In Texas real estate, many license holders operate under a familiar (and generally correct) rule of thumb: If it’s not in writing and signed, it’s probably not enforceable.
That instinct will usually keep you out of trouble. But there’s a notable exception you need to understand if you ever talk compensation with another agent.
The General Rule: Get It in Writing
Under TRELA § 1101.806(c), agreements for commissions tied to the purchase or sale of real estate must be in writing and signed by the party to be charged.
No signed writing equals no enforceable commission claim. Simple, clean, and easy to remember.
The Exception That Changes the Game
Under TRELA § 1101.806(a)(1), the in writing and signed by the party to be charged requirement does not apply to agreements to share compensation among license holders.
This means certain broker-to-broker compensation agreements (like cooperative compensation (BAC) and referral agreements) can be enforceable even if they’re not in writing.
Yes, including conversations that happen over the phone.
Why This Matters in the Real World
Let's say you call another agent and say something like, “We’ll pay 3% BAC if your buyer brings a good offer with these terms.” You might think you’re just talking and have meant that you intend to formalize the BAC agreement when you receive the actual offer on the assumption nothing is binding until it’s written.
However, depending on how that conversation unfolds, you may have just created an enforceable agreement through that phone conversation.
Because of the exception found in TRELA § 1101.806(a)(1), your casual conversations about compensation can carry real legal weight. That means off-the-cuff statements can become binding agreements; ambiguity can work against you; and “we’ll figure it out later” might already be too late.
This is one of those areas where precision isn’t just professional—it’s necessary.
Practical Takeaway: Script It Before You Say It
If you’re discussing compensation with another agent, don’t wing it. Instead, decide in advance what you are (and are not) offering, and use clear, consistent language. Avoid vague or conditional statements unless you mean them.
In short, be intentional with your words because they can bind you. “We agreed to BAC over the phone” might sound informal, but under Texas law, it might be very formal and enforceable. When it comes to compensation conversations, say what you mean and mean what you say, and it's always a best practice to make the agreement in writing.
A Glimpse of Where Things Are Heading
There’s reason to believe this issue may become less common as the industry shifts away from cooperative compensation. Texas REALTORS® recently announced their intention to remove Paragraph 5A of their listing agreements which contained listing broker's agreement with the seller to offer cooperative compensation to buyer's agents.
This will amplify the shift in practice to negotiate contributions toward broker compensation on a deal-by-deal basis in the Paragraph 12 of the TREC contracts. The growing use of Paragraph 12 to negotiate fee contributions are pushing compensation discussions into clearer, more structured channels. That’s good for both agents and principals.
