The short answer is, yes—a real estate broker in the State of Texas can lose their license. Like most states, Texas has standards regarding the minimum qualifications a person must complete to become a real estate broker and maintain their license. As with many licensed professions, real estate brokers cannot deviate from the prescribed duties and responsibilities set by state statutes.
How Texas Law Views Real Estate Brokers
Real estate brokers are in a unique position because they generally assume more responsibility for the activities of real estate agents under their supervision. For example, suppose a complaint is filed against a real estate agent but omits the name of the supervising broker. In that case, the broker is the subject of the complaint until it can be shown that they performed their professional responsibilities responsibly.
Real estate brokers are also responsible for the activities they conduct through a business entity by or on behalf of the broker. Unlike real estate agents, real estate brokers maintain a higher level of responsibility for both their actions and the actions of their businesses.
What Government Agency Regulates Real Estate Broker Licenses in Texas?
Created in 1949 by the Texas State Legislature, the Texas Real Estate Commission (TREC) protects consumers in real property transactions and valuation services. The core mission of the TREC is to license and educate real estate brokers and those involved in real estate transactions and investigate complaints against brokers. The TREC also provides regulation and enforcement of Texas law protecting consumers in real estate transactions.
The Minimum Qualifications Necessary to Become a Real Estate Broker
Texas real estate brokers must meet the following criteria to be eligible to apply for a real estate brokerage license:
- Be a United States citizen or a lawfully admitted alien resident
- Be at least 18 years old
- Meet the TREC’s qualifications for honesty, trustworthiness, and integrity
In addition to the minimum criteria listed above, real estate brokers must be qualified to perform the duties of a real estate broker. Those qualifications include:
- 270 hours of qualifying real estate courses, which must include courses on the principles of real estate, agency and contract, real estate finance, and real estate brokerage
- 630 hours in additional classroom time related to qualifying courses accepted by the TREC, which can include courses in law, accounting, and marketing, among others
- Four years of active experience as a real estate sales agent totaling 3600 points reported on your Qualifying Experience Report for a Broker License
- Submitting an application
- Providing fingerprints
- Passing a background check
- Passing the real estate broker license exam
What Actions Constitute Misconduct for a Real Estate Broker?
Texas state law provides a list of actions that constitute misconduct worthy of investigation and discipline. The TREC uses a level system, with Level 1 being the most severe and Level 3 being the least, to determine the severity of a broker’s misconduct. Below is a breakdown of misconduct according to the level of seriousness.
Level 1 Misconduct
Level 1 misconduct includes:
- Fraud or misrepresentation involving the loss of funds greater than $10,000
- Misconduct involving personal safety issues
- Unlicensed activity by a broker
- Mortgage fraud
Level 2 Misconduct
Level 2 misconduct includes:
- Fraud or misrepresentation involving the loss of funds less than $10,000
- Allegations involving educational providers
- Violation of a section of the Texas Occupations Code:
- Inspector negligence or incompetence
- Promising employment based on an inspection report
- Creating a conflict of interest by acting in multiple capacities as an inspector, broker, principle, etc.
- Agreeing to perform regarding an inspection
- Violations of the Standards of Practice of the profession as established by statute
Level 3 Misconduct
Level 3 misconduct includes:
- Technical violations
- Complaints unrelated to misconduct above Level 2
How the Disciplinary Process Works
Once a complaint has been filed, TREC will investigate the nature of the alleged violation and the facts about the matter. The Commission will then issue a written Notice Alleged Violation to the license holder (the “respondent”). The respondent then can decide whether to accept the determination of TREC or request a evidentiary hearing (i.e., bench trial) on the merits.
If the respondent elects a hearing, the case and relevant documents will be submitted to the State Office of Administration Hearings (SOAH) and an administrative law judge (ALJ) to preside over the matter. Parties must produce pleadings, records, and service to SOAH as a part of the proceedings.
At this point, the ALJ will issue a Proposal for Decision on the case. TREC will then render the final decision during their Commission Meeting. Alternatively, TREC could send the case back to the Administrative Law Judge for further deliberation. Finally, if the license holder was found to have violated the law, the TREC will render a disciplinary decision.
What Constitutes Discipline?
Discipline can include suspension or revocation of a real estate brokerage license and the imposition of administrative penalties and fees based on the nature of the violation. In addition, those with a revoked license cannot reapply for a new license until two years after their license was revoked.
Can I Still Operate as a Real Estate Broker If My License Has Been Suspended?
Unfortunately, no. Upon the suspension of a brokerage license, the holder of that license cannot engage in activities that constitute the performance or attempted performance of a valid brokerage license holder. Further, the suspended license holder must refrain from advertising real estate brokerage services for the duration of their suspension.
In the cases where a suspended license holder has a contractual obligation to perform services, he or she must inform all parties to the contract of their brokerage license status that they cannot engage in brokerage services until the conclusion of the suspension. If he or she controls any funds being held in trust regarding a real estate transaction, he or she must inform all parties and remit the funds on the instruction of the principals.
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