Ed Neuhaus 
I get this question from agents at least a couple times a month. They’ve been thinking about stepping back from production, they’ve looked at the TREC website, and they come away more confused than when they started.
“So if I go inactive, can I still get paid for referrals?”
It’s a completely reasonable question. And TREC’s answer is technically on their website, but it’s buried in legalese and split across multiple pages in a way that makes you feel like you need a law degree to parse it. So lets just do this in plain English.
The Three License Statuses (What They Actually Mean)
TREC recognizes three states a real estate license can be in: active, inactive, and expired. These are not interchangeable. They are meaningfully different, and the differences matter a lot if you’re thinking about your next chapter.
Active: The Full Picture
An active license means exactly what it sounds like. You can do everything a license permits: list properties, work with buyers, negotiate contracts, and yes, make referrals. You have a sponsoring broker, you’ve met your CE requirements, and your license is current.
To stay active, you’re looking at 18 hours of continuing education every two years. That’s 4 hours of Legal Update I, 4 hours of Legal Update II, 3 hours of contract-related coursework, and 7 hours of elective CE. If you need to knock out your CE hours, Aceable’s online program lets you complete everything at your own pace from home. You also pay renewal fees to TREC and any dues or fees to your brokerage.
The total cost to maintain an active license runs somewhere in the $200-$400 per year range depending on what you pay for CE and which brokerage you’re with. That number drops significantly if you move to a referral-only arrangement, which we’ll get to.
Inactive: The One That Confuses Everyone
Here’s where it gets important. An inactive license is not a suspended license. It’s not a punishment. It’s just a dormant license. You still have it. TREC still has your records. You can reactivate it. But while you’re inactive, there’s one rule that governs everything:
You cannot conduct real estate brokerage activity.
TREC is explicit about this. Conducting brokerage activity with an inactive license is a violation of TRELA Section 1101.351(c) and can result in sanctions. And here’s the part that trips people up: making a referral counts as brokerage activity. So if your license is inactive and you call up a friend and say “I’ve got a buyer for you, I want 25% of the commission,” that’s a problem. That referral is not collectible and you’ve put yourself in violation.
But here is the part TREC’s website doesn’t explain well at all.
You can still receive payment for referrals you made while you were active.
If you were active when you made the referral, if you had a sponsoring broker and a current license when you picked up the phone and sent that buyer over, you have the right to that commission. TREC Rule 535.3 says compensation can flow through your current sponsoring broker OR the broker who sponsored you at the time you earned the right to that compensation. Going inactive after the referral is made doesn’t erase what you earned. The key is the timing. The referral has to be made while you’re active. Everything after that is paperwork.
One other thing about inactive status: you do not need CE to renew in inactive status. So if you’ve let your CE slide and your renewal is coming up, you can renew inactive without the coursework. It’s not ideal long-term, but it keeps the license alive without a CE bill.
Expired: Start Over
An expired license is in a different category entirely. Your license lapsed because the renewal deadline passed and you didn’t act. You cannot do anything with an expired license, and reinstating it requires going back through TREC, paying reinstatement fees, and potentially completing additional education depending on how long it’s been expired.
This is the one agents regret most. The difference between going inactive proactively and accidentally letting a license expire is significant, both in cost and in hassle. Inactive licenses keep the door open. Expired licenses close it, and re-opening it takes real effort.
If you’re not sure which status your license is in right now, you can look it up on the TREC REALM portal.
The Strategy Most Agents Don’t Know About
Once you understand the timing rule on referrals, a pretty simple strategy emerges.
Make your referrals while you’re still active. Set them up. Get agreements in place. Then, once the referrals are properly established through your broker while your license is active, you can move to inactive status without losing those commissions.
Agents who are planning a gradual transition often use this window intentionally. They spend a few months identifying everyone in their sphere who’s likely to buy or sell in the next year or two, make those referrals while they’re still active, then reduce their overhead by going inactive while the commissions work their way through the pipeline. It’s not a workaround. It’s just understanding how the rule actually works and planning accordingly. Here is what the actual income looks like when you do this right.
The agents who get into trouble are the ones who go inactive first, then try to collect on referrals they make afterward. That’s the sequence TREC doesn’t allow.
What Is an LFRO and Do You Need One?
If you want to stay in the referral game longer term, rather than just clearing out your pipeline before going inactive, there’s a structure designed for exactly this: the Limited Function Referral Office, or LFRO.
An LFRO is a brokerage licensed by TREC whose agents do one thing: make referrals. That’s it. No listings. No showings. No contracts. The agent and the broker sign an agreement that limits the agent’s activity to generating referrals, and all the referral fees flow through the LFRO broker to the agent.
The important thing to understand about an LFRO is that you still need an active license to be sponsored by one. You’re not inactive. You’re active, sponsored by the LFRO, but limited by agreement to referral-only activity. So you still have the CE requirements and renewal fees. The difference is you don’t have the overhead of a full-service brokerage. No desk fees, no split on non-existent production, no requirements to attend team meetings. You pay a modest fee to the LFRO for the sponsorship arrangement, send referrals, and collect your percentage.
There are referral-only brokerages in Texas set up specifically for this. We have a full guide on how to become a referral-only agent in Texas if you want the step-by-step. TREC has an FAQ page on LFROs that explains the structure if you want the official version. The short version: active license, sponsored by the LFRO, referrals only, low overhead.
At Neuhaus Realty Group, we have worked with transitioning agents who want to stay in the referral game without the full production overhead. If you’re wondering whether this structure might work for your situation, that’s an easy conversation to have.
TREC Rule 535.124: The Broker Succession Rule (August 2024)
This one isn’t directly about retiring agents, but it matters if you’re an agent and your broker is getting older or is the sole designated broker of a business entity.
In August 2024, TREC adopted Rule 535.124, which became effective September 11, 2024. It’s called the “Death of a Designated Broker” rule.
Here’s the old problem. If your sponsoring broker was the designated broker of a business entity and that broker died, every agent sponsored by that entity would have their license go inactive immediately. Not in 30 days. Not after a transition period. Immediately. Active listings in jeopardy, pending contracts in limbo, a scramble to find a new sponsor before you could do anything again.
The new rule gives business entities 14 days to designate a replacement broker. During those 14 days, the sponsored agents can keep working. The replacement broker still has to meet all TREC’s normal requirements to be a designated broker. The rule doesn’t waive anything. It just buys the entity enough time to make an orderly transition instead of an emergency one.
Two limits on this rule worth knowing. First, it only applies to designated brokers for business entities. If your broker is an individual and that individual dies, the old rule still applies, which means your license goes inactive immediately. Second, the 14-day window is for the entity to designate a new broker. If the entity doesn’t act in 14 days, you go inactive anyway.
Why does this matter for retiring agents? If your plan involves staying active through a small brokerage or a referral arrangement, and the broker of that operation is getting up there in years, understanding this rule matters. It’s worth asking how continuity is handled.
The Two Mistakes That Derail Otherwise Smart Transitions
I’ve seen enough of these situations to notice the patterns. Two mistakes come up again and again.
The first is letting the license expire instead of going inactive. These feel similar but they’re very different outcomes. Going inactive is a choice you make deliberately. Your license stays on file with TREC, you pay a modest renewal fee, and you can reactivate when you want to. Expiration happens when you don’t act, and reinstatement is more complicated and more expensive than most agents expect. TREC’s own page on this distinction is worth bookmarking if you’re anywhere close to your renewal date and not sure which way to go.
The second mistake is not transferring your license to a referral brokerage before stepping back. A lot of agents mentally “retire” without making any formal change. They stop taking clients, stop marketing, let things drift. Meanwhile their license is still active under their old brokerage, they’re potentially still on the hook for fees, and they haven’t set up any mechanism to collect referral income from their sphere. The smart move is to make the decision deliberately: transfer to an LFRO or referral-friendly brokerage where you can stay active cheaply, or go formally inactive and understand what that means for future referrals.
The agents who have the smoothest transitions are the ones who treat the license question the same way they’d treat anything else in business. Make a decision, document it, and set it up properly.
What If You Don’t Want to Deal With TREC at All?
Here is the question that comes up once I have explained all of this. Some agents listen to the active vs. inactive vs. expired breakdown and say: okay, but what if I just want to be done with TREC entirely?
Fair question. And there is an answer.
The Neuhaus Realty Group Emeritus Program is a marketing position, not a real estate position. The distinction matters legally and practically. Emeritus Ambassadors are compensated with a marketing fee for their database and personal introductions. They are not making referrals in the TREC sense. They are not conducting brokerage activity. They are providing marketing services: contact access, personal endorsement, reputation.
Which means no license required. Let it expire. No CE. No renewal fees. No sponsoring broker. No TREC involvement whatsoever.
This is not a workaround or a gray area. It is a different category of activity entirely. The marketing fee is compensation for something that does not require a real estate license: giving access to your contact database and making personal introductions to people who know and trust you. Agents who have been in the business for twenty-five years have a sphere that trusts them personally. That trust has value independent of a license.
For agents who are genuinely done with the administrative side of being a licensee, the Emeritus Program is often a cleaner solution than trying to navigate the referral-only structure. You are not juggling CE deadlines or transfer paperwork. You are just being yourself to people who already know you.
If you want to understand the full structure, visit the Emeritus Program page or reach out directly to talk through whether it fits your situation.
Frequently Asked Questions
Still Figuring Out Your Options?
License status questions are genuinely confusing, and the stakes are real. Getting this wrong means either leaving money on the table or accidentally running into a TREC violation.
At Neuhaus Realty Group, we help experienced agents sort through their transition options without pressure and without a sales pitch. Whether you’re figuring out the referral structure, thinking about a gradual handoff, or just trying to understand what your license actually lets you do right now, that’s a conversation we’re happy to have.
If you want to keep earning from your sphere while stepping back from production, there’s a right way to set that up. Reach out to Ed Neuhaus and lets figure out what that looks like for your situation. You can also learn more about the Emeritus Program on our program page.
