broker designated broker business entity texas

Can a broker be the designated broker for more than one business entity in Texas?

Property management businesses act as intermediaries between property owners and tenants. They market properties, collect rent, handle maintenance and repairs, address tenant complaints, and carry out evictions.

In addition to making life easier for property owners, property management businesses bring experience and expertise to their client’s real estate investment strategy.

In Texas, property managers must go a step further and comply with Texas Real Estate Commission rules and the Real Estate Licensing Act.

If you operate a property management business in Texas, here’s what you need to know about the state’s licensing and registration requirements.

Are property management companies required to get a business license in Texas?

Property management businesses in Texas may need to obtain a real estate broker license. According to Texas law, the primary business activities of a property management company are considered the same as a real estate business. For instance, if your company lists, rents, negotiates, collects rent, or places a tenant in Texas, your business will need a real estate broker license.

If you operate as an LLC or corporation and function as a real estate broker, the Texas Real Estate Commission requires you to obtain a separate license for your business entity. (It’s not enough to have an individual license and register a separate legal entity with the commission.)

What are the licensing requirements for a property management company in Texas?

Resident and nonresident business entities must meet certain prerequisites before applying for a license.

Resident business entities

  • Resident business entities must be authorized to transact in Texas.

Nonresident business entities

If you are a nonresident business entity (meaning your business entity was created or chartered under the laws of another state), you may apply for a license in Texas if your business meets the following criteria:

  • is licensed as a broker in another state
  • was created or chartered in a state that does not license business entities, and your entity is lawfully engaged in the practice of real estate brokerage in that state

Texas Real Estate License

Licensing requirements for Texas brokerage firms.

A business entity offering real estate brokerage services to the public typically must register with the real estate commission before conducting business activity. For assistance with licensing, please contact us to learn about our software and managed license services.

  • Jump To:
  • Texas Real Estate Company Licenses
  • Texas Individual Real Estate Licenses

Company Licenses

Texas Real Estate Company Licenses

Texas Real Estate Business Entity License

Agency: Texas Real Estate Commission
Eligible Entity Types:
  • Corporations 
  • Limited Liability Companies
  • General Partnerships
Foreign Qualification is Prerequisite: Yes
Ownership Requirements:
  • If the designated broker owns 10% or more of the business entity, proof of ownership must be provided. Examples:
    • Corporations:  
      • Stock Certificates;
      • IRS Schedules K-1, C, or G;
      • Corporate Resolution or Meeting Minutes signed by Directors or all Shareholders (must include a copy of the Articles of Incorporation and/or Bylaws)
    • Limited Liability Companies:
      • Operating Agreement;
      • IRS Schedules K-1, C, or G.
    • General Partnerships:
      • Partnership Agreement;
      • IRS Schedules K-1, C, or G. 
Insurance Requirements:

If the designated broker does not own at least 10% of the business entity, proof of E&O insurance for the entity must be provided. 

Qualifying Individual Requirements:
  • A business entity must designate an active Texas real estate broker to act for it. The designated broker must be a managing officer of the business entity and must be in good standing with the Commission. 
  • The designated broker must have fingerprints on file with the Department of Public Safety (DPS) for TREC in order to satisfy the statutory requirement for honesty, trustworthiness, and integrity. 
  • Proof of the designated broker's current status as a managing officer, manager or managing member, or general partner for the business entity.
  • Examples of acceptable proof of managing authority include the following:
    • Corporation:
      • Corporate Resolution or Meeting Minutes signed by Directors or all Shareholders - must include a copy of Articles of Incorporation and/or Bylaws;
      • Officers and Directors Info from the Franchise Tax Account Status page results;
      • Articles of Incorporation or Certificate of Amendment filed with the Secretary of State's office
    • Limited Liability Company (LLC):
      • Operating Agreement signed by all Members;
      • Officers and Directors Info from the Franchise Tax Account Status page results;
      • Certificate of Formation or Certificate of Amendment filed with the Secretary of State's Office; Company Resolution
    • Partnership:
      • Partnership Agreement signed by all Partners
Requirement Notes:

A business entity created or chartered in another state must submit proof that the business entity: is licensed as a broker by the state in which it was created or chartered, is licensed as a broker in a state in which it is permitted to engage in real estate brokerage business as a foreign business entity, was created or chartered in a state that does not license business entities, and the entity is lawfully engaged in the practice of real estate brokerage in that state.

Initial Registration

More Details

Form:

Application for a Real Estate Broker License by a Business Entity

Filing Method:

Mail

Agency Fee:

$235

Notes:

A business entity must designate an active Texas real estate broker to act for it. The designated broker must be a managing officer of the business entity and must be in good standing with the Commission. 

Before you Apply:
  • A business entity must be permitted to engage in business in Texas to receive a Texas real estate broker license. 
Required Attachments:
  • A Franchise Tax Account Status page must accompany the application.
  • Proof of the designated broker's current status as a managing officer, manager or managing member, or general partner for the business entity
  • If the designated broker does not own at least 10% of the business entity, proof of E&O insurance for the entity must be provided. 
  • If the designated broker owns 10% or more of the business entity, proof of ownership must be provided
  • A business entity created or chartered in another state must submit proof that the business entity: 
    • is licensed as a broker by the state in which is was created or chartered;
    • is licensed as a broker in a state in which it is permitted to engage in real estate brokerage business as a foreign business entity; or
    • was created or chartered in a state that does not license business entities and the entity is lawfully engaged in the practice of real estate brokerage in that state. 
Background Check Requirements: ACCESS PREMIUM DATA

Registration Renewal

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Individual Licenses

Texas Individual Real Estate Licenses

Texas Real Estate Broker License

Agency: Texas Real Estate Commission

Initial Registration

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Registration Renewal

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Texas Real Estate Sales Agent License

Agency: Texas Real Estate Commission

Initial Registration

More Details

Registration Renewal

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Learn about real estate licensing in other states:

Key Terms

Associate Broker - Associate brokers are qualified to work independently as a broker, but choose to work under the authority of a designated broker.

On-Site Manager - A broker or salesperson who oversees the operations of a branch office under the authority of the designated broker.

Qualifying Broker/Designated Broker - An experienced and licensed real estate broker responsible for management and operation of a real estate firm.

Real Estate - Land, buildings, and their permanent improvements and fixtures. Also called "real property" in contrast to personal property.

Real Estate Agent - This term refers generally to any licensed real estate professional.

Reciprocity - Reciprocity makes it easier for out-of-state real estate firms to gain approval to operate in a foreign state by streamlining some licensing requirements.

Industry Resources

Association of Real Estate License Law Officials (ARELLO)
Offers a license verification database accross 43 jurisdictions.

NAIOP Commercial Real Estate Development Association Agencies
Aid education, research, and advocacy efforts in the real estate industry.

National Association of Realtors
Real estate trade organization that provides information and resources for development of the real estate industry.

Urban Land Institute
Research and education association concerned with responsible land use and creating sustainable communities.

Revised April 25, 2022. Complete data last reviewed April 04, 2022.

What is a designated broker in Texas?

Designate a Broker. A business entity cannot act as a broker in Texas unless the entity designates an active individual broker to act on its behalf. The designated broker must be a managing officer of the business entity and must be in good standing with the Commission.

Can a Realtor have an LLC in Texas?

As a Realtor, yes you can establish an LLC however I recommend you meet with your CPA to be sure your tax liabilities are understood.

Which of the following business entities is generally prohibited from brokering real estate?

which of the following businesses entities is generally prohibited from brokering Real Estate? A brokerage that is not affiliated with a franchisor.

Can a Texas broker pay an out of state broker?

The Texas Real Estate License Act states, "a licensed broker may pay a commission to a licensed broker of another state if the foreign broker does not conduct in this state any of the negotiations for which the fee, compensation, or commission is paid." There you have it.

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