By: Armbrister S.B. No. 489
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the disclosure of certain information by a person
1-2 licensed to sell real estate.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 15C, The Real Estate License Act (Article
1-5 6573a, Vernon's Texas Civil Statutes), is amended to read as
1-6 follows:
1-7 Sec. 15C. (a) A licensee under this Act who represents a
1-8 party in a proposed real estate transaction shall disclose that
1-9 representation at the time of the licensee's first contact with:
1-10 (1) another party to the transaction; or
1-11 (2) another licensee who represents another party to
1-12 the transaction.
1-13 (b) The disclosure required under Subsection (a) of this
1-14 section may be made orally or in writing.
1-15 (c) A licensee who represents a party in a real estate
1-16 transaction acts as that party's agent.
1-17 (d) Except as provided by Subsection (e) of this section, a
1-18 licensee shall furnish to a party in a real estate transaction at
1-19 the time of the first face-to-face meeting with the party the
1-20 following written statement:
1-21 "Before working with a real estate broker, you should
1-22 know that the duties of a broker depend on whom the
1-23 broker represents. If you are a prospective seller or
1-24 landlord (owner) or a prospective buyer or tenant
2-1 (buyer), you should know that the broker who lists the
2-2 property for sale or lease is the owner's agent. A
2-3 broker who acts as a subagent represents the owner in
2-4 cooperation with the listing broker. A broker who acts
2-5 as a buyer's agent represents the buyer. A broker may
2-6 not represent both an owner and a buyer in the same
2-7 transaction but may act as an intermediary between the
2-8 parties if the parties consent in writing. A broker
2-9 can assist you in locating a property, preparing a
2-10 contract or lease, or obtaining financing without
2-11 representing you. A broker is obligated by law to
2-12 treat you honestly.
2-13 "IF THE BROKER REPRESENTS THE OWNER: The broker
2-14 becomes the owner's agent by entering into an agreement
2-15 with the owner, usually through a written listing
2-16 agreement, or by agreeing to act as a subagent by
2-17 accepting an offer of subagency from the listing
2-18 broker. A subagent may work in a different real estate
2-19 office. A listing broker or subagent can assist the
2-20 buyer but does not represent the buyer and must place
2-21 the interests of the owner first. The buyer should not
2-22 tell the owner's agent anything the buyer would not
2-23 want the owner to know because an owner's agent must
2-24 disclose to the owner any material information known to
2-25 the agent.
2-26 "IF THE BROKER REPRESENTS THE BUYER: The broker
2-27 becomes the buyer's agent by entering into an agreement
3-1 to represent the buyer, usually through a written buyer
3-2 representation agreement. A buyer's agent can assist
3-3 the owner but does not represent the owner and must
3-4 place the interests of the buyer first. The owner
3-5 should not tell a buyer's agent anything the owner
3-6 would not want the buyer to know because a buyer's
3-7 agent must disclose to the buyer any material
3-8 information known to the agent.
3-9 "IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may
3-10 not act as an agent for more than one party to a
3-11 transaction but may act as an intermediary between the
3-12 parties if the broker complies with The Texas Real
3-13 Estate License Act. The broker must obtain the written
3-14 consent of each party to the transaction to act as an
3-15 intermediary. The written consent must state who will
3-16 pay the broker and, in conspicuous bold or underlined
3-17 print, set forth the broker's obligations as an
3-18 intermediary. The broker is required to treat each
3-19 party honestly and to comply with The Texas Real Estate
3-20 License Act. A broker who acts as an intermediary in a
3-21 transaction: (1) shall treat all parties honestly;
3-22 (2) may not disclose that the owner will accept a price
3-23 less than the asking price unless authorized in writing
3-24 to do so by the owner; (3) may not disclose that the
3-25 buyer will pay a price greater than the price submitted
3-26 in a written offer unless authorized in writing to do
3-27 so by the buyer; and (4) may not disclose any
4-1 confidential information or any information that a
4-2 party specifically instructs the broker in writing not
4-3 to disclose unless authorized in writing to disclose
4-4 the information or required to do so by The Texas Real
4-5 Estate License Act or a court order. With the parties'
4-6 consent, a broker acting as an intermediary between the
4-7 parties may appoint a person who is licensed under The
4-8 Texas Real Estate License Act and associated with the
4-9 broker to communicate with and carry out instructions
4-10 for one party and another person who is licensed under
4-11 that Act and associated with the broker to communicate
4-12 with and carry out instructions for the other party.
4-13 "If you choose to have a broker represent you, you
4-14 should enter into a written agreement with the broker
4-15 that clearly establishes the broker's obligations and
4-16 your obligations. The agreement should state how and
4-17 by whom the broker will be paid. You have the right to
4-18 choose the type of representation, if any, you wish to
4-19 receive. Your payment of a fee to a broker does not
4-20 necessarily establish that the broker represents you.
4-21 If you have any questions regarding the duties and
4-22 responsibilities of the broker, you should resolve
4-23 those questions before proceeding."
4-24 (e) A licensee is not required to provide the written
4-25 information under Subsection (d) of this section if:
4-26 (1) the proposed transaction is for a residential
4-27 lease for not more than one year and no sale is being considered;
5-1 or
5-2 (2) the licensee meets with a party who is represented
5-3 by another licensee.
5-4 (f) In the written information required to be provided under
5-5 Subsection (d) of this section, the licensee may substitute the
5-6 word "buyer" with "tenant" as appropriate.
5-7 (g) The written information required to be provided under
5-8 Subsection (d) of this section may be printed in any format that
5-9 uses at least 10-point type.
5-10 (h) A real estate broker may not act as an agent for more
5-11 than one party to a transaction but may act as an intermediary
5-12 between the parties if <unless>:
5-13 (1) <the real estate broker, prior to entering into
5-14 any written agreements to represent more than one party to the
5-15 transaction, in accordance with the rules of the commission,
5-16 provides the parties with the applicable agency disclosure form
5-17 promulgated by the commission which defines common agency
5-18 relationships, duties of the broker, and potential conflicts that
5-19 may develop;>
5-20 <(2)> the real estate broker obtains <enters into>
5-21 written consent from each party <agreements in which all parties>
5-22 to the transaction for <consent to and authorize> the real estate
5-23 broker to act as an intermediary in <represent more than one party
5-24 to> the transaction; and
5-25 (2) <(3)> the written consent of the parties under
5-26 Subdivision (1) of this subsection states <agreements set forth>
5-27 the source of any expected compensation to the real estate broker.
6-1 (i) <(b)> A written listing agreement to represent a seller
6-2 or landlord or a written agreement to represent a buyer or tenant
6-3 which also authorizes a real estate broker to act as an
6-4 intermediary in <agent for more than one party to> a transaction is
6-5 sufficient to establish written consent of the party to the
6-6 <agreement for the real estate broker to represent more than one
6-7 party to the> transaction <under this section> if the written
6-8 agreement sets forth, in conspicuous bold or underlined print, the
6-9 real estate broker's obligations under Subsection (j) <(c)> of this
6-10 section.
6-11 (j) <(c)> A real estate broker who acts as an intermediary
6-12 between parties in <agent for more than one party to> a transaction
6-13 <shall>:
6-14 (1) may not disclose to the buyer or tenant that the
6-15 seller or landlord will accept a price less than the asking price
6-16 unless otherwise instructed in a separate writing by the seller or
6-17 landlord;
6-18 (2) may not disclose to the seller or landlord that
6-19 the buyer or tenant will pay a price greater than the price
6-20 submitted in a written offer to the seller or landlord unless
6-21 otherwise instructed in a separate writing by the buyer or tenant;
6-22 (3) may not disclose any confidential information or
6-23 any information a party specifically instructs the real estate
6-24 broker in writing not to disclose unless otherwise instructed in a
6-25 separate writing by the respective party or required to disclose
6-26 such information by this Act or a court order <law>; <and>
6-27 (4) shall treat all parties to the transaction
7-1 honestly <and impartially so as not to favor one party or work to
7-2 the disadvantage of any party>; and
7-3 (5) shall comply with this Act.
7-4 (k) If a real estate broker obtains the consent of the
7-5 parties to act as an intermediary in a transaction in compliance
7-6 with this section, the real estate broker may appoint, by providing
7-7 written notice to the parties, one or more licensees associated
7-8 with the broker to communicate with and carry out instructions for
7-9 one party and one or more other licensees associated with the
7-10 broker to communicate with and carry out instructions for the other
7-11 party or parties. A real estate broker may appoint a licensee to
7-12 communicate with and carry out instructions for a party under this
7-13 subsection only if the written consent of the parties under
7-14 Subsection (h) or (i) of this section authorizes the broker to make
7-15 the appointment. The real estate broker and the appointed
7-16 licensees shall comply with Subsection (j) of this section.
7-17 However, during negotiations, an appointed licensee may provide
7-18 opinions and advice to the party for whom the licensee is
7-19 appointed.
7-20 (l) The duties and obligations of a licensee or party as
7-21 provided by this section supersede and are in lieu of duties and
7-22 obligations under common law or any other law.
7-23 (m) In this section:
7-24 (1) "Face-to-face meeting" means a meeting at which a
7-25 substantive discussion occurs with respect to specific real
7-26 property. The term does not include a meeting that occurs at a
7-27 property being held open for prospective purchasers or tenants or a
8-1 meeting that occurs after the parties to the transaction have
8-2 signed a contract to sell, buy, rent, or lease the real property
8-3 concerned.
8-4 (2) "Intermediary" means a broker who is employed to
8-5 negotiate a transaction between the parties subject to the
8-6 obligations in Subsection (j) of this section and for that purpose
8-7 may be an agent for the parties to the transaction. The
8-8 intermediary shall act impartially so as not to favor one party
8-9 over the other. Appointment by the intermediary of associated
8-10 licensees under Subsection (k) of this section to communicate with,
8-11 carry out instructions for, and provide opinions and advice to the
8-12 parties for whom the licensees are appointed is an impartial act.
8-13 (3) "Licensee" means a real estate broker or real
8-14 estate salesman and includes a licensed associate of a licensee.
8-15 (4) "Party" means a prospective buyer, seller,
8-16 landlord, or tenant or an authorized representative of a party,
8-17 including a trustee, guardian, executor, administrator, receiver,
8-18 or attorney-in-fact. The term does not include a licensee who
8-19 represents a party.
8-20 (5) "Subagent" means a licensee who represents a
8-21 principal through cooperation with and consent of a broker
8-22 representing the principal and who is not sponsored by or
8-23 associated with the principal's broker. <(d) The real estate
8-24 broker shall use due diligence to assist the parties in
8-25 understanding the consents, agreements, or instructions under this
8-26 section in which the real estate broker is permitted to represent
8-27 more than one party to a transaction.>
9-1 SECTION 2. The Real Estate License Act (Article 6573a,
9-2 Vernon's Texas Civil Statutes) is amended by adding Section 15F to
9-3 read as follows:
9-4 Sec. 15F. (a) A party is not liable for a misrepresentation
9-5 or a concealment of a material fact made by a licensee in a real
9-6 estate transaction unless the party knew of the falsity of the
9-7 misrepresentation or concealment and failed to disclose the party's
9-8 knowledge of the falsity of the misrepresentation or concealment.
9-9 (b) A licensee is not liable for a misrepresentation or a
9-10 concealment of a material fact made by a party in a real estate
9-11 transaction unless the licensee knew of the falsity of the
9-12 misrepresentation or concealment and failed to disclose the
9-13 licensee's knowledge of the falsity of the misrepresentation or
9-14 concealment.
9-15 (c) A party or a licensee is not liable for a
9-16 misrepresentation or a concealment of a material fact made by a
9-17 subagent in a real estate transaction unless the party or licensee
9-18 knew of the falsity of the misrepresentation or concealment and
9-19 failed to disclose the party's or licensee's knowledge of the
9-20 falsity of the misrepresentation or concealment.
9-21 (d) The duties and obligations of a licensee or party as
9-22 provided by this section supersede and are in lieu of duties and
9-23 obligations under common law or any other law.
9-24 (e) In this section, "licensee" and "party" have the meaning
9-25 assigned to those terms by Section 15C of this Act.
9-26 SECTION 3. This Act takes effect January 1, 1996.
9-27 SECTION 4. The importance of this legislation and the
10-1 crowded condition of the calendars in both houses create an
10-2 emergency and an imperative public necessity that the
10-3 constitutional rule requiring bills to be read on three several
10-4 days in each house be suspended, and this rule is hereby suspended.