TEXAS LTC TEST FINAL TEST 2026
QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ Texas Real Estate Commission (TREC).
Answer: -created in 1949-purpose: to administer the provisions of the
License Act-authority to make rules and regulations-9 members (3 represent
the general public, 6 are real estate brokers)-all appointed by the governor
and approved by the Senate-serve 6 year terms-has the power to subpoena
books, records, and witnesses-has the power to issue or revoke Real Estate
Licenses
◍ Policyowner.
Answer: -King of the policy-Controls the policy and signs for any change
◍ Underwriting.
Answer: process of classifying arisk for the purpose ofissuing insurancec o v
erage
◍ Broker Lawyer Committee.
Answer: -writes promulgated contract forms-13 members (6 are brokers
appointed by TREC, 6 are lawyers appointed by the President of the State
Bar Association, 1 is a public member appointed by the governor)
◍ Real Estate Recovery Fund.
Answer: created by TREC to pay aggrieved persons who suffered a
monetary loss due to unscrupulous acts of the licensees-persons can receive
up to 3 times the amount of money lost-when an amount is paid out of it, the
license of the individual is automatically revoked or suspended without a
hearing (cannot be recovered until the fund has been repaid with interest)
◍ persons who must have a real estate license.
, Answer: 1.attorneys who participate in a commission split2.auctioneers
involved in a real estate transaction3.apartment locators4.real estate
salespeople5.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)1-4 MUST BE SPONSORED BY
A BROKER AND RECEIVE COMMISSIONS ONLY FROM THAT
BROKER
◍ steps in obtaining a real estate license.
Answer: 1. meet the educational requirements2. submit an application with
or without a sponsoring broker3. submit the required fees4. pass the state
exam5. demonstrate integrity
◍ licensing requirements.
Answer: -18 years of age-resident of Texas at the time of
application-comply with legal residency requirements (not an illegal alien)
◍ educational requirements.
Answer: 180 classroom hours with a minimum of 120 in core real estate
courses-60 hours in Principles of Real Estate, 30 hours in Law of Contracts,
30 hours in the Law of Agency are mandatory
◍ Insurable interest.
Answer: In life & healthinsurance, insurableinterest must exist at thetime of
application.
◍ R i d e r.
Answer: A rider is a policy formu s e d t o revise o r a d dcoverage in an
in-forcelife or health policy.• Also known as ane n d o r s e m e n t .
◍ TREC Consumer information form 1-1.
Answer: -notifies the public of the recovery fund-applies to both real estate
licensees and inspectors-must be displayed in the broker's office-must be
included in listing and buyer representation agreements, as well as any
invoices for services
◍ Commissioner of insurance in texas is appointed by.
, Answer: The governor
◍ Texas Real Estate License Act (TRELA).
Answer: -passed by legislation to protect the public against unscrupulous
brokers and salesmen-rules and regulations are construed liberally with a
view toward their purpose, and have the full force and effect of the law
◍ foreign broker.
Answer: a broker from another state-must work through resident
brokers-may collect commission from a Texas broker, as long as that broker
does not negotiate in Texas
◍ Commissioner of insurance in texas powers are:.
Answer: • To enforce insurance rules and law• But not to make law!• Not a
public prosecutor• Cannot sentence you to jail or prison-Sets Continuing
Education requirements• To approve producer licenses and insurer's
Certificates of Authority• To approve insurer endorsement forms• Can
request information about fraudulent claims, but NOT THE INSURED.•
Examines the records of each admitted and domestic insurer at least once
every 5 years.
◍ How often does commissioner of texas Examines the records of each
admitted and domestic insurer.
Answer: at least once every 5 years.
◍ advertising rules.
Answer: -broker name must be on each page of the web site-licensee's web
site must include the name of sponsoring broker-when advertising listed
property, broker or company name must be in the ad
◍ Reinsurance reserves.
Answer: > The Department will NOT tell an insurer to releasetheir
reinsurance reserves.
◍ Commissioner of Insurance sanction and penalties.
Answer: • 10:30 Rule> 10 days notice before revoking certificate of
authority>The hearing must be held within 30 days of therequest
, ◍ Senate Bill 489.
Answer: allows the broker to act as an intermediary in a transaction where
he represents both the seller and the buyer and has the written permission of
both parties including how the broker will be paid-only a broker can act as
an intermediary-appropriate for the broker to appoint associates to work
with the parties in the transaction (may give advice and opinions to one
party)-requires a licensee to give Information About Brokerage Services
(IABS) to a prospect at the first substantive dialogue
◍ Stock.
Answer: -Owned by shareholders-Dividend is a sharing ofprofit but neverg
uaranteed
◍ M u t u a l.
Answer: -Owned by policyholders-Dividend is a return ofpremium but
neverg u a r a n t e e d
◍ Fraturnal benefit societies.
Answer: Provides insurance only to their members
◍ substantive dialogue.
Answer: a face-to-face meeting where substantive dialogue of real estate
takes place or any mailing with a substantial amount of information about a
particular property
◍ subagent.
Answer: a licensee who represents the seller while being sponsored by a
broker other than the listing broker-working with a buyer customer rather
than a buyer client
◍ Seller's Disclosure of Property Condition.
Answer: must be given to a buyer before he signs an offer to make that offer
binding on the buyer-if the buyer does not have the disclosure before
signing, he has 7 days to terminate his offer, after receiving the
disclosure-disclosure required in most states, but not all (required in Texas)
QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ Texas Real Estate Commission (TREC).
Answer: -created in 1949-purpose: to administer the provisions of the
License Act-authority to make rules and regulations-9 members (3 represent
the general public, 6 are real estate brokers)-all appointed by the governor
and approved by the Senate-serve 6 year terms-has the power to subpoena
books, records, and witnesses-has the power to issue or revoke Real Estate
Licenses
◍ Policyowner.
Answer: -King of the policy-Controls the policy and signs for any change
◍ Underwriting.
Answer: process of classifying arisk for the purpose ofissuing insurancec o v
erage
◍ Broker Lawyer Committee.
Answer: -writes promulgated contract forms-13 members (6 are brokers
appointed by TREC, 6 are lawyers appointed by the President of the State
Bar Association, 1 is a public member appointed by the governor)
◍ Real Estate Recovery Fund.
Answer: created by TREC to pay aggrieved persons who suffered a
monetary loss due to unscrupulous acts of the licensees-persons can receive
up to 3 times the amount of money lost-when an amount is paid out of it, the
license of the individual is automatically revoked or suspended without a
hearing (cannot be recovered until the fund has been repaid with interest)
◍ persons who must have a real estate license.
, Answer: 1.attorneys who participate in a commission split2.auctioneers
involved in a real estate transaction3.apartment locators4.real estate
salespeople5.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)1-4 MUST BE SPONSORED BY
A BROKER AND RECEIVE COMMISSIONS ONLY FROM THAT
BROKER
◍ steps in obtaining a real estate license.
Answer: 1. meet the educational requirements2. submit an application with
or without a sponsoring broker3. submit the required fees4. pass the state
exam5. demonstrate integrity
◍ licensing requirements.
Answer: -18 years of age-resident of Texas at the time of
application-comply with legal residency requirements (not an illegal alien)
◍ educational requirements.
Answer: 180 classroom hours with a minimum of 120 in core real estate
courses-60 hours in Principles of Real Estate, 30 hours in Law of Contracts,
30 hours in the Law of Agency are mandatory
◍ Insurable interest.
Answer: In life & healthinsurance, insurableinterest must exist at thetime of
application.
◍ R i d e r.
Answer: A rider is a policy formu s e d t o revise o r a d dcoverage in an
in-forcelife or health policy.• Also known as ane n d o r s e m e n t .
◍ TREC Consumer information form 1-1.
Answer: -notifies the public of the recovery fund-applies to both real estate
licensees and inspectors-must be displayed in the broker's office-must be
included in listing and buyer representation agreements, as well as any
invoices for services
◍ Commissioner of insurance in texas is appointed by.
, Answer: The governor
◍ Texas Real Estate License Act (TRELA).
Answer: -passed by legislation to protect the public against unscrupulous
brokers and salesmen-rules and regulations are construed liberally with a
view toward their purpose, and have the full force and effect of the law
◍ foreign broker.
Answer: a broker from another state-must work through resident
brokers-may collect commission from a Texas broker, as long as that broker
does not negotiate in Texas
◍ Commissioner of insurance in texas powers are:.
Answer: • To enforce insurance rules and law• But not to make law!• Not a
public prosecutor• Cannot sentence you to jail or prison-Sets Continuing
Education requirements• To approve producer licenses and insurer's
Certificates of Authority• To approve insurer endorsement forms• Can
request information about fraudulent claims, but NOT THE INSURED.•
Examines the records of each admitted and domestic insurer at least once
every 5 years.
◍ How often does commissioner of texas Examines the records of each
admitted and domestic insurer.
Answer: at least once every 5 years.
◍ advertising rules.
Answer: -broker name must be on each page of the web site-licensee's web
site must include the name of sponsoring broker-when advertising listed
property, broker or company name must be in the ad
◍ Reinsurance reserves.
Answer: > The Department will NOT tell an insurer to releasetheir
reinsurance reserves.
◍ Commissioner of Insurance sanction and penalties.
Answer: • 10:30 Rule> 10 days notice before revoking certificate of
authority>The hearing must be held within 30 days of therequest
, ◍ Senate Bill 489.
Answer: allows the broker to act as an intermediary in a transaction where
he represents both the seller and the buyer and has the written permission of
both parties including how the broker will be paid-only a broker can act as
an intermediary-appropriate for the broker to appoint associates to work
with the parties in the transaction (may give advice and opinions to one
party)-requires a licensee to give Information About Brokerage Services
(IABS) to a prospect at the first substantive dialogue
◍ Stock.
Answer: -Owned by shareholders-Dividend is a sharing ofprofit but neverg
uaranteed
◍ M u t u a l.
Answer: -Owned by policyholders-Dividend is a return ofpremium but
neverg u a r a n t e e d
◍ Fraturnal benefit societies.
Answer: Provides insurance only to their members
◍ substantive dialogue.
Answer: a face-to-face meeting where substantive dialogue of real estate
takes place or any mailing with a substantial amount of information about a
particular property
◍ subagent.
Answer: a licensee who represents the seller while being sponsored by a
broker other than the listing broker-working with a buyer customer rather
than a buyer client
◍ Seller's Disclosure of Property Condition.
Answer: must be given to a buyer before he signs an offer to make that offer
binding on the buyer-if the buyer does not have the disclosure before
signing, he has 7 days to terminate his offer, after receiving the
disclosure-disclosure required in most states, but not all (required in Texas)
