1-1 By: Armbrister S.B. No. 489
1-2 (In the Senate - Filed February 7, 1995; February 8, 1995,
1-3 read first time and referred to Committee on State Affairs;
1-4 February 27, 1995, reported favorably, as amended, by the following
1-5 vote: Yeas 11, Nays 0; February 27, 1995, sent to printer.)
1-6 COMMITTEE AMENDMENT NO. 1 By: Armbrister
1-7 Amend S.B. No. 489 in SECTION 1, Section 15C, Subsection (m)
1-8 (Introduced version page 8, line 10, Committee printing page 4,
1-9 line 26) by adding a new Subdivision (4), to read as follows:
1-10 (4) "Subagent" means a licensee who represents a
1-11 principal through cooperation with and consent of a broker
1-12 representing the principal and who is not sponsored by or
1-13 associated with the principal's broker.
1-14 COMMITTEE AMENDMENT NO. 2 By: Armbrister
1-15 Amend S.B. No. 489 as follows:
1-16 (1) Insert in SECTION 1, Subsection (d), in the paragraph
1-17 beginning IF THE BROKER ACTS AS AN INTERMEDIARY, after the sentence
1-18 "The written consent must state who will pay the broker" and before
1-19 the "." the following:
1-20 and, in conspicuous bold or underlined print, state that the
1-21 broker does not represent either party and set forth the broker's
1-22 obligations as an intermediary
1-23 (2) Insert in SECTION 1, Subsection (i), after the words "in
1-24 conspicuous bold or underlined print," the following:
1-25 that the broker does not represent either party in the
1-26 transaction and sets forth.
1-27 COMMITTEE AMENDMENT NO. 3 By: Armbrister
1-28 Amend S.B. No. 489, in SECTION 1, Subsection (j), by deleting
1-29 Subdivision (4), and inserting the following to read as follows:
1-30 (4) shall treat all parties to the transaction
1-31 honestly and impartially so as not to favor one party or work to
1-32 the disadvantage of any party; and
1-33 A BILL TO BE ENTITLED
1-34 AN ACT
1-35 relating to the disclosure of certain information by a person
1-36 licensed to sell real estate.
1-37 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-38 SECTION 1. Section 15C, The Real Estate License Act (Article
1-39 6573a, Vernon's Texas Civil Statutes), is amended to read as
1-40 follows:
1-41 Sec. 15C. (a) A licensee under this Act who represents a
1-42 party in a proposed real estate transaction shall disclose that
1-43 representation at the time of the licensee's first contact with:
1-44 (1) another party to the transaction; or
1-45 (2) another licensee who represents another party to
1-46 the transaction.
1-47 (b) The disclosure required under Subsection (a) of this
1-48 section may be made orally or in writing.
1-49 (c) A licensee who represents a party in a real estate
1-50 transaction acts as that party's agent.
1-51 (d) Except as provided by Subsection (e) of this section, a
1-52 licensee shall furnish to a party in a real estate transaction at
1-53 the time of the first face-to-face meeting with the party the
1-54 following written statement:
1-55 "Before working with a real estate broker, you should
1-56 know that the duties of a broker depend on whom the
1-57 broker represents. If you are a prospective seller or
1-58 landlord (owner) or a prospective buyer or tenant
1-59 (buyer), you should know that the broker who lists the
1-60 property for sale or lease is the owner's agent. A
1-61 broker who acts as a subagent represents the owner in
1-62 cooperation with the listing broker. A broker who acts
1-63 as a buyer's agent represents the buyer. A broker may
1-64 not represent both an owner and a buyer in the same
1-65 transaction but may act as an intermediary between the
1-66 parties if the parties consent in writing. A broker
1-67 can assist you in locating a property, preparing a
1-68 contract or lease, or obtaining financing without
2-1 representing you. A broker is obligated by law to
2-2 treat you honestly.
2-3 "IF THE BROKER REPRESENTS THE OWNER: The broker
2-4 becomes the owner's agent by entering into an agreement
2-5 with the owner, usually through a written listing
2-6 agreement, or by agreeing to act as a subagent by
2-7 accepting an offer of subagency from the listing
2-8 broker. A subagent may work in a different real estate
2-9 office. A listing broker or subagent can assist the
2-10 buyer but does not represent the buyer and must place
2-11 the interests of the owner first. The buyer should not
2-12 tell the owner's agent anything the buyer would not
2-13 want the owner to know because an owner's agent must
2-14 disclose to the owner any material information known to
2-15 the agent.
2-16 "IF THE BROKER REPRESENTS THE BUYER: The broker
2-17 becomes the buyer's agent by entering into an agreement
2-18 to represent the buyer, usually through a written buyer
2-19 representation agreement. A buyer's agent can assist
2-20 the owner but does not represent the owner and must
2-21 place the interests of the buyer first. The owner
2-22 should not tell a buyer's agent anything the owner
2-23 would not want the buyer to know because a buyer's
2-24 agent must disclose to the buyer any material
2-25 information known to the agent.
2-26 "IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may
2-27 not act as an agent for more than one party to a
2-28 transaction but may act as an intermediary between the
2-29 parties if the broker complies with The Texas Real
2-30 Estate License Act. The broker must obtain the written
2-31 consent of each party to the transaction to act as an
2-32 intermediary. The written consent must state who will
2-33 pay the broker. The broker is required to treat each
2-34 party honestly and to comply with The Texas Real Estate
2-35 License Act. A broker who acts an an intermediary in a
2-36 transaction: (1) shall treat all parties honestly; (2)
2-37 may not disclose that the owner will accept a price
2-38 less than the asking price unless authorized in writing
2-39 to do so by the owner; (3) may not disclose that the
2-40 buyer will pay a price greater than the price submitted
2-41 in a written offer unless authorized in writing to do
2-42 so by the buyer; and (4) may not disclose any
2-43 confidential information or any information that a
2-44 party specifically instructs the broker in writing not
2-45 to disclose unless authorized in writing to disclose
2-46 the information or required to do so by The Texas Real
2-47 Estate License Act or a court order. With the
2-48 parties' consent, a broker acting as an intermediary
2-49 between the parties may appoint a person who is
2-50 licensed under The Texas Real Estate License Act and
2-51 associated with the broker to communicate with and
2-52 carry out instructions for one party and another person
2-53 who is licensed under that Act and associated with the
2-54 broker to communicate with and carry out instructions
2-55 for the other party.
2-56 "If you choose to have a broker represent you, you
2-57 should enter into a written agreement with the broker
2-58 that clearly establishes the broker's obligations and
2-59 your obligations. The agreement should state how and
2-60 by whom the broker will be paid. You have the right to
2-61 choose the type of representation, if any, you wish to
2-62 receive. Your payment of a fee to a broker does not
2-63 necessarily establish that the broker represents you.
2-64 If you have any questions regarding the duties and
2-65 responsibilities of the broker, you should resolve
2-66 those questions before proceeding."
2-67 (e) A licensee is not required to provide the written
2-68 information under Subsection (d) of this section if:
2-69 (1) the proposed transaction is for a residential
2-70 lease for not more than one year and no sale is being considered;
3-1 or
3-2 (2) the licensee meets with a party who is represented
3-3 by another licensee.
3-4 (f) In the written information required to be provided under
3-5 Subsection (d) of this section, the licensee may substitute the
3-6 word "buyer" with "tenant" as appropriate.
3-7 (g) The written information required to be provided under
3-8 Subsection (d) of this section may be printed in any format that
3-9 uses at least 10-point type.
3-10 (h) A real estate broker may not act as an agent for more
3-11 than one party to a transaction but may act as an intermediary
3-12 between the parties if <unless>:
3-13 (1) <the real estate broker, prior to entering into
3-14 any written agreements to represent more than one party to the
3-15 transaction, in accordance with the rules of the commission,
3-16 provides the parties with the applicable agency disclosure form
3-17 promulgated by the commission which defines common agency
3-18 relationships, duties of the broker, and potential conflicts that
3-19 may develop;>
3-20 <(2)> the real estate broker obtains <enters into>
3-21 written consent from each party <agreements in which all parties>
3-22 to the transaction for <consent to and authorize> the real estate
3-23 broker to act as an intermediary in <represent more than one party
3-24 to> the transaction; and
3-25 (2) <(3)> the written consent of the parties under
3-26 Subdivision (1) of this subsection states <agreements set forth>
3-27 the source of any expected compensation to the real estate broker.
3-28 (i) <(b)> A written listing agreement to represent a seller
3-29 or landlord or a written agreement to represent a buyer or tenant
3-30 which also authorizes a real estate broker to act as an
3-31 intermediary in <agent for more than one party to> a transaction is
3-32 sufficient to establish written consent of the party to the
3-33 <agreement for the real estate broker to represent more than one
3-34 party to the> transaction <under this section> if the written
3-35 agreement sets forth, in conspicuous bold or underlined print, the
3-36 real estate broker's obligations under Subsection (j) <(c)> of this
3-37 section.
3-38 (j) <(c)> A real estate broker who acts as an intermediary
3-39 between parties in <agent for more than one party to> a transaction
3-40 <shall>:
3-41 (1) may not disclose to the buyer or tenant that the
3-42 seller or landlord will accept a price less than the asking price
3-43 unless otherwise instructed in a separate writing by the seller or
3-44 landlord;
3-45 (2) may not disclose to the seller or landlord that
3-46 the buyer or tenant will pay a price greater than the price
3-47 submitted in a written offer to the seller or landlord unless
3-48 otherwise instructed in a separate writing by the buyer or tenant;
3-49 (3) may not disclose any confidential information or
3-50 any information a party specifically instructs the real estate
3-51 broker in writing not to disclose unless otherwise instructed in a
3-52 separate writing by the respective party or required to disclose
3-53 such information by this Act or a court order <law>; <and>
3-54 (4) shall treat all parties to the transaction
3-55 honestly <and impartially so as not to favor one party or work to
3-56 the disadvantage of any party>; and
3-57 (5) shall comply with this Act.
3-58 (k) If a real estate broker obtains the consent of the
3-59 parties to act as an intermediary in a transaction in compliance
3-60 with this section, the real estate broker may appoint, by providing
3-61 written notice to the parties, one or more licensees associated
3-62 with the broker to communicate with and carry out instructions for
3-63 one party and one or more other licensees associated with the
3-64 broker to communicate with and carry out instructions for the other
3-65 party or parties. A real estate broker may appoint a licensee to
3-66 communicate with and carry out instructions for a party under this
3-67 subsection only if the written consent of the parties under
3-68 Subsection (h) or (i) of this section authorizes the broker to make
3-69 the appointment. The real estate broker and the appointed
3-70 licensees shall comply with Subsection (j) of this section.
4-1 However, during negotiations, an appointed licensee may provide
4-2 opinions and advice to the party for whom the licensee is
4-3 appointed.
4-4 (l) The duties and obligations of a licensee or party as
4-5 provided by this section supersede and are in lieu of duties and
4-6 obligations under common law or any other law.
4-7 (m) In this section:
4-8 (1) "Face-to-face meeting" means a meeting at which a
4-9 substantive discussion occurs with respect to specific real
4-10 property. The term does not include a meeting that occurs at a
4-11 property being held open for prospective purchasers or tenants or a
4-12 meeting that occurs after the parties to the transaction have
4-13 signed a contract to sell, buy, rent, or lease the real property
4-14 concerned.
4-15 (2) "Licensee" means a real estate broker or real
4-16 estate salesman and includes a licensed associate of a licensee.
4-17 (3) "Party" means a prospective buyer, seller,
4-18 landlord, or tenant or an authorized representative of a party,
4-19 including a trustee, guardian, executor, administrator, receiver,
4-20 or attorney-in-fact. The term does not include a licensee who
4-21 represents a party. <(d) The real estate broker shall use due
4-22 diligence to assist the parties in understanding the consents,
4-23 agreements, or instructions under this section in which the real
4-24 estate broker is permitted to represent more than one party to a
4-25 transaction.>
4-26 SECTION 2. The Real Estate License Act (Article 6573a,
4-27 Vernon's Texas Civil Statutes) is amended by adding Section 15F to
4-28 read as follows:
4-29 Sec. 15F. (a) A party is not liable for a misrepresentation
4-30 or a concealment of a material fact made by a licensee in a real
4-31 estate transaction unless the party knew of the falsity of the
4-32 misrepresentation or concealment and failed to disclose the party's
4-33 knowledge of the falsity of the misrepresentation or concealment.
4-34 (b) A licensee is not liable for a misrepresentation or a
4-35 concealment of a material fact made by a party in a real estate
4-36 transaction unless the licensee knew of the falsity of the
4-37 misrepresentation or concealment and failed to disclose the
4-38 licensee's knowledge of the falsity of the misrepresentation or
4-39 concealment.
4-40 (c) A party or a licensee is not liable for a
4-41 misrepresentation or a concealment of a material fact made by a
4-42 subagent in a real estate transaction unless the party or licensee
4-43 knew of the falsity of the misrepresentation or concealment and
4-44 failed to disclose the party's or licensee's knowledge of the
4-45 falsity of the misrepresentation or concealment.
4-46 (d) The duties and obligations of a licensee or party as
4-47 provided by this section supersede and are in lieu of duties and
4-48 obligations under common law or any other law.
4-49 (e) In this section, "licensee" and "party" have the meaning
4-50 assigned to those terms by Section 15C of this Act.
4-51 SECTION 3. This Act takes effect January 1, 1996.
4-52 SECTION 4. The importance of this legislation and the
4-53 crowded condition of the calendars in both houses create an
4-54 emergency and an imperative public necessity that the
4-55 constitutional rule requiring bills to be read on three several
4-56 days in each house be suspended, and this rule is hereby suspended.
4-57 * * * * *