Agency and Fiduciary Duties
Who represents whom
Texas does not use the term "dual agency." Under the Real Estate License Act (Occupations Code Ch. 1101), a broker may act as an intermediary between parties to a transaction only with the written consent of both parties. Once intermediary status is agreed, the broker may appoint an associated license holder to work with each party, but only if both parties consent in writing to that appointment.
The fiduciary duties
Memorize the six: loyalty, obedience, disclosure, confidentiality, reasonable care and diligence, accounting. Traps to watch:
- Obedience runs only to lawful instructions.
- Confidentiality survives termination of the relationship; the duty does not end at closing.
- A seller's agent must still disclose known material adverse facts about the property. A cracked foundation is not a secret to keep.
- Compensation does not create representation. A buyer's agent may be paid out of the seller's proceeds and still owe undivided loyalty to the buyer.
Disclosure timing
The Information About Brokerage Services notice is given at the first substantive communication about a specific property. Asking for a showing is not yet substantive; discussing price, terms, or motivation is. Using a TREC form does not by itself create an agency relationship, and a customer is not a client.
Rule of thumb
Ask who signed the agency agreement, not who signed the check.
Worked example
An agent representing a buyer learns from the listing agent that the seller is relocating and desperate to close. The agent owes his buyer diligent representation and must disclose material facts about the property to both sides, but he may not reveal the seller's confidential motivation. He also may not repeat his client's private financial position to the seller's side.