In Texas, an intermediary is a broker who:
Audio Lesson
Duration: 2:29
Question & Answer
Review the question and all answer choices
Represents only the buyer
Option A is incorrect because representing only the buyer would define a buyer's agent, not an intermediary. An intermediary must represent both parties, not just the buyer, as this would create a conflict of interest under Texas law.
Represents only the seller
Option B is incorrect because representing only the seller would define a seller's agent or subagent, not an intermediary. An intermediary must represent both parties simultaneously, not just the seller.
Represents both parties with their consent
Represents neither party
Option D is incorrect because an intermediary does represent both parties; they don't act as a neutral third party without representation. The intermediary has limited agency responsibilities to both the buyer and seller.
Why is this correct?
In Texas, an intermediary broker is specifically defined as one who represents both buyer and seller in the same transaction with the written consent of both parties. This creates a limited agency relationship where the broker must remain neutral and cannot disclose confidential information without permission.
Deep Analysis
AI-powered in-depth explanation of this concept
Understanding agency relationships is fundamental to real estate practice as they define the broker's legal obligations to parties in a transaction. This question specifically addresses Texas' unique intermediary provision, which differs from traditional agency models. The core concept is that an intermediary represents both buyer and seller simultaneously, but only with written consent from both parties. This creates a limited agency relationship where the broker must remain neutral and cannot disclose confidential information from one party to the other without permission. The question challenges students by testing knowledge of Texas-specific regulations that differ from other states. Many states don't allow dual representation at all, while others permit it without requiring consent. Recognizing this distinction is crucial for Texas licensees. This concept connects to broader real estate knowledge about fiduciary duties, disclosure requirements, and the importance of properly documenting agency relationships through written agreements.
Knowledge Background
Essential context and foundational knowledge
The intermediary provision is a unique aspect of Texas real estate law that allows brokers to facilitate transactions where both parties are willing to work with the same broker. This concept was established by the Texas Real Estate Commission to provide flexibility in the market while still protecting consumers. The requirement for written consent ensures that both parties understand they are not receiving traditional fiduciary duties. This differs from traditional dual agency models in other states and creates specific obligations for the intermediary broker, including maintaining confidentiality, avoiding conflicts of interest, and obtaining informed consent.
BRIC - Both parties Represented, Informed Consent required
Remember that an intermediary in Texas must represent Both parties with the buyer and seller's Informed Consent (written).
When questions about Texas intermediaries appear, look for the key elements: representation of both parties AND written consent. If either element is missing, it's not an intermediary relationship.
Real World Application
How this concept applies in actual real estate practice
Imagine a buyer and seller who are both clients of the same brokerage firm. The seller wants to list their property, and the buyer wants to purchase a home. Instead of assigning different agents, the broker can act as an intermediary if both parties provide written consent. In this scenario, the broker would facilitate the negotiation but must remain neutral, cannot disclose the seller's minimum acceptable price to the buyer without permission, and cannot disclose the buyer's maximum price to the seller. This arrangement can be efficient but requires careful documentation and clear communication about the limited nature of the representation.
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