Texas Real Estate Investment Examination
ACTUAL EXAM 2026/2027 | Texas Real
Estate Commission TREC | Verified Q&A |
Pass Guaranteed - A+ Graded
Section 1 – TREC Legal & Regulatory Framework (15 Questions)
Q1: Under TREC Rule 535.154, within what timeframe must a broker deposit earnest money after
receiving a signed contract?
A. Within 24 hours of receipt
B. By the close of the next business day after contract execution
C. Within 5 business days of contract execution
D. Upon closing of the transaction
Correct Answer: B
Rationale: TREC Rule 535.154 mandates earnest money be deposited by close of the next business day
after contract execution. The incorrect "5 business days" violates the strict timeline and subjects the
broker to disciplinary action.
Q2: A Texas real estate agent advertises an investment property on social media without including the
broker's name. Which TREC advertising rule applies?
A. Agent name must appear larger than the broker's name
B. Broker's name must be included in a clear and conspicuous manner
C. Only the property address is required
D. Social media is exempt from advertising rules
Correct Answer: B
Rationale: TREC Rule 535.155 requires all advertising to include the broker's name clearly and
conspicuously. Social media is not exempt; omitting the broker's name violates consumer protection
standards.
Q3: What is the maximum administrative penalty TREC may impose for a first-time violation of the Real
Estate License Act?
,A. $1,000 per violation
B. $5,000 per violation
C. $10,000 per violation
D. $25,000 per violation
Correct Answer: B
Rationale: TREC may impose up to $5,000 per violation for first-time offenses under the Real Estate
License Act. Repeat violations or serious misconduct can result in higher penalties or license revocation.
Q4: A Texas seller signs a Seller's Disclosure Notice but fails to disclose a known foundation issue. The
buyer discovers this after closing. What is the buyer's primary legal recourse?
A. File a complaint with the Texas Attorney General
B. Sue for damages under the Deceptive Trade Practices Act (DTPA)
C. Request TREC to rescind the sale
D. File a criminal complaint against the seller
Correct Answer: B
Rationale: Failure to disclose known defects violates the DTPA and Texas Property Code, giving the
buyer civil remedies. TREC does not have authority to rescind real estate transactions—that requires
judicial action.
Q5: Which of the following constitutes practicing law without a license under Texas law when
performed by a real estate agent?
A. Explaining contract provisions to a client
B. Recommending a specific title company
C. Drafting a deed or promissory note for a transaction
D. Calculating prorations for closing
Correct Answer: C
Rationale: Drafting legal instruments like deeds or promissory notes constitutes unauthorized practice
of law. Agents may explain contract terms and calculate prorations but must use attorneys or title
companies for legal document preparation.
Q6: Under Texas Property Code, what is the minimum notice period a landlord must provide for non-
payment of rent before filing for eviction?
A. 3 days
B. 7 days
C. 10 days
D. 30 days
,Correct Answer: A
Rationale: Texas Property Code §24.005 requires a 3-day notice to vacate for non-payment of rent
before eviction proceedings. The longer periods apply to other lease violations or month-to-month
terminations, not rent non-payment.
Q7: A Texas broker holds an earnest money check made payable to the seller. What action is required?
A. Return the check to the buyer immediately
B. Deposit the check into the broker's operating account
C. Obtain a new check made payable to the broker or trust account name
D. Forward the check directly to the seller
Correct Answer: C
Rationale: Earnest money must be deposited into the broker's trust account; checks must be payable to
the broker or trust account name. Depositing a seller-payable check violates trust account rules and
creates commingling risk.
Q8: Which TREC disciplinary action is NOT available for violations of the Real Estate License Act?
A. Revocation of license
B. Suspension of license
C. Mandatory prison sentence
D. Administrative penalty
Correct Answer: C
Rationale: TREC has civil and administrative authority only; criminal penalties including imprisonment
require separate judicial proceedings through the criminal justice system. TREC cannot impose
incarceration.
Q9: A Texas agent represents both buyer and seller in an investment property transaction with full
disclosure. What fiduciary duty creates the greatest risk in this dual agency?
A. Obedience
B. Loyalty
C. Accounting
D. Disclosure
Correct Answer: B
Rationale: The duty of loyalty is most compromised in dual agency as the agent cannot fully advocate
for competing interests. While disclosure addresses the conflict, undivided loyalty to both parties is
inherently impossible.
, Q10: Under TREC rules, which information MUST be included in a residential lease for a single-family
investment property?
A. Tenant's social security number
B. Property owner's mailing address
C. Management company's fee structure
D. Comparable rental rates in the area
Correct Answer: B
Rationale: TREC lease forms require the property owner's name and mailing address for legal notices.
Social security numbers and management fees are not mandatory lease provisions, and comparable
rates are irrelevant to lease validity.
Q11: A Texas investor uses a deed of trust to secure a loan. What distinguishes this from a mortgage in
Texas?
A. Deed of trust requires judicial foreclosure
B. Mortgage allows non-judicial foreclosure
C. Deed of trust involves a third-party trustee for foreclosure
D. Mortgage provides faster foreclosure timelines
Correct Answer: C
Rationale: Texas deed of trust involves a trustee who can conduct non-judicial foreclosure; mortgages
require judicial foreclosure. The trustee structure enables the efficient non-judicial process Texas
lenders prefer.
Q12: What is the statutory redemption period for homestead property in Texas after a non-judicial
foreclosure under a deed of trust?
A. No statutory redemption period exists
B. 30 days
C. 6 months
D. 2 years
Correct Answer: A
Rationale: Texas non-judicial foreclosure under deed of trust provides no post-sale statutory
redemption period for homesteads. This distinguishes Texas from states with redemption rights and
makes foreclosure consequences immediate.
Q13: Which action by a Texas broker regarding earnest money constitutes commingling?
ACTUAL EXAM 2026/2027 | Texas Real
Estate Commission TREC | Verified Q&A |
Pass Guaranteed - A+ Graded
Section 1 – TREC Legal & Regulatory Framework (15 Questions)
Q1: Under TREC Rule 535.154, within what timeframe must a broker deposit earnest money after
receiving a signed contract?
A. Within 24 hours of receipt
B. By the close of the next business day after contract execution
C. Within 5 business days of contract execution
D. Upon closing of the transaction
Correct Answer: B
Rationale: TREC Rule 535.154 mandates earnest money be deposited by close of the next business day
after contract execution. The incorrect "5 business days" violates the strict timeline and subjects the
broker to disciplinary action.
Q2: A Texas real estate agent advertises an investment property on social media without including the
broker's name. Which TREC advertising rule applies?
A. Agent name must appear larger than the broker's name
B. Broker's name must be included in a clear and conspicuous manner
C. Only the property address is required
D. Social media is exempt from advertising rules
Correct Answer: B
Rationale: TREC Rule 535.155 requires all advertising to include the broker's name clearly and
conspicuously. Social media is not exempt; omitting the broker's name violates consumer protection
standards.
Q3: What is the maximum administrative penalty TREC may impose for a first-time violation of the Real
Estate License Act?
,A. $1,000 per violation
B. $5,000 per violation
C. $10,000 per violation
D. $25,000 per violation
Correct Answer: B
Rationale: TREC may impose up to $5,000 per violation for first-time offenses under the Real Estate
License Act. Repeat violations or serious misconduct can result in higher penalties or license revocation.
Q4: A Texas seller signs a Seller's Disclosure Notice but fails to disclose a known foundation issue. The
buyer discovers this after closing. What is the buyer's primary legal recourse?
A. File a complaint with the Texas Attorney General
B. Sue for damages under the Deceptive Trade Practices Act (DTPA)
C. Request TREC to rescind the sale
D. File a criminal complaint against the seller
Correct Answer: B
Rationale: Failure to disclose known defects violates the DTPA and Texas Property Code, giving the
buyer civil remedies. TREC does not have authority to rescind real estate transactions—that requires
judicial action.
Q5: Which of the following constitutes practicing law without a license under Texas law when
performed by a real estate agent?
A. Explaining contract provisions to a client
B. Recommending a specific title company
C. Drafting a deed or promissory note for a transaction
D. Calculating prorations for closing
Correct Answer: C
Rationale: Drafting legal instruments like deeds or promissory notes constitutes unauthorized practice
of law. Agents may explain contract terms and calculate prorations but must use attorneys or title
companies for legal document preparation.
Q6: Under Texas Property Code, what is the minimum notice period a landlord must provide for non-
payment of rent before filing for eviction?
A. 3 days
B. 7 days
C. 10 days
D. 30 days
,Correct Answer: A
Rationale: Texas Property Code §24.005 requires a 3-day notice to vacate for non-payment of rent
before eviction proceedings. The longer periods apply to other lease violations or month-to-month
terminations, not rent non-payment.
Q7: A Texas broker holds an earnest money check made payable to the seller. What action is required?
A. Return the check to the buyer immediately
B. Deposit the check into the broker's operating account
C. Obtain a new check made payable to the broker or trust account name
D. Forward the check directly to the seller
Correct Answer: C
Rationale: Earnest money must be deposited into the broker's trust account; checks must be payable to
the broker or trust account name. Depositing a seller-payable check violates trust account rules and
creates commingling risk.
Q8: Which TREC disciplinary action is NOT available for violations of the Real Estate License Act?
A. Revocation of license
B. Suspension of license
C. Mandatory prison sentence
D. Administrative penalty
Correct Answer: C
Rationale: TREC has civil and administrative authority only; criminal penalties including imprisonment
require separate judicial proceedings through the criminal justice system. TREC cannot impose
incarceration.
Q9: A Texas agent represents both buyer and seller in an investment property transaction with full
disclosure. What fiduciary duty creates the greatest risk in this dual agency?
A. Obedience
B. Loyalty
C. Accounting
D. Disclosure
Correct Answer: B
Rationale: The duty of loyalty is most compromised in dual agency as the agent cannot fully advocate
for competing interests. While disclosure addresses the conflict, undivided loyalty to both parties is
inherently impossible.
, Q10: Under TREC rules, which information MUST be included in a residential lease for a single-family
investment property?
A. Tenant's social security number
B. Property owner's mailing address
C. Management company's fee structure
D. Comparable rental rates in the area
Correct Answer: B
Rationale: TREC lease forms require the property owner's name and mailing address for legal notices.
Social security numbers and management fees are not mandatory lease provisions, and comparable
rates are irrelevant to lease validity.
Q11: A Texas investor uses a deed of trust to secure a loan. What distinguishes this from a mortgage in
Texas?
A. Deed of trust requires judicial foreclosure
B. Mortgage allows non-judicial foreclosure
C. Deed of trust involves a third-party trustee for foreclosure
D. Mortgage provides faster foreclosure timelines
Correct Answer: C
Rationale: Texas deed of trust involves a trustee who can conduct non-judicial foreclosure; mortgages
require judicial foreclosure. The trustee structure enables the efficient non-judicial process Texas
lenders prefer.
Q12: What is the statutory redemption period for homestead property in Texas after a non-judicial
foreclosure under a deed of trust?
A. No statutory redemption period exists
B. 30 days
C. 6 months
D. 2 years
Correct Answer: A
Rationale: Texas non-judicial foreclosure under deed of trust provides no post-sale statutory
redemption period for homesteads. This distinguishes Texas from states with redemption rights and
makes foreclosure consequences immediate.
Q13: Which action by a Texas broker regarding earnest money constitutes commingling?
