When Can a Broker Act as an Intermediary in Texas?

The Intermediary Relationship is the legal framework for in-house transactions in Texas. To act as an intermediary, specific statutory preconditions must be met.

Why the Correct Option is Right

Option B is correct because the Texas Real Estate License Act (TRELA) is strict: intermediary status requires dual written consent. This consent must be conspicuous, printed in bold or underlined text, and outline the broker’s duties of neutrality. This is typically authorized in the Listing Agreement (for the seller) and the Buyer Representation Agreement (for the buyer).

Why the Other Options are Traps

• Option A is a trap because verbal agreements are completely invalid to establish intermediary consent. If a broker works with a buyer without a written agreement, the broker represents the seller as a subagent, and no intermediary relationship exists.
• Option C is a trap because intermediary relationships are fully legal and common in both residential and commercial real estate transactions.
• Option D is a trap because if the agents work for different brokers, it is a standard cooperative transaction, not an intermediary in-house transaction.

The Exam Trap

Watch out for questions where a broker represents a buyer but subrepresents the seller. If you are a subagent representing the seller, you do not have an intermediary relationship. You represent the seller, and your loyalty is to the seller, meaning you must treat the buyer as a customer, not a client.

Worked Texas Example

Scenario: Sponsoring Broker Maria has a listing with Seller Sam. Buyer Bill walks into her office, refusing to sign a written representation agreement but wanting Maria to write an offer on Sam’s house. Outcome: Maria cannot act as an intermediary. Since Bill did not sign a representation agreement, Maria represents Sam only. Bill is a customer, and Maria must treat him fairly but must maintain full fiduciary loyalty to Sam.