A California buyer's agent refers their client to a home inspector without disclosing that the agent receives a $100 referral fee from the inspector for each referral. Which of the following laws or duties is most directly violated by this failure to disclose?
Correct Answer
A) The agent's fiduciary duty of disclosure and loyalty under California agency law
A California buyer's agent owes fiduciary duties including the duty of disclosure and the duty of loyalty. Receiving a $100 referral fee from a home inspector without disclosing it to the buyer client creates a direct conflict of interest — the agent's recommendation may be motivated by personal financial gain rather than the buyer's best interest. Under California Civil Code §2079.16 and established fiduciary principles, agents must disclose all compensation received in connection with the transaction, regardless of the source.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
More Laws Of Agency Fiduciary Duties Questions
A property sold for $450,000. The commission rate was 6%. If the listing broker received 60% of the total commission, how much did the listing broker receive?
An individual who is not employed by the client, but has been delegated agency duties by an agent of the client, is referred to as a(n):
What are the three steps of the agency disclosure in proper chronological order?
An agent needs to disclose a conflict of interest to the affected parties when a principal or service provider in the transaction is the agent’s:
A broker who simultaneously represents the best interests of both opposing parties in a transaction is known as a(n):
- → When showing a listed residential property of one to four dwelling units to potential buyers, the listing broker is required to disclose:
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- → A real estate broker is subject to disciplinary action from the Department of Real Estate (DRE) if they:
- → The seller states they will accept the buyer’s offer if the broker lowers their 6% commission by 25%. If the broker accepts, they will receive:
- → When a broker wants to store documents electronically, the storage method may not allow the final documents to be altered. What method of electronic document storage is required by the Department of Real Estate (DRE)?
- → A broker receives a full price offer on a house they are listing. Before they present the offer to the seller, another broker brings in an all cash offer for $5,000 less. The listing broker is to:
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- → A broker who fails to promptly disclose their dual agency status is subject to:
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