MUD (Municipal Utility District) disclosure required when applicable.
Before you read
Test yourself first: 5 questions
Question 1 of 5
Under TREC rules, where must a Texas broker deposit earnest money and other client funds that the broker holds on behalf of others?
Answer: B. TREC requires a broker who accepts money belonging to others to maintain a separate trust or escrow account, kept distinct from the broker's operating funds, to safeguard client money.
Question 2 of 5
When a Texas license holder receives earnest money or other escrow funds belonging to others, the funds must be:
Answer: B. Trust funds must be held in a designated trust or escrow account and may not be commingled with the broker's operating or personal funds.
Question 3 of 5
Which of the following best describes the difference between a Texas broker license and a sales agent license?
Answer: D. A Texas broker may work independently, hold escrow funds, and sponsor sales agents. A sales agent must always be sponsored by, and work under the supervision of, an active broker.
Question 4 of 5
Which additional disclosure is commonly required for Texas properties in certain locations, such as near the coast or in a floodplain?
Answer: B. Texas requires several location-based notices when applicable, such as the coastal area property notice for property seaward of the Gulf Intracoastal Waterway and disclosures about whether the property is in a floodplain or flood pool, alongside the standard condition disclosure.
Question 5 of 5
Texas requires the Legal Update CE specifically so license holders stay current on which of the following?
Answer: D. The mandatory TREC Legal Update courses keep license holders current on changes in Texas statutes, TREC rules, promulgated contract forms, and required practices and disclosures, which is why they are a fixed component of the 18-hour CE requirement.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Seller's Disclosure Notice required for most residential resales.
- MUD (Municipal Utility District) disclosure required when applicable.
- Texas is a community property state.
- Texas has strong homestead protections for primary residences.
- TREC-promulgated contract forms are required for standard transactions.
- Client funds must be held in escrow/trust, never commingled.
- Recovery for harmed consumers: Real Estate Recovery Trust Account.
Texas Disclosures, Escrow/Trust Funds & Key Numbers: FAQs
Is Texas Disclosures, Escrow/Trust Funds & Key Numbers on the real estate exam?
Yes. State License Law is a scored domain on the Texas real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Texas test this differently?
Texas applies its own license law on top of the national portion. This page covers the Texas rules specifically, which is what the state section of your exam tests.
