What Are Fiduciary Duties in Real Estate?

Fiduciary duties are the legal obligations that a real estate agent owes to their client (principal) under the law of agency. These duties represent the highest standard of care in a professional relationship and are remembered by the acronym OLD CAR: Obedience — following all lawful instructions of the client; Loyalty — putting the client's interests above all others, including the agent's own; Disclosure — revealing all material facts and information that could affect the client's decisions; Confidentiality — protecting the client's private information, including financial situation and motivation; Accountability — properly accounting for all funds and documents entrusted to the agent; and Reasonable Care — exercising competence, diligence, and skill expected of a licensed professional. Fiduciary duties arise when an agency relationship is established, whether through a written agreement (express agency), actions and conduct (implied agency), or third-party perception (apparent agency).

These duties continue even after the agency relationship ends for certain obligations like confidentiality. A breach of fiduciary duty can result in license revocation, civil liability for damages, and potential criminal charges. It is important to distinguish that while agents owe fiduciary duties to clients, they owe lesser duties of honesty, fairness, and disclosure of material facts to customers (non-represented parties).