The Ultimate Guide to TREC Requirements and the MCD

How’s your moral character? Is it good enough to pass TREC’s test to get a Texas real estate license?
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How’s your moral character? Is it good enough to pass TREC’s test to get a Texas real estate license?

The Texas Real Estate Commission (TREC) wants to make sure everyone they license is an upstanding citizen who isn’t going to abuse their position. It’s a little vague, but one requirement all applicants must meet is TREC’s qualification for honesty, trustworthiness, and integrity.

In this post, we will talk about TREC’s rules and values, along with the Moral Character Determination test and how you can ace it. We’ll answer the following questions: What is TREC’s Moral Character Determination test? Who is required to file a Moral Character Determination? What is on TREC’s Criminal History Questionnaire? How do I write/get a Letter of Character Reference? How do I fill out TREC’s Background History Form? What mistakes should I avoid when filing for a Moral Character Determination? * What happens if you fail the Moral Character Determination?

The Moral Character Determination test is how TREC decides if you’re fit to be a Texas real estate agent or broker.

Let’s start with an easy step-by-step guide about what is involved.

What the Moral Character Determination Process Involves

TREC takes a number of steps during the application process to test an applicant’s moral character. They require:

Step 1. Answers about criminal history and professional background on the application. There are four questions on the application that address whether an applicant’s professional or criminal background has any blemishes. They are yes or no questions. If any of the answers are “yes” you’ll need to complete step 3.

Step 2. Fingerprints for a background check. All applicants must also get fingerprinted and have them on file with the Department of Public Safety (DPS) in order to get a license. The fingerprints are used to do a background check. You know, because some people may not be completely honest on the application questionnaire.

Step 3. Background history form submission. If you said yes to any part of the four background questions or have a license in another state you’ll be required to submit a background history form (Form ID: BH-3). This form is used to describe violations, convictions and professional disciplinary actions in detail. Supporting documents must also be included. If an investigation ensues, TREC will use this information to make a moral character determination.

Step 4. An investigation into your background (if necessary). If TREC is on the fence as to whether an application does or doesn’t meet the moral character requirement they’ll initiate an investigation. In addition to looking at the nature and extent of the charges, convictions, disciplinary actions and/or offenses the investigation will determine the applicant’s present fitness for a license based on:

  • Disciplinary actions related to professional or occupational licensing or registration
  • Age the offense(s) occurred
  • If the person has maintained a clean record since their final offense
  • If the person has maintained steady employment
  • How much time has passed since the offense(s) occurred
  • Compliance with the court or agency’s terms and conditions
  • Whether the applicant has completed their sentence, parole, probation, disciplinary actions, etc.
  • Letters of character reference (see below)
  • Evidence of rehabilitation
  • Whether the applicant lied, attempted to mislead or withheld information during the application process
  • Whether the applicant has violated any Commission rules or provisions of the Texas Real Estate License Act
  • Failure to comply with any administrative orders

Step 5. - Letters of character reference. TREC will also take any letters of character reference into account during their investigation process. The letters can be from people within the applicant's business or professional community who are aware of the applicant's prior misconduct.

Applicants can also submit a letter of reference from a potential sponsoring broker that is aware of the prior misconduct, law enforcement or prosecutions involved in the case and anyone else who has had contact with the individual.

The Moral Character Determination Form

If you’re at all concerned about how the moral character determination test will turn out you can submit a Moral Character Determination (MCD) form before you apply for a license. In addition to the MCD form, you’ll also have to submit the background history form along with related documentation.

Instead of doing a background check TREC will use the information you provide to let you know your odds of being deemed morally worthy of getting a real estate license. Essentially, it’s a $50 litmus test (the fee for filing an MCD is $50) that can save you time, money and aggravation if TREC would likely deny your application due to background discrepancies.

The TREC moral character determination test involves various steps to judge whether an applicant meets the requirement. In some cases, one of those steps is reviewing an applicant’s Moral Character Determination (MCD) Form.

The When, What and Why of a Moral Character Determination Form

The Moral Character Determination Form isn’t so much a requirement as it is a voluntary request. Anyone who’s concerned about meeting TREC’s qualifications for honesty, trustworthiness, and integrity can pay the $50 fee and submit the MCD form (along with supporting documents) to request that Commission make a moral character determination before they apply for a license.

You’ll need to provide information on any and all criminal and professional offenses, investigations and/or disciplinary actions. The more detail the better. A Background History Form also has to accompany the MCD form. The Commission will use the information you provide to make a determination.

So what’s the upside? If you are probably (or definitely) going to be denied a license based on the honesty, trustworthiness and integrity qualifications the MCD can save you time and money that would be spent going through the application process. It’s an even better idea to submit an MCD before you take the required Texas real estate courses since you won’t get back the money or time you invested meeting the education requirement.

Who Should Request a Moral Character Determination

Although TREC doesn’t really spell out their qualifications for honesty, trustworthiness, and integrity, if you can honestly answer “no” on questions 7-11 of the license application form you should be fine.

However, if you answer yes on one of the questions and/or any of the following will be discovered during the background check requesting a Moral Character Determination is a good idea. It’s definitely a good idea for applicants with a record of:

  • Criminal offenses/convictions
  • Unpaid judgments
  • Disciplinary actions taken against a professional or occupational license
  • Performing unlicensed real estate activity

If you’ve already submitted a license application the window of opportunity for submitting an MCD has passed. The Commission will look over the application and the accompanying Background History Form to decide whether to permit a license, deny a license or initiate an investigation to explore the matter further.

Now that we’ve covered the MCD details and process, you may be wondering how exactly TREC decides in your character shows honesty, trustworthiness, and integrity.

Just how does TREC determine if an applicant possesses those qualities?

They have several methods, but the first step is a series of questions on the Texas real estate license application. The questions delve into the applicant’s professional disciplinary and criminal history (if there is one). Every applicant must answer the questions honestly, which may require filling out additional forms with more information.

Disciplinary Action and Criminal History Questions on the Texas Real Estate License Application

Here are the disciplinary action and criminal history questions you’ll have to answer on the application. Remember, honesty is always the best policy. There will also be a background check that will uncover criminal history whether it’s stated on the application or not.

Question 8 (a) Have you ever had a professional or occupational license in this state or any other state suspended, canceled or revoked, or ever surrendered such a license?

(b) Have you ever had an application for a professional or occupational license disapproved or denied in this state or any other state?

(c) Are there any disciplinary hearings or investigations pending against any professional or occupational licenses you hold in this state or any other state?

Question 9 Are there any unpaid judgments against you?

Question 10 (a) Have you ever been convicted of a criminal offense? (Include all felonies, all misdemeanors other than minor traffic tickets, and all military tribunal convictions.)

(b) Have you ever been placed on parole, probation or community supervision (also known as deferred adjudication) regardless of whether the case was dismissed or you were discharged?

(c) Are there any criminal charges pending against you?

Question 11 Have you ever acted, or attempted to act, as a real estate broker or sales agent or appraiser in this state or in any other state at a time when not properly licensed? (Include all periods in which you acted either before obtaining a license or after a license may have expired.)

What Happens If You Answer Yes on Any of the Criminal History Questions

So you had a little snafu at some point or maybe made a dumb mistake when you were much younger? As long as it wasn’t a violent crime, an offense involving money, or a real estate-related crime you probably won’t automatically be denied a license.

However, you will have to fill out and submit a Background History Form if you answer “yes” to any of the questions above. On the Background History Form you must provide additional details about any discrepancies in your past as well as supporting documents.

Every offense, even ones that were dismissed, must be noted. A separate Background History Form is needed for each discrepancy that’s reported.

Answering the criminal history questions can be stressful if your record isn’t squeaky clean. If there’s any doubt in your mind that you’ll meet the honesty, trustworthiness and integrity qualification you can always request a Moral Character Determination before submitting an application to find out if you meet the qualifications.

Do you know someone who’s applying for a Texas real estate license? There’s a chance they may need a letter of character reference.

Letters of character reference are needed when an applicant has to submit a Background History Form because of a prior criminal offense. The Commission may request letters of character reference or the applicant may collect them to help show they are presently fit for a license.

If you’ve been asked to provide a letter of character reference here are a few details that can help during the writing process.

Who Usually Provides a Letter of Character Reference?

Are you the best person to provide a letter of character reference? Letters of reference are most impactful when they come from particular individuals. TREC law states that the applicant is responsible for providing letters from:

  • People in the applicant’s industry, business or professional community
  • Prospective sponsoring broker

Additionally, an applicant can submit letters of recommendation from:

  • Prosecution who prosecuted the applicant’s case
  • Law enforcement who arrested the applicant
  • Correctional officers who had custodial responsibility for the applicant
  • Sheriff or chief of police in the applicant’s community
  • Anyone else who has personal contact with the applicant

What to Include in a Letter of Character Reference

The general purpose of a letter of a character reference is to vouch for the applicant and help them prove that they should be allowed to get a Texas real estate license. It’s your testimony about their character.

The two things that are absolutely necessary on a letter of character reference are:

  • Statement that you are aware of the applicant’s criminal offense or criminal conduct
  • Your signature

Other information that you’ll want to include in the letter of character reference:

  • Briefly provide information on who you are at the opening of the letter.
  • Your relationship with the applicant and how long you’ve known them (include two to three sentences at the beginning of the letter).
  • Your opinion of the applicant’s character based on traits, values, behavior and charitable deeds.
  • Your opinion of whether they are fit to have a Texas real estate license - knowledge level, integrity, skill sets, etc.
  • Your opinion on whether the applicant has been fully rehabilitated.
  • Specific examples that support your opinions.

There’s no need to go overboard with the accolades, but the tone should be positive. Simply provide an honest assessment of the applicant’s character and qualifications based on direct experiences. Try to keep your letter factual and supported by specifics and facts.

It’s best to keep the letter of character reference to a single page. At the end of the letter, you can include that the Commission may contact you for more information or to answer additional questions.

Finally, sign the letter, print your name and date it.

Did you answer “yes” to any of the professional or criminal history questions on the TREC real estate license application? Then you’ll have to fill out a Background History Form. You’ll also need to submit the form if you request a Moral Character Determination

Filling out the form can put any applicant on edge. Completing the Background History Form correctly is important since errors can slow down the licensing process and your responses could lead to an investigation or license denial.

This step-by-step guide will help you stress less while filling out the Background History Form.

Who Has to Fill Out the Background History Form

The questions on the license application are limited to a few situations. Those who will have to submit a Background History Form include:

  • People who have held real estate licenses in other states.
  • People who have other professional or occupational licenses.
  • Anyone who has had been involved in a disciplinary hearing or investigation.
  • Anyone who’s professional license has been suspended, revoked or canceled
  • Applicants with pending judgments or lawsuits.
  • Those who have anything on their criminal record.
  • Anyone who has taken part in unlicensed activity.

Now, on to filling out the form.

Step 1 - Download the Background History Form

The Background History Form can be found on the TREC website. Download the PDF and read through the directions completely before you start.

Downloading the form is important because that’s the only way to save information as you work on it.

Step 2 - Be 100% Honest and Transparent

TREC wants to know the truth, the whole truth and nothing but the truth. If you provide misleading information or lie about the circumstances and TREC finds out they’ll probably deny your license application. No bueno.

Step 3 - Provide Personal, Contact and Employment Information

The first thing you be asked to do is list your name, contact information, and employment history. The employment history will need to include everything in the last five years as well as unemployment periods of 30+ days.

Step 4 - List Every Single License and/or Infraction (Even Dismissed Charges)

Another reason TREC will deny a license is if an applicant fails to report an infraction on the Background History Form. TREC wants you to list every single thing:

  • Felonies
  • Misdemeanors
  • Dismissed cases
  • Parole situations
  • Probationary periods
  • Deferred adjudication/community supervision

The infractions should be noted no matter how long ago they occurred.

Step 5 - Include a Background History Form for Each Infraction

You may end up having to submit more than one Background History Form. TREC requires a separate form for each license held, criminal case/charge, judgment, and disciplinary action.

Step 6 - Provide Detailed Explanations

The Background History Form is your chance to explain your yes answers. Space is provided on the form, but if it isn’t enough, attach additional pages rather than cutting your answers short.

Step 7 - Submit Supporting Documents

You’ll also need to include documents related to anything you report on the Background History Form. The form will provide directions for what type of documents need to be submitted at the bottom of each section. Don’t send in the form until you’re able to gather the additional information.

Step 8 - Print, Sign and Date the Form

The Background History Form isn’t valid unless it’s signed and dated.

Step 9 - Mail the Background History Form

The form and all additional documents can’t be submitted online. They have to be mailed to the Texas Real Estate Commission at:

P.O. Box 12188 Austin, TX 78711-2188

After you submit the form it may take TREC some time to respond. They could ask you for additional information or initiate an investigation. Regardless, it’s best to respond immediately and comply with the TREC directives if you want to get a Texas real estate license.

When you decide to get a Texas real estate license you may not realize the process includes a pretty extensive background check. If there’s any concern that something from the past may impact your future as a real estate agent you can request a Moral Character Determination.

Submitting a Moral Character Determination (MCD) form will help you find out if you’re likely to pass the Texas Real Estate Commission’s honesty, integrity and trustworthiness requirement before actually applying for a license. It’s a convenience that can save you time and money, as long as you do things correctly.

Here are five mistakes you’ll want to avoid when filing for a moral character determination.

MCD Mistake #1 - Not Being 100% Honest

The worst mistake you can make is not being 100% honest when filling out the MCD form. It’s one of the quickest ways to get your license application denied once you move to that step.

Some people are tempted to bend the truth on the MCD since the Commission doesn’t do a background check. But trust us, if your MCD checks out but then doesn’t line up with what the Commission finds during the background check it won’t turn out good. Even if it’s a small white lie, TREC will interpret that as a lack of honesty and probably deny the license.

MCD Mistake #2 - Not Noting Every Infraction, Including Dismissed Charges

Another big mistake is failing to note every single possible infraction that could turn up in the background check. When you’re answering the questions on the form everything must be disclosed no matter how much time has passed. Even dismissed and pending charges count so include everything.

MCD Mistake #3 - Not Including a Background History Form

You’ll have to also submit a Background History form as well. The MCD will be considered incomplete and returned if TREC doesn’t receive both forms.

Get tips on how to fill out the TREC Background History form.

MCD Mistake #4 - Not Submitting the Appropriate Fee

Along with a Background History form, you’ll also need to submit a fee. The fee is $50, but it has to be paid in a certain way. You can only pay by money order or check, and it has to be for the full amount. If you don’t make the payment exactly as directly the MCD will be rejected.

MCD Mistake #5 - Submitting an MCD After You’ve Already Submitted an Application

If you’ve already submitted a license application the train is rolling down the tracks. At this stage, there’s no point in submitting a Moral Character Determination form.

Don’t worry, the MCD and Background History form are pretty straightforward. As long as you avoid the mistakes above and fill out the forms completely you should get a response letting you know if you’re likely to be okayed for a Texas real estate license.

Now, moving on. What happens if you fail the MCD?

People who have performed unlicensed activity, have a record of criminal offenses, are subject to unpaid judgments or experienced professional discipline are strongly encouraged to request a Moral Character Determination (MCD). The determination is essentially a way to find out if the Commission believes you’ll meet the honesty, integrity and trustworthiness requirement before going through the full application process.

After submitting an MCD form and Background History form you’ll hear back from TREC letting you know if your MCD was approved or denied. If you passed, great! You can move forward in the process with more reassurance you’ll be approved for a Texas real estate license.

But what happens if you fail the TREC Moral Character Determination? What steps you should take next?

What to Do If You Fail the Moral Character Determination?

TREC carefully examines and considers each MCD submission on a case-by-case basis. If they feel something in your past isn’t satisfactory for receiving a real estate license you’ll be notified by email or mail. TREC is fairly lenient, but violent offenses, real estate-related crimes, and charges involving money are huge red flags that often lead to a license denial.

It’s understandable to be upset if you get a denial notice from TREC after submitting an MCD. But that doesn’t have to be the end of the road on your path to getting a Texas real estate license.

You can’t appeal the Commission’s determination, but you can submit another Moral Character Determination and Background History form in hopes of getting a more favorable outcome. This time it may be helpful to include:

  • More details on the infraction
  • Letters of character reference
  • Professional references
  • Proof of rehabilitation

Basically, do what you can to prove that your past infraction was an isolated event and that you’re now an upright citizen who is fit to have a license. Point out the facts and details that support this, like how long it’s been since the infraction and the steps you took to correct your actions.

Hopefully, by providing the additional compelling information you can turn the first Moral Character Determination around.

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