WHAT REAL ESTATE BROKERS NEED TO KNOW ABOUT THE ATTORNEY-CLIENT AND BROKER-CLIENT RELATIONSHIPS IN TEXAS COMMERCIAL REAL ESTATE TRANSACTIONS

Transcription

1 WHAT REAL ESTATE BROKERS NEED TO KNOW ABOUT THE ATTORNEY-CLIENT AND BROKER-CLIENT RELATIONSHIPS IN TEXAS COMMERCIAL REAL ESTATE TRANSACTIONS CHRISTOPHER T. NIXON CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P. 200 CRESCENT COURT, SUITE 1500 DALLAS, TEXAS (FAX)

2 OUTLINE A. INTRODUCTION B. CHARACTERIZATION OF THE RELATIONSHIPS 1. How is the Attorney-Client Relationship Characterized? 2. How is the Broker-Client Relationship Characterized? C. DUTIES OF AN ATTORNEY AND A BROKER TO THE CLIENT 1. Duties of an Attorney to the Client.. 2. Duties of a Broker to the Client. D. CREATION OF THE RELATIONSHIPS 1. How is the Attorney-Client Relationship Created? 2. Two Ways in which the Attorney-Client Relationship is Created. 3. How is the Broker-Client Relationship Created? E. WHO IS THE CLIENT? WHO REPRESENTS THE CLIENT? 1. Attorney Disclosures. 2. Broker Disclosures. F. ATTORNEY REPRESENTATION OF MULTIPLE CLIENTS WITH POTENTIALLY CONFLICTING INTERESTS G. COMMON ATTORNEY CONFLICT SITUATIONS IN REAL ESTATE TRANSACTIONS 1. Corporation/Officers. 2. Partners. 3. Members of the Same Family.

3 4. Borrower/Guarantor. 5. Fee Attorney/Closing Attorney. H. INTERMEDIARIES 1. What is an Intermediary? 2. Attorney as an Intermediary. I. CONCLUSION

4 WHAT REAL ESTATE BROKERS NEED TO KNOW ABOUT THE ATTORNEY-CLIENT AND BROKER-CLIENT RELATIONSHIPS IN TEXAS COMMERCIAL REAL ESTATE TRANSACTIONS A. INTRODUCTION Real estate attorneys and brokers face a myriad of ethics and liability related issues, challenges, and considerations in each Texas real estate transaction in which they participate. Many of these issues, challenges, and considerations relate directly to their relationship with the client. The purpose of this presentation and outline is to highlight a few of the principal ethics and liabilityrelated issues, challenges, and considerations real estate attorneys and brokers face with respect to the attorney-client relationship and the broker-client relationship in Texas commercial real estate transactions. Real estate brokers basic understanding of the ethical and liability issues associated with these client relationships will help to strengthen brokers representation of clients and to prevent potential ethics violations and liability exposure of brokers in Texas commercial real estate transactions. Example Situation: Broker and Attorney represent Buyer in Buyer s purchase from Seller, Inc. of an industrial warehouse property. Buyer and Seller, Inc. entered into a Contract of Sale to evidence their agreement. The Contract of Sale and the title company require Seller, Inc. to provide Buyer and the title company with sufficient evidence of Seller, Inc. s authority to sell the property. Seller, Inc. does not have sufficient evidence of authority to sell the property and is not represented by legal counsel. Buyer s lender requires that the transaction close by the end of the week. Broker suggests to Seller, Inc. that Attorney prepare the appropriate authority documents for Seller, Inc. to facilitate the closing of the transaction. Attorney refuses to do so. Why did Attorney Refuse to Prepare the Requisite Documents for Seller, Inc.? Because Attorney does not represent Seller, Inc., Attorney may face ethical and liability ramifications if he prepares legal documents on Seller, Inc. s behalf in connection with the transaction. Broker s basic understanding of Attorney s role in the transaction and the ethical and liability issues attorneys face in any given real estate transaction would have better enabled Broker to represent the interests of Client and facilitate the transaction. The information and examples in this presentation are intended to strengthen real estate brokers understanding of such issues. B. CHARACTERIZATION OF THE RELATIONSHIPS:

5 1. How is the Attorney-Client Relationship Characterized? a. Agency Principals. It is well-settled that the attorneyclient relationship is a relationship of principal and agent, governed by agency principals. 1 b. Fiduciary Relationship. The attorney-client relationship is a fiduciary relationship as a matter of law How is the Broker-Client Relationship Characterized? a. Agency Principals. Like the attorney-client relationship, the broker-client relationship is governed by agency principals. 3 b. Fiduciary Relationship. The first rule of the Canons of Professional Ethics adopted by the Texas Real Estate Commission states: A real estate broker or salesperson, while acting as an agent for another, is a fiduciary. 4 C. DUTIES OF AN ATTORNEY AND BROKER TO THE CLIENT 1. Duties of an Attorney to the Client. A fiduciary relationship imposes fiduciary duties upon the attorney to the client, including the duty to inform, 5 the duty to explain, 6 and the duty to maintain confidences. 7 1 Texas Employers Ins. Ass n v. Wermske, 349 S.W.2d 90 (Tex. 1961) Perez v. Kirk & Carrigan, 822 S.W.2d 261 (Tex. App. Corpus Christi 1991, writ denied). TEX. OCC. CODE ANN (Vernon 2003). 22 Adm. C Texas Disciplinary Rules of Professional Conduct 103(a). Texas Disciplinary Rules of Professional Conduct 103(b). Texas Disciplinary Rules of Professional Conduct 105(b).

6 2. Duties of a Broker to the Client. The nature of the broker-client relationship is such that a real estate broker or salesperson 8 has certain fiduciary duties to the client. a. What are the Fiduciary Duties of a Real Estate Broker to the Client? (i) CLOSING THE DEAL IS NOT A BROKER S PRIMARY DUTY!! (ii) The primary duty of a real estate broker is to represent the interests of the client. (iii) Four General Categories of Fiduciary Duties: Loyalty, Reasonable Care, Performance, and Accounting. (iv) Duty of Loyalty: (1) This is the duty that is most often breached by real estate brokers. (2) A real estate broker must place no personal interest above that of its client. 9 Example Situation: Broker agrees to represent Seller in selling Seller s property. Broker tricks Seller and buys Seller s property for himself at a price below fair market value. Seller sues Broker for breach of fiduciary duty.10 (3) A real estate broker must disclose to its client all relevant information of which it is aware which may affect the client s rights, interest, or decision In this outline, the term broker shall mean both real estate broker and salesperson, except when the context requires otherwise Adm. C (3). 10 See Ramsey v. Gordon, 567 S.W.2d 868 (Tex. Civ. App. Waco, 1978); Wilson v. Donze, 692 S.W.2d 734 (Tex. App. Fort Worth 1985, no writ) Adm. C (b); Riley v. Powell, 665 S.W.2d 578 (Tex. Civ. App. Fort Worth, 1984).

7 In Steptoe v. True, 38 S.W.3d 213 (Tex. App. Houston (14th Dist) January, 2001), Steptoe bought a beach house in Galveston County. True was the broker representing the seller of the house. At the time of the sale, there was a concrete bulkhead in front of the house and in front of the vegetation line. The contract of sale included the Coastal Property Addendum and the Bulkhead Addendum which disclosed that the property line was the vegetation line and that the State could require the removal of any improvements which were located beyond the vegetation line. Shortly after the sale, the State removed the bulkhead and, due to erosion, the house subsided into the Gulf. The State had previously notified the seller that it would remove the bulkhead, but Steptoe claims he did not receive that information. Steptoe filed a lawsuit against True. The Court found that True made no affirmative misrepresentation to Steptoe and none can be inferred from the fact that he furnished the required addenda to the contract of sale. Steptoe s negligence cause of action also failed because the broker had no duty to Steptoe to inspect the property and disclose all facts which might affect its value. True had no duty to disclose facts he did not know. (4) The real estate broker must follow the client s instructions, to the extent not in violation of law or ethical rules. Situation 1: In Jackson v. Williams, 510 S.W.2d 645 (Civ. App Beaumont 1974, ref. n.r.e), the buyer of a tract of real property conditioned the sale on buyer securing an appraisal showing the property to be worth the contract price. The seller told her broker not to return the buyer s earnest money deposit unless the broker received a written appraisal showing the property to be worth less than the contract price. Contrary to these instructions, the broker returned the earnest money deposit to the buyer when the buyer told the broker that the property appraised lower than the contract price (when, in fact, the real property appraised for the purchase price). The seller brought suit for specific performance against the buyer, and prevailed, but the court denied the broker her commission on the sale due to the broker s violation of instructions from the seller. The

8 broker violated her fiduciary duties and, thus, was not entitled to a commission. Situation 2: Broker represents Owner in connection with Owner s sale of its restaurant to Buyer. Owner explains to Broker that the roof of the restaurant is in desperate need of repair and that Buyer is not aware of the problem. Owner instructs Broker to affirmatively tell Buyer that Owner is not aware of any roof problems. Can Broker follow this instruction of Owner? No, because this information would be a significant factor to a reasonable and prudent buyer in making the decision to purchase the property, Broker must disclose this fact to Buyer despite Owner s instructions to Broker. Broker would face suspension or revocation of his license under Texas Occupations Code Section (b)(3) and (4), among other liabilities, if it fails to do so. (v) Duty of Reasonable Care. (1) A real estate broker must: (i) be knowledgeable about market conditions affecting the real estate business, (ii) be informed of national, state, and local issues and developments in the real estate industry, and (iii) exercise judgment and skill in the performance of the work. 12 This duty also includes notions of confidentiality about the client s situation. (2) A real estate broker is responsible for the authorized acts of its salespersons. 13 A real estate broker may be held liable for actual damages from the tortious conduct of its salesperson, but not punitive damages unless the broker is held to be negligent in hiring the salesperson and to have authorized, ratified, or approved the salesperson s tortious acts Adm. C Adm. C (a). See Wagner v. Hall, 519 S.W.2d 488, 491 (Civ. App. El Paso 1975, no writ).

9 (3) A real estate broker must refrain from intentionally or recklessly making false representations. In Stone v. Lawyers Title Insurance Corporation, 554, S.W.2d 183 (Tex. 1977), the seller s broker represented to the buyer that the seller s property is not encumbered by an easement, when, in fact, it is. The court stated that a broker may be held liable for fraud under common law when the representation is false and the broker makes it recklessly, without any knowledge of whether it is true. (vi) Duty of Performance. A real estate broker must do its job with diligence and obedience. A broker must negotiate the best possible transaction for the client. 15 One Texas court held that the primary duty of the seller s real estate broker is to obtain for its client the highest price then obtainable and known to the agent. 16 Of course, the price of the real estate is not the only factor in a sales transaction to be considered by the broker in determining whether a particular transaction is the best possible transaction. (vii) Duty of Accounting. A real estate broker must account for all funds placed with the broker on behalf of her client in connection with activities performed on her client s behalf. 17 (viii) Additional Duty to Third Parties. A real estate broker must treat other parties to the transaction fairly Adm. C (b). Wilson v. Donze, 692 S.W.2d 734 (Tex. App. Fort Worth 1985, no writ). 22 Adm. C (c). 22 Adm. C

10 D. CREATION OF THE RELATIONSHIPS: 1. How is the Attorney-Client Relationship Created? a. Test: What is the reasonable expectation of the client in light of all of the surrounding circumstances? 19 The relationship comes into existence when the client reasonably expects the relationship to exist (not when the lawyer accepts representation). b. Question of Fact. The determination as to whether an attorney-client relationship exists is a question of fact for the jury Two Ways in which the Attorney-Client Relationship is Created: a. Expressly by the Attorney and the Client An engagement letter is recommended to clarify the terms of the relationship. b. Impliedly by the Conduct of the Attorney and the Client (i) An attorney-client relationship may be implied from the conduct of the parties. 21 One Texas court stated in dicta that all that is required is that the parties explicitly or by their conduct manifest an intention to create the attorney-client relationship. 22 (ii) No Compensation Necessary. Compensation or a promise to pay legal fees is not necessary to form the relationship. 23 Gratuitous representation is enough. (iii) This is a Problem Area for Attorneys. Lawyers tend to share their opinion on just about every subject with just See Perez, 822 S.W.2d at 265. Security Sav. Ass n v. Clifton, 755 S.W.2d 925 (Tex. App. Dallas 1988, no writ). Perez, 822 S.W.2d at 265. Parker v. Carnahan, 772 S.W.2d 151, 157 (Tex. App. Texarkana 1989, writ denied). 23 Perez, 822 S.W.2d at 265.

11 about anyone who will listen. If the lawyer s opinion contains legal advice, it may be reasonable for the listener to expect an attorney-client relationship to exist based on such advice. (iv) Cocktail Party Situation. The casual conversation an attorney has with a cocktail party guest about a problem he is having with his swimming pool contractor may impliedly create an attorney-client relationship. PRACTICAL ADVICE: In an informal setting, don t be surprised if an attorney does not agree to undertake (or to generally help out on ) a matter. In this situation, an attorney should require the potential client to contact him at his office to see if there is anything he can do to help with the matter. (v) Consultation. Mere consultation is not enough to create an attorney-client relationship. 24 (1) But Duties After Consultation: (a) maintain confidences, (b) avoid future or existing conflicts, (c) advise the potential client of any deadlines, if applicable How is the Broker-Client Relationship Created? Like the attorney-client relationship, no formality is required to create the broker-client relationship. Although a broker must obtain a signed written agreement to collect a commission from a client, 26 an oral agreement to assist a party in a real estate transaction may be sufficient to subject the broker to fiduciary obligations and duties to the party. 27 In Wilson v. Donze, 692 S.W.2d 734 (Tex. App. Fort Worth 1985, no writ), a real estate broker contacted the owners of a 12 acre tract of property requesting to represent them in the sale of the 12 acre tract. The owners declined 24 Green v. State, 667 S.W.2d 528 (Tex. Crim. App. 1984). 25 Texas Disciplinary Rules of Professional Conduct TEX. OCC. CODE ANN (c) (Vernon 2003). See, e.g., Schiller v. Elick, 240 S.W.2d 997 (Tex. 1951).

12 his offer because they did not want to pay a real estate commission in connection with the sale. Nonetheless, the broker orally represented to the owners that he would find a buyer willing to pay the best possible price for the property and would require the buyer to pay his commission. The broker arranged the sale of the property, but did not disclose that he was actually buying the property for himself to resell for a profit. The broker was found to be acting on the owners behalf despite that the owners refused to pay a commission. Because he was held to be acting on behalf of the owners, he was held to be liable to the seller for his misrepresentations that he would find a third-party buyer and for failing to secure the best possible price for the owners. What Fiduciary Duties did the Broker Breach? Duty of Loyalty and Duty of Performance. E. WHO IS THE CLIENT? /WHO REPRESENTS THE CLIENT? These are Simple Questions, but Often can be Difficult to Answer in a Real Estate Transaction. A commercial real estate transaction commonly involves three or more parties and several representatives and agents of each party. Many times, a person involved in a transaction incorrectly assumes that all other persons involved in the transaction know that person s role in the transaction. PRACTICAL ADVICE: It is important for a real estate broker to understand who all of the players are and how each player fits into a given transaction. If you are unsure how a particular person fits into the transaction, ask her. Asking about a given person s role in the transaction may avoid an embarrassing situation for you and will enable you to better represent the interests of your client in the transaction. 1. Attorney Disclosures. a. The Attorney Does Not Represent the Deal. The attorney should clearly identify the client in accepting business and disclose such representation to all other parties. b. The Failure to Clearly Identify the Client and Disclose Such Representation to Other Parties is a Frequent Potential for Conflict in any Real Estate Transaction. Why? Given an attorney s involvement in a real estate transaction, other parties may believe that the attorney represents multiple (or all) parties. The legal documents

13 prepared by the attorney relate to more than the attorney s client. Each party to the real estate transaction may not be represented by independent legal counsel and may not understand the role of the attorney preparing the closing documents. c. Written Disclosures. (i) Disclosure of Representation. In any real estate transaction, an attorney should disclose in writing to all parties the identity of the attorney s client. (ii) Disclosure of Non-Representation ( I m not your lawyer letter). One Texas court held that the duty to advise a person that he is not being represented by the attorney arises if the attorney was aware or should have been aware that the attorney s conduct would lead a reasonable person to believe that he/she was being represented by the attorney. 28 In the situation in which there are multiple parties with similar interests in a given transaction and the attorney represents only one of them, the attorney should disclose in writing to the other parties that he does not represent them. In this situation, it is also prudent to have the parties not being represented sign a non-representation disclosure letter acknowledging the party s understanding of the attorney s representation in the transaction. 2. Broker Disclosures. a. A real estate broker must make clear to all parties to a real estate transaction the party for whom the agent is acting. 29 b. A real estate broker must provide to its client, at the time of the first substantive dialogue, 30 a written disclosure statement in statutory form, which discloses, among other things, (i) the duties of the real estate broker, and how they vary depending on whom the broker represents and (ii) that the party should enter into a written agreement 28 Parker, 772 S.W.2d at TEX. OCC. CODE ANN (b)(7) (Vernon 2003). 30 The words substantive dialogue are a defined term in TEX. OCC. CODE ANN (a) (Vernon, 2003).

14 with the broker clearly establishing the broker s role and how the broker will be paid. 31 See Exhibit A attached hereto for a copy of the statutory form of written disclosure statement. F. ATTORNEY REPRESENTATION OF MULTIPLE CLIENTS WITH POTENTIALLY CONFLICTING INTERESTS Rule 1.06(c) of the Texas Disciplinary Rules of Professional Conduct (TDRPC) provides that an attorney may represent a person in a situation involving a potential conflict of interest if: (a) the attorney reasonably believes the representation of each client will not be materially affected, and (b) each potentially affected client consents to the representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any. G. COMMON ATTORNEY CONFLICT SITUATIONS IN REAL ESTATE TRANSACTIONS 1. Corporation/Officers. Rule 1.12 of the TDRPC provides that when an attorney is retained by an entity, the attorney s client is the entity (not its officers, directors, or employees). The interests of a corporation and those of its officers, directors, and employees are often adverse. When an attorney represents a corporation, the attorney must clarify the identity of his client whenever he meets with the officers, directors, or employees if their interests may be adverse to those of the corporation. An attorney can be disqualified and sanctioned for not disclosing possible conflicts between the interests of the corporation and the interests of its officers, directors, and employees. 2. Partners. The attorney must initially determine whether it represents the partnership, all of the partners, or only one of the partners. TDRPC 31 TEX. OCC. CODE ANN (c) (d) (Vernon 2003). There are two exceptions to this rule when a broker is not required to provide the written disclosure statement: (i) The transaction is for a residential lease for not more than one year and no sale is being considered; or (ii) The broker meets with a party who is represented by another broker. TEX. OCC. CODE ANN (c) (Vernon 2003).

15 Rule 1.12 applies to any entity so that an attorney s representation of a partnership does not necessarily include representation of the partners Members of the Same Family. In family real estate transactions, it is particularly important to disclose to each participant the identity of the attorney s client and the identity of those family members the attorney does not represent; particularly since not all family members may have legal representation and may not understand the role of the attorney representing only a single family member. 4. Borrower/Guarantor. If an officer of a corporation executes a guaranty for the obligations of the corporation in a loan transaction, is it clear whether the attorney representing the corporation also represents the guarantor? The interests of the corporation and the guarantor are not aligned. 5. Fee Attorney/Closing Attorney. a. A fee attorney or closing attorney is entitled to a percentage of the title insurance premium by either (i) performing title examination services 33 or (ii) closing the transaction. 34 b. By performing services entitling the attorney to a percentage of the title insurance premium, the attorney establishes an attorney-client relationship with the title insurance company. 35 c. An attorney may represent both the title insurance company and a party to the real estate transaction provided the attorney complies with TDRPC Rule 1.06(c). d. Attorney also acting as Broker. If an attorney is representing a client as both attorney and real estate broker in a real estate transaction, can he fairly guard the legal interests of the client when he will lose the real estate commission if the transaction does not close? Closing the transaction (and, thus, collecting the real estate commission) 32 Burnap v. Linnartz, 914 S.W.2d 142 (Tex. App. San Antonio 1995, writ denied). 33 The definition of title examination is set forth in Texas Title Insurance Act article 9.02(m). 34 The phrase closing the transaction is a key statutory term of art under Texas Title Insurance Act article 9.02(n). 35 Tex. Comm. on Professional Ethics, Op. 408, V. 47, Tex. B.J. 44 (1984).

16 is not a primary duty of the broker to the client, but the potential to earn a real estate commission certainly raises a conflict of interest concern. Prior to such representation, the attorney must disclose this conflict of interest to the client and obtain the client s consent to the dual-role. H. INTERMEDIARIES 1. What is an Intermediary? A broker or attorney who is employed to act as the agent for both parties in negotiating a transaction between the parties. 2. Attorney as an Intermediary. TDRPC 1.07 permits an attorney to act as an intermediary provided the attorney consults with each client concerning the implications of the common representation and obtains each client s written consent to the common representation, among other requirements. Example 1: Partners request that an attorney draft a partnership agreement to represent all of their interests. The attorney is not an adversary for one partner. His loyalty is to all partners to reach their common goals. Example 2: Attorney represents both seller and buyer in a purchase and sale transaction. Given the inherent nature of the conflict and the ethical and liability risks associated therewith, it is not advisable for an attorney to represent both the seller and the buyer in a commercial real estate transaction regardless of whether both the seller and the buyer consent to the common representation. 3. Broker as an Intermediary. Section (a) of the Texas Occupations Code provides that a broker may act as an intermediary between parties to a real estate transaction if (i) the broker obtains written consent from each party and (ii) the written consent of the parties states the source of all expected compensation to the broker. a. A broker must act fairly and impartially as an intermediary. 36 b. A broker acting as an intermediary may not: (i) disclose to the buyer that the seller will accept a price less than the asking price, unless otherwise instructed in a separate writing by the seller; 36 TEX. OCC. CODE ANN (c) (Vernon 2003).

17 I. CONCLUSION (ii) disclose to the seller that the buyer will pay a price greater than the price submitted in a written offer to the seller, unless otherwise instructed in a separate writing by the buyer; or (iii) disclose any confidential information or any information a party specifically instructs the broker in writing not to disclose unless: (1) otherwise instructed in a separate writing by the respective party; (2) such disclosure is required by law or court order; or (3) the information materially relates to the condition of the property. 37 Real estate attorneys and brokers face numerous ethics and liability related issues, challenges, and considerations in each Texas real estate transaction in which they participate. Real estate brokers basic understanding of the ethical and liability issues associated with the attorney-client and broker-client relationships will help to facilitate brokers representation of clients and to prevent potential ethics violations and liability exposure of brokers in Texas commercial real estate transactions. 37 TEX. OCC. CODE ANN (d) (Vernon 2003).

18 EXHIBIT A Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. IF THE BROKER REPRESENTS THE OWNER: The broker becomes the owner s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner s agent anything the buyer would not want the owner to know because an owner s agent must disclose to the owner any material information known to the agent. IF THE BROKER REPRESENTS THE BUYER: The broker becomes the buyer s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer s agent anything the owner would not want the buyer to know because a buyer s agent must disclose to the buyer any material information known to the agent. IF THE BROKER ACTS AS AN INTERMEDIARY: A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction: (1) shall treat all parties honestly; (2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner; (3) may not disclose that the

19 buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and (4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property. With the parties consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party. If you choose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker s obligations and your obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.