Texas Intermediary Relationship: Agency Law for the Exam
Texas's intermediary model is unlike most states. Understand when it applies, what's required, and what an intermediary broker can and cannot do.
Texas uses a unique agency model called the "intermediary relationship" instead of dual agency. Understanding this is critical — the Texas exam tests it in almost every sitting.
Three Agency Relationships in Texas
1. Seller's Representative (Listing Agent) A broker who represents the seller owes fiduciary duties to the seller: loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care. The listing broker must disclose known material facts to buyers but cannot disclose confidential seller information.
2. Buyer's Representative A broker who represents the buyer under a written Buyer's Representation Agreement owes fiduciary duties to the buyer. Texas requires a written agreement for buyer representation.
3. Intermediary When one broker's firm represents BOTH the buyer and the seller in the same transaction, the broker acts as an intermediary. This requires: - **Written consent from both parties** (typically in the listing agreement and buyer representation agreement) - **Appointment of different associated agents** — one appointed to represent the seller, one appointed to represent the buyer - The intermediary broker (usually the managing broker) oversees but cannot favor either party
What an Intermediary Broker Cannot Do
The intermediary broker has significant restrictions: - Cannot give opinions or advice — must remain neutral - Cannot disclose the seller's minimum acceptable price to the buyer - Cannot disclose the buyer's maximum willingness to pay to the seller - Cannot advocate for either party over the other
The appointed agents (not the intermediary broker) can give opinions and advice, but only to their appointed party.
Disclosure Requirements
Texas requires two key disclosure documents:
1. Information About Brokerage Services (IABS) Every real estate license holder must provide this form at first substantive contact with a prospective buyer or seller. It explains the types of representation available in Texas.
2. Intermediary Consent Typically included in: - Listing agreements (seller consents to broker acting as intermediary if buyer is also represented by the firm) - Buyer's Representation Agreements (buyer consents to broker acting as intermediary if property listed with same firm)
Comparison: Texas vs. Other States
| State Approach | Texas Version | |---|---| | Dual agency | Intermediary relationship | | Dual agent duties | Neutrality; no opinions or advice | | Subagents | Appointed associates | | Written consent required | Yes — both parties |
Common Exam Questions
Q: A Texas broker has a listing agreement with a seller. A buyer who has signed a buyer's rep agreement with the same brokerage wants to make an offer. What must the broker do? A: Obtain written consent from both parties to act as intermediary, and appoint different associated agents for each party.
Q: An intermediary broker can: A) Give advice to the seller about negotiating strategy B) Disclose the buyer's financial situation to the seller C) Appoint associated licensees to represent each party D) Advocate for the party that has been a client longer
Answer: C — The intermediary may appoint associated licensees. All other options violate the intermediary's neutrality obligations.
[Practice Texas agency questions at CARealestate.com/states/texas](https://carealestate.com/states/texas)
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