Updated for the Texas state-law outline effective January 1, 2026 · Pearson VUE #094401 rev. 01/2026
Texas agency and brokerage, the complete 11-item state-law guide.
Learn disclosure, intermediary practice, client duties, broker supervision, and unlicensed-assistant limits. Then work the interactive scenarios to apply the Texas relationship rules.
Agency and Brokerage is the largest Texas state-law area at 11 scored items. It covers disclosure, intermediary practice, duties to clients, broker and sales agent relationships, broker responsibility, and proper use of unlicensed assistants. When one Texas broker represents both sides, the relationship is intermediary with the written consent of both parties. Never dual agency, which Texas does not permit. The broker stays fair and impartial and may, optionally, appoint a license holder to each party. The IABS notice is a disclosure given at the first substantive communication; it does not create representation.
Exam prep only. This explains how the Texas exam tests agency rules, not legal advice for a live transaction.
Phase 1 · Understand
What this area is worth
Eleven scored items. The highest-leverage Texas law area.
Percentages do not tell you what to do. Misses do. Agency contains 11 scored questions, and you can miss only 12 scored Texas state law questions overall (28 correct out of 40).
11scored Agency and Brokerage items
12misses allowed across the entire Texas state law portion
1miss left for the other 29 items if Agency goes badly wrong
Missing every Agency question would leave room for only one additional miss across the other 29 scored state questions. That is the case for spending disproportionate time here.
Area guide
Study all six official Agency and Brokerage subtopics.
Pearson lists six rows and does not publish an item count for each row. Cover every one, then use the supporting lessons for appointments, 2026 buyer agreements, and compensation.
Texas does not permit dual agency. One broker on both sides uses the intermediary relationship, and only with both parties' written consent.
Intermediary
Written consent
A broker represents both parties only with the written consent of both, usually obtained up front.
Appointments
Optional
The broker may appoint a license holder to each party, but never the same one to both.
IABS timing
First substantive communication
Give the IABS notice at the first substantive communication with a party about a specific property.
IABS nature
Disclosure
IABS is informational. It does not by itself create a representation relationship.
Fairness
No favoritism
An intermediary may not favor one party or reveal one party's confidential information.
Phase 2 · Apply
Scenario tool
Pick the situation. See the correct Texas answer.
Each scenario shows the lawful relationship, the governing statute, whether IABS is required, and the trap the exam sets.
IntermediaryTRELA §1101.559 (broker as intermediary; act fairly and impartially); §1101.651(d) (prohibited disclosures).
Intermediary, with the written consent of both parties.
When the same broker is on both sides, Texas uses the intermediary relationship, not dual agency. The written consent is normally obtained up front in the listing agreement and the buyer-representation agreement, which authorize the broker to act as intermediary if the firm ends up on both sides. The intermediary must act fairly and may not favor one party over the other.
IABS notice
IABS was already required at first substantive communication with each party, before this point.
This is NOT dual agency. Texas does not permit dual agency; the lawful path is intermediary with written consent.
Most agency misses come from calling the Texas model dual agency or assuming IABS is always required. Walk the questions.
Is one broker on both sides of the deal?
If the same broker represents both the buyer and the seller, the relationship is intermediary, authorized by the written consent of both parties, not dual agency, which Texas does not permit.
Where does the written consent come from?
Usually from the listing agreement and the buyer-representation agreement, which authorize the broker to act as intermediary if the same firm ends up on both sides of a transaction.
Do you have to make appointments?
No. Appointments are optional. If the written consent authorizes it, the broker may appoint one associated license holder to advise the buyer and a different one for the seller; never the same person to both.
When is the IABS notice required?
At the first substantive communication with a party about a proposed transaction involving specific real property, unless an exception applies. For a 2026 open-house question, also identify the host's broker: a host from the listing brokerage discloses owner representation but does not give visitors IABS or a buyer agreement; an outside host who does not represent the owner must provide IABS and obtain the required written agreement before showing.
Phase 3 · Avoid the traps
Do not confuse these
Six pairs that decide most agency questions.
Almost every miss in this area is one of these six confusions. Each pair gives the one test that separates them and the wording that tells you which side you are on.
Client
The party the broker represents. Owed the duties that come with representation.
vs
Customer
The party on the other side. Owed honesty, fairness, and disclosure of known material defects.
What decides it
Did the broker agree to represent the party, or did the parties' conduct create an agency relationship? IABS alone never does. For a prospective residential buyer, §1101.563 adds a written-agreement requirement before a showing or offer.
Stem clue
"Working with" does not prove representation, but it is not meaningless. Read the agreement and the conduct before deciding whether the party is a client or customer.
IABS notice
A written notice explaining the ways a broker can represent a party.
vs
Agency relationship
Created by an express agreement or, in some situations, implied by conduct. Specific 2026 residential-buyer activity requires a written agreement.
What decides it
The notice informs. It does not create agency. Decide representation from the parties' agreement and conduct, then apply any separate writing requirement.
Stem clue
If the stem says the notice was provided and then asks who is represented, the answer turns on the agreement, not the notice.
Intermediary
The Texas relationship when one broker represents both parties. It is lawful only with the written consent of both, and that consent must state the source of any expected compensation (§1101.559(a)(2)).
vs
Dual agency
Not permitted in Texas.
What decides it
Same broker on both sides means intermediary, and only with both parties' written consent. Two agents at one brokerage is still one broker.
Stem clue
"Dual agency" is never the correct answer to a Texas question. If it appears as an option, it is a distractor.
Intermediary with appointments
A different associated license holder is appointed to each party, and each may advise the party they were appointed to. The written consent must authorize appointments, and written notice of them goes to all parties (§1101.560(b)).
vs
Intermediary without appointments
Everyone stays neutral. No opinions or advice favoring either party.
What decides it
Appointments are optional, they must be authorized in the written consent, and they are what unlocks advice. No appointment means no advice.
Stem clue
If the stem never mentions appointments, assume there are none, and reject any answer in which someone advises a party.
Confidential information
A party's motivation, bottom line, or the terms they would actually accept. Protected without written authorization.
vs
Material defect
A known defect in the property's condition. Must be disclosed.
What decides it
Confidentiality protects the person's negotiating position. It never protects the property's condition.
Stem clue
"The seller said they'd take less" is confidential. "The agent knows the foundation is cracked" gets disclosed.
The sales agent's act
Performed through and in the name of the sponsoring broker.
vs
The broker's responsibility
Supervision and responsibility for the sales agent's real estate activity.
What decides it
A broker can delegate the task. A broker cannot delegate away the responsibility.
Stem clue
Any option in which a sales agent acts independently of the broker, whether by taking compensation directly or advertising alone, is wrong.
Rule first, guidance second
Keep the tested rule clean.
Where newer practice guidance adds a separate obligation, it is kept out of the statutory rule on purpose. Memorize the statute, recognize when different facts activate a different rule, and never merge the two.
Open houses in 2026: identify the host's broker first
TRELA §1101.558(c)(3) still lists a communication at a property held open for viewing, concerning that property, as an IABS exception. The 2026 pre-showing rule in §1101.562(b) adds a second question: does the host's broker represent the owner?
Exam cue
A host from the listing broker's office discloses owner representation but does not give visitors IABS or a buyer agreement. An outside host who does not represent the owner provides IABS and, for a prospective residential buyer, enters the required written agreement before showing.
Fact sorter
Which facts decide, and which are there to pull you off.
Application items rarely fail on the rule. They fail because a plausible detail looks decisive and is not. These two scenarios are identical except for one fact. Read them together, then work the full set in the scenario lab.
Intermediary practice
Tests: TRELA §1101.559 to §1101.560, intermediary with appointments
Agent A listed the property. Agent B, at the same brokerage, is working with a buyer who wants it. Both parties signed agreements consenting in writing to intermediary. The broker appoints A to the seller and B to the buyer.
Decides
Both agents work at the same brokerageOne broker on both sides. This is the intermediary trigger.
Decides
Both parties consented in writingWritten consent from both is what makes intermediary lawful.
Decides
Different license holders were appointed to each partyAppointments unlock advice to the appointed party.
Noise
A and B work from different offices and have never metGeography and familiarity change nothing. The broker is the same.
What is the relationship, and may Agent B advise the buyer on what to offer?
Answer
Intermediary with appointments. Agent B may advise the buyer.
Why
The broker stays neutral, but an appointed license holder may advise the party they were appointed to. That is the entire point of making appointments.
The trap
Answering "dual agency," which is never correct in Texas. The subtler trap is assuming the neutrality of the broker also silences the appointed agents. It does not.
20 questions across the 6 official subtopics. The result tells you which subtopic is weak and sends you to the one lesson that covers it.
Checkpoint
Can you hold all of Texas Agency and Brokerage?
20 questions across the 6 official subtopics. You get your score broken down by subtopic, so a weak spot points at one lesson instead of the whole area.
ADisclosure
BIntermediary Practice
CDuties to Client (including Minimum Services)
DBroker-Sales Agent Relationships
EBroker's Responsibility for Acts of Sales Agent
FAppropriate Use of Unlicensed Assistants
Reading the question
What the wording is actually testing.
Exam stems signal the rule before they ask the question. Learn the signal and you have answered half the item before reaching the options.
"…at the first substantive communication about a specific property"
Really askingHas the IABS trigger been reached, and does an exception apply?
Decide byCheck the three §1101.558(c) exceptions, then check whether a 2026 pre-showing duty changes the result. At an open house, identify whether the host's broker represents the owner.
"Both agents work for the same brokerage"
Really askingIs this an intermediary fact pattern?
Decide byOne broker on both sides. Look next for written consent, then for appointments.
"The seller mentioned they would accept less"
Really askingIs this confidential information or a disclosable fact?
Decide byIt concerns the party's negotiating position, so it is confidential without written authorization.
"The license holder appointed to the buyer…"
Really askingDo appointments exist, and what does that unlock?
Decide byAppointments exist, so that person may advise their own party, but never both.
"The agent working with the buyer"
Really askingIs the buyer a client or a customer?
Decide byThe phrase alone does not settle agency. Read the agreement and conduct, and remember that §1101.563 requires a written agreement before buyer-side brokerage involving a residential showing or offer.
"The assistant told the caller…"
Really askingWas that clerical work or licensed activity?
Decide byConfirming what was advertised, meaning size, price, and terms, is clerical, provided the caller is told the person is clerical staff (§535.5(g)). Opinions, advice, negotiation, and showing require a license.
Provisions cited on this page
TRELA §1101.351License required; a sales agent acts for a sponsoring broker
Verified July 29, 2026. Statutory rules were checked against the official Texas Occupations Code Chapter 1101, including §§1101.351, 1101.557–1101.563, 1101.651, 1101.652, and 1101.803, with the amendments effective January 1, 2026. TREC Rules 531.20, 535.2, 535.3, 535.4, 535.5, 535.141, and 535.156 were checked against TREC's current published rule text. The 2026 open-house outcomes were checked against TREC's January 7, 2026 buyer and tenant representation guidance. Exam figures were checked against Pearson VUE outline #094401, rev. 01/2026, which lists 40 scored state items and 11 for Agency/Brokerage, and Candidate Handbook #094400, January 2026, rev. 05/2026, which requires 28 correct on the state portion. Statutes, rules, forms, and exam procedures can change; verify current requirements with TREC and Pearson VUE.
Intermediary duties
What an intermediary may, must, and may not do.
The intermediary stays neutral. These limits come straight from TRELA §1101.559 (act fairly and impartially) and §1101.651(d) (the prohibited disclosures). They are central to intermediary fact patterns.
May not
Favor one party
An intermediary must act fairly and impartially and may not act so as to advantage one party over the other.
May not
Reveal a party's bottom line
Without the required separate writing, the broker may not disclose that the seller will take less than the asking price or that the buyer will pay more than the price submitted in a written offer.
May not
Leak confidential information
Confidential information from one party may not be disclosed to the other unless that party authorizes it in writing.
May
Appoint license holders
With written consent, the broker may appoint a different associated license holder to advise each party.
Must
Disclose material defects
Known material defects about the property must still be disclosed. Confidentiality does not cover property condition.
Official references
Exam context and source notes.
Intermediary practice and the IABS notice sit in the Texas Agency / Brokerage area of the Pearson VUE state-law outline. Rules are from TRELA (Texas Occupations Code Chapter 1101).
No. Texas does not permit dual agency. When one broker represents both the buyer and the seller in the same transaction, the lawful relationship is intermediary, which requires the written consent of both parties and may include appointed license holders.
What is the difference between an intermediary and an appointed license holder?+
The intermediary is the broker who, with written consent, represents both parties and stays fair and impartial. Appointed license holders are associated license holders the broker may appoint (one to the buyer and a different one to the seller) to communicate with and advise each party separately. Appointments are optional and the same person cannot be appointed to both parties.
When must a license holder provide the IABS notice?+
At the first substantive communication with a party about a specific property. The notice is exempt at an open house concerning that property, when the party is already represented by another license holder, and for a residential lease of less than one year when a sale is not being considered.
Does giving someone the IABS notice make them my client?+
No. IABS is an informational disclosure, not a representation agreement. Agency can arise through an express agreement or, in some situations, through conduct. Since January 1, 2026, a license holder performing brokerage for a prospective residential buyer must also have the written agreement required by §1101.563 before a showing or, if no property will be shown, before presenting an offer.
Can an intermediary reveal what a party will accept?+
No. An intermediary may not disclose that a party will accept a price or terms other than those offered, and may not reveal confidential information, unless the party authorizes it in writing. The broker must still disclose known material defects about the property.
What must the written consent to intermediary actually say?+
Under TRELA §1101.559(a), the broker must obtain written consent from each party, and that written consent must state the source of any expected compensation to the broker. A listing agreement or buyer-representation agreement authorizing intermediary is sufficient consent if it sets out the §1101.651(d) prohibited conduct in conspicuous bold or underlined print.
Do appointments have to be in writing?+
The authority to appoint must be in the parties' written consent, and under §1101.560(b) the broker must provide written notice of the appointment to all parties involved in the transaction. A different associated license holder is appointed to each party; the same person may never be appointed to both.
Can a broker who represents both sides simply refuse to act as intermediary?+
No. Under §1101.561(b), a broker who agrees to represent both a buyer or tenant and a seller or landlord in a transaction must agree to act as an intermediary.
How many scored items is Agency and Brokerage worth?+
Eleven of the 40 scored items on the Texas Sales Agent state-law portion, which makes it the largest state-law area. You need 28 correct out of 40 to pass that portion, so the whole portion allows only 12 misses.
Is the broker responsible if a sales agent breaks a rule without the broker knowing?+
Yes. TRELA §1101.803 makes a licensed broker liable to the Commission, the public, and the broker's clients for conduct engaged in under Chapter 1101 by a sales agent associated with or acting for the broker. The statute contains no knowledge requirement, and supervisory duties can be delegated while the responsibility cannot.
Who may pay a sales agent for a transaction?+
Only the sponsoring broker. Under §1101.651(b) a sales agent may not accept compensation for a real estate transaction from anyone other than the broker sponsoring them, or the broker who was sponsoring them when the compensation was earned. The broker's permission does not authorize a direct payment.
Did the 2026 rules change when the IABS notice is required?+
The three exceptions in §1101.558(c) remain in the statute, but SB 1968 added separate pre-showing duties in §§1101.562 and 1101.563. That is why an outside open-house host who does not represent the owner must provide IABS and enter a written agreement before showing, even though the ordinary open-house communication is listed in §1101.558(c). Identify the host's relationship before answering.
Does every open-house host follow the same IABS rule in 2026?+
No. TREC gives two outcomes. A host from the listing broker's office represents the owner, does not give visitors IABS, and does not enter a buyer agreement, but must disclose owner representation. A host outside the listing brokerage who does not represent the owner must provide IABS and enter the §1101.563 written agreement before showing. TREC says this remains true even if the visitor already has a written representation agreement with another broker.
What may a broker do when showing property without representing the party?+
Under §1101.562(a) the broker must not have agreed to represent the party, must not otherwise be acting as their agent, must give no opinions or advice, and must perform no other act of brokerage for them. Under §1101.562(c) the broker may still confirm the property's size, price, and terms.
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