Did you ever have a question you wanted to ask a real estate professional but were afraid or embarrassed to do so? Or maybe you
did ask but received a glossy response that didn’t really answer your question. We try to provide candid answers to questions folks have brought to our attention.
Yes. When a real estate agent signs a representation agreement with a buyer or seller, that person becomes their ‘client’ and realtors have a fiduciary duty to them.
What Does It Mean to be a Fiduciary?
To be a fiduciary means to hold a position of trust and confidence, with a legal obligation to act in the best interests of another party. Fiduciary relationships are characterized by the highest standard of care, loyalty, and honesty. Key aspects of being a fiduciary include:
1. Duty of Loyalty: Fiduciaries must prioritize the interests of the party they represent above their own interests or the interests of third parties. They must avoid conflicts of interest and act solely for the benefit of their client.
2. Duty of Care: Fiduciaries are obligated to exercise diligence, skill, and care in carrying out their responsibilities. They must make informed decisions and provide competent advice or services.
3. Duty of Confidentiality: Fiduciaries are required to maintain confidentiality regarding their client's information and affairs. They must not disclose confidential information without the client's consent, except as required by law.
4. Duty of Disclosure: Fiduciaries must disclose all relevant information to their clients, including any conflicts of interest or potential conflicts that may arise.
5. Duty of Prudence: Fiduciaries must act prudently and responsibly in managing the assets or affairs entrusted to them. They should avoid speculative or risky investments and make decisions that are in the best long-term interests of their client.
Fiduciary duties are legally enforceable, and fiduciaries can be held liable for breaches of their duties. Common examples of fiduciaries include trustees, attorneys, some types of financial advisors, and certain types of agents, such as real estate agents and corporate officers. These individuals are entrusted with the responsibility to act in the best interests of their clients or beneficiaries.
