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A new Texas Agency Disclosure statute has been enacted to modify Section 15C of the Real Estate License Act. It became effective January 1, 1996. The Real Estate License Act is set forth in Art. 6573a of the Texas Statutes.

The new law eliminates the TREC 3 form, but sets forth specific disclosure language which must be given to a party in a real estate transaction at the time of the first face-to-face meeting with the party. The disclosure may be printed in any format that uses at least ten-point type. The new law does not require the party to sign the disclosure form and does not require any boxes to be checked. But the broker has the flexibility to request an acknowledgment of receipt of the disclosure statement, if the broker decides to include that on the form.

In addition to the written disclosure requirement at the first face-to-face meeting with a party, the new statute also requires another disclosure. A licensee who represents a party in a proposed real estate transaction must disclose that representation at the time of the licensee's first contact with: (1) another party to the transaction; or (2) another licensee who represents another party to the transaction. That disclosure may be made orally or in writing.

The new law also establishes a concept of "intermediary" between parties in a transaction. Apparently, the change was made in an attempt to avoid the conflict of responsibilities inherent in a dual agency situation. The statute still limits the ability of a broker to disclose information when the broker is acting as an intermediary. The intermediary must act fairly so as to not favor one party over the other. An intermediary may, however, appoint an associated licensee to communicate with one party and another licensee to communicate with the other party.

The statute also adds Section 15F to the Real Estate License Act. The new section is intended to protect a licensee from liability for a misrepresentation or a concealment of a material fact made by a party in a real estate transaction. The statute provides that the licensee is not liable unless the licensee knew of the falsity of the misrepresentation or concealment and failed to disclose that knowledge. The statute also protects a party or a licensee in a similar manner from a misrepresentation or a concealment of a material fact made by a subagent.