Quick Takeaways:

  • Fiduciary duties are all the duties that a real estate agent or broker is legally beholden to when working with a client.
  • These duties, which are in the client’s best interest, can be summarized by the acronym OLDCAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.
  • Agency is created once an agreement is signed, though a small number of states allow oral agreements.

Source: Fiduciary Duties in Real Estate (The Balance, Sep. 20, 2022)

Agency, which creates a legally binding relationship between the real estate agent and their client during the buying and selling process, is one of the most important aspects of the real estate profession. Because of agency, real estate agents to act in their client’s best interest. Agents can have single or double agency, but their status must always be disclosed.

Like many parts of the real estate buying and selling process, keeping documentation of agency disclosure is of the utmost importance. In real estate transactions, agency is often formed without the signature of the client, so it is up to the real estate professional to keep track of your disclosure. Keeping both paper and digital copies of important documents is always a safe idea!

Dual agency occurs when an agent is representing both the buyer and the seller. Disclosure is of the utmost importance in cases of dual agency, as it is still the fiduciary duty of the agent to represent the interest of both clients. Dual agency is illegal in some states.

Each state has different disclosure laws, controlling everything from agency disclosure, dual agency legality, and what sellers must disclose about their home when selling. It is imperative that, as a real estate agent, you study the laws of your state and make sure your clients are fully aware of any pertinent details.

To help better understand the legal issues surrounding agency and disclosure, we have compiled a verity of recent legal cases for you to study.

See References for more information.