Champions State Test Section Chapter 1-6 Review Questions and Answers

TREC General Powers, Composition, Duties, and Powers: Real Estate Advisory Committees -TREC was created in 1949 to administer the provisions of the License Act which was passed in 1939. The primary purpose of both the License Act and TREC is to protect the public. -TREC has the authority to make rules and regulations. TREC can advise with reference to its rules and the laws that govern license holders. -TREC consists of 9 commission members, 3 represent the general public and 6 are real estate brokers. All are appointed by the governor and approved by the Senate. They serve for 6-year terms. -TREC has the power to subpoena books, records, and witnesses. If a license holder fails to respond to a subpoena, TREC can file suit with the Attorney General to enforce the subpoena Broker-Lawyer Committee Writes the promulgated contract forms. -This committee has 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. TREC Handling of Complaints: Investigations, Hearings and Appeals -TREC can initiate an investigation against a license holder at its own motion. -An individual has four years from the effective date of a contract or the date of the incident to file a complaint with TREC regarding the license holder involved. After four years, TREC will no longer investigate a complaint. The complaint must be written and signed. -A consumer can research a complaint history on a license holder through TREC. -Only TREC has the power to issue or revoke Real Estate Licenses. A hearing for the revocation or suspension is held at the State Office of Administrative Hearings (SOAH) unless a license holder requests the hearing be held in his county. If a license holder, in violation, fails to respond to a summons from TREC, TREC will automatically schedule the revocation/ suspension hearing. -If your license is revoked by TREC, you may appeal the decision to the district court. TREC Penalties for Violation: Unlicensed Activity: Authority for Disciplinary Actions; Recovery Trust Account -People engaged in the real estate brokerage business without having secured a license from TREC are guilty of a Class A Misdemeanor and subject to a fine of not more than $4,000.00 or imprisonment in the county jail for not more than one year, or both. Trials for this would be held in the county court. -In addition, persons guilty of a violation of the License Act and whoever profited there from are liable for additional civil penalties of up to three times the amount of money received. -TREC may assess an administrative penalty of up to $5,000 per day for violation of the license act by any person, either licensed or unlicensed. If TREC assesses a penalty, a license holder has 30 days to pay the penalty. Real Estate Recovery Trust Account -This fund was created to pay aggrieved parties who win an uncollectable judgment from an agent/broker. An aggrieved party may collect treble damages up to $50,000 per lawsuit and up to $100,000 per license number. -The account is funded by taking $10 out of every applicant's or renewing licensee's fees. In addition, all fines levied by TREC fund this account which is invested in safe securities like T-Bills and Notes. -If the fund ever falls below $1 million, TREC can assess all licensees $10 or a pro rata share to bring the balance up to $1.7 million. If the balance is above $3.5 million on January 1st, TREC reduces the value to $3.5 million by flushing the excess into the General Fund of Texas where the Texas Legislature spends it. -When any amount is paid out against a licensee, the amount must be paid back with interest and the license can be suspended/revoked. -TREC plays no part in resolving conflicts between license holders. This is usually handled at the Local Board of Realtors level.