Texas intermediary brokerage and the IABS notice, the agency rules the exam tests hardest.
Texas abolished dual agency and uses intermediary instead. Work through the scenarios below to see the correct Texas relationship and exactly when the IABS notice is required.
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 recognize. The broker stays fair and impartial and may, optionally, appoint a license holder to each party. The IABS notice is a disclosure given at first substantive contact; it does not create representation.
Texas does not recognize dual agency. One broker on both sides uses the intermediary relationship.
A broker represents both parties only with the written consent of both, usually obtained up front.
The broker may appoint a license holder to each party, but never the same one to both.
Give the IABS notice at the first substantive communication about a specific property.
IABS is informational. It does not by itself create a representation relationship.
An intermediary may not favor one party or reveal one party's confidential information.
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.
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 was already required at first substantive contact with each party, before this point.
This is NOT dual agency. Texas abolished dual agency; the lawful path is intermediary with written consent.
Deepen it in the glossary: Intermediary, Appointed license holder, IABS, and Dual agency.
How to read an agency scenario in Texas.
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 abolished.
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 specific property. It is exempt at an open house about that property, with a party already represented by another license holder, and for a residential lease under one year with no sale contemplated.
What an intermediary may, must, and may not do.
The intermediary stays neutral. These limits are straight from TRELA §1101.561 and are heavily tested.
Favor one party
An intermediary must act fairly and impartially and may not act so as to advantage one party over the other.
Reveal a party's bottom line
The broker may not disclose that a party will accept a price or terms different from those offered, without written authorization.
Leak confidential information
Confidential information from one party may not be disclosed to the other unless that party authorizes it in writing.
Appoint license holders
With written consent, the broker may appoint a different associated license holder to advise each party.
Disclose material defects
Known material defects about the property must still be disclosed. Confidentiality does not cover property condition.
Does Texas allow dual agency?+
No. Texas does not recognize 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. The IABS is an informational disclosure about the kinds of representation a broker can offer. It does not by itself create a representation relationship. A client relationship is created by a representation agreement, not by the notice.
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.