Real Estate Fiduciary Duties

Real Estate Fiduciary Duties

When you enter into an agreement with a real estate agent, the agent becomes a fiduciary. A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Real estate fiduciary duties, in simple terms, define how an agent should work on the behalf of a client.

The National Association of Realtors (NAR) identifies six main duties of a real estate fiduciary:

  • Loyalty
  • Confidentiality
  • Disclosure
  • Obedience
  • Accounting
  • Reasonable care


This simply means that an agent should always be working for your best interests, not anyone else’s or their own. This also means avoiding any conflicts of interest. An agent’s duty of loyalty prohibits him or her from accepting employment from any person whose interests compete with or are adverse to, yours as the buyer or seller. An example would be for an agent to purchase a property listed with his or her company then immediately sell it for a profit.


It’s imperative for an agent to keep a client’s information confidential. The information that should be kept confidential would include anything that might impact your bargaining position. An example would be disclosing to a buyer that a seller,  represented by that agent, needs to sell quickly. This, however, does not include an agent disclosing material facts concerning the condition of a property.  To do so would constitute a misrepresentation and would impose liability on both the agent and the seller.


An agent is obligated to disclose to his principal all relevant and material information that the agent knows and that pertains to the scope of the agency. Material facts are those that if known by the seller or buyer may have caused them to change their minds. 


Your agent must obey your instructions. These instructions must, of course, be legal and in accordance with your contract. 


Your agent must account for all documents and funds related to the transaction. There must be reporting of all the pertinent documents and financials. 

Reasonable Care

The phrase is open to interpretation; most often being defined in a courtroom. The NAR describes it as a “duty to use his superior skill and knowledge while pursuing his principal’s affairs. This duty includes an obligation to affirmatively discover facts relating to his principal’s affairs that a reasonable and prudent real estate broker would be expected to investigate.” It's akin to the professionalism expected by patients of doctors or clients of attorneys. 

Do agents ever fail in their fiduciary duty? Unfortunately, yes. Not living up to these duties can cause lots of problems for all parties. As an agent, it's important to hold oneself accountable and focus on the best interests of clients. 

Many breaches of fiduciary duty can occur around full disclosure. And it's not limited to the property itself. A client shared a story about her first home purchase and the breach that occurred. The situation revolved around the state DOT planning to expand a road near the townhome the individual purchased. The DOT did not have imminent plans to begin the road work, but this part was disclosed. What wasn’t disclosed was that many of the units within the neighborhood had already been purchased by the DOT. This meant that when she was ready to sell years later, the property value had decreased. The listing was less desirable. Had she known the DOT already owned many of the units, she would have decided not to purchase.

Stories like these are probably too common. Trust is an important part of the agent-client relationship. That's why we work so hard to do everything right. If you’d like to learn more about how we will work for you, send us a note.

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