A property management company expands into Texas. They have operations in five other states. They hire an experienced manager, sign a few owner agreements, begin collecting rent, and start managing leases. Six months later, a complaint lands at the Texas Real Estate Commission.

The manager had no Texas real estate licence. The company had no designated broker. Every dollar of management fees collected during that period was collected in violation of state law - with no legal basis to retain it.

This is not a hypothetical. It is the most common licensing error made by property management companies entering the Texas market - and it happens precisely because Texas's licensing framework is more demanding than operators expect when they first look at it from the outside.

Understanding exactly what TREC requires, what the exemptions actually cover, how the trust account obligations work, and what the penalties for non-compliance are is not optional for property management companies operating in Texas. It is the compliance foundation everything else sits on.

In this guide you will learn :

• Which property management activities require a TREC broker licence in Texas

• Who is exempt - and what the exemptions actually cover

• The requirements to obtain an individual broker licence in 2026

• The requirements for a business entity broker licence

• What the trust account obligations are and how they work in practice

• What the continuing education requirements are for licensed property managers

• What changed under SB 1968 effective January 1, 2026

• What the penalties are for operating without a licence

• How operational infrastructure supports ongoing Texas property manager licensing compliance

Why Texas Property Manager Licensing Requires a Broker Licence

In Texas, property management is regulated as a real estate brokerage activity under Chapter 1101 of the Texas Occupations Code - the Texas Real Estate Licence Act, commonly referred to as TRELA. The Texas Real Estate Commission (TREC) is the state agency responsible for administering and enforcing these requirements.

Under TRELA Section 1101.002, the following activities constitute real estate brokerage activity and require a licence when performed for another person for compensation:

• Leasing or listing real estate for lease

• Negotiating or attempting to negotiate the lease of real estate

• Aiding in locating real estate for lease

• Controlling the acceptance or deposit of rent from a resident of a single-family residential property

This means that any professional property management company that collects management fees, markets vacancies, leases units, negotiates lease terms, or controls rent collection on behalf of a property owner must hold - or operate under - an active Texas real estate broker licence. There is no practical route around this requirement for third-party property management companies.

A licensed sales agent working under a licensed broker may also perform these activities within the scope of the broker's licence. The critical point is that someone at the top of the operation must hold an active broker licence, and the company itself - if it is a business entity - must also be separately licensed.

A property management company that operates legally in California, New York, or any other state does not automatically meet Texas property manager licensing requirements. The Texas framework must be satisfied independently before any management activity begins.

What the Exemptions Actually Cover - and What They Do Not

TRELA Section 1101.005 lists specific exemptions from the licence requirement. Understanding these exemptions precisely matters because they are narrower than they first appear, and misapplying them is one of the most common compliance errors operators make.

On-Site Apartment Complex Managers

• An on-site manager of an apartment complex does not need a real estate licence - but only if the manager has an office physically located at the apartment complex. This is not simply a question of where the manager works most of the time. The "on-site" requirement means the manager must have an office at the complex itself, not that they need to live there.

• TREC is explicit on the limits of this exemption: This exemption applies only to apartments. Managers of condominiums or townhomes are not covered by this exemption and do need to be licensed. The distinction matters for operators managing mixed-use or multi-property portfolios where different asset types are under the same management structure.

Employees of a Property Owner

• An employee of a property owner who manages or leases that owner's property does not need a licence. The key conditions are: a formal employer-employee relationship must exist, and the person must be managing only that specific owner's property.

• A salaried employee of a company that owns its own rental portfolio and manages only those properties internally falls within this exemption. A third-party management company hired to manage someone else's portfolio does not - regardless of how the arrangement is structured on paper.

What These Exemptions Do Not Cover

• For professional property management companies - those managing properties on behalf of other owners for compensation - neither exemption applies. The moment a third-party company accepts a management fee from a property owner, the TREC broker licence requirement is triggered. This applies whether the company is large or small, whether the portfolio is residential or commercial, and whether the management agreement is formal or informal.

Requirements for an Individual Texas Real Estate Broker Licence

To obtain an individual broker licence from TREC, an applicant must satisfy requirements across four areas: experience, education, examination, and background clearance. The requirements were updated effective January 1, 2026 and reflect both the BRAC recommendations and the statutory changes introduced by Senate Bill 1968.

Experience Requirements

• The applicant must have been actively licensed as a real estate sales agent in Texas for at least four years during the 60-month period immediately preceding the application. The experience is not just measured in time - it is measured through a structured point system under 22 TAC Section 535.56.

• Effective January 1, 2026, the minimum experience points required increased from 360 to 720 qualifying experience points. This change was adopted by the Texas Real Estate Commission in November 2025 on the recommendation of the Broker Responsibility Advisory Committee (BRAC) and is now in force for all broker licence applications.

• Points are earned through completed real estate transactions including residential sales, commercial leases, property management activity, and delegated supervision. For property management specifically, the rule now calculates experience on a per property per year basis - a change from the previous per-property-only calculation that better reflects actual property management practice.

• The applicant must demonstrate at least one qualifying transaction per year for four of the five preceding years. Periods of inactivity - where the applicant was not sponsored by a broker or held an inactive licence - do not count toward the active experience requirement.

Education Requirements

• The applicant must complete a total of 900 hours of qualifying education, structured as follows:

• 270 hours of core qualifying real estate courses, which must include:

  • 30 hours - Principles of Real Estate I
  • 30 hours - Principles of Real Estate II
  • 30 hours - Law of Agency
  • 30 hours - Law of Contracts
  • 30 hours - Promulgated Contract Forms
  • 30 hours - Real Estate Finance
  • 30 hours - Real Estate Brokerage (must be completed within two years of the application date)
    
    

• 630 hours of related real estate education : 
  Effective January 1, 2026, a bachelor's degree or higher from an accredited college or university no longer satisfies the full 630 hours. The credit for a bachelor's degree is now capped at 300 hours. The remaining 330 hours must come from qualifying real estate elective courses, TREC-approved continuing education courses, or academic courses in approved subjects such as accounting, business, finance, law, marketing, or real estate.

• This change was introduced because bachelor's degrees in unrelated subjects were previously being used to satisfy the full 630 hours - creating an inconsistency between applicants with real estate-related education and those without. The new cap ensures that all broker applicants have at least some real estate-specific education credit beyond the core 270 hours.

• Applicants who have earned experience points above the 720-point minimum may receive a credit of up to 300 hours toward the 630-hour related education requirement - providing a pathway for experienced practitioners to meet the education requirement through demonstrated industry experience.

Examination

After meeting the education and experience requirements, the applicant must pass the Texas real estate broker examination, administered through Pearson VUE. The exam has two portions: a national portion and a state-specific portion. A passing score of 75% or higher is required on both portions. Applicants have three attempts to pass before additional education is required.

Texas does not have reciprocity with any other state. A property manager holding a broker licence in another state must satisfy all Texas property manager licensing requirements independently to obtain a TREC broker licence.

Background Check and Application

Fingerprints must be submitted for a criminal background check through TREC's approved fingerprinting service before the application will be fully processed. The application is submitted through TREC's REALM Portal. All applications must include the qualifying experience report, course completion certificates, and any transcripts for college courses claimed toward the related education requirement.

Requirements for a Business Entity Broker Licence

A property management company operating as a corporation, LLC, partnership, or other business entity must obtain its own TREC broker licence before engaging in any brokerage activity in Texas. This is a completely separate requirement from the individual broker licence.

Under TRELA Section 1101.002, all business entities engaged in real estate brokerage activity, including partnerships, must be licensed. Under TRELA  Section 1101.355, a licensed business entity must:

• Designate an active individual Texas real estate broker to act on its behalf for all brokerage activity

• The designated broker must be a managing officer of the entity - specifically an officer, manager, or general partner - in good standing with TREC

• The designated broker must be an individual person; another business entity cannot serve as designated broker

This structure has direct operational implications. A property management company cannot simply hire a licensed broker as an employee and operate under their licence unless that broker holds a formal officer or management position within the company.

If the designated broker leaves the company, has their licence lapse into inactive status, or is otherwise no longer in good standing with TREC, the business entity's ability to operate is directly affected. Property management companies expanding into Texas need to build succession planning into their broker structure - not treat the designated broker role as a one-time compliance checkbox.

Trust Account Obligations: Where Texas Property Manager Licensing Compliance Gets Operational

When a licensed property manager collects rent, security deposits, or other money on behalf of a property owner, that money is held in a fiduciary capacity. This is one of the most operationally significant TREC broker licence Texas obligations - and one of the most commonly mishandled at scale.

The Core Obligation

• Under TRELA  Section 1101.652(b) (10), money received from property management activities must be deposited into a trust or escrow account where other money from the managed properties is kept. This is not optional. Collecting owner funds without maintaining a proper trust account is a violation of TRELA and grounds for disciplinary action by TREC.

Segregation of Funds

• Property management money - rent collections, maintenance funds, owner distributions held pending disbursement - must be kept completely separate from the broker's own business operating funds. Commingling client funds with the company's own funds is a serious violation. TREC views commingling as both a financial management failure and a breach of fiduciary duty to the property owner.

• At portfolio scale, Texas trust account property management compliance is not a policy problem - it is a systems problem. If leasing, rent collection, and accounting sit in different tools, reconciliation becomes reconstruction. A company managing 200 units across multiple properties cannot rely on manual processes to maintain clean, current trust account records. The gap between what should be in the trust account and what is in it widens every time a transaction is processed in one system and recorded in another.

Security Deposits

• Security deposits collected from tenants may be held either in the main property management trust account or in a separate dedicated account. Holding them in a separate account is not legally required but is considered best practice for record-keeping clarity and audit readiness - particularly for companies managing large residential portfolios where security deposit volumes are significant.

Interest on Trust Accounts

• A broker cannot keep interest earned on money held in a trust or escrow account unless the person depositing the money has signed a written agreement specifically authorising the broker to retain the interest. [Rule 535.146(c)(3)] If the agreement does not authorise retention of interest, any interest earned belongs to the client and must be accounted for and disbursed accordingly. Using a non-interest-bearing account simplifies this obligation significantly.

Record-Keeping Requirements

• TREC requires brokers to maintain accurate, current records of all trust account activity. These records must be retained for at least four years and must be readily available to TREC for inspection. At portfolio scale, this means every transaction in and out of the trust account needs to be documented - receipts, disbursements, reconciliations, and owner accounting statements.

• A trust account that cannot be reconciled at any given moment is a compliance exposure. When TREC audits a property management operation, the trust account reconciliation is a primary focus. A property management company that cannot produce a clean, current reconciliation on demand is in a fundamentally vulnerable position regardless of how well it manages its properties day-to-day.

• The property accounting and financial reporting systems that support daily operations are the same systems that support Texas trust account property management compliance. When they are connected, reconciliation is a managed process. When they are fragmented, every audit becomes a risk.

Continuing Education Requirements for Licensed Property Managers

A Texas real estate broker licence must be renewed every two years. Renewal requires completion of 18 hours of continuing education (CE) in each renewal period. Effective January 1, 2026, the CE structure for all brokers is:

• 4 hours - TREC Legal Update I

• 4 hours - TREC Legal Update II

• 3 hours - Contract-related coursework

• 6 hours - Broker Responsibility Course (now required for ALL brokers)

• 1 hour - Elective CE

The Broker Responsibility Course is now mandatory for every broker regardless of whether they sponsor sales agents or supervise other licence holders. Previously this course was only required of brokers with supervisory responsibilities. The change under SB 1968 makes it a universal renewal requirement for the entire broker population.

For Texas property manager licensing compliance, this means every licensed broker within the operation needs to complete the Broker Responsibility Course as part of each renewal cycle. The course covers the regulatory framework governing brokerage operations, TRELA requirements, supervision obligations, trust account rules, and advertising compliance - all directly relevant to property management practice.

New broker licence applicants from January 1, 2026 onwards must also complete the Broker Responsibility Course before their licence is issued, not at their first renewal.

What Changed Under SB 1968 Effective January 1, 2026

Senate Bill 1968, passed by the Texas Legislature and effective January 1, 2026, introduced several changes to the Texas Real Estate Licence Act with direct implications for property management companies.

• Broker Responsibility Course - universal requirement
  All brokers must now complete the six-hour Broker Responsibility Course as part of each licence renewal, and all new broker applicants must complete it before licensure is granted.

• Broker experience points - increased to 720
  As confirmed by TREC, the minimum qualifying experience points for a broker licence increased from 360 to 720, effective January 1, 2026. This directly affects the pathway for staff within a property management company who are pursuing their own broker licences.

• Bachelor's degree education credit capped
  A bachelor's degree previously satisfied the full 630 hours of related education. Effective January 1, 2026, the credit is capped at 300 hours, with the remaining 330 hours required from real estate-specific coursework.

• Written agreement requirements
  SB 1968 introduced requirements around written representation agreements, drawing clearer boundaries around what activities require a signed agreement before they can be performed. Property management operations that also handle leasing on behalf of tenants should review their internal processes for when written agreements must be in place.

What Happens If You Operate Without a Licence

Operating as a property manager for compensation in Texas without a TREC broker licence - when one is required - carries consequences that are severe enough to threaten the viability of the business.

• Criminal liability
  Under Texas law, engaging in real estate brokerage activity without a licence is a Class A misdemeanour. This means potential criminal penalties including significant fines and county jail time. The criminal exposure applies to both individuals performing unlicensed activity and to the company facilitating it.

• TREC disciplinary action
  TREC has authority to issue civil penalties and take disciplinary action against any licence holder who assists or facilitates unlicensed brokerage activity. A licensed broker who knowingly allows an unlicensed person to perform brokerage activities on their behalf risks their own licence.

• Unenforceable fee agreements
  Courts in Texas will generally not enforce fee agreements made in connection with unlicensed brokerage activity. A property management company that has been collecting management fees without the required licence may find itself unable to recover those fees legally - and may be required to disgorge fees already collected.

• Most compliance failures
  In Texas property manager licensing are not intentional - they come from fragmented systems and poor documentation where records cannot be produced when required. A company that cannot demonstrate what properties it managed, what fees it collected, and whether it held the required licence at the time may face compounded exposure when TREC investigates. The paper trail matters as much as the licence itself.
  
  The risk is particularly acute for companies entering Texas from other markets. The TREC licensing structure - individual broker licence, business entity broker licence, designated broker in a management position - must all be in place before any Texas management agreement is signed.

The Practical Setup Checklist for Property Management Companies Entering Texas

For operators setting up a compliant Texas property management operation from scratch, the sequence matters. Here is what needs to be in place before taking on the first management agreement:

Before taking on any Texas management work :

1. Identify the individual who will serve as designated broker - confirm their Texas broker licence is active and in good standing with TREC

2. Confirm the designated broker holds a formal officer or management position within the business entity

3. Apply for and obtain the business entity broker licence through TREC's REALM Portal

4. Establish the trust account - a dedicated trust or escrow account separate from operating funds

5. Document the trust account procedures in writing including reconciliation schedule and signatory controls

Ongoing TREC broker licence Texas compliance :

• Track individual broker licence renewal dates (every two years)

• Complete 18 hours of CE per renewal period including the Broker Responsibility Course

• Maintain trust account reconciliations current and accessible

• Retain all property management financial records for a minimum of four years

• Monitor TREC for rule updates - the regulatory environment in Texas is active

If the designated broker leaves or their licence becomes inactive :

• The business entity's brokerage activity is immediately affected

• A replacement must be identified, their officer/management position confirmed, and TREC notified

• Build succession planning into internal governance before it becomes an emergency

Property management companies that manage lease agreements and renewals, rent collections, maintenance operations, and financial reporting in a single connected system are better positioned to meet TREC's record-keeping requirements than those running multiple disconnected tools. The documentation TREC might ask for at any point should be the same documentation the company uses to run its business every day.

For property management companies operating in regulated environments like Texas, systems are not just operational tools - they are part of the compliance infrastructure. Platforms like RIOO, built natively on NetSuite, bring leasing, accounting, and reporting into a single system - making Texas trust account property management, audit readiness, and record-keeping significantly more controlled at scale. riooapp.com

Frequently Asked Questions

Q: Do property managers in Texas need a real estate broker licence?
Yes - any person or company that manages property for compensation, including leasing, rent collection, or lease negotiation on behalf of a third party, must hold or operate under an active Texas real estate broker licence issued by TREC under TRELA Section 1101.002. A licensed sales agent working under a broker may also perform these activities within the scope of the broker's supervision.

Q: Are there exemptions from the Texas property manager licensing requirement?
Yes, but they are narrow. On-site apartment complex managers with an office at the property are exempt - but this exemption does not apply to condominiums or townhomes. Employees of a property owner managing only that owner's property are also exempt. Neither exemption covers third-party professional property management companies collecting management fees.

Q: Does a property management company as a business entity need its own TREC broker licence?
Yes - under TRELA Section 1101.355, all business entities engaged in brokerage activity must be separately licensed by TREC. The entity must designate an active individual Texas real estate broker who is a managing officer of the company. That designated broker must be an individual, not another business entity.

Q: How many experience points are required for a Texas broker licence in 2026?
Effective January 1, 2026, the minimum qualifying experience points required increased from 360 to 720 points under updated rule 22 TAC Section 535.56. The applicant must also have at least four years of active experience during the 60 months preceding the application, with at least one qualifying transaction per year for four of those five years.

Q: What are the trust account requirements for Texas property managers?
Under TRELA Section 1101.652(b)(10), all money received from property management activities must be held in a dedicated trust or escrow account, completely separate from the broker's operating funds. Security deposits may be held in the same trust account or a separate account. A broker cannot retain interest earned on trust account funds unless the client has signed a written agreement permitting it per TREC Rule 535.146(c)(3).

Q: What changed for Texas property manager licensing under SB 1968 in 2026?
Effective January 1, 2026, all Texas real estate brokers must complete the six-hour Broker Responsibility Course as part of their 18-hour CE renewal requirement - regardless of whether they sponsor sales agents. New broker applicants must also complete the course before their licence is issued. The minimum broker experience points increased to 720, and bachelor's degree credit toward the related education requirement is now capped at 300 hours.

Disclaimer : This blog is intended as an educational overview of Texas property manager licensing requirements for property management professionals. It does not constitute legal advice. Requirements may change. Property managers should consult a qualified Texas real estate attorney and verify current requirements directly with TREC at trec.texas.gov before operating in Texas.