Information Regarding Recovery Funds
TREC has two funds to help reimburse consumers who suffer damages caused by TREC license holders: the Real Estate Recovery Trust Account and the Real Estate Inspection Recovery Fund. Each recovery fund has different filing requirements and payment limits.
Consumers may file an application for payment from the Real Estate Recovery Trust Account after filing suit and obtaining a final judgment in civil court for damages against a licensed real estate broker, sales agent or easement/right-of-way agent (or an employee or agent of such a license holder) for certain conduct.
The Real Estate Inspection Recovery Fund was repealed by HB 1363 (88th Leg., R.S.). However, for an application in which the events giving rise to the claim occurred before September 1, 2023, consumers have until March 1, 2026, to file for payment from the Real Estate Inspection Recovery Fund, after filing suit and obtaining a final judgment in civil court for damages against a licensed inspector for certain conduct.
These recovery funds are "funds of last resort." They have been created to reimburse consumers for out-of-pocket damages caused by license holders when the license holders cannot pay for those damages. If you have received any payment or settlement towards the amount of judgment from a license holder, another defendant, or the license holder’s insurance company, the amount of that payment or settlement may reduce the amount you may recover from the recovery funds.
What are the payment limits for the recovery funds?
Regardless of the number of applicants, payments from the Real Estate Recovery Trust Account may not exceed $125,000 per transaction, with a maximum of $250,000 per license holder for multiple transactions. Payments from the Real Estate Inspection Recovery Fund may not exceed $12,500 per transaction, with a maximum of $30,000 per license holder for multiple transactions.
What is the difference between a recovery fund claim and a complaint with TREC?
You do not have to file a complaint with TREC to apply for payment from one of the recovery funds. When you file a complaint, TREC will investigate and may assess an administrative penalty as part of the disciplinary action taken against a license holder. The administrative penalty is paid to TREC for deposit into the recovery funds. It is not paid to the person who filed the complaint.
You may only file an application for payment from one of the recovery funds after you have obtained a civil court judgment awarding damages against a TREC license holder and complied with other requirements.
Filing a Claim for Reimbursement
The process for filing an application for payment from the recovery fund is not the same for everyone. We have provided some general guidelines below for your reference. You may also email TREC staff at email@example.com to help answer general questions about the process.
Obtain a Final Judgment
Before you file an application for payment from one of the recovery funds, you must file a lawsuit in court and obtain a civil judgment from the court against a TREC license holder. You must file your lawsuit in the court within two years after the events giving rise to your claim occurred. So, even if you file a complaint with TREC, do not wait until the TREC complaint process is complete before you file a civil lawsuit or you run the risk of the statute of limitations expiring. After the court grants a final judgment in your lawsuit, you must also obtain an abstract of judgment and writ of execution before filing an application for payment from the recovery fund with TREC. Please note that if you are going to obtain an agreed judgment, it must be submitted to TREC BEFORE being signed by the judge if you intend to request reimbursement from the Real Estate Recovery Trust Account.
Obtain an Abstract of Judgment
Once you obtain a final judgment from the court, you will need to obtain an Abstract of Judgment. Each Texas county may have different requirements for obtaining an abstract of judgment. You will need to check with the County Clerk's Office in the county where you obtained the judgment and follow the requirements to obtain an abstract of judgment.
After you obtain an abstract of judgment, you will need to file it with the County Clerk in the real property records of the county in which the court judgment was obtained. For example, if you sued a license holder and obtained a judgment in a Travis County court, you would file the abstract of judgment with the Travis County Clerk in the Travis County real property records. You will need to submit a file-stamped copy of the abstract of judgment to the TREC with your recovery fund application.
Obtain a Writ of Execution Returned Nulla Bona
You must ask the court to issue a writ of execution. A writ of execution is a written order to the constable or sheriff to locate the defendant and demand payment of the judgment. If the defendant has no assets that can be sold to satisfy the judgment, the constable or sheriff usually will return the writ of execution to the court “nulla bona,” which is a Latin phrase meaning “no goods.”
The words “nulla bona” (or its equivalent) must appear on the writ return. You must submit a copy of the writ of execution and the officer's return stating “nulla bona” to TREC with your recovery fund application.
Filing Your Application
After obtaining a judgment, abstract of judgment, and writ of execution, you may file an Application for Order Directing Payment from the Real Estate Recovery Trust Account or Real Estate Inspection Recovery Fund. This application must be filed in the same court and cause number in which you obtained the judgment. You will need to submit a file-stamped copy of the application, along with copies of the final judgment, abstract of judgment, and writ of execution to TREC. It is not necessary to set a court date at this time. Most claims can be resolved without the need to go to court for a hearing.
Review and Approval
Once TREC receives your application, and the documents mentioned above, we will review the documents you have submitted and send you an acknowledgment letter describing any additional information that is needed to review your application. Some of the most common information requested includes documents like a file-stamped copy of the original petition, an explanation of the facts and circumstances surrounding the case, and attorney billing statements. If your application is eligible for payment from the recovery fund, we will recommend approval and payment of the application to the Commission at their next regularly scheduled meeting. Depending on the date of the next Commission meeting and the receipt of ALL information requested, it may take several months to complete this process. If your application is not eligible for payment from the recovery fund, we will recommend denial and you may contact the Office of the Attorney General to request a hearing to contest the denial.
If the Commission approves the application for payment, some additional paperwork must be completed before payment can be made. We will prepare an Order Directing Payment and an Assignment of Judgment. These documents must be reviewed and approved by the Attorney General. Once approved, the Attorney General will send these two documents to the applicant or their attorney with instructions on how to sign the documents, file them with the Court, and send them back to the Office of the Attorney General. The Attorney General will return the documents to TREC for final processing. Once the TREC receives the documents from the Attorney General, it usually takes 2-3 weeks for TREC to process the application and mail out the checks.
As you can see, filing an application for payment from one of the recovery funds is a long and somewhat complicated process. You may submit an application on your own or hire an attorney to help you with this process. If you hire an attorney, you may seek reimbursement for reasonable attorney’s fees paid as part of your application for payment from one or both of the recovery funds. Reasonable attorney’s fees are eligible for payment from the recovery funds, but only up to the payment limits of each fund.