Sanctions can include reprimand, license suspension, or license revocation.
Before you read
Test yourself first: 5 questions
Question 1 of 5
What fund did Texas establish to reimburse consumers who obtain a court judgment against a license holder for fraud or misrepresentation that cannot be collected?
Answer: A. The Real Estate Recovery Trust Account reimburses aggrieved consumers who hold an uncollectible court judgment against a license holder arising from a violation of the License Act in a brokerage transaction.
Question 2 of 5
Which fund is used in Texas to reimburse consumers who obtain a final court judgment against a license holder for certain violations but cannot collect it?
Answer: A. The Real Estate Recovery Trust Account reimburses aggrieved consumers who win an eligible judgment against a license holder and are unable to collect, up to statutory limits.
Question 3 of 5
A consumer is financially harmed by a Texas license holder's fraudulent act and obtains a court judgment that the license holder cannot pay. Which TREC-administered fund may provide limited recovery?
Answer: B. The Real Estate Recovery Trust Account, administered by TREC, can reimburse aggrieved consumers (up to statutory limits) who obtain a court judgment against a license holder for certain violations and cannot collect it. The license holder's license is suspended until the fund is repaid.
Question 4 of 5
The Texas Real Estate Recovery Trust Account is used to:
Answer: B. The Recovery Trust Account reimburses consumers who obtain a court judgment against a license holder and cannot otherwise collect.
Question 5 of 5
The Texas Real Estate Recovery Trust Account exists primarily to do what?
Answer: B. The Real Estate Recovery Trust Account reimburses consumers who obtain a court judgment for damages caused by a licensee's violation when the licensee cannot pay, subject to statutory limits.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- TREC may investigate complaints and discipline licensees for violations of the Real Estate License Act.
- Sanctions can include reprimand, license suspension, or license revocation.
- TREC may impose administrative penalties for violations.
- Recovery fund: the Real Estate Recovery Trust Account compensates eligible consumers harmed by a licensee.
- Recovery payments require a valid court judgment against the licensee that goes unsatisfied.
- A licensee whose conduct triggers a payment from the account can have the license suspended until the amount is repaid.
- TREC handles enforcement and consumer claims under the Act.
Texas License Discipline, Penalties & Recovery Fund: FAQs
Is Texas License Discipline, Penalties & Recovery Fund 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.
