TREC Agency Relationships and Disclosure 1 — Questions and Answers
Question 1: Under TREC rules, when must a real estate license holder provide the Information About Brokerage Services (IABS) notice to a prospective buyer or tenant?
- Only after a written contract is signed
- At the first substantive dialogue about a specific property (Correct answer)
- Only when the client requests it in writing
- At the time of closing
Correct answer: At the first substantive dialogue about a specific property
Texas law requires license holders to provide the IABS notice at the first substantive dialogue about specific real property with a prospective buyer or tenant.
Question 2: Which of the following best describes an 'intermediary' under the Texas Real Estate License Act (TRELA)?
- A broker who represents neither buyer nor seller
- A broker who represents both parties in the same transaction with written consent (Correct answer)
- An unlicensed assistant who facilitates closings
- A title company officer who mediates disputes
Correct answer: A broker who represents both parties in the same transaction with written consent
An intermediary is a broker who is authorized to negotiate a transaction between the parties when representing both the buyer and seller in the same transaction, with written consent from both.
Question 3: A Texas real estate broker may act as an intermediary only if:
- The broker obtains verbal consent from both parties
- Both clients sign separate representation agreements with different agents
- The broker has written consent from both the buyer and the seller (Correct answer)
- The Texas Real Estate Commission approves the transaction in advance
Correct answer: The broker has written consent from both the buyer and the seller
TRELA requires that the broker obtain written consent from both parties before acting as an intermediary in a transaction.
Question 4: When a license holder represents the seller in a transaction, what duty does the license holder owe to an unrepresented buyer?
- Full fiduciary duty including loyalty and confidentiality
- Only the duty to disclose known material defects and treat them honestly (Correct answer)
- No duty whatsoever since they represent only the seller
- The same duties owed to the seller under the agency agreement
Correct answer: Only the duty to disclose known material defects and treat them honestly
A seller's agent owes the unrepresented buyer honesty and must disclose known material defects, but does not owe fiduciary duties such as loyalty or confidentiality.
Question 5: Under Texas law, a 'subagent' is best defined as:
- A license holder employed directly by the buyer
- A license holder who is sponsored by the listing broker's competitor
- A license holder who acts for the principal through the principal's agent (Correct answer)
- An unlicensed assistant supervised by a licensed salesperson
Correct answer: A license holder who acts for the principal through the principal's agent
A subagent is a license holder who represents the principal (typically the seller) through another broker, essentially acting as an agent of the listing broker's client.
Question 6: Which form must a Texas broker use to authorize an appointed license holder to represent a buyer when the broker is acting as an intermediary?
- TREC Form 1-4 (One to Four Family Residential Contract)
- An intermediary appointment notice within the written consent agreement (Correct answer)
- TREC Form OP-C (Notice to Prospective Buyer)
- A separate subagency authorization approved by TREC
Correct answer: An intermediary appointment notice within the written consent agreement
When acting as an intermediary, the broker must appoint different license holders to represent each party and this appointment is typically included within or attached to the written intermediary consent.
Question 7: A Texas sales agent can enter into an agency agreement with a client only through:
- Their own authority as a licensed agent
- The sales agent's sponsoring broker (Correct answer)
- The Texas Real Estate Commission directly
- A written independent contractor agreement
Correct answer: The sales agent's sponsoring broker
In Texas, sales agents do not have independent authority to represent clients; all agency relationships must be established through the sales agent's sponsoring broker.
TREC Agency Relationships and Disclosure 1
Under TREC rules, when must a real estate license holder provide the Information About Brokerage Services (IABS) notice to a prospective buyer or tenant?