Agency and Fiduciary Duties
The Texas agency models
Texas does not label the relationship "dual agency." A license holder is either a single agent for one party or an intermediary between the parties in the same transaction. Intermediary status requires written consent before acting, clear disclosure, and written appointments. An intermediary may not advocate for one party to the detriment of the other and may never disclose that a party would pay more or accept less than the listed terms. A broker may appoint different associated license holders to each party; confidentiality as to price remains absolute.
Disclosures
The Information About Brokerage Services (IABS) form must be given at the first substantive communication with a party (or the party's representative) and, at the latest, before an offer is submitted. The agency disclosure is not a contract. A buyer representation agreement should be in writing and signed to create a true client relationship; without it the buyer is a customer.
Fiduciary duties
Mnemonic OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, reasonable care. Confidential information learned during the agency survives termination of the relationship; the other duties end. A broker must pass along material information to the client, but discloses only what is legally required to the other side (known defects that are not readily observable).
Traps
- An intermediary who slips into giving one party advice or "bottom line" numbers.
- Assuming confidentiality dies when the listing expires.
- Treating a customer as though a fiduciary duty were owed.
Rule of thumb
When in doubt, disclose status in writing before you discuss price. Worked example - a broker acting as intermediary learns the seller would accept $20,000 less; the broker must keep that from the buyer while still presenting both offers honestly.