Fiduciary Duty
Definition and meaning of Fiduciary Duty in real estate.
Fiduciary duty is a strict legal and ethical obligation that requires a real estate agent or broker to act solely in the best interest of their client.
In more detail
This obligation is established through an agency agreement, such as a listing agreement or buyer representation agreement. The duty consists of several core responsibilities, including loyalty, confidentiality, obedience, disclosure, and reasonable care. An agent who violates this obligation can face lawsuits, license suspension, or disciplinary action from professional associations.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Who owes it | Real estate brokers, agents, and property managers to their clients |
| Core duties | Loyalty, confidentiality, obedience, disclosure, accounting, and care |
| Watch out for | Dual agency conflicts where the agent represents both buyer and seller |
A buyer's agent learns that the seller is willing to accept a lower price but keeps this information confidential from others while using it to negotiate a better deal for their client.
Frequently asked questions
Does a real estate agent owe this duty to a customer?
No, agents owe customer service duties like honesty and fair dealing to non-clients, but the full legal obligation is reserved for clients who sign representation agreements.
What happens if an agent breaches this duty?
The client can terminate the relationship, sue the agent for damages, or file a complaint with the state licensing board.
Related terms
Sources & references
See our sources and editorial standards.