Texas Real Estate State ExamTexas Real Estate State Exam, Chapter 2 – Licensing-Graded A, Exams of Advanced Education

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Texas Real Estate State Exam, Chapter 2

– Licensing-Graded A

PERSONS/ACTIVITIES REQUIRING A LICENSE - correct Answers-1. Attorneys must have real estate license to participate in a commission split.

2. Auctioneers involved in any part of a real estate transaction.
3. Apartment locators.
4. Real Estate sales agents.
5. Business entities that receive compensation on behalf of a license holder (Example: A sales agent who incorporates and wants commissions paid to his/her corporation) must be a licensed as a broker.
6. The designated officer of a licensed real estate corporation, or the designated manager of a licensed Real Estate Limited Liability Company. The designated one is a broker. If a designated agent has less than 10% interest in a real estate business entity, he must provide proof that the entity has E&O insurance with a minimum annual limit of $1 million per occurrence. If the designated agent own 10% or more of the business, then the required amount of E&O insurance is $0.
7. A third party (person or entity) who controls the acceptance or collection of rent from a single family residence (like a property manager).
8. Any business entity that engages in real estate brokerage and is required to be registered to do business in Texas with the Secretary of State must be licensed as a broker. All sales license holders must be sponsored by a broker and receive commissions only from that broker. Designated officers and managers must be brokers. All real estate entities must have a broker. - correct Answers- PERSONS/ACTIVITIES EXEMPT FROM LICENSING - correct Answers-1. Texas licensed attorneys can handle a real estate transaction for a client for a fee as long as they do not participate in broker to broker commission splits. Any attorney licensed in a state other than Texas will need to be licensed in Texas (as an attorney) to handle a real estate transaction for a client for a fee in Texas.
9. Court appointed receivers, trustees, guardians, and sheriffs. Anyone engaged in or carrying out foreclosure sales.
10. Administrators and executors of a will.
11. On-site apartment managers.
12. New home sales agents working for one builder or owner.
13. Cemetery lot sales agents
14. A person selling his own property.
15. An employee leasing or renting property for the owner.
16. Corporate employees buying/selling/leasing or renting corporate property.

10. Hotel/motel personnel.
11. An attorney-in-fact.
12. An auctioneer calling a real estate auction.
13. Anyone selling mobile homes. BUSINESS ENTITIES; NON-RESIDENT BROKER; INSPECTORS AND APPRAISERS

• correct Answers- Definition of business entities? - correct Answers-Engage in real estate brokerage activity, including partnerships, need to be licensed. How do you receive or maintain a license for a business entity? - correct Answers-A business entity must designate an individual holding an active Texas real estate broker license who is an officer, manager, or general partner of the entity to act for it. What should the assumed name (not the legal name, company doing business under fictitious name) be, if a brokerage or business entity elects to do business under the assumed name? - correct Answers-The assumed name should be filed with the Secretary of State, TREC and the local county clerk. If a broker has an assumed name, where should it be filed? - correct Answers-The county clerk in every county in which the has an office. A _________ ______ may use an assumed name or DBA (doing business as) in business. - correct Answers-License holder Who must be notified in writing, by the broker, of the brokers or the sponsored sales agents use of an assumed name within 30 days of starting or stopping use of the name? - correct Answers-TREC Definition of Non-resident broker? - correct Answers-A Texas licensed broker who does not have a home or office in Texas. Who should non-resident brokers work through? - correct Answers-Resident brokers Since non-resident broker cannot represent a buyer or seller in Texas, what can they do? - correct Answers-They can refer a buyer or seller to a resident broker and earn a referral commission. How can a foreign or out of state broker collect commission from a Texas broker as long as that broker does not negotiate in Texas? - correct Answers-A commission may be paid in the form of cash or a gift. (Example: $1,000 watch) Who has the authority to license real estate inspectors in Texas? - correct Answers- TREC

• Sales agent license first renewal requires 98 hours. 90 hours of SAE - Sales Agent Apprentice Education consisting of 3 qualifying courses plus 8 hours - 4 each of Legal 1 and Legal 2.
• Failure to complete and submit 98 hours to TREC prior to the first renewal will cause the renewal to be rejected by TREC. The license will then expire. BROKERS LICENSE: - correct Answers-- 900 - classroom hours, including 30 hours of Real Estate Brokerage. The brokerage course must be taken within the 2 years prior to the broker application filing date.
• 4 years of active sales license holder experience during the 5 years preceding the date of the application.
• 3600 points - 300 points per sale A 6-hour broker responsibility course is required for any sponsoring broker or designated broker of a business entity who sponsors one or more sales agents at any time during that brokers current license period. LICENSE MAINTENANCE AND RENEWAL: - correct Answers-Continuing Education: required for all sales agent license holders after the first renewal and for all broker license holder. Continuing Education or CE, is an 18-hour class taken once every 2 years. It includes 4 hours each of Legal 1 and Legal 2 as mandated by TREC. If TREC does not have proof of CE at the time of the license holder renews, how much will the fee for renewal cost? - correct Answers-$200 penalty, the renewal will be active for 60 days. After 60 days is up, if CE is not submitted to TREC, the license will automatically become inactive. How to return license back to active status? - correct Answers-The license holder will have to complete and submit CE, pay an additional $250 penalty and pay $50 to move the license back to active status. What will the license holder have to submit a form stating what? - correct Answers-"He or she did not engage in real estate while inactive." An individual may not hold a Broker and a Sales agent license at the same time. Texas is a one person, one license state. However, any licensed broker may act as a sales agent and a broker at the same time. - correct Answers- ADDITIONAL POINTS: - correct Answers-- No time limit for TREC to deny an application. however once TREC decides to disapprove an application they must notify the applicant within 30 days.

• If a licensure is disapproved, applicant can make an appeal within 10 days after the receipt of the notice of denial. Of no appeal is made within 10 days, the applicant gives up the right to do so, and the ruling of the Commission stands.
• If a license holder defaults on Texas Sate Student Loans, TREC will refuse to renew the license of that individual.
• If an applicant applies without a broker and passes the test, there is no time limit for choosing a broker. INACTIVE STATUS: TREC allows inactive status. TREC will hold a broker or sales license for the licensed person. - correct Answers-- The license holder must still pay renewal fees and meet SAE requirements. Once past SAE requirements, CE is not required for inactive status.
• The time spent as inactive does not apply toward the four-year requirement for a brokers certification.
• The inactive license holder may not engage in the real estate business.
• The inactive license holder does not need a sponsoring broker during this period.
• To activate an inactive license, apply through a broker, pay $50 and complete 18 hours of CE if necessary.