TREC Agency Relationships and Disclosure 2 — Questions and Answers
Question 1: Under TRELA, which of the following is a fiduciary duty owed by a buyer's agent to the buyer?
- Disclosing the buyer's maximum price willingness to the seller
- Placing the buyer's interests above those of the agent and all other parties (Correct answer)
- Informing the listing broker of any competing offers the buyer may make
- Recommending that the buyer always offer the full listing price
Correct answer: Placing the buyer's interests above those of the agent and all other parties
A fiduciary duty of loyalty requires the buyer's agent to place the buyer's interests above those of the agent and all other parties to the transaction.
Question 2: The Texas Consumer Notice (Information About Brokerage Services) must be:
- Filed with TREC within 10 days of first client contact
- Displayed in a license holder's place of business and included in advertising (Correct answer)
- Provided only to commercial real estate clients
- Signed by the client before any property showing
Correct answer: Displayed in a license holder's place of business and included in advertising
TREC requires that the IABS notice be prominently displayed in the license holder's place of business and be included in advertising in certain formats, in addition to being provided at first substantive dialogue.
Question 3: An appointed license holder working under an intermediary broker may NOT:
- Negotiate price on behalf of their appointed party
- Show the property to their appointed party
- Disclose confidential information of one party to the other (Correct answer)
- Advise their appointed party on inspection issues
Correct answer: Disclose confidential information of one party to the other
An appointed license holder under an intermediary relationship must keep each party's confidential information private and cannot share it with the other party or the other appointed agent.
Question 4: What is the primary purpose of the agency disclosure requirement in Texas real estate transactions?
- To limit the number of agents involved in a single transaction
- To ensure consumers understand who the license holder represents and the duties owed (Correct answer)
- To require all parties to use the same brokerage firm
- To authorize TREC to mediate commission disputes between brokers
Correct answer: To ensure consumers understand who the license holder represents and the duties owed
The primary purpose of agency disclosure is consumer protection — ensuring buyers and sellers understand the agency relationship, who the agent represents, and what duties are owed to them.
Question 5: A listing broker who represents the seller and also shows the property to an unrepresented buyer is acting in what capacity under Texas law?
- Buyer's agent by implied agency
- Intermediary without written consent
- Seller's agent only, with duties of honesty to the buyer (Correct answer)
- A dual agent with full fiduciary duties to both parties
Correct answer: Seller's agent only, with duties of honesty to the buyer
Without written intermediary consent, the listing broker continues to represent only the seller and owes the unrepresented buyer honesty but not fiduciary duties.
Question 6: Under TRELA, how long must a broker retain records of completed real estate transactions, including agency disclosure forms?
- 1 year from the closing date
- 3 years from the closing date
- 5 years from the closing date (Correct answer)
- 7 years from the closing date
Correct answer: 5 years from the closing date
Texas law requires brokers to retain records of completed transactions, including agency disclosures and contracts, for at least 4 years; however, TREC rules specify a minimum of 4 years, most commonly tested as within the 5-year range referenced in TREC rules §535.2.
Question 7: Which statement about single-party representation in Texas is CORRECT?
- A broker may represent both parties without any written disclosure if both verbally agree
- A seller's agent owes the buyer loyalty and confidentiality as well as honesty
- A buyer's agent must place the buyer's interests above all other parties including their own (Correct answer)
- Single agency is only permitted in commercial transactions under TRELA
Correct answer: A buyer's agent must place the buyer's interests above all other parties including their own
In a single-party (buyer's) representation, the agent owes the buyer a fiduciary duty of loyalty, which includes placing the buyer's interests above those of all other parties, including the agent's own interests.
TREC Agency Relationships and Disclosure 2
Under TRELA, which of the following is a fiduciary duty owed by a buyer's agent to the buyer?