Fiduciary Duty – as a licensed broker in a Real Estate Transaction
When a Realtor becomes a selling or buying agent for a client, they have a Fiduciary Duty – as a licensed broker. What this means is that your Realtor must abide by certain rules and restrictions required of all fiduciaries working in the field.
Fiduciary duties include: remaining loyal, fully disclosing all information to the client, keeping confidential, accounting, and reasonable care and diligence.
Remaining loyal in regards to fiduciary responsibilities refers to always working for the best interest of the client being represented. This includes disregarding the needs of everyone else involved in the transaction, including their own interest as a broker. One such example of a failure to remain loyal is for a Realtor to buy a piece of property from a seller, and turn around and sell it for a profit immediately. The seller must get a fair and reasonable price for their property regardless of who buys it.
Fully disclosing all information is another fiduciary responsibility of the broker. All buyers, offers, potential problems with the property and new information must be presented to the client. The broker has an obligation to give their client all the information they have regarding the value of the property in a clear and concise manner.
Staying confidential is another aspect of the job of a fiduciary. Your broker must keep confidential any information that would hurt your bargaining abilities in a real estate transaction. For example, if you must sell your home to avoid foreclosure, your broker can’t provide this information to the buyer.
The fiduciary responsibilities of a licensed broker also includes taking diligent care to protect the interests of their principal client, and to comply with all known laws that govern the transaction. The fiduciary must further provide a detailed accounting to their client, outlining where all money has been allocated.
The fiduciary duty of licensed brokers in a real estate transaction protect the client at all times. The broker must act in the best interest of the client throughout the deal, provide all necessary paperwork to the client, keep an accurate accounting, and remain loyal.
Real estate transactions get complicated and generally involved large sums of money. Consumers can rest assured that their broker has a set of fiduciary duties that they must follow in order to remain in good standing as a Realtor. All consumers are well cared for under the fiduciary rules set forth by the federal government.
For more information about fiduciary duty or commercial real estate, please contact us.