TEXAS PROPERTY MANAGEMENT
LICENSING EXAM
1. Which of the following best describes the primary purpose
of a property management agreement?
A. To transfer ownership of the property
B. To establish financing terms for a property purchase
C. To define the authority and responsibilities of the property
manager
D. To guarantee rental income for the owner
Rationale: A property management agreement is a legally
binding contract that outlines the duties, powers,
compensation, and responsibilities of the property manager and
the property owner. It does not transfer ownership or guarantee
profits.
2. In Texas, which agency regulates real estate brokers and
sales agents involved in property management?
A. Texas Department of Housing
B. Texas Apartment Association
C. Texas Secretary of State
D. Texas Real Estate Commission (TREC)
Rationale: TREC oversees licensing, regulation, and enforcement
for real estate professionals in Texas, including those
performing property management activities requiring licensure.
3. Trust funds collected by a property manager should be
deposited into:
A. The manager’s personal account
B. An operating account with company funds
,C. A separate trust or escrow account
D. Any account approved by tenants
Rationale: Trust funds such as security deposits and rent
payments must be kept separate from personal or business
operating funds to prevent commingling and protect client
assets.
4. Which of the following is considered a fiduciary duty owed
by a property manager to a property owner?
A. Avoiding written agreements
B. Maximizing tenant turnover
C. Loyalty and obedience to lawful instructions
D. Refusing maintenance requests
Rationale: Property managers owe fiduciary duties including
loyalty, obedience, accounting, confidentiality, and reasonable
care to their clients.
5. What is the maximum amount a Texas landlord can charge
for a security deposit?
A. One month’s rent
B. Two months’ rent
C. Three months’ rent
D. There is no statutory limit
Rationale: Texas law does not impose a maximum limit on
residential security deposits, though the amount must still
comply with fair housing and anti-discrimination laws.
6. A lease agreement is best defined as:
A. A deed transferring ownership
B. A contract granting possession for a specified period
C. A financing instrument
D. A property inspection report
, Rationale: A lease is a legal contract that grants a tenant the
right to occupy and use property for a certain period in
exchange for rent.
7. Which federal law prohibits discrimination in housing
based on race, religion, sex, and national origin?
A. Sherman Antitrust Act
B. Americans with Disabilities Act
C. Fair Housing Act
D. Truth in Lending Act
Rationale: The Fair Housing Act prohibits discrimination in
housing-related activities based on protected classes including
race, color, religion, sex, disability, familial status, and national
origin.
8. Commingling occurs when:
A. Tenants share rental units
B. Maintenance costs exceed rent
C. Client funds are mixed with personal or business funds
D. Owners manage multiple properties
Rationale: Commingling is the improper mixing of client trust
funds with the property manager’s personal or company funds
and is prohibited by TREC rules.
9. Which type of lease automatically renews until terminated
by either party?
A. Gross lease
B. Percentage lease
C. Estate for years lease
D. Periodic tenancy
LICENSING EXAM
1. Which of the following best describes the primary purpose
of a property management agreement?
A. To transfer ownership of the property
B. To establish financing terms for a property purchase
C. To define the authority and responsibilities of the property
manager
D. To guarantee rental income for the owner
Rationale: A property management agreement is a legally
binding contract that outlines the duties, powers,
compensation, and responsibilities of the property manager and
the property owner. It does not transfer ownership or guarantee
profits.
2. In Texas, which agency regulates real estate brokers and
sales agents involved in property management?
A. Texas Department of Housing
B. Texas Apartment Association
C. Texas Secretary of State
D. Texas Real Estate Commission (TREC)
Rationale: TREC oversees licensing, regulation, and enforcement
for real estate professionals in Texas, including those
performing property management activities requiring licensure.
3. Trust funds collected by a property manager should be
deposited into:
A. The manager’s personal account
B. An operating account with company funds
,C. A separate trust or escrow account
D. Any account approved by tenants
Rationale: Trust funds such as security deposits and rent
payments must be kept separate from personal or business
operating funds to prevent commingling and protect client
assets.
4. Which of the following is considered a fiduciary duty owed
by a property manager to a property owner?
A. Avoiding written agreements
B. Maximizing tenant turnover
C. Loyalty and obedience to lawful instructions
D. Refusing maintenance requests
Rationale: Property managers owe fiduciary duties including
loyalty, obedience, accounting, confidentiality, and reasonable
care to their clients.
5. What is the maximum amount a Texas landlord can charge
for a security deposit?
A. One month’s rent
B. Two months’ rent
C. Three months’ rent
D. There is no statutory limit
Rationale: Texas law does not impose a maximum limit on
residential security deposits, though the amount must still
comply with fair housing and anti-discrimination laws.
6. A lease agreement is best defined as:
A. A deed transferring ownership
B. A contract granting possession for a specified period
C. A financing instrument
D. A property inspection report
, Rationale: A lease is a legal contract that grants a tenant the
right to occupy and use property for a certain period in
exchange for rent.
7. Which federal law prohibits discrimination in housing
based on race, religion, sex, and national origin?
A. Sherman Antitrust Act
B. Americans with Disabilities Act
C. Fair Housing Act
D. Truth in Lending Act
Rationale: The Fair Housing Act prohibits discrimination in
housing-related activities based on protected classes including
race, color, religion, sex, disability, familial status, and national
origin.
8. Commingling occurs when:
A. Tenants share rental units
B. Maintenance costs exceed rent
C. Client funds are mixed with personal or business funds
D. Owners manage multiple properties
Rationale: Commingling is the improper mixing of client trust
funds with the property manager’s personal or company funds
and is prohibited by TREC rules.
9. Which type of lease automatically renews until terminated
by either party?
A. Gross lease
B. Percentage lease
C. Estate for years lease
D. Periodic tenancy
