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Texas Professional Standards - Realtors

By
Real Estate Agent with JLA Realty TREC # 0524744

 2008 Code of Ethics

During the recent Professional Standards Training Seminar, a concern was raised regarding whether or not a portion of Standard of Practice 16-13 conflicts with Texas law.  The relevant provision reads as follows:

"REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects' exclusive representatives or at the direction of prospects."

As indicated by the emphasis, the concern is that the code indicates that REALTORS® may indeed provide assistance to consumers who are currently party to an exclusive agency agreement, so long as that assistance occurs with the consent of either the consumer or the broker.  Generally speaking, this provision does not violate Texas law.

However, Occupations Code § 1101.652 (b)(22) reads as follows:

"The commission may suspend or revoke a license issued under this chapter or take other disciplinary action authorized by this chapter if the license holder, while acting as a broker or salesperson negotiates or attempts to negotiate the sale, exchange, or lease of real property with an owner, landlord, buyer, or tenant with knowledge that that person is a party to an outstanding written contract that grants exclusive agency to another broker in connection with the transaction."

This provision of the Occupations Code addresses the situation where a licensee is representing one party to a transaction and is compelled for some reason to deal directly with the other party to the transaction (i.e. Agent A is representing Buyer A and is compelled to present an offer directly to Seller B (represented by Agent B)).  State law would prohibit in that situation negotiating a contract directly with a party who is exclusively represented.  So, to the extent negotiating a contract is considered a substantive service, a REALTOR® would be prohibited by state law from negotiating a contract with a buyer, seller, landlord, or tenant who is a party to an exclusive agency agreement.

But, when it comes to the typical situation that would be covered by SOP 16-13, state law does not contradict the Code of Ethics. For example, if a buyer who is currently party to an exclusive agency agreement approaches another agent in an attempt to secure the same type of service, both the Code of Ethics and state law permit the second agent to provide buyer agency services.  Another example (as seen in Case Interpretation #16-13) occurs when a listing agent is approached by a buyer who is exclusively represented but wants to make an offer without the assistance of their broker.  Assuming the listing broker knows there is an agency agreement in place, the client unilaterally decides to make an offer without assistance, and the buyer is informed the listing broker represents the seller only, the listing broker would not be in violation of SOP 16-13 or state law by assisting the buyer in completing the contract (without advice or opinions).

Please note the above does not address contractual remedies or other common law civil remedies that could be available to a non-breaching party to an exclusive agency agreement.

For all of your Pearland TX real estate needs, please visits my site at www.danfrankrealty.com

Posted by

Danny Frank
A Texas Realtor
JLA Realty

The Pearland Real Estate Expert

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Comments (1)

Jonelle Simons
Windermere Real Estate - Park City, UT
Good points, and VERY informative post, thanks so much for sharing!  I think agency laws are a little different in each state, but the principal is the same.    
Mar 23, 2008 03:43 AM