They are still happening: Real estate leasing scams continue to pose a threat to property owners in Texas, especially in the greater Houston area, prompting the Texas Real Estate Commission (TREC) to issue warnings such as this press release sent to more than a dozen news outlets—most of them based in the southeastern part of the state—including The Houston Chronicle, Bisnow, and The Real Deal.

TREC's Enforcement Division, led by Director Michael Molloy, is tracking these fraudulent property leasing activities.

"Over the past two years, there's been a noticeable increase in rental scams, with a concentration in the greater Houston area. These scams are deceiving landlords, tenants, and even our license holders into fraudulent lease agreements," said Molloy.

Straight From the Case Files

TREC's 37-member enforcement division—which includes 10 attorneys, legal assistants, and investigators—is handling numerous rental fraud cases. Here are some real-life examples.

Hefty Violations Call for Hefty Penalties

• A sales agent in Houston knowingly submitted lease applications with fake credit reports. TREC’s investigation found the agent and co-conspirators were engaging in this type of conduct for several years. This activity resulted in a $115,000 administrative penalty, and the agent’s license was revoked.
• A co-conspirator's license was also revoked and assessed a $48,750 administrative penalty.

Their scheme involved helping unqualified tenants obtain a lease by submitting inaccurate or falsified records regarding income, credit history, and prior evictions to property managers or landlords. Also, a false story included in applications would read in part:

“Let me know if my clients will work for you. I have deposit and 1st month rent in office. Will consider 2 year lease. They were approved on another property but owner decided to take an offer for sale. Thanks.”

Such misrepresentations are used as a ploy to distract and discourage the landlord or property manager from running a separate review of the applicant and may appear to bolster the legitimacy of otherwise fake documents.

Sales Agents, Sponsoring Broker Disciplined Together

Case 1

• A sales agent engaged in a scheme placing unqualified applicants by submitting fraudulent lease applications for at least seven single-family homes between December 1, 2022, and May 12, 2023. Four leases were executed based on those fraudulent applications.
• The Commission found the sponsoring broker failed to adequately supervise the agent and was reprimanded and ordered to pay a $1,000 administrative penalty.
• The sales agent’s license was revoked.

Case 2

• A Houston broker was sponsoring three sales agents who submitted fraudulent lease applications (incorrect credit scores, work histories, incomes) for at least 24 single family homes between May 2022 and September 2022.
• After each lease was executed, someone other than the applicant would move into the property.
• The broker was formally reprimanded and ordered to pay a $1,000 penalty.
  • One agent’s license was revoked and assessed a $31,000 penalty.
  • A second agent’s license was revoked and assessed a $26,500 penalty.
  • A third agent’s license was placed on probated suspension.

How to Avoid Trouble

As these property rental scams persist, TREC staff emphasizes the importance of due diligence, even if you use a real estate license holder to find a tenant. Be sure to review the details you receive in a rental application. If something feels off, don’t be afraid to ask questions, or consult with another license holder or an attorney. TREC urges all Texans to stay informed and be proactive in combating real estate fraud.

About Disciplinary Actions

License revocation: The individual’s license is stripped and means they cannot practice real estate activity.

License suspension: The individual cannot practice real estate activity for a defined period.

Probated suspension: The individual can practice real estate activity but if the license holders violate the terms and conditions of the order, the license will be suspended for the defined period.

Administrative penalties: Fines for violations of TREC rules or The Real Estate License Act.