TEXAS CONTRACTS & AGENCY — SALESPERSON EXAM CHEAT SHEET

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TREC PROMULGATED FORMS — Critical Rules

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ONE TO FOUR FAMILY RESIDENTIAL CONTRACT — High-Yield Paragraphs

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OPTION PERIOD vs. EARNEST MONEY — Easily Confused

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> EXAM CUE: Option fee not paid = contract has NO unrestricted termination right, period. Time is critical.

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THIRD PARTY FINANCING ADDENDUM

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TEXAS AGENCY — The Intermediary Model (MOST TESTED)

Key Distinction: Texas ≠ National

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TYPES OF REPRESENTATION

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INTERMEDIARY — What You CAN'T Do

As intermediary broker, NEVER:

• Disclose seller will accept less than asking price

• Disclose buyer will pay more than offered

• Share either party's confidential information without written permission

• Advocate for one party over the other

> EXAM CUE: Intermediary = Switzerland. Neutral. Fair dealing only.

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INTERMEDIARY WITH APPOINTMENTS — The Setup

`` Broker (Intermediary, neutral) ├─ Appointed Associate A → Represents SELLER (can advocate) └─ Appointed Associate B → Represents BUYER (can advocate) ``

Why appointments matter:

• Seller's agent can advise seller to hold firm on price

• Buyer's agent can advise buyer to offer more

• Broker (intermediary) provides no advocacy to either

Requirements:

• Written consent in representation agreements

• Appointments in writing

• Disclose to both parties

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INFORMATION ABOUT BROKERAGE SERVICES (IABS)

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Rule	What It Means
Must use TREC forms when applicable	License law violation if you use non-promulgated form when TREC form exists
Exception to "must use"	Attorney-drafted form for specific transaction OR no TREC form exists
TAR forms when?	TAR members only; NOT a substitute for TREC forms
Paragraph	Key Point	Trap
1	Parties correctly named	Listing broker responsible for accuracy
3	Sales price breakdown: cash + financing = total	Don't confuse with earnest money
5 — Earnest Money	Paid to escrow/title company (not broker)	Is NOT option fee; separate payments
6 — Title	Seller furnishes commitment; buyer right to review exceptions	Survey negotiable
7 — Property Condition	Buyer right to inspect during option period	Seller NOT required to repair unless financing addendum or amended
9 — Closing	Time is of the essence; proration date = day of closing belongs to buyer	Possession at closing unless leases used
15 — Default	Either party can seek specific performance (not just earnest money)	Earnest money forfeited only if parties agree or court orders
18 — Escrow	Earnest money dispute resolution process	Mediator if parties disagree
Feature	Option Fee	Earnest Money
Paid to whom?	SELLER directly	Escrow/title company
Deadline	Within 3 days of execution	As stated in contract
Purpose	Buys unrestricted right to terminate	Proof of intent to perform
If buyer terminates	Seller keeps it	Returned to buyer
If buyer proceeds	Credited toward purchase price	Applied to down payment
If NOT delivered on time/amount	NO OPTION PERIOD EXISTS	Contract proceeds w/o termination right
Element	Rule
Buyer's obligation	Make application + use good faith effort to obtain loan
Financing approval deadline	Set in Paragraph 3B of addendum
Seller notification	If denied, buyer must notify seller in writing
Waiver	If buyer waives contingency, must close regardless of financing
No financing + no waiver	Earnest money returned; buyer not in breach
Deliberate failure	Breach of contract (good faith required)
Concept	Texas Name	National Name	Your Job
Representing both parties	Intermediary	Dual agency	Use "intermediary" on TX exam
One agent per party in intermediary	Appointed associate	—	Unique to Texas
Type	Fiduciary to Whom?	Can Advocate?	Disclosure Req'd?
Seller's Agent	Seller only	Yes (seller's interests)	IABS at 1st substantive dialogue
Buyer's Agent	Buyer only	Yes (buyer's interests)	IABS at 1st substantive dialogue
Intermediary (no appt)	Both (neutral)	NO — broker is neutral	IABS + written consent from both
Intermediary w/ Appointments	Broker = neutral; agents appointed to each	Yes (appointed agents only)	IABS + written consent + written appts
Requirement	Answer
Who must give?	All license holders
When?	At 1st substantive dialogue about specific property
Which form?	TREC-promulgated form
Penalty if missing?	License violation; does NOT invalidate transaction
How delivered?	In person, email, or website
Content?	Explains seller's agent, buyer's agent, intermediary, and duties in each

> TRAP: Missing IABS is a license violation but doesn't void the deal.

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FIDUCIARY DUTIES — Single Agent

OLDS FAC (mnemonic):

• Obedience — follow lawful instructions

• Loyalty — client's interests first

• Disclosure — reveal material facts

• Secrecy/Confidentiality