Agency, the IABS Notice, Intermediary Practice and Written Buyer Agreements

Texas agency law is statutory. On the broker exam you must recognize when representation exists, what notice is due and when, how a broker lawfully works both sides as an intermediary, and what changed for buyers on January 1, 2026.

Agency and the minimum services

• A broker who represents a party, or lists real estate under an exclusive agreement, is that party's agent.
• At a minimum, the broker must answer the party's questions and present any offer to or from the party, and must inform the party of material information, including the receipt of an offer.
• A broker owes the principal the highest fiduciary obligation, puts the principal's interest above the broker's own, and deals honestly and fairly with all parties.
• A broker or sales agent must respond within two calendar days to the principal, to a license holder representing another party, and to an unrepresented party.
• Texas has no dual agency, and subagency was repealed by SB 1968.

Disclosing representation and the IABS notice

• Representation disclosure: a license holder who represents a party discloses it, orally or in writing, at the first contact with another party or with that party's license holder.
• IABS: at the first substantive communication with a party about specific real property, the license holder gives written notice in at least a 10-point font. It describes the ways a broker can represent a party (including as an intermediary), the duties owed to a party the broker represents, the basic obligations owed to a party the broker does not represent, and the name, license number and contact information of the license holder, supervisor and broker. TREC's form is IABS 1-2.
• Exceptions: no IABS is required for a residential lease of less than one year when no sale is being considered, for a meeting with a party known to be represented by another license holder, or for a conversation at a property held open to the public about that property.
• The IABS may be delivered in person, by first class mail or overnight carrier, in the body of an email, or as an attachment or link with a specific reference in the email body, but not as a link in a footnote or signature block. Each business website also links to it from the homepage.

Intermediary practice

An intermediary is a broker employed to negotiate a transaction between the parties who may act as an agent of the parties for that purpose. A broker who agrees to represent both a buyer or tenant and a seller or landlord in the same transaction must act as an intermediary.

• Consent: written consent from each party that states the source of any expected compensation. A listing or buyer agreement authorizing intermediary practice is enough if it states the prohibited conduct in conspicuous bold or underlined print.
• Appointments: if the consents authorize it, the broker may appoint one associated license holder to each party and must give written notice of the appointments to all parties. An appointed license holder may give opinions and advice to the party to whom that license holder is appointed.
• No appointments: then neither the broker nor the agents may offer advice or opinions to either party, and they must not favor one party over the other.
• Another license holder may be authorized to make the appointments, but may not appoint himself or herself. There is always a single intermediary broker, who must act fairly and impartially.

An intermediary and any appointed license holder may not disclose, unless instructed in a separate writing, that the seller or landlord will accept less than the asking price, or that the buyer or tenant will pay more than the price in a written offer. They may not disclose confidential information or information a party told them in writing not to disclose, unless a separate writing allows it, the law or a court order requires it, or it materially relates to the condition of the property. They may not treat a party dishonestly.

Showing property without representation

A broker may show property for sale or lease to a party without representing that party only if the broker has not agreed, orally or in writing, to represent the party, is not otherwise acting as the party's agent, gives no opinions or advice about the property or transactions in general, and performs no other brokerage act for the party. Before the showing, the broker discloses representation of the owner or, if the broker does not represent the owner, gives the IABS notice. The broker may still confirm the size, price and terms of the property.

Written agreement before showing a home

• A license holder who performs any brokerage act for a prospective buyer of residential real property (a single-family house; a duplex, triplex or quadraplex; or a condominium or cooperative unit) must have a written agreement before showing any such property, or, if none will be shown, before presenting an offer.
• The agreement states the services, the termination date, whether it is exclusive or non-exclusive, whether the license holder represents the buyer as buyer's agent or only shows property, and the amount or rate of compensation and how it is determined. It must say in conspicuous language that broker compensation is not set by law and is fully negotiable.
• A showing-only agreement may not be exclusive and may not state a termination date more than fourteen days after it is signed. More services require a separate agreement.
• Failing to enter into a required written agreement is a ground for discipline.

Intermediary

The one broker who, with every party's written consent, negotiates between parties the broker's firm represents on both sides.

Appointed license holder

An associated license holder the intermediary names in writing to advise one party.

Substantive communication

The first real discussion about specific property that triggers the IABS notice.

Where this shows up on the exam

Disclosure, intermediary practice and duties to the client (including minimum services) are three of the seven Agency & Brokerage topics, a section worth 10 of the 50 scored State items. Expect IABS timing and exceptions, the consent and appointment steps, and showing-agreement limits.

Sources

North Carolina law as published by the General Assembly and the Office of Administrative Hearings, checked 2026-11-05:

• Tex. Occ. Code §§1101.002, 1101.551-1101.563, 1101.651(d), 1101.652(b)(34)
• 22 TAC §§531.20, 535.2, 535.157
• SB 1968 (89th Leg., 2025), effective January 1, 2026
• TREC License Holder FAQ (staff guidance)
• Pearson VUE Texas Broker State Law outline #094401