Real estate transactions are complex, and as a buyer or seller, it's essential to work with a real estate agent who will protect your interests throughout the process. One of the key ways an agent does this is by fulfilling their fiduciary duties. In real estate, fiduciary duty refers to the legal obligation an agent has to act in the best interests of their client. Here's a closer look at the fiduciary duties of a real estate agent:
Duty of Loyalty
The duty of loyalty requires the agent to put their client's interests above their own. This means the agent must disclose any conflicts of interest and not engage in any activities that could compromise their client's position. For example, an agent should never represent both the buyer and seller in the same transaction as this creates a conflict of interest. Similarly, an agent should not purchase a property on behalf of a client without disclosing their personal interest in the property.
Duty of Disclosure
The duty of disclosure requires the agent to provide their client with all relevant information related to the transaction. This includes disclosing any known defects or issues with the property and any other information that could affect the client's decision to buy or sell. For example, if the agent knows that a new highway is going to be built nearby, they must disclose this to their client as it could impact the property's value.
Duty of Confidentiality
The duty of confidentiality requires the agent to keep all information related to the transaction confidential. This includes any personal or financial information their client shares with them. The agent cannot disclose this information to anyone without the client's consent, except in certain circumstances such as when required by law.
Duty of Care
The duty of care requires the agent to use their knowledge, skills, and experience to act in their client's best interests. This includes providing advice and guidance throughout the transaction and taking steps to protect their client's interests. For example, if the agent knows that a property has issues with the foundation, they should advise their client to get a professional inspection before making an offer.
Duty to Account
The duty to account requires the agent to keep accurate records of all financial transactions related to the transaction. This includes keeping track of any deposits, payments, and other financial transactions. The agent must provide their client with an accurate accounting of these transactions and be prepared to answer any questions their client may have.
Why Fiduciary Duties Matter
Working with an agent who takes their fiduciary duties seriously is essential for both buyers and sellers. When an agent fulfills their fiduciary duties, they act in the best interests of their client, which helps to protect their client's financial and legal interests. This can help to prevent potential disputes and legal issues down the road. By working with an agent who is committed to fulfilling their fiduciary duties, buyers and sellers can have greater confidence in the real estate transaction process.
