Real Estate Agency Law - Fiduciary Duties are Like an OLD CAR
A true agency relationship, as designated by a written agency agreement, has certain additional duties legally required and for which the agent can be held liable if violated or not performed as required. To help you to remember them, use the acronym OLDCAR.
Barring illegality or superseding the terms of the representation contract, as an agent of your client, you must obey their instructions.
As an example, let's say you're a seller agent who has two buyer offers almost identical in price and contingencies in-hand. Your seller instructs you to accept the offer from Agent B without going back to both buyer Agents A and B for further offers because your seller "doesn't like Agent A". Though you may feel that it is unfair to Agent A and their buyer, you must obey the instructions of your seller.
However, a seller's instruction not to consider one agent's offer because the buyer is of a certain ethnicity is illegal. You should not -- legally cannot -- follow such an instruction.
As your client's fiduciary agent, you must be loyal and keep their best interests ahead of those of any other party, including yourself. Your potential commission, particularly in competing-offer situations, should not be a consideration and would be disloyal to your client.
The offer of a bonus to buyer agents with an accepted purchase offer is of particular note here. In no way should the buyer agent give preference to any property because of a bonus. While it is perfectly acceptable to show the property to the buyer if you believe it's something which might suit them, ethics requires that you tell them about the bonus prior to writing a purchase offer for them.
Though confidentiality is discussed separately, it is also a component of the loyalty piece: Disclosing anything about clients without express consent is not in keeping with this loyalty requirement.
Laws in many states require a real estate agent, whether in an "agency" capacity or not, to disclose material facts to their clients. Material facts are those that, if known by the buyer or seller, might have caused them to change their purchase or sale actions.
Taking it a step further, the fiduciary duty of disclosure includes virtually any knowledge agents possess which might benefit their clients in the process. For instance, if, as a buyer agent, you know the seller is financially strapped, the disclosure of this information aids your buyer in negotiations.
Your fiduciary duty of confidentiality requires that you do not disclose any information learned about your clients, their business, financial or personal affairs or motivations. This duty survives property closing and lasts forever. Only a court instruction to disclose relieves a fiduciary agent of this duty.
Accounting for all documents and funds in the transaction is a fiduciary duty. Accurate reporting of the whereabouts of all monies pertaining to the transaction and their ultimate disposition is a fiduciary responsibility.
This duty is one to which you should apply special care. The words "reasonable care" are only finally fully defined in many cases by a judge or jury when it's too late to change your actions. Licensed real estate professionals are expected to have a certain level of knowledge and be able to advise and guide clients through the real estate sale process without harm.
Whether representing buyers or sellers, real estate agents are expected to advise knowledgeably on prices, inspections, negotiations, repairs and many other facets of a transaction. If questions arise regarding things you're not expected to know, you are expected to advise clients on how and where to obtain the information they seek.
Know Your Fiduciary Duties as an Agent and Perform them Diligently:
Note that the first letters of the duties listed spell out OLD CAR, so it's easier to remember.
Over many years, common and statutory laws have evolved regarding agency and fiduciary responsibilities. As real estate representation evolves, new court cases arise each year in states across the nation actively adding to the expectations of clients and courts regarding agent responsibility in real estate transactions.
Know the laws in your state regarding what agency is and what it is not. It is your responsibility as a real estate agent to know what's required of you and work diligently to perform within those constructs. Don't try to offer advice or services for which you are not qualified, but know that court rulings exist which have indicated the real estate professional should have known where to send clients for the information they needed.