What responsibilities do real estate brokers have in Texas? According to the Texas Real Estate Commission (TREC), real estate brokers have canons of professional ethics and conduct:
- Fidelity: real estate brokers must act as a trustee when representing agents, with an obligation to represent the interests of the agent’s client and position.
- Integrity: real estate brokers have an obligation to exercise integrity in the transaction.
- Competency: a license holder must be experienced as a real estate brokerage practitioner.
- Consumer information: active real estate brokers are required to provide the Consumer Protection Notice in a noticeable location at each business location and on the homepage of their business website.
- Discriminatory practices: brokers are forbidden from inquiries or disclosures regarding an owner, previous or current occupant, potential purchaser with relation to any indication of preference or discrimination based off of race, color, religion, sex, national origin, ancestry, familial status, or disability.
- Information about brokerage services: the TREC adopts by reference the Information About Brokerage Services Notice, which active brokers must provide for clients and organizations.
What happens if these responsibilities are breached? Any disregard of the procedures listed above, or failure to follow the instructions of a client may result in a violation of industry regulations of TREC. In addition, unlicensed brokerage activity is a criminal offense, classified as a Class A misdemeanor punishable by confinement of up to one year in a county jail and a fine of up to $4,000. TREC may also pursue administrative penalties not to exceed $5,000 for each violation. Every day a violation continues may be counted as a separate violation for the imposition of administrative penalties. The Commission may also issue a “cease and desist” or obtain injunctive relief and fees regarding such relief.
To prevent common TREC violations, brokers should take necessary precautions to ensure they are licensed and act responsibly for the authorized activities of their agents. Brokers must have written policies to ensure the competency of their agents within the scope of their practice and must establish that they are receiving the necessary education to perform the authorized activities.
If you are a broker and believe you may have to defend against a TREC violation or you would like more information about how to handle commission complaints, we invite you to contact us to speak with a board-certified real estate attorney. You can reach a Texas lawyer at 713-572-4900.