Texas penalties: unlicensed activity, disciplinary actions, and the Real Estate Recovery Trust Account

Texas enforcement and consumer recovery

Texas separates punishment, professional discipline, and reimbursement. Unlicensed activity requiring a real estate license can bring administrative enforcement and other civil or criminal consequences. Holding a license later does not erase an earlier violation. Misrepresentation, mishandling entrusted money, and other violations can expose a license holder to discipline.

Under Texas Occupations Code section 1101.702, an administrative penalty cannot exceed $5,000 per violation; each day may count separately. Seriousness, prior violations, deterrence, correction efforts, and justice affect the amount. TREC may suspend or revoke a license in addition to or instead of a monetary penalty. Correction does not necessarily eliminate liability.

A notice describes the allegation, recommended sanction, and hearing right. The respondent has through the twentieth day after receipt to accept or request a hearing in writing. Failure to respond timely results in a commission order approving the determination. A State Office of Administrative Hearings judge conducts a requested hearing and proposes a decision; TREC issues the order. Within thirty days after the order becomes final, the person must pay or petition for judicial review.

Recovery is a separate route

The Real Estate Recovery Trust Account reimburses qualifying actual damages caused by covered acts. The relevant license or certificate must have been held when the act occurred. Coverage can also involve an unlicensed employee or agent of a license or certificate holder. It is not general insurance against a disappointing purchase.

Ordinarily, the claimant needs a final judgment, execution returned nulla bona, meaning no property was found to satisfy it, and a perfected judgment lien before filing a verified claim in the court that entered judgment. Special bankruptcy and multiple-defendant requirements qualify that sequence. After the twentieth day following written notice to TREC and the judgment debtor, the claimant may seek a payment order. Recovery is waived if a hearing is not scheduled before the application's first anniversary.

The supplied excerpts do not reproduce every covered act or enforcement provision; distinguish these general descriptions from the specific procedures and limits stated here.

Texas limits payments, including fees, interest, and costs, to $125,000 per transaction regardless of claimant count, and $250,000 against one license or certificate holder until reimbursement. A business entity and its designated broker count as one license holder for these limits. When valid claims exceed available limits, actual damages take priority, then interest on those damages, then other interest, attorney fees, and costs.

If a holder fails to repay an account payment in full before the thirty-first day after TREC's notice, TREC must revoke, although it may probate the revocation order. Eligibility for a license or certificate requires full repayment plus legal interest. Repayment does not dispose of another disciplinary proceeding.