Key Takeaways
- Texas sales agents must be sponsored by an active licensed broker to have an active license
- The sponsoring broker is responsible for the sales agent's real estate activities and proper supervision
- Sales agents cannot receive commissions directly from clients—all compensation must flow through the broker
- Brokers must maintain written policies and procedures for supervising sales agents
- A sales agent's license becomes inactive when they leave a sponsoring broker until a new sponsor is found
Sponsorship and Broker Supervision
In Texas, sales agents cannot work independently—they must be sponsored by a licensed broker to have an active license.
Sponsorship Requirements
What is Sponsorship?
A sponsoring broker is the licensed broker who:
- Activates the sales agent's license
- Supervises the sales agent's activities
- Is responsible for the sales agent's conduct
- Pays all commissions to the sales agent
Sponsorship Rules
| Rule | Description |
|---|---|
| Active license required | Broker must be actively licensed in Texas |
| Written agreement | Must have written sponsorship agreement |
| One sponsor only | Cannot be sponsored by multiple brokers simultaneously |
| REALM registration | Sponsorship must be recorded in TREC's system |
When Sponsorship Ends
When a sales agent leaves a broker:
- License becomes inactive immediately
- Sales agent cannot practice until re-sponsored
- Must find new sponsoring broker to reactivate
- No fee required for sponsorship transfer
Key Point: An inactive license is still valid—the agent just cannot practice real estate until re-sponsored.
Broker Supervision Responsibilities
Required Supervision
Texas brokers must provide reasonable supervision of sales agents, including:
| Area | Requirements |
|---|---|
| Transactions | Review and approve all contracts and documents |
| Advertising | Approve all marketing materials |
| Trust funds | Ensure proper handling of client money |
| Education | Verify completion of required training |
| Conduct | Monitor for ethical violations |
Written Policies
Brokers must maintain written policies and procedures covering:
- Supervision of sales agent activities
- Handling of trust account funds
- Advertising and marketing standards
- Document retention requirements
- Complaint handling procedures
Commission Payment Rules
All Commissions Through Broker
Texas law requires that all commissions must flow through the broker:
| Allowed | Not Allowed |
|---|---|
| Broker pays sales agent | Client pays sales agent directly |
| Broker receives from cooperating broker | Sales agent receives from other broker |
| Sales agent receives from sponsoring broker | Sales agent bills client for services |
Commission Disputes
- Commission disputes are civil matters, not TREC violations
- TREC does not resolve commission disputes between parties
- Disputes must be resolved in court or through mediation
Broker Liability
Vicarious Liability
The sponsoring broker is vicariously liable for the sales agent's:
- Misrepresentations and fraud
- Failure to disclose material facts
- Trust fund violations
- Advertising violations
Broker Defenses
A broker may avoid liability by demonstrating:
- Adequate supervision policies were in place
- Sales agent acted outside scope of authority
- Broker had no knowledge of misconduct
Team Arrangements
Team Requirements
If sales agents work as a team:
| Requirement | Description |
|---|---|
| Team name registration | Must be registered with TREC |
| Broker identification | Broker's name must appear in advertising |
| License display | Each team member must display license |
| Supervision | Broker must supervise all team activities |
Team Advertising
All team advertising must:
- Include the sponsoring broker's name
- Comply with TREC advertising rules
- Not mislead the public about the team's relationship to the broker
What happens to a Texas sales agent's license when they leave their sponsoring broker?
In Texas, who is allowed to pay a commission directly to a sales agent?