Texas is an always-growing state with plenty of hot markets for real estate agents. However, the state is strict on its licensed professionals, and running afoul of Texas's licensing authority can cause serious problems for your career.
The Lento Law Firm Professional License Defense Team knows how hard real estate agents work to get and maintain a license. When issues arise with those licenses, we're ready to help. If you're facing issues with your Texas real estate license, give us a call at 888-535-3686 or fill out our confidential online form and include some details about your situation.
Real Estate Licensing Authority in Texas
Headquartered in Austin, the Texas Real Estate Commission (TREC) oversees all real estate licenses for the state. TREC was established in 1949 to protect the state's residents in selling, buying, and transferring property.
TREC's licensing division is responsible for issuing and renewing licenses for:
- Real estate brokers
- Sales agents
- Property appraisers
- Property inspectors
- Easement or right-of-way registrants
TREC also has an enforcement division that manages incoming complaints on licensees. This team uses the following to enforce regulations and issue discipline when necessary:
- The Real Estate License Act
- Rules of the Commission
- Chapter 1102 of the Texas Occupations Code
- The Texas Timeshare Act
The enforcement group also routinely reviews applications to assess the trustworthiness and integrity of applicants.
A separate education and examinations division oversees continuing education in the state. This includes ensuring that any continuing education classes meet state standards both for their design and their delivery methodologies.
Complaint Intake in Texas
Whether you live in Dallas, San Antonio, Corpus Christi, or one of the other many towns in the state, disciplinary actions kick off with a complaint. It could be from your coworker, a client, or a third party who has reason to report you. When a complaint comes in, the investigation team looks into the allegations. The 37-person team is made up of:
- 10 attorneys
- Legal assistants
- Investigators
Complaints must be submitted in writing. You can use the official Complaint Form, but you can also simply detail your case in writing and send it to Texas Real Estate Commission, PO Box 12188, Austin, TX 78711-2188. You can also email [email protected], but you'll need to sign your written statement for it to be accepted.
Anonymous complaints will be declined. Every complainant must provide a name and sign the complaint. Complaints must also be filed within four years of the alleged incident to qualify to be investigated.
Common Reasons for TREC Investigations
When a complaint comes in, the investigations team prioritizes it based on the potential for harm, the number of license holders potentially involved, the number of violations, and the complaint history of the licensee.
TREC uses a three-tier approach to handling investigations, with Level 1 being the most serious. They are:
- Level 1
- Fraud or misrepresentation that involves a loss of more than $10,000
- Personal safety issues
- Working without a license
- Mortgage fraud
- Level 2
- Fraud or misrepresentation that involves a loss of less than $10,000
- Negligence
- Level 3
- Technical violations
When an incoming complaint names more than two groups of license holders, the team bumps that complaint up a level. The same goes for complaints involving licensees with three or more complaints filed within a one-year period or a history of disciplinary action.
The Complaint Intake Process
When a complaint comes into TREC, the investigations team first reviews the information to see if the complaint meets all the basic requirements to initiate an investigation. If the following is present, the team won't be able to investigate:
- The complaint wasn't signed: Without a signature and the name of the complainant, the investigators can't act. Unsigned complaints will be returned with a request for a signature. Once it's resubmitted, the team can take action.
- The complaint falls outside TREC's jurisdiction: TREC only handles complaints specific to Texas real estate and inspection professionals. If it doesn't fall under its jurisdiction, the complaint will be closed without further action.
- The complaint is missing important information: When this happens, the team will return the complaint with a request for it to be resubmitted within 14 days. At the end of that 14-day timeframe, the complaint will be closed without an investigation.
When a complaint meets the basic requirements, the team opens an official complaint. The following people will receive a copy of the complaint:
- All named parties in the complaint
- The broker who sponsors the parties mentioned in the complaint
- The designated broker for those mentioned in the complaint
Education providers and instructors have 15 days to respond to the complaint. All others have only 10 days. That includes real estate agents and brokers, inspectors, educators, and right-of-way agents.
Headquarters and Fields Investigations
Once a complaint moves to the investigation phase, it's put in one of two investigation categories. One category is a headquarters investigation, which is handled by legal assistants who request a response to the complaint and turn the complaint over to an attorney for review.
Other complaints are handed to the field investigations team for review. These investigators do a deeper dive into the details, not only reading the complaint and response but also reaching out to the complainant, respondents, and any witnesses who can shed light on the reported incident. All of this information is compiled for a report that's turned over to an attorney for review.
Complaint Handling
After reviewing the information, the attorney will make a decision based on whether a violation actually occurred. That decision will lead to a recommendation, which will be one of the following:
- No disciplinary action: After a thorough review, attorneys sometimes decide no action needs to be taken. This could be because the incident falls outside TREC's jurisdiction, no violation occurred, or there simply wasn't enough evidence to prove that a violation occurred. When this decision is made, a copy of the findings is sent to the person who complained and each licensee named in the complaint.
- Informal disciplinary action: In some cases, the attorney decides the violation wasn't serious enough for more severe action. When that happens, the attorney sends a written advisory letter to the licensee named in the complaint. This is similar to a warning, and it remains in the licensee's file for 10 years. Although no disciplinary action will be taken, it could be used as evidence if the licensee is reported for similar behavior in the future.
- Formal disciplinary action: This is the worst-case scenario. The attorney decides, in this case, that a violation has taken place and punishment should result. That punishment could be a reprimand, license suspension, or license revocation. In addition to these actions, TREC may impose administrative penalties, which can range from $100-$5,000.
Notification of Disciplinary Action
Once the attorney has made a decision, a notice will be sent to the licensee(s). This notice will include the original petition with the incident details, any conclusions of violation that the attorney found, and the type of discipline recommended by the attorney. This disciplinary action will be one of two types:
- Agreed order: With this type of action, you, the respondent, admit to the allegations against you and agree to the disciplinary action being imposed. This usually only happens when you've agreed in advance that you understand the wrongdoing. In some cases, you may have even made an attempt to correct the misdeed.
- Notice of Alleged Violation (NOAV): In most cases, the attorney will send a NOAV, which happens when you didn't agree to the allegations or you failed to respond in a timely manner. You'll have 30 days to either accept the discipline or request a hearing. If you accept, a Final Order will be issued.
Real Estate License Hearings in Texas
Typically, the best course of action, after you've received an NOAV is to take advantage of the hearing option offered. As soon as you request a hearing, the State Office of Administrative Hearings will put you on the docket. This hearing will probably be at least 30 days from the date it's requested, although they are scheduled as far as 90 days out.
Once the hearing is scheduled, you'll receive a notice with the date. During the time leading up to the hearing, you should gather all the documentation you can to present to the board. If you live far from Austin in a town like Amarillo or Lubbock, you'll also need to plan to travel on the hearing date.
The Lento Law Firm Professional License Defense Team can work with you to prepare a case that will give you the best chance possible of eliminating or reducing the disciplinary action that has been imposed. We can gather information from witnesses and comb through records to help you prepare a solid argument.
Appealing a Board Decision
Within 60 days of your hearing, an administrative law judge will issue a Proposal for Decision. You'll have a limited amount of time to respond to this decision, and your response will need to detail any errors you see in the proposal and the judge will review it and submit it to TREC commissioners, who will issue a decision called a Final Order.
This isn't the end of the road, though. If you have a solid case you can present to overturn the finding, you can request a rehearing. It will either be granted or denied. If granted, you can go back in front of the commissioners for another shot, but if not, your only recourse is to file an appeal in district court.
Types of Disciplinary Action in Texas
The TREC issues three types of punishment for real estate professional code violations in the state. The least severe is a reprimand, which allows you to retain your license. With more serious violations, you'll either see your license being temporarily suspended or permanently revoked.
In Texas, the following violations are grounds for license suspension or revocation, among others:
- Felony convictions
- Fraudulently obtaining a license
- Paying fees using a bad check
- Failing to respond to complaints in a timely manner
- Engaging in misrepresentation in the field of real estate
- Negligence or incompetence
- Misrepresentation of a property defect
- Accepting funds from one party in a real estate transaction without disclosing it to the other parties involved
- Failing to account for or remit deposits or other funds received from the property buyer or seller
- Commingling deposits or other funds with the licensee's own money
- Improperly paying or dividing commissions
The Impact of Disciplinary Action
Whether you live in downtown Houston or a small town like Wimberley or Dripping Springs, getting and maintaining a TREC license is essential to a career in real estate. Losing your license, even temporarily, can have devastating impacts on your career.
But even if you keep your license, a reprimand, fines, or probation can hurt you. The state has made it easier than ever to look up the disciplinary history of real estate professionals in the state. Avoiding a mark on that record is the best thing you can do for your career.
Protecting Your Texas Real Estate License
If you hold a TREC license, it's important to do what you can to avoid the complaint that launches an investigation. Being honest in all of your dealings and operating with integrity and professionalism at all times can help reduce your risk.
Even with all your best efforts, though, complaints sometimes happen. Once an investigation has launched, here are some steps you can take to protect your license:
- Respond to all requests for information as quickly as possible
- Document every interaction with TREC investigators
- Gather as much documentation as possible to support your case, including relevant emails and text messages
- If the allegations against you are founded, negotiate with the TREC to reduce the severity of any consequences
- Make sure you fulfill all obligations attached to a temporary suspension or probation to improve your chances of a reinstatement
From the initial notice to the Final Order, an experienced attorney can help you with a TREC investigation. We'll help you craft responses to investigators, gather information, and prepare your case for any hearings. The Lento Law Firm Professional License Defense Team has years of experience with Texas real estate license issues and can walk you through what to expect. Give us a call at 888-535-3686 or fill out our online form.
