Who has the legal right to sue a client for an unpaid real estate commission in Texas?
Only the sponsoring broker has the legal right to sue a client for a commission; sales agents cannot sue clients directly.
Under TRELA, all commissions are owned by the broker. Sales agents are sub-agents of their broker and cannot maintain a lawsuit against a member of the public for unpaid real estate commissions.
TRELA §1101.806— Liability of License Holder for Compensation
Select Your Answer Choice
Exam Explanation
Suing for Commissions in Texas
The collection of commissions is a tightly regulated area in Texas real estate. Sponsoring brokers must initiate all formal billing and lawsuits against defaulting clients.
Why the Correct Option is Right
Option B is correct because TRELA specifies that only a licensed broker can sue for commissions. Since a sales agent is only authorized to act through their sponsoring broker, they cannot initiate a lawsuit against a client. The agent must request that their broker sue on their behalf.
Why the Other Options are Traps
- Option A is a trap because sales agents have no standing to sue clients for commissions.
- Option C is a trap because TREC is a regulatory agency and does not assist license holders in collecting unpaid fees.
- Option D is a trap because listing agreements are between the client and the broker, not the individual agent.
The Exam Trap
Remember that in order to sue for a commission, three statutory requirements must be met:
- The agreement must be in writing.
- The agreement must be signed by the party to be charged.
- The broker must prove they advised the buyer in writing to have the abstract of title examined or get a title insurance policy. If the broker failed to provide this written title notice, they cannot sue to recover their commission!
Worked Texas Example
Scenario: Agent Sally writes a listing contract for seller Jack. Jack sells the property but refuses to pay the 6% commission. Sally files a lawsuit in small claims court to recover her $12,000 share of the commission. Outcome: The judge will immediately dismiss Sally’s lawsuit. Sally has no legal standing to sue. Her sponsoring broker must file the lawsuit instead, and the broker must prove they gave the buyer the required title insurance notice.