Remedies for Breach of Fiduciary Duties in Real Estate

couple meeting with real estate agent


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Fiduciary duties are required only if the real estate professional is acting in an "agent" capacity. While they may all be called real estate agents, the fact is that very few deals these days involve a real estate agent actually acting as an agent.

In most states, the practice of "agency" in real estate is dying. In the past, the listing brokerage was always the "agent" of the seller. When another brokerage brought a buyer, that brokerage became a "sub-agent" of the seller. It's not hard to see the problem here. The poor buyer isn't represented by anyone, and their "agent" is required to be loyal to the interests of the seller.

Agents vs. Brokers

Sub-agency has almost disappeared, with buyers now represented by a real estate professional who is working in their best interests. However, it's rare for that real estate professional to be acting as a true "agent." They are referred to as "transaction brokers," "facilitators," or other terms that do not imply that they are actual agents of the buyer.

Most states have now enacted laws that require a specific signed document that makes the real estate professional an agent. This way there is no misunderstanding as to what is required of the agent and what the customer expects. They're technically a "client" if there is an agency relationship. In most situations these days, the real estate agent is acting in some other capacity, sometimes called a "facilitator" or "representative." 

Requirements of Agency

With that out of the way, let's look at the expanded requirements, or duties, for an "agency" situation.

  • Loyalty: This is a bedrock duty requiring that the agent always act solely in the best interests of the client. No other personal, familial or business interest can take priority over the interests of the client.
  • Confidentiality: Even after a deal has closed, into the future, the agent must always safeguard the client's confidences and secrets.
  • Disclosure: The agent must disclose to the client all the information that's material and relevant. To help decide if something is material, think: would the client change a decision about buying or selling or change a negotiation based on the information if disclosed.
  • Obedience: As long as it's not illegal to do so, the agent must do what the client wants them to do.
  • Reasonable Care and Diligence: Be competent and do the job right.
  • Accounting: Account for all monies or property belonging to the client.

If you rearrange those a bit, they are easier to remember using the acronym OLDCAR for the first letter of each duty. Being a true agent is a much higher level of representation, and no real estate professional should be practicing as an agent without a full understanding of what it means, as well as the approval of their broker.

Remedies for Fiduciary Breach

So, what can the client do if the agent doesn't perform as required?


When a breach of fiduciary duties by a real estate agent is involved, the principal can ask the courts to rescind the contract and restore them to their status before entering the agreement. This could involve the return of the property to the seller and refund of the purchaser's money. There does not need to be something unfair about the transaction itself, only the breach of fiduciary duties by the agent.

Forfeiture of Commission

No payment is entitled to a real estate agent that breaches their fiduciary duties. Thus the agent can be required to refund any compensation received.


A breach of fiduciary duties by a real estate agent could result in damages to their client principle. If so, the agent would be required to compensate the client for those damages. Suppose the agent for the seller of a property failed to present a better offer to the seller than the one they accepted. The agent would be required to reimburse the seller for the difference in the lower and higher offers.

If you have an attorney as a real estate customer, they'll almost always tell you that they do not want an "agent." They do not want exposure to vicarious liability.