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Texas activities requiring a license, exemptions, business entities, inspectors, and appraisers
Finish →Question 1 of 40
Under Texas law, which relationship must exist before a licensed sales agent engages in brokerage?
Reveal answer
Correct answer: Sponsorship by a licensed broker, with the agent acting for that broker
Texas requires both broker sponsorship and action for that broker before a sales agent engages or attempts to engage in brokerage.
Question 2 of 40
An unlicensed Texas brokerage assistant is asked to unlock a listed house for prospective buyers and wait outside without discussing terms. No exemption applies. What is the correct classification?
Reveal answer
Correct answer: Showing property, which requires a real estate license
Texas expressly includes unlocking or providing access for a prospective buyer within showing property.
Question 3 of 40
A Texas investor buys a house in her own name, renovates it, and sells it for a profit on her own behalf. Which conclusion follows?
Reveal answer
Correct answer: She may sell as principal without a broker or sales agent license.
Texas permits a person acting as principal to purchase or sell real estate for profit without a brokerage license.
Question 4 of 40
Two unlicensed siblings jointly own Texas land. One offers to sell her own interest and, for a fee, negotiate the sale of her brother's interest. No other exemption applies. Which distinction is correct?
Reveal answer
Correct answer: Selling her own interest is permitted; representing her brother for a fee requires licensing.
A co-owner may convey their own interest, but compensated agency for another owner requires a license unless otherwise exempt.
Question 5 of 40
Which entity arrangement qualifies for Texas's exemption from broker licensing for receiving a sales agent's earned brokerage compensation?
Reveal answer
Correct answer: A registered LLC, 60% owned by that agent, receiving the compensation and performing no other broker acts
The exemption requires an LLC or S corporation, registration, at least 51% ownership by the license holder, and no other acts of a broker.
Question 6 of 40
A Texas property company hires and directly pays an employee to lease property owned by the company. What does the entity-employee rule provide?
Reveal answer
Correct answer: The employee does not need a real estate license for this work for the employer.
Texas exempts an individual employed and directly compensated by an entity to buy, sell, or lease real property for that entity.
Question 7 of 40
A Texas brokerage employee manages the sales agents' negotiations and directs their listing work but never personally meets a customer. No exemption applies. What is required?
Reveal answer
Correct answer: A broker or sales agent license, because the employee directs licensed activities
Employees, agents, or associates of a broker must be licensed if they direct or supervise people performing licensed acts.
Question 8 of 40
How is the Texas Appraiser Licensing and Certification Board organized under Texas law?
Reveal answer
Correct answer: As an independent subdivision of the Texas Real Estate Commission
The statute identifies the Texas Appraiser Licensing and Certification Board as an independent subdivision of TREC.
Question 9 of 40
A person works from outside Texas and conducts brokerage by email concerning land located entirely in Texas. Does the person's physical absence remove the activity from Texas's licensing rule?
Reveal answer
Correct answer: No; remote brokerage concerning Texas real property is treated as acting within Texas.
The Texas rule treats brokerage conducted from another state by email or other media as acting within Texas when the property is wholly or partly in Texas.
Question 10 of 40
Which Texas brokerage task is expressly included within showing property?
Reveal answer
Correct answer: A representative hosts an open house for prospective buyers.
Texas expressly includes hosting an open house at the property in the definition of showing.
Question 11 of 40
A property company replaces its directly paid leasing employee with an independent contractor to lease the company's properties. The contractor has no license and claims the same employee exemption. What is the flaw?
Reveal answer
Correct answer: An independent contractor is not an employee for this exemption.
Texas expressly excludes independent contractors from the definition of employee used in this entity exemption.
Question 12 of 40
A licensed Texas auctioneer who has no real estate license agrees to auction land. The seller also asks the auctioneer to prepare buyers' offers. How should the auctioneer distinguish the work?
Reveal answer
Correct answer: Auctioning is exempt, but preparing offers requires a real estate license.
The Texas auctioneer exemption covers auctioning real property, not preparing offers, showing property, or negotiating contracts.
Question 13 of 40
A Texas brokerage receptionist identifies herself as clerical staff and reads the price and square footage from an existing advertisement to a caller. Which rule applies?
Reveal answer
Correct answer: She may confirm this advertised information without a real estate license.
Identified clerical or administrative employees may confirm advertised size, price, and terms without a real estate license.
Question 14 of 40
Which individual can satisfy the core Texas designated-broker requirements for a brokerage entity?
Reveal answer
Correct answer: An active Texas broker in good standing who has managing authority
The designated broker must hold an active Texas broker license in good standing and have managing authority for the entity.
Question 15 of 40
A Texas brokerage entity's designated broker owns 8% of the company. Which additional entity requirement is triggered by that ownership level?
Reveal answer
Correct answer: Providing proof of the errors and omissions insurance required by the Act
Ownership below 10% triggers the statutory requirement that the entity provide proof of the prescribed errors and omissions insurance.
Question 16 of 40
A sponsored Texas sales agent prepares an ordinary-course written estimate of a seller's likely listing price for a potential sale. Which description preserves the price-analysis exception in the appraisal statute?
Reveal answer
Correct answer: A written price analysis that is not referred to as an appraisal
The broker price-analysis exception requires ordinary-course, transaction-related work that is not referred to as an appraisal; it includes a sales agent acting under a sponsoring broker's authority.
Question 17 of 40
A Texas plumber checks pipes while making repairs and does not advertise or solicit work as being in the business of inspecting improvements. How does the inspection chapter address this situation?
Reveal answer
Correct answer: It provides a limited exception for the described tradesperson activity.
The inspection chapter excludes specified repair, maintenance, or inspection activity when the person does not publicly represent being in the business of inspecting improvements.
Question 18 of 40
A carpenter relies on Texas's inspection-chapter tradesperson exception while checking work during repairs. He then advertises that he is in the business of inspecting real property improvements. What changes?
Reveal answer
Correct answer: He no longer satisfies the exception's condition against publicly holding himself out as being in the inspection business.
The tradesperson exception is conditioned on not representing to the public through solicitation or advertising that the person is in the business of inspecting improvements.
Question 19 of 40
A brokerage is being conducted physically within Texas, but the property and the client are outside Texas. Which statement describes Texas's territorial licensing rule?
Reveal answer
Correct answer: It applies because the brokerage is performed physically within Texas.
The Act applies to brokerage performed physically within Texas regardless of property location or customer or client residence.
Question 20 of 40
An applicant has passed the Texas sales agent exam but has not received the license. A broker offers to supervise the applicant's listing negotiations immediately. What is the result?
Reveal answer
Correct answer: The applicant may not act as a sales agent before receiving the license.
The Act prohibits an applicant from acting as a broker or sales agent until the license evidencing that authority is received.
Question 21 of 40
A Texas licensed brokerage entity's designated broker becomes inactive. The entity still has licensed sales agents and current insurance. What follows?
Reveal answer
Correct answer: The entity cannot act as a broker while it lacks a qualified designated broker.
An inactive broker cannot act as designated broker, and an entity may not act as a broker without a designated broker meeting the Act's requirements.
Question 22 of 40
A Texas sales agent owns exactly 51% of an LLC registered with TREC. The LLC receives that agent's earned brokerage compensation and performs no other broker acts. Which conclusion is correct?
Reveal answer
Correct answer: The LLC meets the stated ownership threshold for the compensation-receiving exemption.
The exemption requires at least 51% ownership by the license holder, so exactly 51% satisfies that condition.
Question 23 of 40
What does Texas's inspection chapter say about work a person is authorized to perform under another state or local governmental license or registration?
Reveal answer
Correct answer: The chapter does not prevent the person from performing the authorized act.
Section 1102.002(b) preserves acts authorized by a license or registration issued under another law by the state or a governmental subdivision.
Question 24 of 40
A Texas broker gives a written price estimate in the ordinary course of brokerage for a potential sale, but labels it an appraisal. Which conclusion follows about the broker price-analysis exception?
Reveal answer
Correct answer: The exception's no-appraisal-label condition is not satisfied.
The exception requires that the analysis, opinion, or conclusion not be referred to as an appraisal; the other conditions do not cure that defect.
Question 25 of 40
A Texas brokerage hires an unlicensed caller to ask homeowners to list their properties with the firm. The caller will not discuss listing terms. No exemption applies. Which statement is correct?
Reveal answer
Correct answer: Soliciting listings requires a real estate license.
Texas expressly requires a real estate license to solicit listings, independently of negotiating listing terms.
Question 26 of 40
A Texas resident leases a building as tenant and then subleases it for profit on his own behalf. He is not representing the owner or another tenant. Which principle applies?
Reveal answer
Correct answer: A person acting as principal may sublease for profit without a brokerage license.
Texas's principal rule expressly includes leasing and subleasing real estate for profit.
Question 27 of 40
A Texas LLC plans to negotiate real estate transactions for clients. Its managing member is an active broker in good standing, but the LLC has no broker license. What is missing?
Reveal answer
Correct answer: The LLC's own broker license
The Act requires a business entity acting as a broker to hold its own license; an individual's broker license does not replace it.
Question 28 of 40
For Texas's exemption allowing an entity to receive a license holder's brokerage compensation, which entity types are specified?
Reveal answer
Correct answer: A limited liability company or an S corporation
The statute specifies an LLC or an S corporation, together with the other ownership, registration, and activity conditions.
Question 29 of 40
A licensed Texas brokerage entity's designated broker owns exactly 10% of it. What does the ownership-based insurance trigger in the Act provide?
Reveal answer
Correct answer: That trigger does not apply because it is based on ownership below 10%.
The specified insurance trigger is ownership of less than 10%; exactly 10% does not meet that trigger.
Question 30 of 40
A Texas sales agent gives an ordinary-course written price analysis for a potential sale, without calling it an appraisal, but acts independently of any sponsoring broker. Which required feature of the broker price-analysis exception is missing?
Reveal answer
Correct answer: The sales agent's action under a sponsoring broker's authority
The exception includes a sales agent acting under the authority of a sponsoring broker; the described agent lacks that feature.
Question 31 of 40
A Texas seller asks whether a sales agent license by itself qualifies its holder to perform a professional real estate inspection. Which answer best distinguishes the credentials?
Reveal answer
Correct answer: Inspection has a separate licensing framework; the sales agent license alone does not confer that authority.
Brokerage and professional real estate inspection are distinct licensing functions. A sales agent license alone does not establish qualification to provide professional inspection services.
Question 32 of 40
An unlicensed Texas owner leases her own property, while an unlicensed brokerage assistant hosts an open house for a client's listing. No other exemption applies. Which comparison is correct?
Reveal answer
Correct answer: The owner acts as an exempt principal; the assistant performs a showing requiring licensing.
The owner-principal rule permits leasing one's property, while the showing rule includes hosting an open house for prospective buyers or tenants.
Question 33 of 40
An otherwise qualified Texas brokerage entity designates an active broker in good standing but gives the broker no managing authority. The broker owns 20% of the entity. What is the problem?
Reveal answer
Correct answer: Ownership does not replace the designated broker's required managing authority.
Texas requires the designated broker to have managing authority regardless of entity type; an ownership interest does not cure its absence.
Question 34 of 40
Which limitation is central to Texas's registration exception for a company receiving a license holder's earned brokerage compensation?
Reveal answer
Correct answer: The company must perform no other acts of a broker.
The compensation-entity exemption expressly requires the entity to perform no other acts of a broker.
Question 35 of 40
Which service falls outside Texas's auctioneer exemption when performed by an auctioneer who has no real estate license?
Reveal answer
Correct answer: Negotiating the real estate purchase contract
The rule exempts auctioning real property but expressly excludes negotiating contracts without a real estate license.
Question 36 of 40
A Texas broker supplies a written price estimate in the ordinary course of business for a proposed refinancing and does not call it an appraisal. Does the transaction-purpose condition of the broker price-analysis exception include this use?
Reveal answer
Correct answer: Yes; the exception includes an actual or potential encumbrance of a real property interest.
The exception includes analyses related to actual or potential encumbrance, as well as acquisition, disposition, or management of a real property interest.
Question 37 of 40
Two Texas LLCs are owned by license holders. One negotiates transactions for clients; the other is properly registered, meets the ownership requirement, and only receives its owner's earned brokerage compensation. Which comparison is correct?
Reveal answer
Correct answer: The negotiating LLC needs brokerage authority; the qualifying payee LLC can use the compensation exception.
The Act distinguishes an entity conducting brokerage from a qualifying registered entity that receives compensation and performs no other broker acts.
Question 38 of 40
An identified Texas clerical employee has been confirming advertised property information. The broker adds responsibility for directing sales agents' negotiations. What changes under the licensing rules?
Reveal answer
Correct answer: Directing licensed activities creates a licensing requirement that clerical confirmation did not.
Limited identified clerical confirmation is exempt, but a broker's employee who directs people performing licensed acts must be licensed.
Question 39 of 40
A Texas sales agent's sponsoring broker authorizes an ordinary-course written price estimate for management of a property interest. The analysis is not called an appraisal. Which statement is correct about the purpose of this analysis?
Reveal answer
Correct answer: Management is among the purposes covered by the broker price-analysis exception.
The exception expressly includes a written price analysis related to actual or potential management of an interest in real property.
Question 40 of 40
A Texas property-owning company employs and directly pays someone to lease its properties. Separately, a brokerage employs someone to solicit listings from unrelated owners. Neither worker is licensed. Which distinction is correct?
Reveal answer
Correct answer: The directly paid entity employee can fit the owner-entity exemption; the listing solicitor needs licensing.
An employee directly compensated by the employing property-owning entity may lease for it, while solicitation of listings for a brokerage requires a license.
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