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Responsibilities of a Texas Real Estate Broker

By Tabitha Naylor

The responsibilities and obligations of a Texas real estate broker to their principals (the buyer, seller or both parties) are defined in Texas common or case law, the Texas Real Estate Commission's (TREC) Canons of Professional Ethics and Conduct for Real Estate Licensees, and the National Association of Realtors' Code of Ethics and Standards of Practice. Brokers that violate these duties face severe penalties that can include the loss of their license and money damages.

Broker Representation

Brokers are required to disclose who they represent in a real property transaction. The seller is normally the broker's principal. In most cases, a broker can assume they will be considered to represent the party paying their commission unless proper disclosure is made to all parties.

Disclosure Duties

According to common law, a broker has a fiduciary responsibility to the principal. This means a broker is obligated to act with honesty and loyalty, and in the best interest of the principal. The broker must also provide full disclosure of information, diligence (an earnest and persistent effort on behalf of the principal), and be accountable for all actions taken on behalf of the principal.

Texas law requires disclosure of the following information: Title defects, financial ability of a proposed purchaser, who the broker represents, who will pay the broker commission, increases in value of the principal's property being sold, all offers to purchase the principal's property, and the broker acting in his or her own interest.

Texas law also requires that if a broker knows information material to a transaction, the broker must disclose that information to his or her principal. Historically, Texas courts have judged harshly on brokers who withhold significant information that would have affected their principal's decisions in a transaction.

Statutory Disclosure Duties

The Deceptive Trade Practices Consumer Protection Act (DTPA) requires brokers to disclose all information of which they have actual knowledge to their principals. Brokers violate this act when the fail to disclose information they have knowledge of, or there are misrepresentations made, regardless of whether or not the broker has actual knowledge that these representations were false or incorrect. The DTPA specifically prohibits brokers from representing:

  • Goods or services as having characteristics, uses or benefits they do not;
  • Goods or services as being of a particular standard, quality, or grade they are not;
  • That an agreement confers rights, remedies or obligations it does not;
  • That salespersons, representatives, or agents have authority to negotiate the final terms of a transaction they do not;
  • That a guarantee, or warranty confers rights, or remedies it does not;
  • That work or services have been performed when they have not.

All disclosures should be made in writing because written disclosure provides documentary evidence of disclosure.

For a more detailed explanation of broker responsibilities and obligations refer to the National Association of Realtors' Code of Ethics and Standards, or visit the Texas Real Estate Commission website for more information.

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