What does 22 TAC §535.2 require of a sponsoring broker?

§535.2 imposes the core broker-responsibility obligations under TREC rules: (a) notify each sponsored sales agent in writing of the scope of authorized activities; (b) owe the highest fiduciary obligation to the principal and disclose all material information; (c) be responsible for proper handling of trust funds in compliance with §535.146; (d) be responsible for sponsored sales agent property-management activities requiring a license; (e) supervise (with permitted written delegation) all license holders sponsored by the broker. The broker is responsible for both the agent's authorized acts and any acts beyond the written scope that the broker permits.

Must broker delegations be in writing?

Yes. Under §535.2(e), any delegation by the broker to another license holder of compliance-assistance responsibility must be in writing. Any license holder who leads, supervises, directs, or manages a team must be delegated as a supervisor in writing. The broker must provide the name of each delegated supervisor to TREC on a form (or through the online process) within 30 days of a delegation that has lasted or is anticipated to last more than 3 consecutive months. The broker must also notify TREC within 30 days after a delegation has ended.

What is the 2-day response rule under §535.157?

§535.157 (Obligation to Respond Timely) requires brokers and sales agents to respond within 2 calendar days to principals in a real estate transaction (and to other license holders representing principals). The 2-day clock runs in calendar days — weekends and holidays count. The same 2-day standard applies to broker-to-sponsored-agent responses. Additionally, brokers must deliver TREC correspondence to sponsored sales agents within 3 calendar days after receipt. These are standalone compliance obligations enforced by TREC through complaint investigations.

Does the sponsoring broker have to directly supervise every sales agent activity?

No. §535.2(a) explicitly states "the broker is not required to supervise the sales agents directly." The broker's obligation is structural — written scope of authorized activities, compliance systems, delegated supervisors for teams, fiduciary and trust-fund compliance — not minute-by-minute oversight of every showing or contract. The broker remains accountable for the agent's authorized acts and for acts beyond the scope that the broker permits, but operates through the structural framework rather than direct supervision.

What happens with a business-entity broker?

When the broker is a business entity (LLC, corporation, partnership), the broker-responsibility obligations under §535.2 fall on the designated broker — the individual licensed broker the entity has named as the responsible party. The designated broker is personally accountable for the entity's compliance with §535.2 and all related broker rules. If the designated broker leaves the entity, the entity must designate a new broker within a specified window or lose its broker license entirely.

Who must take the TREC Broker Responsibility Course?

Under SB 1968 and the current Chapter 535 framework, all brokers must complete the Broker Responsibility Course every renewal cycle, regardless of whether they sponsor sales agents. Broker license applicants must also complete the course before licensure. The course covers the substance of §535.2 and related supervision rules. The rationale: the framework applies to every broker (trust-fund and fiduciary duties under §535.2(b) and (c) don't depend on sponsorship), and any broker may add sales agents or serve as a delegated supervisor during the renewal cycle.

TREC Broker Supervision — 22 TAC §535.2 Broker Responsibility, Delegation, and 2-Day Response Rule

TL;DR

The Texas Real Estate Commission's broker-supervision framework sits in 22 TAC §535.2 (Broker Responsibility), with related obligations spread across Chapter 535. Under §535.2(a), the sponsoring broker must notify each sponsored sales agent in writing of the scope of the agent's authorized activities; the broker is responsible for the agent's authorized acts and is also responsible for any acts the broker permits beyond the authorized scope. Under §535.2(b), the broker owes the highest fiduciary obligation to the principal. Under §535.2(c), the broker is responsible for trust funds and must comply with §535.146 (Maintaining Trust Money). Under §535.2(d), the broker is responsible for sponsored sales agent property-management activities requiring a license. Under §535.2(e), brokers may delegate compliance-assistance responsibilities to another license holder but cannot relinquish overall supervision; any license holder who leads, supervises, directs, or manages a team must be delegated as a supervisor in writing, with the delegation reported to TREC within 30 days for delegations expected to last more than 3 consecutive months. Under §535.157 (Obligation to Respond Timely), brokers and sales agents must respond to principals and other license holders within 2 calendar days; brokers must also deliver TREC correspondence to sponsored sales agents within 3 calendar days. SB 1968 requires all brokers to complete the Broker Responsibility Course every renewal cycle, regardless of whether they sponsor sales agents.

The Statutory and Regulatory Architecture

Texas real estate licensing is statutory at the top — the Real Estate License Act in Chapter 1101 of the Texas Occupations Code — and regulatory in the implementation, through 22 TAC Chapter 535. Within Chapter 535, the broker-supervision rules are concentrated in Subchapter B (General Provisions Relating to the Requirements of Licensure). The single most important rule is §535.2, titled "Broker Responsibility," which sets out the foundation of every supervision obligation a sponsoring broker owes to a sponsored sales agent and to the public.

Texas's licensing structure differs from many other states in two key ways. First, there is no "broker associate" license category — Texas licenses are either broker or sales agent, with brokers permitted to operate independently or to sponsor sales agents, and sales agents only able to operate under a sponsoring broker. Second, the broker-sponsorship relationship is structured as a fiduciary, regulatory, and contract relationship simultaneously: the broker has fiduciary duties to the public, regulatory accountability to TREC, and contract authority to define the scope of the sales agent's activities. For the foundational distinction between the two license types and the sponsorship relationship at the structural level, see our companion guide on Texas broker vs. sales agent supervision.

§535.2(a) — Scope of Authorized Activities, In Writing

The opening provision of §535.2 is also the most foundational: the broker must notify each sponsored sales agent in writing of the scope of the sales agent's authorized activities under the Real Estate License Act. The written-scope requirement is not optional, and the written instrument is the document TREC investigators look for in a complaint or audit.

Within the written scope, the broker is responsible for the agent's authorized acts. If the agent acts within the scope as written, the broker is on the hook regardless of whether the broker had actual knowledge of the specific transaction. If the broker permits — explicitly or by acquiescence — sales agent activities beyond the explicit written scope, the broker is also responsible for those acts. The "permits" language captures a broker who knows the agent is engaging in activities outside the written scope and does nothing to stop it. Silence equals permission for accountability purposes.

What §535.2(a) does not require: direct, on-the-ground supervision of every sales agent activity. The rule says explicitly: "the broker is not required to supervise the sales agents directly." The broker's obligation is structural and accountable, not micromanagerial. The broker sets the scope in writing, ensures compliance systems are in place, and answers to TREC and to the public when something goes wrong — but does not need to ride along on showings or co-sign every contract.

§535.2(b) and (c) — Fiduciary Duty and Trust Funds

§535.2(b) establishes the broker's substantive duty to the principal: "A broker owes the highest fiduciary obligation to the principal and is obliged to convey to the principal all information known to the agent which may affect the principal's decision unless prohibited by other law." This is the codification of the broker's full-disclosure duty to the principal in an agency relationship. The "unless prohibited by other law" carve-out preserves carve-outs like §5.008(c) (no duty to disclose AIDS/HIV history or unrelated deaths) and Fair Housing-related restrictions on the kind of information that can lawfully be conveyed.

§535.2(c) imposes specific responsibility for trust funds: the broker is responsible for the proper handling of trust funds placed with the broker and must comply with §535.146 (Maintaining Trust Money). The detail of §535.146 — separate trust accounts, no commingling, monthly reconciliation, prohibition on broker personal use — is covered in depth in our Texas real estate escrow and trust account rules guide, and parallels the Florida escrow rules described in our Florida broker escrow and trust account rules guide. The two regimes share most fundamentals but differ in specifics (Texas does not have Florida's 3/15/30 conflicting-demands timeline, for instance).

§535.2(d) extends broker responsibility to a frequently overlooked area: property management. If a sponsored sales agent engages in property-management activities that require a real estate license — managing rental properties for owners, collecting rent, advertising rentals, screening tenants — the broker is responsible for those activities. Property management is often informally delegated to sales agents within brokerages, and §535.2(d) ensures the broker cannot disclaim accountability simply because the agent operated the property-management book independently.

§535.2(e) — Written Delegation of Supervisors and Team Leaders

§535.2(e) addresses the practical reality that large brokerages and team-based brokerages cannot have the designated broker personally supervising every sponsored sales agent. The rule permits delegation while preserving the broker's overall accountability.

Key requirements:

A broker may delegate to another license holder the responsibility to assist in administering compliance with the Act and Rules.
The broker may not relinquish overall responsibility for the supervision of license holders sponsored by the broker. Delegation is delegation of assistance — not transfer of ultimate accountability.
Any license holder who leads, supervises, directs, or manages a team must be delegated as a supervisor. This is the "team leader" rule: in any brokerage where sales agents organize into teams and one license holder leads the team, that team leader is by rule a delegated supervisor for the team members.
Delegation must be in writing. Oral delegation does not satisfy §535.2(e); the broker needs a written delegation instrument.
TREC notification. The broker must provide the name of each delegated supervisor to TREC on a form (or through the online process) within 30 days of any delegation that has lasted, or is anticipated to last, more than 3 consecutive months. Short-term delegations (e.g., 2-month substitute supervision while a designated supervisor is on extended leave) do not require TREC notification, but anything ongoing must be reported.
Notification of delegation ending. The broker must also notify TREC within 30 days after a delegation has ended.

When the delegated supervisor is also a broker (or later becomes a broker), additional rules apply for transitions and accountability. The detail is in §535.2(e)(2) and following.

§535.157 — Two-Day Response and Three-Day Mail Delivery

Rule §535.157 establishes timely-response obligations that apply to both brokers and sales agents:

2-calendar-day response rule. Brokers and sales agents must respond to principals in a real estate transaction (and to other license holders representing principals) within 2 calendar days. The 2-day clock includes weekends and holidays — calendar days, not business days. This is a stricter standard than many other states' rules and is enforced by TREC through complaint investigations.
2-day broker-to-agent response. A sponsoring broker (or delegated supervisor under §535.2(e)) must respond to sponsored sales agents within 2 calendar days as well. The rule recognizes that sales-agent inability to reach the broker for guidance creates compliance risk.
3-calendar-day mail delivery. A sponsoring broker (or delegated supervisor) must deliver mail and other correspondence from TREC to their sponsored sales agents within 3 calendar days after receipt. This rule ensures that TREC notices, complaint correspondence, and licensing updates reach the sales agent promptly even when first delivered to the broker.

The 2-day and 3-day standards are easy to overlook in a busy brokerage but are routinely cited in TREC complaints when a transaction goes off the rails. Internal brokerage compliance procedures typically include a documented response-time policy and an email/text logging system to demonstrate compliance.

Designated Broker Rule — Business Entity Brokerages

When the broker is a business entity — an LLC, corporation, or partnership — the broker responsibilities under §535.2 fall on the designated broker: the individual licensed broker the entity has named as the responsible party. The designated broker is the person personally accountable for the entity's compliance with §535.2 and with all other broker-responsibility rules.

The designated broker's accountability includes:

Personal responsibility for all the entity's broker obligations under §535.2.
Personal accountability for trust-fund compliance under §535.2(c) and §535.146.
Personal responsibility for the entity's written-scope notifications under §535.2(a).
Personal responsibility for delegating supervisors under §535.2(e) and notifying TREC within 30 days.

If the designated broker leaves the entity or ceases to be a Texas broker, the entity must designate a new broker within a specified window — failing which the entity loses its broker license. This rule explains why brokerage entity sale transactions require careful sequencing of broker transitions.

The Broker Responsibility Course — SB 1968 and §535.56

Texas SB 1968 modified the broker-education requirements. Under the current rule framework (reflected in §535.56 and the broker-renewal CE requirements), all brokers must complete the Commission's Broker Responsibility Course every renewal cycle — regardless of whether they sponsor sales agents.

The rationale: the Broker Responsibility Course covers the substance of §535.2 and the related supervision rules. Even a broker operating independently — without sponsored sales agents — needs to understand the broker-responsibility framework because (a) they may add sales agents during the renewal cycle, (b) they may be brought in as a delegated supervisor at another brokerage, and (c) the trust-fund and fiduciary duties under §535.2(b) and (c) apply to every broker regardless of sponsorship status.

Broker license applicants must complete the Broker Responsibility Course before licensure under §535.56, reflecting the legislative judgment that the supervision framework should be understood from day one of a broker's career.

What §535.2 Does NOT Do

Two important clarifications about the limits of §535.2:

(1) §535.2 does not create an employer-employee relationship. §535.2 states explicitly: "This section is not meant to create or require an employer/employee relationship between a broker and a sponsored sales agent." Many Texas sales agents are independent contractors for tax and labor-law purposes — they receive 1099 income, set their own hours, and are not subject to the employer's wage-and-hour rules. §535.2 governs the regulatory accountability of the broker for the sales agent's licensed real estate activities, but does not transform the worker-classification relationship under federal or state labor law.

(2) §535.2 does not require direct supervision. As discussed above, §535.2(a) explicitly states the broker is not required to supervise the sales agents directly. The structural accountability model — written scope, fiduciary duties, trust-fund compliance, delegated supervisors for teams — is the framework, not minute-by-minute oversight.

The interaction of these two clarifications is important: the broker has substantial regulatory accountability for sales agent activities, but operates through structural mechanisms (writing, delegation, compliance programs) rather than through direct supervision that would convert the relationship into employer-employee. For the parallel Florida supervision framework, see our Florida FREC/DBPR licensing structure guide.

FAQ

What does 22 TAC §535.2 require of a sponsoring broker?: §535.2 imposes the core broker-responsibility obligations under TREC rules: (a) notify each sponsored sales agent in writing of the scope of authorized activities; (b) owe the highest fiduciary obligation to the principal and disclose all material information; (c) be responsible for proper handling of trust funds in compliance with §535.146; (d) be responsible for sponsored sales agent property-management activities requiring a license; (e) supervise (with permitted written delegation) all license holders sponsored by the broker. The broker is responsible for both the agent's authorized acts and any acts beyond the written scope that the broker permits.
Must broker delegations be in writing?: Yes. Under §535.2(e), any delegation by the broker to another license holder of compliance-assistance responsibility must be in writing. Any license holder who leads, supervises, directs, or manages a team must be delegated as a supervisor in writing. The broker must provide the name of each delegated supervisor to TREC on a form (or through the online process) within 30 days of a delegation that has lasted or is anticipated to last more than 3 consecutive months. The broker must also notify TREC within 30 days after a delegation has ended.
What is the 2-day response rule under §535.157?: §535.157 (Obligation to Respond Timely) requires brokers and sales agents to respond within 2 calendar days to principals in a real estate transaction (and to other license holders representing principals). The 2-day clock runs in calendar days — weekends and holidays count. The same 2-day standard applies to broker-to-sponsored-agent responses. Additionally, brokers must deliver TREC correspondence to sponsored sales agents within 3 calendar days after receipt. These are standalone compliance obligations enforced by TREC through complaint investigations.
Does the sponsoring broker have to directly supervise every sales agent activity?: No. §535.2(a) explicitly states "the broker is not required to supervise the sales agents directly." The broker's obligation is structural — written scope of authorized activities, compliance systems, delegated supervisors for teams, fiduciary and trust-fund compliance — not minute-by-minute oversight of every showing or contract. The broker remains accountable for the agent's authorized acts and for acts beyond the scope that the broker permits, but operates through the structural framework rather than direct supervision.
What happens with a business-entity broker?: When the broker is a business entity (LLC, corporation, partnership), the broker-responsibility obligations under §535.2 fall on the designated broker — the individual licensed broker the entity has named as the responsible party. The designated broker is personally accountable for the entity's compliance with §535.2 and all related broker rules. If the designated broker leaves the entity, the entity must designate a new broker within a specified window or lose its broker license entirely.
Who must take the TREC Broker Responsibility Course?: Under SB 1968 and the current Chapter 535 framework, all brokers must complete the Broker Responsibility Course every renewal cycle, regardless of whether they sponsor sales agents. Broker license applicants must also complete the course before licensure. The course covers the substance of §535.2 and related supervision rules. The rationale: the framework applies to every broker (trust-fund and fiduciary duties under §535.2(b) and (c) don't depend on sponsorship), and any broker may add sales agents or serve as a delegated supervisor during the renewal cycle.

Bottom Line

TREC broker supervision under 22 TAC §535.2 is built on a structural-accountability model: the sponsoring broker sets the scope of each sponsored sales agent's authorized activities in writing, owes the highest fiduciary obligation to the principal, is responsible for trust-fund compliance under §535.146, and is responsible for the agent's property-management activities. Direct supervision is not required, but the broker remains accountable for both authorized acts and acts beyond the scope that the broker permits. Written delegation under §535.2(e) is the mechanism for team supervision and large-brokerage compliance — team leaders must be delegated supervisors, and delegations expected to last more than 3 consecutive months must be reported to TREC within 30 days. §535.157 imposes 2-calendar-day response obligations and a 3-calendar-day mail-delivery obligation. Business-entity brokerages operate through a designated broker who is personally accountable for the entity's compliance. Under SB 1968, every broker — sponsoring or not — must complete the Broker Responsibility Course every renewal cycle. For the underlying seller-disclosure framework that intersects with broker supervision obligations, see our Texas seller's disclosure notice guide.

Source: 22 TAC §535.2 — Broker Responsibility · TREC — Broker Responsibility Rule Materials · Texas Occupations Code Chapter 1101 — Real Estate License Act