Texas State Law cheat sheet
Texas Standards of Conduct Texas Real Estate Exam Cheat Sheet
Standards of Conduct tests how a Texas license holder handles money, advertising, compensation, legal boundaries, and conduct that can support discipline.
Focus on the action, not the label. Ask whose money it is, who authorized the payment, whether the communication is misleading, and whether the license holder crossed into legal drafting.
What Pearson tests
- Professional ethics, grounds for discipline, fraud, misrepresentation, and unauthorized practice of law
- Trust accounts, commingling, conversion, fee splitting, rebates, and compensation
- Advertising, broker identification, team names, assumed names, and misleading claims
Three traps to catch
- Commingling means mixing client funds with business or personal funds. Conversion means unauthorized use of those funds.
- A rebate is not automatically prohibited, but it must comply with consent, disclosure, and anti-misrepresentation rules.
- Filling approved blanks is different from drafting legal language for a party.
Essential vocabulary
Texas Standards of Conduct terms to know
- Commingling
- Mixing trust money with a broker's business or personal funds.
- Conversion
- Unauthorized use or control of money belonging to another.
- Trust account
- An account used to hold money belonging to others under applicable rules.
- Blind advertisement
- An advertisement that fails to identify the responsible broker as required.
- Unauthorized practice of law
- Giving legal services or drafting legal provisions beyond a license holder's lawful authority.
- Fee splitting
- Sharing brokerage compensation, which is restricted when the recipient is not properly licensed or authorized.
- Rebate
- Return of part of a fee or commission under conditions allowed by law and broker consent.
- Citation
- A TREC enforcement mechanism for specified violations and penalties.
Check your recall
Can you answer these without notes?
1What is the difference between commingling and conversion?
Commingling is improper mixing. Conversion is unauthorized use.
2May a sales agent receive a commission directly from a client?
Compensation must flow with the written consent and authority of the sponsoring broker under TREC rules.
3May a license holder draft a custom legal clause for a client?
No. The license holder must stay within the permitted use of promulgated forms and avoid unauthorized practice of law.
Use the sheet, then retrieve
Test the rules while they are still fresh.
Read the full lesson when a definition is fuzzy. Then answer the topic questions without looking back at this sheet.
Primary sources
This is exam-prep education, not legal, tax, or transaction advice. Confirm the current law, form, and official exam materials before relying on a rule in practice.