging to another;
  • Offenses against the person;
  • Offenses against public administration;
  • Offenses involving the sale or other disposition of real or personal property belonging to another without authorization of law;
  • Offenses involving moral turpitude;
  • Offenses in violation of Chapter 21, Texas Penal Code (sexual offenses);
  • Offenses for which the person has been required to register as a sex offender under Chapter 62, Texas Code of Criminal Procedure;
  • Felonies involving the manufacture, delivery, or intent to deliver controlled substances;
  • Offenses of attempting or conspiring to commit any of the foregoing offenses;
  • Offenses involving aiding and abetting the commission of an offense listed in this section;
  • Repeated violations of one criminal statute or multiple violations of different criminal statutes; and
  • Felonies involving driving while intoxicated (DWI) or driving under the influence (DUI).

Other criminal offenses also may qualify as directly related to the duties of real estate agents and brokers based on the following factors:

  • The nature and seriousness of the crime;
  • The relationship of the crime to the purposes for requiring a license to engage in the occupation;
  • The extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved;
  • The relationship of the crime to the ability, capacity, or fitness required to perform the duties and discharge the responsibilities of the licensed occupation; and
  • Any correlation between the elements of the crime and the duties and responsibilities of the licensed occupation.

As a result, conviction of or deferred adjudication for any qualifying criminal offenses can result in disciplinary action against the license of a real estate agent or broker.

We Will Represent Your Interests Before TREC

The experienced real estate license defense lawyers at Bertolino LLP, will defend you against any TREC disciplinary proceedings that you may be facing. We will investigate the complaint and allegations against you, evaluate the evidence, present your options, and devise the best defense strategy for your case. Together, we will work to clear your name and protect your real estate license. Call us at (512) 515-9518 or contact us online.

Call or text (512) 476-5757 or complete a Case Evaluation form