Key Takeaways
- Texas defines agency in terms of the six fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care (OLD CAR)
- Texas recognizes three types of agency: seller's agent, buyer's agent, and intermediary (dual agency)
- The Information About Brokerage Services (IABS) form must be provided at first substantive dialogue
- A license holder cannot represent both buyer and seller unless acting as an intermediary with written consent
- Subagency is no longer the default in Texas—brokers must establish agency through agreement
Texas Agency Relationships
Agency law in Texas is governed by the Texas Real Estate License Act (TRELA) and common law principles. Understanding agency relationships is critical for the Texas state exam.
Important: This section covers Texas-specific agency law. For general agency concepts, see our Real Estate Salesperson exam prep.
Types of Agency Relationships
Texas recognizes three types of agency relationships:
| Type | Description |
|---|---|
| Seller's Agent | Represents the seller's interests |
| Buyer's Agent | Represents the buyer's interests |
| Intermediary | Represents both parties with limitations |
Single Agency
In single agency, the license holder represents only one party:
- Seller's Agent - Owes fiduciary duties to seller
- Buyer's Agent - Owes fiduciary duties to buyer
No Subagency Default
Key Point: Texas eliminated subagency as the default relationship. A cooperating broker working with a buyer is not automatically a subagent of the seller.
Brokers must establish their agency relationship through:
- Written buyer representation agreement, OR
- Acting as the seller's subagent (with agreement)
Fiduciary Duties (OLD CAR)
Texas agents owe six fiduciary duties to their clients, remembered by the acronym OLD CAR:
| Duty | Description |
|---|---|
| Obedience | Follow lawful instructions |
| Loyalty | Put client's interests first |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect client's private information |
| Accounting | Account for all money and property |
| Reasonable Care | Use skill and diligence |
Information About Brokerage Services (IABS)
The IABS is a TREC-promulgated form that explains agency relationships to consumers.
When to Provide IABS
The IABS must be provided at the first substantive dialogue:
| Situation | When to Provide |
|---|---|
| Listing appointment | At or before meeting |
| Showing property | Before substantive discussion |
| Open house | When buyer shows interest |
| Phone/online inquiry | At first substantive contact |
What "Substantive Dialogue" Means
| Is Substantive | Is NOT Substantive |
|---|---|
| Discussing property features | Providing general MLS information |
| Negotiating terms | Giving directions to property |
| Making recommendations | Answering factual questions |
| Discussing client's needs | Casual conversation |
IABS Content
The IABS explains:
- Types of agency representation available
- Broker's duties to clients vs. customers
- How compensation does not determine agency
- The intermediary relationship option
Exam Tip: The IABS is for information only—it does not create an agency relationship. Agency is created by agreement.
Customer vs. Client
| Term | Definition | Duties Owed |
|---|---|---|
| Client | Person represented by agent | Full fiduciary duties |
| Customer | Person NOT represented | Honesty, fairness only |
Duties to Customers
Even when not representing someone, agents owe:
- Honest dealing
- Fair treatment
- No misrepresentation
- Disclosure of material defects (if known)
When must a Texas license holder provide the Information About Brokerage Services (IABS) form?
What does the acronym OLD CAR represent in Texas agency law?