Recovery Trust Account
A special fund maintained by TREC to reimburse consumers who suffer monetary damages due to the fraudulent or deceptive actions of real estate license holders.
Exam Context & Texas Nuance
Recovery Trust Account
The Real Estate Recovery Trust Account is a statutory consumer protection fund. When a consumer wins a civil judgment against a license holder for fraud or misrepresentation but cannot collect the money, they can apply to TREC for payment from this trust account.
Texas-Specific Nuance & Citation
Under TRELA Subchapter M (§1101.601), TREC maintains this fund. The account is funded by license fees. The statutory limits are capped at $50,000 for a single transaction (regardless of how many claimants there are) and $100,000 lifetime limit for any single license holder.
The Trap
A critical exam trap is what happens to the agent’s license once the recovery fund pays out. The agent’s license is automatically suspended the moment a payment is made from the fund on their behalf. The agent cannot get their license back until they repay the fund in full with interest.
Worked Example
An agent in Conroe defrauds a buyer of $45,000. The buyer sues, wins a court judgment, but the agent declares bankruptcy. The buyer petitions TREC and is paid $45,000 from the Recovery Trust Account. The agent’s license is immediately suspended, and they must repay the $45,000 plus interest to be eligible for reinstatement.