7.2 Texas Agency and the Intermediary Relationship

Texas Has No Dual Agency

Many states allow dual agency, where one agent represents both buyer and seller. Texas does not. Under TRELA Section 1101.561, if a broker is going to represent both parties in the same transaction, the broker must act as an intermediary — a distinct statutory relationship, not dual agency. A license holder who agrees to be a "dual agent" is violating the License Act. This is one of the most heavily tested distinctions on the Texas state portion.

The intermediary relationship exists at the broker level. When a brokerage has a listing on a property and one of its agents also represents a buyer interested in that property, the broker becomes the intermediary. The individual agents do not each separately represent their own clients in the old single-agency sense; the broker facilitates the transaction impartially.

The IABS Form

The Information About Brokerage Services (IABS) form is the foundational disclosure. TRELA requires a license holder to give the IABS to a prospective party at the time of the first substantive dialogue about a specific property. "Substantive dialogue" means a meeting or written communication about a party's needs or a specific property — not merely meeting at an open house, giving directions, or answering a general factual question.

Critically, the IABS does not create an agency relationship. It is purely informational — it explains the types of representation available and the broker's duties. Agency is created only by a written representation agreement, not by the IABS.

Written Agreement Required to Represent

To represent a buyer or seller, and to be eligible to act as an intermediary, the broker needs a written representation agreement. A written listing agreement (for the seller) and a written buyer-representation agreement (for the buyer) establish the agency relationship and the broker's compensation.

For intermediary status specifically, TRELA requires the broker to obtain written consent from both parties. A representation agreement satisfies this consent requirement if it:

1. Authorizes the broker to act as an intermediary between the parties;
2. Lists the conduct the intermediary is prohibited from performing, in conspicuous bold or underlined print; and
3. States who will pay the broker.

Because the consent must be in place before the intermediary situation arises, brokerages build this language into their standard listing and buyer-representation agreements at the outset.

Intermediary With vs. Without Appointments

Once a broker is an intermediary, the broker chooses how the firm's associates participate:

With appointments, each party gets an associate who can give advice and opinions, much like single agency — but the appointed associates still cannot reveal the other side's confidential information. The broker who makes the appointments must remain neutral. A broker may not appoint one associate to one party and serve as the appointee for the other party — that is not considered fair and impartial.

Confidentiality and Statutory Disclosure Obligations

An intermediary — and any appointed associate — operates under strict confidentiality limits. Under TRELA the intermediary may not disclose:

• That the seller will accept a price less than the asking price, unless authorized in writing;
• That the buyer will pay a price greater than the price submitted in an offer, unless authorized in writing;
• Any confidential information about a party (for example, motivation, financial limits, deadlines), unless authorized in writing or required by law; and
• Any information a party specifically instructs the broker to keep confidential, unless disclosure is required by law.

Information a broker learned before becoming an intermediary remains confidential and cannot be used against that party.

What Must Still Be Disclosed

Confidentiality never overrides honesty. Regardless of representation type, a license holder must disclose known material defects and may not misrepresent or conceal them. The intermediary must treat both parties fairly and impartially and must not act so as to favor one party over the other.

Exam tip: If a question describes one agent secretly "representing both sides equally" with full advocacy for each, the answer is that this is prohibited dual agency in Texas — the lawful path is the broker-level intermediary relationship with written consent.