New Jersey salesperson Rachel is the buyer's agent for the Johnsons. After the Johnsons' offer is accepted, they tell Rachel they are having second thoughts and want to back out. Rachel knows the seller is very motivated and believes the Johnsons are making a mistake. What should Rachel do to fulfill her fiduciary duty?
Correct Answer
A) Advise the Johnsons of the potential legal and financial consequences of withdrawing, then follow their instructions if they still wish to proceed with withdrawal
Rachel's fiduciary duties of obedience and reasonable care require her to inform the Johnsons of the potential consequences of their decision — such as loss of their earnest money deposit or potential legal liability — and then follow their lawful instructions. The duty of obedience requires following client instructions; the duty of reasonable care requires ensuring clients understand the implications of their choices. Once informed, the Johnsons have the right to make their own decision.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A relationship where a listing broker authorizes other brokers to act as agents of the seller, extending the seller's agency relationship to cooperating brokers.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
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