FIDUCIARY DUTIES

What is Fiduciary Duty?

In the context of a real estate agent, “fiduciary duty” refers to the legal and ethical obligation that
the agent has to act in the best interests of their clients. This duty is based on trust and confi-
dence and requires the agent to prioritize the client’s interests above their own or those of any
other party involved in a real estate transaction. Fiduciary duties in real estate typically include:

1. Loyalty: The agent must be loyal to their client and avoid any conflicts of interest. This
means not engaging in activities that could compromise the client’s best interests, such
as dual agency (representing both the buyer and seller in the same transaction) without
informed consent.
2. Confidentiality: Real estate agents are required to keep all client information confidential,
even after the transaction has concluded. This includes not disclosing personal or financial
information unless authorized by the client or required by law.
3. Disclosure: Agents have a duty to provide clients with all relevant information about a
property and the transaction process. This includes disclosing any known material defects
in the property and sharing information about offers and negotiations.
4. Obedience: Agents must follow the lawful instructions of their clients and carry out their
wishes within the bounds of the law and ethical standards.
5. Reasonable Care and Diligence: Agents are expected to use their professional skills and
knowledge to represent their clients competently. This involves conducting thorough market
research, property inspections, and providing sound advice.
6. Accounting: Agents are responsible for accurately handling and accounting for their
clients’ funds and financial transactions related to the real estate transaction.
7. Full Disclosure: Agents are obligated to disclose any potential conflicts of interest or any
relationships that could influence the transaction. For example, if the agent has a personal
or financial interest in the transaction, they must disclose this to the client.

Fiduciary duties are legally enforceable, and agents who breach their fiduciary obligations can
face legal and disciplinary consequences. Clients rely on their real estate agents to act with
honesty, integrity, and transparency, and the fiduciary duty ensures that agents uphold these
standards while representing their clients’ interests in real estate transactions.
Next, you’ll review scenarios involving real estate agents and their fiduciary duties to
their clients.

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 Instructions:
For each scenario, mark the option you believe represents a real estate agent honoring their
fiduciary duty to their client. Using the first page of this document, write the type of fiduciary
duty being represented in the scenario.

Scenario 1:
A buyer asks you to find homes that fit their budget and criteria.
You pull properties that fit well within the buyer’s price range and include most, if not all, of
their criteria.
You find homes for your buyer that are definitely out of their budget, and are not sticking
with the criteria they specified.
Fiduciary Duty:
Scenario 2:
A buyer is interested in buying a property you currently have listed.
In the moment, you tell the buyer “no problem, I can represent both of you.”
You tell the buyer that you currently represent the seller. They are comfortable being
represented by you as well. You get written consent from the seller to represent both
parties and present it to your buyer before proceeding.
Fiduciary Duty:
Scenario 3:
You receive an offer on a property you have listed.
After reviewing the offer, you decide that your seller would not benefit from it and you do
not present it to your seller.
After reviewing the offer and seeing that it may not be the best option for your seller, you
present it to your seller to get their opinion.
Fiduciary Duty:
Scenario 4:
Your buyer is interested in a property you know is in very poor condition.
You tell them about the property’s true condition and let them decide if they want to
purchase it.
You decline to disclose your knowledge of the property’s condition and let your buyer
make an offer.
Fiduciary Duty:

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 Answer Key:

Scenario 1:
A buyer asks you to find homes that fit their budget and criteria.
You pull properties that fit well within the buyer’s price range and include most, if not all, of
their criteria.
Fiduciary Duty: Reasonable Care and Diligence
Scenario 2:
A buyer is interested in buying a property you currently have listed.
You tell the buyer that you currently represent the seller. They are comfortable being
represented by you as well. You get written consent from the seller to represent both
parties and present it to your buyer before proceeding.
Fiduciary Duty: Loyalty
Scenario 3:
You receive an offer on a property you have listed.
After reviewing the offer and seeing that it may not be the best option for your seller, you
present it to your seller to get their opinion.
Fiduciary Duty: Obedience
Scenario 4:
Your buyer is interested in a property you know is in very poor condition.
You tell them about the property’s true condition and let them decide if they want to
purchase it.
Fiduciary Duty: Disclosure

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© Keller Williams Realty, Inc.
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