Key takeaways
- Brokers can delegate supervision, but never overall responsibility, and team leads must be delegated supervisors in writing.
- Written policies must cover eight areas, including coaching for the first three times an agent performs a new type of activity.
- Eight record types must be kept for at least four years after closing, termination or the end of the transaction.
- Brokers and delegated supervisors must respond to sponsored agents within two calendar days.
Every Texas brokerage that sponsors sales agents carries the same core obligation: the broker is responsible for the authorized acts of those agents. TREC Rule 535.2 spells out what that responsibility looks like in practice, from written policies to record keeping to how quickly a broker answers an agent. For a brokerage with 20, 100 or 500 agents, the rule is less about knowing the text and more about running it every day without gaps.
This guide walks through what Rule 535.2 requires, then turns each requirement into an operating habit your offices can measure.
Who the rule applies to
Rule 535.2 applies to any broker who sponsors sales agents and to the designated broker of a business entity. When the brokerage is a business entity, the designated broker is the person responsible for the broker duties in the rule. The broker does not have to supervise agents directly, and TREC confirms that supervision can be delegated to a qualified license holder. What the broker cannot do is hand off overall responsibility.
Two delegation details trip up growing brokerages:
- Team leads are supervisors. Any license holder who leads, supervises, directs or manages a team must be delegated as a supervisor, and the delegation must be in writing.
- TREC must be told. If a delegation has lasted or is expected to last more than three consecutive months, the broker must give TREC the supervisor's name within 30 days, and notify TREC again within 30 days after the delegation ends.
Multi-office brokerages often add team leads faster than they update these records. A roster that ties every team to a named, delegated supervisor, with the delegation date, makes the 30-day notice a task rather than a memory.
The eight written policies Rule 535.2(i) requires
Brokers who sponsor agents must keep current written policies and procedures that ensure each of the following. The table pairs each item with a practical way to run it.
| Rule 535.2(i) requires policies that ensure… | How to run it day to day |
|---|---|
| Agents know the scope of their authorized activities and are competent, including in their geographic market | Record each agent's authorized activities and markets in their profile; review at onboarding and when they take on a new activity type |
| Agents keep an active license while practicing | Track license expiration dates and send renewal reminders well ahead of the date |
| All compensation is paid by, through or with the written consent of the sponsoring broker | Pay commissions only from an approved Disbursement Authorization tied to the transaction |
| Agents get timely notice of changes to the Act, rules or promulgated forms, before the effective date | Log each notice, the date sent and who received it |
| Agents get coaching from an experienced license holder the first three times they perform a new type of activity | Flag first, second and third transactions of each type and assign a coach to the file |
| Agents follow TREC advertising rules | Route new websites, signs and recurring ad templates through a review step |
| Trust accounts and consumer funds are kept with appropriate controls under Rule 535.146 | Record deposits against the transaction and reconcile the trust account on a fixed schedule |
| Records are kept as Rule 535.2(h) requires | Store required documents on the transaction record so they stay together for the retention period |
The coaching item changed recently. TREC amended the rule to raise the minimum number of coached repetitions for a new type of activity from one time to three times. If your policy manual still says "first transaction," it is out of date.
TREC's Broker Responsibility course manual also recommends reviewing the brokerage's policies and procedures with each agent every year. An annual acknowledgment, with a date stamp, gives you evidence that the review happened.
The records you must keep for four years
Rule 535.2(h) lists records a broker must keep, in a format readily available to TREC, for at least four years from the closing, termination of the contract or end of the transaction:
- Disclosures
- Commission agreements, such as listing agreements and buyer representation agreements
- Substantive communications with parties to the transaction
- Offers, contracts and related addenda
- Receipts and disbursements of compensation
- Property management contracts
- Appraisals, broker price opinions and comparative market analyses
- Sponsorship agreements between the broker and sponsored agents
The hard part is not storage. It is completeness. When a CMA lives in one tool, the contract in another, texts on an agent's phone and the commission payout in a spreadsheet, assembling one complete file takes hours. That is exactly when gaps surface, often after a complaint or claim has already been made.
Operational test: pick five closed files at random from different offices. Can you produce all eight record types for each one in under ten minutes? If not, your retention policy exists on paper but not in practice.
The two-day response rule
A broker, or a supervisor delegated under the rule, must respond to sponsored sales agents within two calendar days. Brokers and supervisors must also deliver TREC mail and correspondence to their sponsored agents within three calendar days of receiving it.
In a large brokerage, agent questions arrive by text, email, chat and in the hallway. A single queue for agent requests, with a timestamp and an owner, turns a two-day rule into something you can report on by office and by supervisor.
Why systems matter more as you grow
Rule 535.2 does not cap the number of agents a broker can sponsor or the number of delegated supervisors. TREC's course manual notes that brokers can build layers of supervision without limits. That flexibility is what lets brokerages scale, and it is also why manual oversight breaks down. Every new office or team multiplies the number of deadlines, documents and handoffs a broker is still responsible for.
Brokerages that hold up well under review usually share a few traits:
- Each transaction has one record that holds the parties, documents, communications and payout.
- Contract dates become tracked tasks with owners, and late tasks escalate to the broker.
- Compensation flows only through an approved Disbursement Authorization tied to that record.
- Leadership can see exceptions, such as missing documents or overdue tasks, by office.
That is the model behind PulseHubCo's connected modules, built for brokerages with 20 or more agents up to multi-office enterprises. Whatever tools you use, the goal is the same: make the broker's responsibilities visible before they become a problem.
This article is general information, not legal advice. Rules change, so confirm current requirements in the TREC rules and with your counsel. For more guides like this, browse PulseHubCo Insights.
Frequently asked questions
Does a Texas broker have to supervise agents directly?
No. TREC says supervision can be delegated to a license holder with the experience and expertise to supervise properly, but the broker remains responsible for the authorized acts of sponsored agents and cannot give up overall responsibility.
How long must a Texas brokerage keep transaction records?
Rule 535.2(h) requires at least four years from the date of closing, termination of the contract or end of the transaction, in a format readily available to TREC.
Do team leads need to be registered with TREC?
Any license holder who leads, supervises, directs or manages a team must be delegated as a supervisor in writing. If the delegation lasts or is expected to last more than three consecutive months, the broker must give TREC the name within 30 days.