Active vs. Inactive License Status in Texas

To legally engage in real estate brokerage activities in Texas, a person must hold an active license. If a license is placed on inactive status, or if broker sponsorship is terminated, the individual loses all legal rights to perform real estate acts under TRELA §1101.351.

Why This Rule Exists

This ensures that every practicing sales agent has an active designated broker supervising their transactions and that the public is only represented by agents who are in full regulatory compliance, including current continuing education (CE) credits.

The Exam Trap

A major exam trap concerns commissions earned while active but paid while inactive. If a sales agent performs a brokerage act (such as securing a contract) while their license is active, but their license is placed on inactive status (e.g., they leave their broker) before the closing date, they can still legally collect their commission. The commission eligibility depends entirely on the status of the license at the exact time the real estate activity was performed.

Worked Texas Example

Scenario: Agent Todd closes a sale on June 15th while active with ABC Realty. On June 20th, Todd decides to take a break and places his license on inactive status. Sgreeing with the transaction files, the escrow closes on June 25th. Outcome: Todd can legally be paid his share of the commission by ABC Realty, because he was fully active on the date the contract was executed and performed. ABC Realty cannot refuse payment based on his current inactive status.