Information for Brokers and Salespersons Regarding Use of Unlicensed
Assistants in Real Estate Transactions
Brokers and salespersons often use unlicensed personnel for assistance in conducting their real estate brokerage activities. Such unlicensed persons, sometimes referred to as administrative assistants, can be of great help to a busy agent. However, care must be taken to ensure that the unlicensed person does not conduct any of the activities for which real estate licensure is required. This article defines some of those activities which may and may not be legally conducted by unlicensed persons.
Sections 1101.351(a) and 1101.758 of The Real Estate License Act establish that it is a crime for an unlicensed
person to engage in activity for which a real estate license is required. The broker or salesperson
who employs an unlicensed person might be criminally charged for the crime as well. In addition,
TREC may take disciplinary action against a broker or salesperson who pays or associates with an
unlicensed person who engages in activities that require a real estate license. Authority for this
disciplinary action is set out in Sections 1101.652(b)(11) and (26) of the License Act. For these reasons,
it is important to distinguish between those activities that do and those that do not require a real
estate license. Section 1101.002(1)(a) of the License Act sets forth a list of activities that require
licensure and are worthy of a close reading.
Preliminarily, the real estate brokerage activities must be "for another" person or entity. This means
that persons who are buying, selling or leasing their own property do not need a license; they are
acting for themselves and not for another person. The activities must also be for a fee or something
of value, or with the intention of collecting a fee or something of value. This means, for example,
that an unlicensed person whose neighbor has been transferred out of state may solicit tenants and
negotiate a lease on behalf of the neighbor so long as the person does not receive or expect to
receive anything of value for helping.
The list of activities requiring licensure may be summarized and placed in two categories (but
remember, this is a summary only and not all inclusive). First, and as used in the paragraph above,
are those activities in which a person directly helps another buy, sell, or lease real property. These
activities, such as negotiating a listing agreement with a property owner, spending the afternoon
with a couple showing houses for sale, or negotiating a contract to buy or lease real property,
obviously require licensure. These "direct" activities are seldom the subject of debate or
controversy.
The second category of activities might be referred to as "indirect" activities and are more
troublesome. Section 1101.002(a)(ix) of the License Act requires licensure of those persons who procure
or assist in procuring prospects to buy, sell, or lease property. Section 1101.002(a)(x) of the License Act
requires licensure of those persons who procure or assist in procuring properties to be bought, sold,
or leased. If the words "assist in" were read broadly enough, virtually everyone working in a real
estate office would need a license. Common sense dictates, however, that many activities can be
legally conducted in a real estate brokerage office that do not require licensure. There may
sometimes exist only a thin line between those activities that require licensure and those that do not.
The foregoing general rules and the following discussion of factual situations may help licensees
accurately draw this line.
Q: May an unlicensed person, identified as such, make calls to determine whether a
person is interested in buying or selling property, or has property they wish to sell,
and if so, make an appointment for a licensed agent to talk to them?
A: No. Often referred to as "telemarketing," any such activities conducted in Texas must be conducted
by a licensee. In Tex. Atty. Gen. Op. H-1271 (1978), the attorney general concluded that a license
was required. Also, Commission Rules 535.1(c) and 535.15(b) make it clear that all solicitation
work must be conducted by licensees.
Q: May an unlicensed person sit in on an open house?
A: Yes, but care must be taken that the unlicensed person does not "show" the house to prospective
purchasers. Commission Rule 535.1(c) makes clear that only licensed agents are allowed to show
properties. On the other hand, Commission Rule 535.1(c) also specifically allows a broker to hire
an unlicensed person to serve as a "hostess, attendant, or custodian" at homes offered for sale by
the broker. The Rules do not define these terms, and such a hostess should be limited to
welcoming the visitors. The hostess may register the guests and refer inquiries to a licensee.
Clearly, the hostess must not point out features of the home or neighborhood to visitors; however,
as is the case with secretaries and receptionists discussed below, the hostess may distribute a flyer
or brochure that describes the property.
Q: May unlicensed assistants set appointments to show a listing?
A: Yes. Under the general rules stated above, it is permissible for an assistant to call a homeowner
and schedule an appointment for the broker to bring a potential buyer to see the home. If the broker
then becomes tied up on other matters, can the unlicensed assistant drive the purchaser to the
listing and let them in the home? Again, yes, but extreme care must be taken that the assistant
does not engage in "showing" the property. The assistant should identify himself as an unlicensed
assistant and explain the assistant's limited role. Any questions that arise regarding the property
or the purchase of the property must be referred to a licensee.
Q: May the unlicensed assistant place "for sale" signs; open a property or accompany
inspectors; place newspaper advertisements as directed by the broker?
A: Yes, subject to the following guidelines. Commission Rule 535.13(c) provides that answering the
telephone and acts of a secretarial nature do not require licensure. Clerical employees need not be
licensed so long as they do not engage in solicitation and do not hold themselves out as licensed
agents. Further, Commission Rule 535.13(c) also states that an unlicensed clerical or secretarial
employee, identified to callers as such, may confirm information concerning the size, price and
terms of property advertised. Taken together, this means that an unlicensed person may, after
identifying himself or herself as an unlicensed person, confirm information previously advertised to
callers or persons dropping by. The unlicensed person should not give information about properties
other than that inquired about, and should refer any requests for information regarding other
properties to a licensed agent. For example, the assistant might confirm that a particular property
called about has three bedrooms and one bath, as previously advertised; however, the assistant
may not attempt to identify properties which instead have two baths and bring these to the attention
of the caller. Such questions must be referred to a licensee. The assistant should not attempt to
"qualify" the caller in any respect. Many other duties that are administrative in nature can be safely
performed, such as inputting data into a computer or typing contracts, but, only as specifically
directed by a licensee. Support personnel can order supplies, schedule maintenance, and all the
other things that are involved in keeping the office open. Bookkeeping and office management
functions may be performed by an unlicensed assistant, as discussed immediately below.
Q: What functions may an unlicensed office manager perform?
A: Commission Rule 535.1(d) provides that unlicensed persons may perform such administrative tasks
as; (1) training or motivating personnel, and (2) those tasks dealing with office administration and
personnel matters. And, Commission Rule 535.2(c) notes that who a broker designates to sign
checks in the brokerage is not regulated by the Commission. Thus, an unlicensed person may
serve as bookkeeper for the company and handle personnel matters. Such an office manager may
also serve as a trainer. However, Commission Rule 535.1(g) further states that an unlicensed
person may not direct or supervise agents in their work as licensees. Therefore, an unlicensed
person may not direct or advise agents in their attempts to help others buy, sell, or lease property.
They may not review contracts, or help make "deals" work. These tasks are properly conducted
only by licensed persons.
Q: May unlicensed persons assist in arranging financing?
A: Yes, but again, great care must be taken. An unlicensed assistant may be directed by a broker or
salesperson to assist a particular buyer in applying for and qualifying for a loan. The assistant may
gather information, contact lenders, and set appointments. However, these acts should be at the
direction of a licensee, and care should be taken that the assistant does not exercise discretion such
as making the decision to apply for a different type of financing than called for in the sales contract.
Mortgage brokers are licensed by the Texas Department of Savings and Mortgage Lending, and any questions
regarding the requirements for licensure for persons dealing with financing issues should be directed
to that agency.
Q: May unlicensed persons serve as property managers for rental properties?
A: Commission Rule 535.13(b) states that those who hold themselves out as "property managers" for
others and for compensation must be licensed, provided the person also rent or leases the property
for the property owner. However, many property management functions appear to fall within
categories of activities that do not require licensure. These include bookkeeping functions and
arranging for repairs. So long as an unlicensed person carefully limits his or her property
management activities to those which do not require a license, neither criminal charges nor
Commission disciplinary action would be warranted. Note that persons acting as on-site managers
at apartment complexes are exempt from licensure under Section 1102.005(7) of the License Act.
Q: What can a licensee do to avoid criminal or disciplinary actions?
A: First, a broker should NOT let his or her license or any of the licensed associates' licenses lapse.
The lapse of a license, often inadvertent, is a common basis for disciplinary action on the grounds
of improper unlicensed activity. Second, analyze any new factual situation according to the rules
above to determine the extent to which the unlicensed person is being allowed to act with discretion,
and how close the unlicensed person is "directly" assisting others in buying, selling, or leasing
property. If still troubled, contact your attorney. You may also write the Commission (or call in an
emergency) for an informal opinion based on a particular fact situation. Managing brokers might
gain some protection from disciplinary action by establishing written guidelines and training dictating
to both their agents and unlicensed personnel what is allowed and not allowed of non-licensees.
As always, you should contact your attorney regarding matters raised by this article. You
may also wish to ask your attorney for advice regarding potential civil liability for acts
performed by unlicensed persons.
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