Texas Legal Update II (2026–2027): What It Covers and Why Every Agent Needs It

If you are renewing an active Texas real estate license, Legal Update II is generally one of the two Legal Update courses you must complete. The 2026–2027 edition is not simply a repeat of the previous course.

This edition focuses on issues Texas agents and brokers are encountering in real transactions: written agreements with buyers, unlicensed assistants performing licensed activity, advertising violations, AI-generated real estate content, veteran and military buyers, and the TREC complaint and enforcement process.

This guide explains what Legal Update II covers, who must take it, when it is due, and how its lessons apply to your business.

Educational disclaimer: This article provides general educational information and is not legal advice. Laws, rules, forms, course approvals, and loan-program requirements may change. Consult TREC, your sponsoring broker, an attorney, or an appropriate lending professional regarding a specific situation.

TL;DR

• Legal Update II is a required four-hour course for Texas sales agents and brokers subject to active-license renewal education requirements.

• Together, Legal Update I and Legal Update II provide eight hours of the education required for renewal.

• For agents on the regular CE cycle, those eight hours are part of the 18-hour CE requirement.

• First-renewal sales agents generally complete 90 additional SAE hours plus Legal Update I and II. Including the education required for initial licensing, they must have 270 qualifying hours plus the two Legal Update courses.

• The 2026–2027 course has four chapters: Competency, Agency, and Advertising; AI and Your Business; Representing Military Veterans and Service Members; and Complaints and Enforcement.

• Your controlling deadline is the expiration date shown on your TREC license record.

• Agent Results Training offers Legal 2 Update (2026–2027), Course #10376-RENE, online and self-paced.

What Is Texas Legal Update II?

Texas Legal Update II is a four-hour continuing education course based on a curriculum developed by the Texas Real Estate Commission. Texas sales agents and brokers subject to active-license renewal education requirements generally must complete it during the applicable renewal period.

TREC updates its Legal Update curriculum every two years. The current course is the 2026–2027 Legal Update II, 12th Edition, replacing the 2024–2025 edition.

Because approved providers teach the TREC-promulgated curriculum, the required subject matter is consistent across providers. The learning experience may differ based on the instructor, format, pacing, platform, and supplemental explanations.

Who Must Take Legal Update II?

Legal Update II generally applies to Texas sales agents and brokers renewing an active license. Where it fits depends on the license holder's renewal situation.

One common mistake deserves special attention: first-renewal sales agents need Legal Update I and Legal Update II in addition to their required SAE coursework. The 90 SAE hours do not replace the eight Legal Update hours.

For a detailed comparison, read CE vs. SAE in Texas real estate.

When Is Legal Update II Due?

Your controlling deadline is the expiration date shown on your TREC license record. Check your record before selecting a course or building your renewal schedule.

Two dates are important:

1. Your license expiration date: Complete the education required for your renewal by this date unless you properly obtain an available CE deferral.

2. The curriculum cycle: The 2026–2027 Legal Update curriculum belongs to that two-year course cycle. Do not assume that this edition will remain available or satisfy a later renewal after the cycle ends.

TREC recommends completing CE early enough for the education provider to report the credit and for it to appear in your record.

If an agent on the regular CE cycle renews active without completing the required CE before the expiration date, TREC assesses a $200 CE deferral fee. Paying the fee allows the agent to remain active for an additional 60 days from the expiration date while completing the education.

Important limitations apply:

• First-renewal SAE requirements cannot be deferred.

• A license renewed late is placed on inactive status, and the CE deferral is not available with a late renewal.

• An inactive license holder cannot perform real estate brokerage activity.

What Does Legal Update II (2026–2027) Cover?

The course is organized into four chapters.

Chapter 1: Competency, Agency, and Advertising

TREC's Canons of Professional Ethics

TREC's Canons of Professional Ethics and Conduct establish three core obligations: fidelity, integrity, and competency.

• Fidelity requires a license holder representing a party to place the client's interests above the license holder's own interests.

• Integrity requires honesty and prohibits misrepresentation or concealment of material facts.

• Competency requires a license holder to possess the knowledge, judgment, and skill reasonably necessary for the work being performed.

What Competency Means in Practice

Competency is not limited to knowing how to fill in a contract. It can involve:

• Subject-matter competency: Understanding the type of work, such as residential sales, property management, farm and ranch, or commercial real estate.

• Geographic competency: Learning the market, local conditions, practices, and issues in the area where the property is located.

• Contract-form competency: Knowing which promulgated forms apply, how they should be completed, and how contractual deadlines are calculated.

For example, a Houston-area agent who primarily sells subdivision homes may receive a call to list 40 acres involving agricultural valuation, a stock tank, and mineral-rights questions. The agent may be highly competent in residential resale but lack the specific knowledge needed for that assignment.

The responsible options are to obtain appropriate supervision or assistance, acquire the necessary competency before acting, or refer the client to someone qualified to handle the transaction.

How Agency Relationships Are Created

An agency relationship may arise through an express agreement or, in some circumstances, by implication based on the parties' words and conduct. Written listing agreements, buyer or tenant representation agreements, and property-management agreements are common express agreements.

However, general agency principles should not be confused with the newer statutory requirement for written agreements involving prospective residential buyers. A license holder performing brokerage activity for a prospective buyer of residential real property generally must comply with the written-agreement requirements in TRELA Section 1101.563.

The Information About Brokerage Services notice must generally be provided at the first substantive communication with a party concerning a proposed transaction involving specific real property. Exceptions apply to certain communications, including qualifying open-house interactions.

What Changed With Written Buyer Agreements?

Legislation effective January 1, 2026, added Sections 1101.562 and 1101.563 to the Texas Real Estate License Act.

Non-representation showings under Section 1101.562

A license holder may show real property to a prospective buyer or tenant without representing that person when the statutory conditions are satisfied. Among other restrictions, the broker must not:

• Have agreed orally or in writing to represent the person;

• Otherwise act as the person's agent during the showing;

• Provide opinions or advice regarding the property or real estate transactions generally; or

• Perform other brokerage activity for that person.

A written agreement used solely for this non-representation showing arrangement must be nonexclusive and may not have a termination date more than 14 days after it is signed.

Written agreements under Section 1101.563

A license holder performing brokerage activity for a prospective buyer of residential real property generally must have a written agreement with the buyer before showing residential property. If no property will be shown, the agreement must generally be in place before an offer is presented.

The agreement must address matters including:

• The services the license holder will provide;

• The agreement's termination date;

• Whether it is exclusive or nonexclusive;

• Whether the license holder represents the buyer or is only providing a non-representation showing under Section 1101.562;

• The amount or rate of broker compensation and how it will be determined; and

• A conspicuous disclosure that broker compensation is not set by law and is fully negotiable.

The same legislative changes removed references to subagency from TRELA.

Transaction Coordinators and Showing Agents

TREC rules do not separately define the title “transaction coordinator.” Whether a license is required depends on the tasks performed, not the job title. Purely administrative work may not require a license, but negotiating, advising, showing property, or otherwise performing brokerage activity does.

A sponsored sales agent who provides transaction-coordination services involving brokerage activity must have the sponsoring broker's written authorization and remain within the scope of that authorization.

Showing property for compensation is brokerage activity. TREC's definition of showing includes allowing a prospective buyer or tenant to view property, unlocking or otherwise providing access, and hosting an open house. A sponsored sales agent performing that activity across brokerages must obtain the required written broker authorization, and compensation must be handled through the sponsoring broker as required by law and TREC rules.

What Can an Unlicensed Assistant Do?

An unlicensed assistant may perform administrative and clerical work but cannot perform real estate brokerage activity. A person's title does not determine whether the activity requires a license.

Because individual tasks can cross the line into licensed activity, brokers should establish written procedures and supervise assistants carefully. Read Does your assistant need a license in Texas? for a more detailed discussion.

What Counts as Advertising?

TREC Rule 535.155 broadly defines advertising as a written or oral statement or communication that induces or attempts to induce a member of the public to use a license holder's services. Advertising can include signs, print materials, email, text messages, websites, social media, and other digital communications.

Important requirements include:

• Broker-name prominence: An advertisement must identify the license holder or team responsible for the ad and include the broker's name. The broker's name must be at least half the size of the largest contact information for a sales agent, associated broker, or team appearing in the ad.

• Contact information: This can include a name, phone number, email address, website, social media handle, or QR code.

• Team names: A broker must register a team name with TREC before it is used. The name must end in “team” or “group” and cannot imply that the team is a separate brokerage.

• Discontinued team names: The broker must notify TREC within 10 days after a registered team name is no longer used.

• Assumed and alternate names: Required names must be registered with TREC before they are used in advertising, subject to the applicable rules for common name derivatives.

Chapter 2: AI and Your Business

Can Texas Real Estate Agents Use AI?

Yes. TREC does not prohibit license holders from using AI tools. However, the license holder remains responsible for the accuracy, fairness, and legal compliance of the final work.

“The AI wrote it” is not a defense to an advertising violation, misrepresentation, fair housing problem, confidentiality breach, or unauthorized practice of law.

The course itself provides a useful model: AI can assist with a first draft, but a knowledgeable person must verify the facts, correct errors, apply professional judgment, and approve the final result.

Five Important AI Risks

1. Hallucinated facts: AI may confidently invent a school assignment, room feature, property measurement, legal rule, or neighborhood fact.

2. Misleading virtual staging: An image tool may alter fixed features, room dimensions, views, finishes, or property condition instead of merely adding furnishings.

3. AI-drafted contract provisions: Asking AI to create legal language for a client can lead to unauthorized practice of law and legally inadequate provisions.

4. Fair housing violations: AI-generated text, targeting, or imagery may produce discriminatory language or impermissible preferences.

5. AI-assisted fraud: Criminals can use generated identities, documents, voices, images, and video to impersonate sellers or redirect funds.

A Practical AI Review Checklist

Before publishing or relying on AI-assisted work:

• Verify material property facts using reliable source documents and records.

• Review descriptions for statements about people, protected classes, or who belongs in a neighborhood.

• Compare virtually staged images with the originals and disclose staging when appropriate.

• Do not use AI to draft special provisions or give legal advice.

• Protect confidential and sensitive client information.

• Follow your broker's policies and obtain approval when required.

• Apply human judgment before sending, posting, signing, or relying on the output.

Agent Results Training's A.I. Agent course shows agents how to apply AI to marketing, follow-up, and productivity while maintaining professional oversight.

Chapter 3: Representing Military Veterans and Service Members

Why This Topic Matters in Texas

Military installations are a major part of the Texas economy. According to the Texas Comptroller, the state's military installations supported approximately 213,000 direct jobs in 2023. Agents working near installations may frequently serve active-duty personnel, veterans, and military families.

How VA Loans Work

A VA-guaranteed loan is made by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs. The VA generally does not lend the purchase money directly. Its guaranty reduces the lender's risk and can allow eligible borrowers to obtain favorable terms.

Agents should understand the basic concepts, including:

• Eligibility and entitlement;

• Residual-income and underwriting considerations;

• The VA funding fee and possible exemptions;

• VA appraisals and minimum property requirements;

• Primary-residence occupancy requirements;

• The potential for no down payment when the transaction and appraisal support it; and

• The absence of monthly private mortgage insurance on VA loans.

Program details and borrower eligibility should be confirmed with a qualified VA lender.

The VA Amendatory Clause

The VA amendatory clause protects a VA buyer from being obligated to complete the purchase when the property's VA-established reasonable value is below the contract price, subject to the clause's terms. The buyer may still choose to proceed and pay an allowed difference after learning the appraised value.

In the Texas Third Party Financing Addendum, the applicable VA language appears in Paragraph 4. Because that addendum already addresses the VA appraisal protection, the TREC Addendum Concerning Right to Terminate Due to Lender's Appraisal is not used with VA financing.

Agents should not interpret loan requirements or advise a buyer how to structure financing beyond their competency. Coordinate with the lender and refer legal questions to an attorney.

The Residential Resale Contract Review course covers the One to Four Family Residential Contract (Resale) and commonly used addenda.

VA Loan vs. Texas Veterans Land Board Programs

Loan limits, rates, occupancy rules, and eligibility can change. Verify current details with the VA, VLB, and the buyer's lender rather than relying solely on a general course summary.

Chapter 4: Complaints and Enforcement

What Happens When Someone Files a TREC Complaint?

A consumer complaint must be submitted in writing and signed. TREC assigns the complaint a case number and sends the complainant written acknowledgment within seven days. Within 30 days after receiving the complaint, staff must notify the complainant whether the matter will be investigated or is outside TREC's jurisdiction.

If TREC determines that the complaint falls within its jurisdiction, it may send the respondent a copy of the complaint and request a written response, documents, books, or records.

When TREC staff requests that information from a respondent, the response is generally due within 14 days after receipt. TREC may extend the period for good cause after receiving a written request for more time.

How the Process Generally Works

1. A signed written complaint is received. TREC acknowledges it and assigns a case number.

2. Staff evaluates jurisdiction and merit. The complainant receives an initial evaluation within 30 days.

3. The respondent may be notified. If the matter proceeds, the respondent receives the complaint and may be asked for information.

4. The evidence is investigated and reviewed. The respondent must cooperate with lawful requests.

5. The matter is dismissed or enforcement is pursued. TREC may dismiss the complaint, issue an advisory letter, or seek an agreed order.

6. A contested case may proceed to SOAH. Unresolved cases can be set for hearing before the State Office of Administrative Hearings, followed by the applicable Commission process.

License holders should not contact TREC Commissioners to discuss an open enforcement matter.

Reporting Criminal Convictions and Pleas

A Texas real estate license holder must notify TREC no later than the 30th day after:

• A final conviction for a felony or a criminal offense involving fraud; or

• Entry of a plea of guilty or nolo contendere to such an offense.

A guilty or nolo contendere plea can trigger the reporting requirement even when the court orders deferred adjudication or community supervision. Reporting the matter for the first time on a later renewal application does not cure a missed 30-day reporting deadline.

Because criminal matters are fact-specific, a license holder facing this situation should consult TREC's current instructions and obtain legal advice when appropriate.

Common Complaint Categories

Complaint trends discussed in the course include:

• Sales-transaction issues, including negligence, referrals, rebates, and earnest money;

• Alleged breaches of fiduciary duty;

• Licensing and criminal-history matters;

• Broker supervision; and

• Leasing and property-management issues.

Lessons From TREC Disciplinary Cases

The course uses enforcement cases to show how everyday decisions can create serious consequences.

When publishing specific fine amounts or disciplinary terms from a course example, confirm them against the cited TREC order or the final course manual.

Can You Take Legal Update II Online?

Yes. Texas license holders may complete Legal Update II through an approved online CE provider when the course and delivery method have been approved by TREC.

Agent Results Training, TREC Provider #10889, offers Legal 2 Update (2026–2027), Course #10376-RENE. The four-hour course is delivered online through instructional video, allowing agents to complete it around showings, appointments, and transactions.

Before enrolling, confirm that the course fits your current renewal period and review your posted education in your TREC license record.

Legal Update II Alone or in a Bundle?

The best option depends on the hours still missing from your record.

Check your education history and renewal requirements before purchasing. Agent Results Training course sales are final.

Seven Practical Takeaways

1. Check your license expiration date and posted education in your TREC record.

2. Review your residential-buyer workflow for compliance with TRELA Sections 1101.562 and 1101.563.

3. Audit assistant and transaction-coordinator duties so unlicensed personnel do not cross into brokerage activity.

4. Review your advertising for broker-name prominence, compliant team names, and properly registered alternate or assumed names.

5. Add human review to every AI workflow involving property facts, images, advertising, clients, or transaction documents.

6. Understand the VA appraisal language in Paragraph 4 of the Third Party Financing Addendum.

7. Remember the enforcement deadlines: generally 14 days after receiving a TREC request for records or information, and 30 days after a reportable conviction or plea.

Frequently Asked Questions

Is Legal Update II the same as Legal Update I?

No. They are separate four-hour courses with different content. License holders subject to the requirement generally need both. Legal Update II covers competency, agency, advertising, AI, military and veteran buyers, and complaints and enforcement. Read the Texas Legal Update I (2026–2027) guide for the subjects covered in Legal Update I.

Do I need Legal Update II for my first Texas sales-agent renewal?

Yes. A first-renewal sales agent generally needs 90 additional hours of SAE plus Legal Update I and Legal Update II. Including the 180 qualifying hours required for initial licensing, the agent must have 270 cumulative qualifying hours plus the two four-hour Legal Update courses. A delegated supervisor may also have a Broker Responsibility requirement.

Does Legal Update II satisfy the three-hour contract requirement?

No. Legal Update II counts toward the eight-hour Legal Update requirement. License holders on the regular 18-hour CE cycle must complete three hours of contract-related coursework separately.

Can I take the 2024–2025 Legal Update II course now?

The applicable curriculum for the current cycle is the 2026–2027 edition. Confirm that the course you select is currently approved and appropriate for your renewal period.

Can I take Legal Update II before Legal Update I?

Yes. They are separate courses and may generally be completed in either order.

Does TREC prohibit agents from using AI?

No. Agents may use AI, but they remain responsible for the resulting work. AI-assisted content must still comply with advertising, fair housing, confidentiality, competency, and unauthorized-practice-of-law requirements.

What happens if I do not finish Legal Update II before my license expires?

For a license holder on the regular CE cycle who timely renews active, a $200 CE deferral fee may provide an additional 60 days to complete the required CE. First-renewal SAE cannot be deferred. If the license is renewed late, it is renewed inactive and the CE deferral is unavailable.

Complete Legal Update II Online

Legal Update II is more than a four-hour renewal requirement. The 2026–2027 course addresses decisions Texas agents make every day: when a written buyer agreement is required, which activities require a license, how advertising must identify the broker, how to supervise AI-assisted work, and how TREC handles complaints.

Complete the course before the deadline shown in your TREC license record and leave enough time for the credit to be reported.

Ready to complete Legal Update II? Enroll in Legal 2 Update (2026–2027) and take it online at your own pace.

Need all 18 hours? Choose the 18 Hour Agent Bundle, or browse all Texas online real estate CE courses.