TREC Canons of Ethics and Texas Standards of Conduct

Start with the canon comparison below, then check your understanding with free Standards of Conduct questions. If you prefer paper, use the printable conduct study sheet. When you are ready to mix topics, take a timed Texas practice exam.

What Are the Three TREC Canons of Ethics?

A client wants the best deal. An agent wants a commission. Another party needs truthful information. Conduct questions often begin where those interests pull in different directions.

Use these three distinctions from TREC Rules 531.2, 531.3, and 531.4:

Remember FIC: Fidelity, Integrity, Competency. These three canons sit within TREC’s broader Chapter 531, which also contains consumer-notice and other requirements. They are Texas licensing rules. Do not confuse them with the separate REALTOR® Code of Ethics.

For each scenario, identify the person owed a duty, the action taken, and the rule that action might violate. Start there before deciding whether discipline is possible.

Know the three canons? Try 15 free Standards questions, or keep reading for the rules behind the answers. No account needed.

What the Texas Real Estate Exam Is Testing

Pearson VUE's current Texas Sales Agent state-law outline assigns 9 of the 40 scored state-law items to Standards of Conduct. It does not publish an item count or cognitive split within the seven rows.

A question may ask for a deadline directly, or describe an agent who delays telling a client something important. Learn both the rule and how to apply it. The sections below follow the seven official rows so you can return to the exact topic you missed.

A. Professional Ethics and Conduct

Fidelity

Under Rule 531.2, an agent is a fiduciary: the client’s interests come first, and other parties must still be treated fairly.

The exam version:

TREC's fidelity rule also says a license holder should be faithful to the trust placed in the license holder and place no personal interest above the client's interest.

That creates several exam traps.

Trap: personal interest over client interest

A listing agent wants a quick closing because the agent needs commission income. A lower offer is easier and cleaner than a higher offer with more contingencies. The agent quietly discourages the seller from looking at the higher offer.

That puts the agent’s commission ahead of the seller’s interests, contrary to fidelity.

Trap: client loyalty as permission to be dishonest

A buyer's agent wants to help the buyer get a good deal, so the agent says something false about the seller's property condition.

Helping a client does not authorize false statements about the property.

Integrity

TREC's integrity rule says a license holder has a special obligation to exercise integrity, including prudence and caution to avoid misrepresentation by acts of commission or omission.

Misrepresentation can happen two ways:

For example:

A buyer does not have to ask the perfect question for a known significant defect to require disclosure.

Integrity also connects to:

• False promises.
• Exaggerated claims.
• Selective facts.
• Fake urgency.
• Misleading advertising.
• Concealing license status.
• Hiding compensation.
• Omitting facts from applications or renewals.

The safest answer usually tells the truth early, clearly, and within the license holder's role.

Competency

TREC's competency canon says a license holder must be knowledgeable and competent as a real estate brokerage practitioner.

The rule expects the license holder to be informed about:

• Local market issues and conditions where the license holder provides services.
• National, state, and local real estate industry issues and developments.
• Judgment and skill in brokerage activities.
• The characteristics of the specific type of real estate being brokered.

Consider this example:

An agent can learn a new specialty, but must obtain the knowledge and support needed before advising a client on unfamiliar issues.

Competency also connects to broker responsibility. TREC's broker responsibility rule says brokers must maintain written policies and procedures to ensure sponsored sales agents are competent for authorized activities, including geographic market competence, and must provide coaching and assistance when a sales agent performs a type of brokerage activity for the first three times.

Exam translation:

Applying the Canons to Honesty and Fair Dealing

TREC Rule 535.156 says a license holder must put the principal's interest above the license holder's own interest. It also says the license holder must deal honestly and fairly with all parties, while representing only the principal and owing fidelity to that principal.

You can negotiate firmly and protect confidential client information. You cannot invent facts or hide information that must be disclosed, even if doing so might help the client.

Applying the Canons to Disclosure Duties

Texas conduct questions ask what the license holder knew, when the license holder knew it, who needed it, and whether it was disclosed properly.

Significant information to the principal

TREC Rule 535.156 says a license holder has an affirmative duty to keep the principal informed at all times of significant information applicable to the transaction.

That is why offer-presentation questions matter.

If the information would affect the principal's decision, the safe answer usually involves informing the principal unless a specific rule or written instruction changes the duty.

Accurate information to the public

The same rule says a license holder has a duty to convey accurate information to members of the public with whom the license holder deals.

This is why "I only represented the seller" is not a license to mislead the buyer.

License-holder self-interest

TREC Rule 535.144 says a license holder acting on their own behalf, or in certain capacities involving spouse, parent, child, controlled business entity, or trust, must disclose in writing that they are a licensed real estate broker or sales agent before entering into a sale or rental contract. The rule also says the license holder may not use their expertise to the disadvantage of the person they deal with.

Exam translation:

IABS and consumer notices

TREC Rule 531.20 covers the Information About Brokerage Services notice. It requires the completed IABS at the first substantive communication as required under the statute and explains acceptable delivery methods. It also says a link to the IABS cannot be buried in an email footnote or signature block.

TREC Rule 531.18 covers the Consumer Protection Notice, including display in a broker's place of business and links on business websites.

Use the IABS and agency-disclosure guide to review delivery requirements and exceptions.

B. Grounds for Discipline

Grounds for discipline are the behaviors that can trigger TREC enforcement.

TRELA and TREC rules include many specific grounds. For exam prep, organize them by family:

A complaint does not automatically establish a violation. TREC investigates and follows its enforcement process. See the complaints and hearings guide for that process.

C. Unauthorized Practice of Law

A Texas license holder must use a form approved for mandatory use when Rule 537.11 applies, subject to the exceptions written into that rule. A license holder may add informational items and explain their meaning without giving legal advice. The license holder may not draft or recommend language affecting legal rights, give legal-effect or title-validity opinions, discourage attorney use, or obtain legal advice for a principal.

The testable rule is:

Typical traps:

• Writing a custom clause that changes legal rights.
• Explaining whether a contract is valid or void.
• Advising a party whether to sue.
• Interpreting legal effect of title exceptions.
• Telling a party how probate, divorce, estate, or bankruptcy law applies.
• Changing a promulgated form in a way that requires legal drafting.

Rule 537.11 has a narrow nuance: at a principal's specific written instruction, a license holder may add or strike language if the change is conspicuous. That is not permission to invent the wording or advise on its legal effect.

Safe exam answer:

D. Trust Accounts

A Texas sales agent does not maintain a trust account and must immediately deliver trust money to the sponsoring broker. Unless the principals agree otherwise in writing, the broker must deposit trust money in a trust account or deliver it to an authorized escrow agent not later than the close of business of the second working day after receiving it, and must not commingle it with personal or non-trust money.

What Rule 535.146 counts as trust money

TREC Rule 535.146 says trust money includes a client's money, earnest money, rent, unearned fees, security deposits, or money held on behalf of another. It says trust money accepted by a broker is held in a fiduciary capacity and must be maintained in a designated broker trust account or delivered to an authorized escrow agent according to the agreement of the principals.

Key exam rules:

• A sales agent does not maintain a trust account.
• Trust money received by a sales agent must be immediately delivered to the sponsoring broker.
• Unless the principals agree otherwise in writing, trust money received by the broker must be deposited in a trust account or delivered to an authorized escrow agent not later than the close of business of the second working day after the broker receives it.
• A broker must not commingle trust money with personal or non-trust money.
• Placing trust money in a broker's personal or operating account can be evidence of commingling.
• Paying operating expenses or making improper withdrawals from a trust account can be evidence of commingling.
• A reasonable broker-owned amount may remain only to cover bank service fees, with detailed records. The rule states no fixed dollar cap.
• Trust-account documentation must be kept for four years.

The key distinction is ownership: money held for someone else does not become the brokerage’s operating money.

E. Splitting Fees

Under TRELA §1101.651(a) and TREC Rule 535.147, a broker or sales agent generally may not share a commission or fee with an unlicensed person who performed acts requiring a license. An expected referral for valuable consideration is itself licensed activity under Rule 535.20. Its examples of valuable consideration include money, rent bonuses, discounts, and merchandise worth more than $50.

For a fee-splitting question, ask:

One compensation rule belongs here even when the stem never says "fee split": TRELA §1101.651(b) says a sales agent may accept transaction compensation only from the sponsoring broker or the broker who sponsored the agent when it was earned. Rule 535.3 also requires written broker consent for a sales agent to receive or pay valuable consideration, but that consent does not authorize the sales agent to accept client payment directly.

F. Rebates

TREC Rule 535.147 allows a rebate or payment of part of a fee or commission to a party when its conditions are met. For a sales agent, the sponsoring broker and the represented party must give written consent. A payment to a party the license holder does not represent also requires the represented party's written consent. The payment may not mislead a broker, lender, title company, governmental agency, or anyone evaluating the buyer's resources or obligations.

TREC Rule 535.148 covers undisclosed commissions or rebates. A license holder may not receive a commission, rebate, or fee from someone other than the person represented without disclosing the intent to the client and obtaining the client's consent.

Exam translation:

Rule 535.148 creates an important separate rule. A license holder may not pay or receive a thing of value to or from another settlement-service provider for a referral, preferred-list placement, or similar arrangement. The rule includes inspectors, lenders, mortgage brokers, title providers, appraisers, attorneys, settlement agents, and other settlement-service providers. Disclosure does not cure that prohibited payment. Market-rate payment for actual goods or services and normal promotional or educational activity not conditioned on referrals are different facts.

Identify the payer, recipient, service, and required consent. Check whether the payment is prohibited before asking whether disclosure would be enough.

G. Advertising

Under Rules 535.154 and 535.155:

• An advertisement must include the license holder or team name placing the ad.
• It must include the broker's name in a readily noticeable way.
• The broker's name must be at least half the size of the largest contact information for any sales agent, associated broker, or team name in the ad.
• A sales agent's ad cannot imply that the sales agent is responsible for operating the brokerage.
• A team name must end in "team" or "group," cannot imply independent brokerage, and must be registered by the broker before use.
• A license holder cannot mislead the public about license status, property status, service-provider compensation, rankings, or involvement in a transaction.

For example, an ad whose largest contact information is a sales agent’s name in 40-point type needs the broker’s name in at least 20-point type, readily noticeable. Meeting the size rule does not excuse a misleading claim elsewhere in the ad.

Failure To Respond

TREC Rule 535.157 requires a broker or sales agent to respond to the principal, another broker or sales agent representing another party, or an unrepresented party within two calendar days. Weekends and holidays count. TREC says an acknowledgment can satisfy the rule when the full answer is not yet available.

The complaint-processing rule uses a different clock. It defines a reasonable time to respond to a TREC staff request for information as 14 days from receipt.

Keep these separate:

For a transaction message received on Friday, the two-calendar-day rule requires a response by Sunday. A brief acknowledgment may satisfy it while the agent obtains the answer.

How to Work Through a Conduct Question

1. Identify the relationship. Is the person a client, another party, the sponsoring broker, or a service provider?
2. Find the action. Look for something said, omitted, drafted, paid, advertised, or held in trust.
3. Check the condition. Does the rule require consent, written instructions, a deadline, a license, or attorney involvement?
4. Choose the permitted action. Do not assume that client approval makes an otherwise prohibited act acceptable.

Worked Examples: TREC Ethics and Conduct

Case 1: The withheld offer

A listing agent receives a low backup offer after the seller has accepted another contract. The seller did not give written instructions to stop submitting offers after acceptance. The agent assumes the seller will not care and does not tell the seller.

Answer: Present the offer and keep the seller informed. Rule 535.156 requires significant transaction information to reach the principal. Its exception for offers after acceptance depends on the principal’s written instructions. The agent’s assumption is not a substitute.

Why the shortcut fails: A low offer can still matter to the seller. Deciding it is unimportant without asking puts the agent’s judgment ahead of the client’s decision.

Case 2: The custom legal clause

A buyer asks the sales agent to write a clause that changes default remedies if the seller defaults.

Answer: Refer the legal wording to an attorney. Rule 537.11 does not authorize a sales agent to draft or recommend language that changes legal rights.

Why the shortcut fails: The buyer’s request does not expand the agent’s legal authority. The rule’s narrow permission to make conspicuous changes on specific written instructions is not permission to invent the clause.

Case 3: The side referral fee

A title company offers a license holder a fee for sending buyers to that title company. The license holder does not disclose the fee to the client.

Answer: Do not accept the referral fee. Telling the client about it would not make this payment permissible.

TREC Rule 535.148 prohibits a thing of value to or from another settlement-service provider for referrals, preferred-list placement, or similar arrangements. Disclosure does not cure that Texas prohibition. RESPA Section 8 and Regulation X can create a separate federal prohibition for settlement-service referrals involving a federally related mortgage loan.

Case 4: The operating account

A broker receives security deposits and places them in the brokerage operating account, then uses the same account to pay office rent.

Answer: Keep the deposits in the appropriate trust arrangement. Rule 535.146 requires separation of trust money from operating funds.

Why the shortcut fails: A spreadsheet does not cure commingling. The narrow allowance for broker-owned funds to cover bank service charges does not let the broker use tenants’ deposits for office rent.

Common Traps

Choose the answer supported by the facts and the specific rule. An answer can sound helpful while exceeding the agent’s authority.

How to Study This Topic

Start by explaining Fidelity, Integrity, and Competency in your own words. Then work through the seven official topics, paying particular attention to money, legal language, and advertising.

When you miss a practice question, write down the fact that changed the answer. Was it the lack of written consent, the type of recipient, the source of the money, or the deadline? Revisit that rule before taking another set. Memorizing an answer without noticing that fact makes a similar question harder next time.

Test Your Understanding

Use the free subtopic checkpoint below after reviewing the checklist. Its questions cover all seven official Standards of Conduct rows and report which row needs more work. The answer choices are designed around plausible rule distinctions, not unrelated distractors.

If you miss a question, explain why the tempting answer fails before moving on. That is where the exam skill develops.

Final Checklist

Before you leave this topic, make sure you can explain each line.

If any line feels fuzzy, this is a good topic for mixed practice. Standards questions rarely stay in one neat bucket.

How This Connects To Other Texas Topics

Standards of conduct connects to:

• Complaints, investigations, hearings, and appeals, because conduct problems can become complaints.
• Penalties, unlicensed activity, and the Recovery Trust Account, because discipline flows from violations.
• Trust accounts, earnest money, and commingling, because trust money is one of the highest-risk conduct areas.
• Splitting fees, rebates, and who may be paid, because compensation rules sit inside Standards of Conduct.
• Unauthorized practice of law, because contract drafting and legal advice are common traps.
• Advertising rules, because misleading ads are conduct issues.
• IABS and agency disclosure, because disclosure is part of public protection.

Use this page as the conduct map, then open the narrower lesson when a rule family needs more work. Standards of Conduct is not an isolated topic. It is the lens the exam uses for honesty, competence, money handling, compensation, advertising, and professional boundaries.

Frequently Asked Questions

Is Standards of Conduct on the Texas real estate exam?

Yes. Pearson's Texas Sales Agent state-law outline gives Standards of Conduct 9 scored items. It includes professional ethics and conduct, grounds for discipline, unauthorized practice of law, trust accounts, splitting fees, rebates, and advertising.

What are the main TREC ethics canons for Texas license holders?

For exam prep, remember fidelity, integrity, and competency. Fidelity means the license holder acting as an agent is a fiduciary. Integrity means avoiding misrepresentation by statement or omission. Competency means being knowledgeable and skilled for the brokerage activity being performed.

Which of the following is not a canon of professional ethics and conduct under TREC rules?

Anything outside fidelity, integrity, and competency. Those three are the canons in TREC Rules 531.2, 531.3, and 531.4. A practice question might offer obedience, loyalty, accounting, or disclosure as a tempting alternative. These describe agency duties, but they are not the names of TREC's three canons. Compare the choices with the canon names, then practice the distinction in the free Standards of Conduct questions.

Does loyalty to a client allow a Texas license holder to mislead another party?

No. A license holder represents the principal and owes fidelity to the principal, but must still deal honestly and fairly with all parties and convey accurate information to the public.

What are common grounds for discipline?

Common exam families include fraud, misrepresentation, false promise, material omission, negligence, incompetence, failure to disclose, trust-money mishandling, improper compensation, unauthorized practice of law, misleading advertising, and failure to comply with TREC rules or requests.

What is the two-day response rule?

TREC Rule 535.157 says a broker or sales agent must respond to the principal, a broker or sales agent representing another party, or an unrepresented party to a real estate transaction within two calendar days. Weekends and holidays count. TREC explains that an acknowledgment can satisfy the response requirement; the rule does not require the license holder to resolve the issue or force a party's decision within two days.

Can a Texas sales agent maintain a trust account?

No. TREC's trust-money rule says a sales agent shall not maintain a trust account. Trust money received by a sales agent must be immediately delivered to the sponsoring broker.

Can a license holder receive an undisclosed fee or rebate from a service provider?

No. Rule 535.148 prohibits paying or receiving a thing of value to or from another settlement-service provider for referrals, preferred-list placement, or similar arrangements. Disclosure does not cure that prohibition. A different third-party fee may require disclosure and consent when it is not independently prohibited.

Is advertising part of Standards of Conduct?

Yes. Pearson lists advertising under Standards of Conduct. Texas advertising rules test broker name, team name, assumed name, sales-agent identity, property status, service-provider compensation, rankings, and whether an ad misleads the public.

Do I need to memorize every statute number?

Usually no. It is more useful to know the conduct families and the exam triggers. You should recognize the role of TRELA, TREC rules, fiduciary duty, honesty, competence, trust money, compensation, and advertising.

Can I practice Standards of Conduct in the Pass Texas web or mobile app?

Yes. Focused Standards of Conduct practice is included with full access in the web and mobile apps. Full access costs $59.99 once, with no subscription. The 15-question Standards quiz on this website is free without an account. A free app account has limited access, including a National diagnostic; it does not unlock the full Standards question bank. Compare access before choosing. Our questions are original, and Pass Texas is not affiliated with TREC or Pearson VUE.

Source review, September 24, 2026: Rules in effect on September 23, 2026 were checked against Pearson VUE Texas Real Estate Content Outlines #094401, effective January 1, 2026; Texas Occupations Code Chapter 1101, including the 2026 amendment to §1101.652; and current TREC Rules in 22 TAC Chapters 531, 535, and 537. The official state-law outline publishes seven Standards of Conduct subtopics but no item split within them. Regulated facts can change, so verify current requirements before applying them to a transaction.

Sources and Methodology

This article is written for Texas real estate sales agent exam candidates. It uses official Texas and Pearson VUE source material first, then translates the topic into plain-English exam prep, original examples, and original practice questions. It does not use copied exam questions and does not claim to reproduce the live exam.

Use it for study purposes only. For real-world discipline, advertising, trust accounts, broker supervision, compensation, legal advice, license status, complaint, hearing, appeal, or transaction questions, verify the current official source and consult the right qualified professional.

This post is exam preparation content for the Texas Real Estate Sales Agent exam. It is not legal, tax, financial, lending, appraisal, brokerage, insurance, title, closing, disciplinary, trust-account, advertising, administrative-hearing, or professional advice.

Sources:

• Pearson VUE Texas Real Estate Content Outlines
• TREC Rules, current courtesy display
• TREC: How to Comply With the Two-Day Response Rule
• Official Texas Administrative Code, Title 22, Part 23
• TREC: How to File a Complaint
• Texas Occupations Code Chapter 1101
• CFPB: RESPA Regulation X, 12 CFR 1024.14 (referral fees and kickbacks)