Does Texas Allow Dual Agency in Real Estate? 

Dual-agency, where a single broker represents both the buyer and seller in a transaction, is permitted in some states. However, dual agency in Texas is strictly prohibited under the (TRELA). Instead, brokers must act as intermediaries, following specific legal guidelines.

In this blog, we’ll explore:

• What dual agency is and how it works.
• Why dual agency is illegal in Texas.
• How the intermediary model protects buyers and sellers.
• Key Texas real estate laws you need to know.

Whether you’re a buyer, seller, or real estate professional, this guide provides valuable insights into Texas real estate practices.

What is Dual Agency?

Dual agency occurs when one real estate agent represents both the buyer and seller in the same transaction. While it aims to streamline communication, it often creates , as the agent cannot fully advocate for either party’s best interests.

Key Points:

• Dual agency is legal in some states but prohibited in Texas.
• It often leads to limited advocacy and confidentiality risks.

How Does Dual Agency Work?

In a dual agency scenario:

• One agent facilitates both sides of the transaction.
• The agent handles negotiations and communication for the buyer and seller.
• The agent must remain neutral, limiting their ability to provide tailored advice.

Why It’s Problematic:

• The agent cannot fully represent either party.
• Confidential information may be inadvertently shared.

Common Scenarios Where Dual Agency May Arise

Dual agency can occur in several situations, including:

• A buyer expresses interest in a property listed by their agent.
• A seller’s agent assists the buyer directly in purchasing the property.
• Transactions within large brokerages where agents represent both parties under the same broker.

Lesson Learned:

• Always clarify the agent’s role to avoid unintentional dual agency.

Texas Real Estate Law and Dual Agency

The Texas Real Estate Commission (TREC), through the Texas Real Estate License Act (TRELA), regulates real estate practices to ensure fairness and transparency.

Key Rules:

• Dual agency in Texas is strictly prohibited.
• Brokers must act as intermediaries when representing both parties.
• Written consent from both the buyer and seller is required.

This legal framework ensures fairness and transparency in real estate transactions.

The Intermediary Role in Texas Real Estate

The intermediary model allows a broker to represent both the buyer and seller—but only with written consent.

How It Works:

• The broker remains neutral and does not advocate for either party.
• Written agreements, such as listing and representation agreements, are required.
• If the brokerage has multiple agents, one can be assigned to each party.

Benefits:

• Eliminates conflicts of interest.
• Ensures compliance with Texas real estate laws.

Texas Dual Agency vs. Intermediary

Aspect	Dual Agency	Intermediary
Representation	A single agent represents both parties	The broker remains neutral.
Legality in Texas	Prohibited.	Allowed with written consent.
Conflicts of Interest	High risk.	Minimized.

Why Texas Prefers Intermediaries?

• Promotes fairness and transparency.
• Protects the interests of both buyers and sellers.

What is a Subagency in Real Estate?

In a real estate transaction, a subagent is an agent who acts on behalf of another agent, typically representing the seller’s interests. This arrangement often occurs when a listing broker authorizes a cooperating brokerage to assist in selling a property.

Key Points:

• The subagent owes fiduciary duties to the seller, not the buyer.
• Subagency arises when a cooperating broker assumes the role of the seller’s agent.
• The actions of a subagent are legally attributed to both the customer and the agent they represent.

How Does It Differ from Dual Agency?

• In a dual agency, one agent represents both the buyer and seller, creating a conflict of interest.
• In subagency, the subagent represents only the seller, while the buyer may have their own agent.

Texas Context:

• Subagency is less common in Texas due to the prevalence of intermediary relationships and the prohibition of dual agency.
• Buyers and sellers should always clarify who their agent represents to avoid misunderstandings.

Unintentional Dual Agency

Unintentional dual agency occurs when an agent inadvertently represents both parties, often due to unclear communication or actions.

How It Happens:

• An agent provides advice to a buyer that implies representation.
• The agent fails to disclose their role clearly.
• Misunderstandings in team-based or brokerage settings.

Why It Matters:

• Courts can deem an agency relationship based on conduct alone.
• Clear communication and transparency are critical to avoid legal disputes.

Challenges and Risks of Dual Agency

The dual agency creates significant risks, including:

• Conflict of Interest: The agent cannot fully prioritize either party’s needs.
• Limited Advocacy: Divided loyalty hinders effective negotiation.
• Confidentiality Risks: Sensitive information may be inadvertently disclosed.
• Legal and Reputational Risks: Dual agency can lead to disputes and damage the agent’s reputation.

Disclosure Requirements in Texas

To comply with Texas Real Estate Laws, brokers must:

• Obtain written consent from both parties.
• Clearly disclose their role as an intermediary.
• Ensure buyers and sellers understand the implications of the arrangement.

Why This Matters:

• Protects all parties from misunderstandings.
• Ensures compliance with TRELA regulations.

Alternatives to Dual Agency in Texas

If you’re wondering, “Is dual agency legal in Texas?” the answer is no. However, there are alternatives:

• Separate Representation: Buyers and sellers can work with different agents.
• Non-Intermediary Brokers: Some brokers may choose not to represent both parties.
• State Comparisons: Understanding how other states handle dual agency can provide context for Texas’ unique approach.

The Role of Agents and Brokers in Dual Agency

Now, let’s look at the role of agents and brokers in dual agency and how relationships are managed. Understanding these responsibilities is crucial for ensuring compliance with Texas real estate laws and maintaining ethical practices in every transaction.

What Agents Need to Do to Remain Compliant with Texas Law?

• Obtain written consent from both parties.
• Maintain neutrality and avoid favoritism.
• Clearly document the intermediary relationship.
• Stay updated on TRELA regulations.

Ethical Responsibilities in Intermediary Relationships

• Foster open communication.
• Provide accurate information without bias.
• Treat all parties equally to build trust.

The Broker’s Role in Managing Intermediary Relationships

• Ensure impartiality and compliance.
• Assign separate agents when possible.
• Document the relationship clearly to avoid misunderstandings.

Conclusion

Texas strictly prohibits dual-agency to promote fairness and transparency and protect all parties in real estate transactions. Instead, the state requires using the intermediary model, where brokers must remain neutral and obtain written consent from both buyers and sellers.

Key Takeaways:

• Dual agency is illegal in Texas, but intermediaries are allowed with proper disclosure.
• Buyers and sellers should seek independent representation to avoid conflicts of interest.
• Transparency and clear communication are essential to comply with Texas real estate laws.

Final Thoughts:

Understanding the differences between dual agency and intermediary relationships is crucial for anyone involved in Texas real estate. By adhering to state regulations and prioritizing ethical practices, buyers, sellers, and real estate professionals can navigate transactions with confidence and trust.

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