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Texas Real Estate Exam (State)
SECTION 1: TREC & LICENSING REQUIREMENTS (Questions 1-15) Question 1 Which agency regulates real estate license holders in Texas? A. Texas Department of Housing B. Texas Real Estate Commission (TREC) C. Texas Association of Realtors D. Department of Commerce Answer: B. Texas Real Estate Commission (TREC) Rationale: TREC is the state agency that oversees real estate licensees, including salespersons and brokers, ensuring compliance with TRELA. The Texas Real Estate Commission was created in 1949 to enforce TRELA. Question 2 What is the minimum age to obtain a Texas real estate salesperson license? A. 16 B. 18 C. 21 D. 25
Answer: B. 18 Rationale: Applicants must be at least 18 years old to obtain a Texas real estate salesperson license. Question 3 How many hours of qualifying education are required for a Texas real estate salesperson license? A. 120 hours B. 150 hours C. 180 hours D. 210 hours Answer: C. 180 hours Rationale: Texas requires 180 hours of TREC-approved pre-licensing education across six qualifying courses: Principles I (30h), Principles II (30h), Law of Agency (30h), Law of Contracts (30h), Promulgated Contracts (30h), and Real Estate Finance (30h). Question 4 What is the term length of an initial Texas real estate salesperson license? A. 1 year B. 2 years C. 3 years D. 4 years Answer: B. 2 years
Rationale: Salespersons must complete 18 hours of TREC-approved CE each two-year renewal period, including 4 hours of legal updates, 6 hours of contract-related courses, and 8 hours of elective courses. Question 7 Who can receive compensation for real estate services in Texas? A. Any individual B. Licensed broker only C. Sales agents directly D. Attorneys only Answer: B. Licensed broker only Rationale: Only brokers can receive commissions; sales agents are paid through their sponsoring broker. A sales agent may receive compensation from someone other than the sponsoring broker only if the sponsoring broker consents. Question 8 A Texas broker must maintain records related to a transaction for at least: A. One year B. Two years C. Four years D. Ten years Answer: C. Four years
Rationale: TREC requires brokers to retain transaction records for at least four years from the date of closing or termination of the transaction. Question 9 Under TREC administrative penalty tiers, a violation of the new written buyer agreement requirement falls into which penalty range? A. $100 - $1,500 per violation per day B. $500 - $3,000 per violation per day C. $1,000 - $5,000 per violation per day D. No penalty Answer: A. $100 - $1,500 per violation per day Rationale: TREC's administrative penalty schedule places the new written buyer agreement requirement (SB 1968) in the first tier penalty range of $100-$1,500 per violation per day. Question 10 What is the maximum administrative penalty TREC can impose per violation? A. $1, B. $2, C. $5, D. $10, Answer: C. $5,
Rationale: Texas requires broker applicants to be at least 21 years old, have held an active salesperson license for at least 4 of the preceding 5 years, complete 900 classroom hours of qualifying education, and pass the broker exam. Question 13 A salesperson in Texas is prohibited from performing which of the following acts? A. Hosting an open house B. Negotiating a commission directly with a seller C. Showing a property to a buyer D. Preparing a standard TREC contract form Answer: B. Negotiating a commission directly with a seller Rationale: Only a broker can negotiate commissions. Salespersons must work under a sponsoring broker and cannot negotiate or accept commissions directly. Question 14 What is the difference between an active and inactive license in Texas? A. An inactive license cannot perform real estate activities B. An inactive license requires no continuing education C. An inactive license is only for brokers D. There is no difference Answer: A. An inactive license cannot perform real estate activities
Rationale: A license becomes inactive when a salesperson leaves their sponsoring broker. An inactive license holder cannot perform real estate activities until they find a new sponsoring broker. Question 15 TREC consists of how many members appointed by the Texas Governor? A. 3 B. 6 C. 9 D. 12 Answer: C. 9 Rationale: TREC is composed of nine members appointed by the governor and confirmed by the state senate. Six members must be licensed real estate brokers or salespersons, and three members represent the public. **SECTION 2: AGENCY RELATIONSHIPS & DISCLOSURES (Questions 16-
Question 16** A Texas broker represents both the buyer and seller in the same transaction with the informed consent of both parties. This relationship is known as: A. Universal agency B. Intermediary brokerage
Answer: B. At the first substantive discussion of a specific property Rationale: TREC requires the IABS form to be delivered at the first substantive discussion of a specific property. Question 19 Effective January 1, 2026, which of the following is TRUE regarding buyer representation in Texas? A. Written agreements are only required for commercial transactions B. Written agreements with prospective buyers of residential property are required C. Oral agreements are still acceptable for buyer representation D. Written agreements are optional if the buyer is a family member Answer: B. Written agreements with prospective buyers of residential property are required Rationale: SB 1968 (effective January 1, 2026) requires written agreements with prospective buyers of residential property prior to showing or presenting an offer. Question 20 Under the new 2026 law (SB 1968), which of the following has been eliminated in Texas real estate transactions? A. Intermediary relationships B. Subagency C. Seller representation D. Written buyer agreements
Answer: B. Subagency Rationale: SB 1968 eliminates subagency in all real estate transactions to provide greater clarity for consumers. The IABS form has been revised to remove references to subagency. Question 21 What is a fiduciary duty? A. To make a profit for the client B. To act in the client's best interest C. To follow all lender rules D. To advertise the property Answer: B. To act in the client's best interest Rationale: Brokers owe fiduciary duties to their clients including loyalty, confidentiality, disclosure of material facts, obedience to lawful instructions, reasonable care, and accounting. Question 22 Which of the following statements about a fiduciary relationship is true? A. A licensee represents the consumer B. A licensee owes fiduciary duties to their client C. A licensee must treat all parties equally D. The relationship ends at closing Answer: B. A licensee owes fiduciary duties to their client
Question 25 A buyer's representation agreement in Texas should include: A. The broker's compensation terms B. The seller's mortgage balance C. Property tax exemptions only D. HOA bylaws exclusively Answer: A. The broker's compensation terms Rationale: Buyer representation agreements typically define compensation, agency responsibilities, and the scope of representation. Question 26 When an agent owes fiduciary duties to their client, which of the following is included? (Select all that apply) A. Loyalty B. Confidentiality C. Disclosure of material facts D. Obedience to lawful instructions Answer: A, B, C, D (All of the above) Rationale: Fiduciary duties include loyalty, confidentiality, disclosure, obedience (to lawful instructions), reasonable care, and accounting. Question 27
A licensee in Texas discovers a material defect in a property. What is the licensee's primary duty? A. Disclose the defect to any prospective buyers B. Inform only the seller C. Keep the defect confidential to protect the seller D. Report the defect to TREC Answer: A. Disclose the defect to any prospective buyers Rationale: Texas law requires licensees to disclose known material defects to all parties who may be affected, regardless of whom they represent. Question 28 In Texas, which of the following must a seller disclose to a buyer? A. The seller's financial situation B. Known material defects in the property C. The seller's reason for moving D. The seller's purchase price Answer: B. Known material defects in the property Rationale: The Texas Seller's Disclosure Notice requires sellers to disclose known material defects, including structural issues, flooding, and other conditions affecting the property. Question 29 A licensee representing a buyer must provide which document to the buyer before they sign a purchase agreement?
Which of the following is required for a contract to be enforceable under the Texas Statute of Frauds? A. The contract must be notarized B. The contract must be in writing and signed by the party to be charged C. The contract must be recorded in the county clerk's office D. The contract must include an attorney's approval Answer: B. The contract must be in writing and signed by the party to be charged Rationale: The Texas Statute of Frauds requires all real estate sale contracts to be in writing and signed. Question 32 TREC allows the use of forms that are not promulgated in which situation? A. If they are prepared by the owner or by an attorney and required by the property owner B. In very unique circumstances only C. If an experienced broker writes the form D. Under no circumstances Answer: A. If they are prepared by the owner or by an attorney and required by the property owner Rationale: TREC allows non-promulgated forms if they are prepared by the property owner or by an attorney and required by the property owner.
Question 33 What is the current form number for the One to Four Family Residential Contract (Resale)? A. 20- 12 B. 20- 15 C. 20- 14 D. 20- 13 Answer: B. 20- 15 Rationale: The current One to Four Family Residential Contract (Resale) is TREC Form 20- 15. Question 34 TRELA specifically prohibits real estate licensees from which of the following? A. Engaging in personal transactions as an agent B. Reducing their commissions C. Engaging in the unauthorized practice of law D. Holding licenses in multiple states Answer: C. Engaging in the unauthorized practice of law Rationale: TRELA prohibits real estate licensees from engaging in the unauthorized practice of law. Agents may fill in promulgated forms but may not draft legal language.
Question 37 Who fills in the blanks on TREC promulgated forms? A. Anyone B. Only attorneys C. License holders D. Buyers only Answer: C. License holders Rationale: License holders may complete promulgated forms but may not draft legal language. This is considered filling in blanks, not practicing law. Question 38 What is the "option period" in a TREC residential contract? A. The time for the seller to find another buyer B. A period during which the buyer may terminate for any reason C. The time for the lender to approve financing D. The period for the title company to prepare documents Answer: B. A period during which the buyer may terminate for any reason Rationale: During the option period, the buyer can terminate the contract for any reason by delivering notice and paying the option fee. Question 39
What is a contingency in a real estate contract? A. A fixed closing date B. A condition that must be met for the contract to be binding C. The broker's commission amount D. The property address Answer: B. A condition that must be met for the contract to be binding Rationale: Contingencies are conditions that must be fulfilled for a contract to become binding or for performance to be required. Common contingencies include financing, inspection, and appraisal. Question 40 Under Texas law, a contract for the sale of real estate must include which essential elements? (Select all that apply) A. Offer and acceptance B. Consideration C. Competent parties D. Legal purpose Answer: A, B, C, D (All of the above) Rationale: The essential elements of a valid contract are: offer and acceptance, consideration, competent parties, legal purpose, and mutual assent. Question 41 The Texas Real Estate Broker-Lawyer Committee does which of the following?
