Texas Intermediary vs. Dual Agency: What the State Exam Expects You to Know

Short answer: when one Texas brokerage represents both the buyer and the seller in the same transaction, Texas law handles it through intermediary practice. The broker needs written consent from each party, must act fairly and impartially, and may appoint one associated license holder to work with each side. National study guides usually call this situation dual agency. The Texas State portion tests the Texas version.

What makes a broker an intermediary

Under the Real Estate License Act (TRELA), Texas Occupations Code §1101.559, a broker may act as an intermediary only if:

• the broker obtains written consent from each party to act as an intermediary in the transaction, and
• that written consent states the source of any expected compensation to the broker.

A written listing agreement or buyer representation agreement can serve as that consent if it authorizes intermediary practice and sets out, in conspicuous bold or underlined print, the conduct that §1101.651(d) prohibits.

What an intermediary may not do

Section 1101.651(d) lists what a broker acting as an intermediary, and any license holder appointed under it, may not do:

1. Tell the buyer or tenant that the seller or landlord will accept less than the asking price, unless the seller or landlord authorizes it in a separate written instruction.
2. Tell the seller or landlord that the buyer or tenant will pay more than the price in a written offer, unless the buyer or tenant authorizes it in a separate written instruction.
3. Disclose confidential information, or information a party has instructed in writing not to disclose, unless a separate written instruction allows it, the law or a court order requires it, or the information materially relates to the condition of the property.
4. Treat a party to the transaction dishonestly, or otherwise violate the Act.

Note the exception in item 3. A known defect that materially relates to the condition of the property is not protected as "confidential". Exam questions often turn on that line.

Appointed license holders

Under §1101.560, an intermediary broker may appoint one associated license holder to communicate with and carry out the instructions of one party, and a different associated license holder for the other party. Two conditions apply:

• the parties' written consent must authorize the broker to make appointments, and
• the broker must give written notice of the appointments to all parties.

An appointed license holder may give opinions and advice during negotiations, but only to the party they were appointed to. The broker stays fair and impartial; §1101.559 says making appointments this way is consistent with that duty.

How this differs from "dual agency" in national material

National courses describe dual agency in general terms: one agent or firm represents both sides with informed consent. Texas sets out its own structure with specific requirements: consent in writing that names the compensation source, prohibited disclosures listed by statute, and appointments with written notice. On the State portion, choose the answer that matches TRELA's rules, not the general national description.

Common exam traps

• Verbal consent. Consent to intermediary practice must be written. A verbal okay is not enough.
• "The seller said they'd take less." The intermediary may not pass that on without the seller's separate written instruction.
• Hiding a defect as "confidential". Information that materially relates to the property's condition is outside the confidentiality protection.
• Advice from the broker. The intermediary broker stays impartial. Opinions and advice come from the appointed license holders, each to their own party.

Practise it

Our free Agency & Brokerage lesson covers intermediary practice alongside the other Texas agency rules. Agency/Brokerage is the largest area of the State portion, with 11 of the 40 scored questions. For the full list of Texas-only rules, see the Texas law a national study guide won't teach you. A paid pass adds the full question bank and timed State-portion mock exams; see pricing.

State RE PREP™ is an independent practice platform. It is not affiliated with, endorsed by, or operated by the Texas Real Estate Commission (TREC) or Pearson VUE, which administer the actual exam. Exam rules change; confirm current details in the Pearson VUE candidate handbook before you book.