📋 Quick Answer: The Texas Real Estate Recovery Trust Account compensates members of the public who suffer financial losses due to the fraudulent or dishonest conduct of a licensed Texas real estate agent or broker.
Key numbers to memorize: Maximum of $50,000 per transaction — maximum of $100,000 per licensee lifetime. When a claim is paid, the licensee's license is automatically revoked until they repay the fund in full with interest.
What Is the Texas Real Estate Recovery Trust Account?
The Texas Real Estate Recovery Trust Account is a fund maintained by the Texas Real Estate Commission (TREC). Its purpose is to compensate members of the public who have suffered financial losses as a direct result of the fraudulent, dishonest, or incompetent conduct of a licensed Texas real estate agent or broker.
The fund acts as a last resort for consumers who have obtained a court judgment against a licensee but cannot collect the damages owed to them. It is funded through fees paid by real estate licensees when they obtain or renew their Texas license.
Who Can File a Claim?
To be eligible to file a claim against the Texas Real Estate Recovery Trust Account, a claimant must generally meet the following requirements:
- They suffered a financial loss caused by the fraudulent, dishonest, or incompetent conduct of a licensed Texas real estate agent or broker
- They obtained a court judgment against the licensee
- They were unable to collect the full judgment from the licensee through other means
- The conduct must have occurred while the person was licensed by TREC
- The claim must be filed within the required time period
The TREC exam tests the Recovery Trust Account limits regularly. The two numbers you must know are $50,000 per transaction and $100,000 per licensee lifetime. If a question gives you a judgment amount higher than $50,000, the fund still only pays up to $50,000 for that single transaction.
How Much Does the Fund Pay?
The Texas Real Estate Recovery Trust Account has strict payment limits:
- Maximum of $50,000 per transaction — regardless of the actual judgment amount. Even if a court awards $120,000, the fund pays only $50,000 for that transaction.
- Maximum of $100,000 per licensee — over the entire course of that licensee's career. Once $100,000 has been paid out on behalf of a licensee, no further claims will be paid against them from the fund.
What Happens to the Licensee When a Claim Is Paid?
When the Texas Real Estate Recovery Trust Account pays a claim on behalf of a licensee, the consequences are immediate and serious:
- The licensee's license is automatically revoked — effective immediately when the fund makes payment
- The license cannot be reinstated until the licensee repays the full amount paid by the fund, plus interest
In Texas, when the Recovery Trust Account pays a claim, the license is revoked — not just suspended. This is different from some other states. Make sure you know this distinction for the Texas State Law portion of your exam.
What Does the Fund NOT Cover?
The Texas Real Estate Recovery Trust Account has important limitations. It does not cover:
- Losses caused by a licensee acting outside the scope of their real estate license
- Losses suffered by other real estate licensees — only members of the public can claim
- Punitive damages awarded by a court
- Losses where the claimant contributed to their own harm through illegal conduct
- Claims not based on a final court judgment
How Is the Fund Financed?
The Texas Real Estate Recovery Trust Account is financed through fees collected from real estate licensees. A portion of every initial Sales Agent and broker license fee, as well as renewal fees, goes into the fund. This creates a consumer protection mechanism funded by the real estate profession itself.
TREC monitors the fund balance and can adjust contribution requirements as needed to maintain adequate reserves.
Practice Recovery Trust Account Questions
The A+ Simulator includes TREC-aligned practice questions covering the Recovery Trust Account and all other high-frequency Texas exam topics.
Get Full Simulator →How Does Texas Compare to Florida and California?
All three states have real estate recovery funds designed to protect consumers. Here is how they compare:
| State | Per Transaction Max | Per Licensee Lifetime Max | When Claim Paid |
|---|---|---|---|
| Texas | $50,000 | $100,000 | License revoked |
| Florida | $50,000 | $150,000 | License suspended |
| California | $50,000 | $250,000 | License suspended |
The per-transaction limit is the same in all three states at $50,000. Texas has the lowest lifetime cap per licensee at $100,000. Also note that in Texas the license is revoked when a claim is paid — in Florida and California it is suspended. These distinctions matter on the exam.
Key Recovery Trust Account Facts for the Texas TREC Exam
- Official name: Texas Real Estate Recovery Trust Account
- Administered by: Texas Real Estate Commission (TREC)
- Maximum per transaction: $50,000
- Maximum per licensee lifetime: $100,000
- When fund pays a claim: Licensee's license is automatically revoked
- Reinstatement requirement: Full repayment of the claim amount plus interest
- Who can claim: Members of the public — not other licensees
- Requirement: Must have obtained a court judgment first
- Fund source: Fees from Texas real estate licensees at initial license and renewal