Fiduciary Duties: What Does an Agent Legally Owe Their Clients?

In addition to having a knowledgeable advocate on your side during the buying or selling process, there are a number of reasons why it’s beneficial to be represented by an agent, or even better, a realtor.

All realtors are required to uphold the National Association of Realtor’s Code of Ethics and Standards of Practice, which ensures that consumers are being thoughtfully represented. Additionally, all licensees must follow the fiduciary duties automatically established by their agent-client relationship. Those duties are: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence. But what do those look like in practice?

Obedience:

An agent must adhere to all lawful client requests. This does not mean that an agent is able to break the law for their client by not disclosing something pertinent, ignoring fair housing laws, etc. But it does mean that if you want to list your house at a price they don’t agree with, they are required to comply if they want to continue working for you.

Loyalty:

It is always required that an agent act in the best interest of their client, even if it’s a detriment to their own best interest. Your agent has to do what’s best for you, and you alone.

Disclosure:

An agent must disclose all known relevant information to their client. This includes anything that the agent knows that may improve the client’s ability to obtain or sell their home, as well as any information that could possibly deter them from purchasing.

Confidentiality:

This is the one duty that extends beyond the completion of your transaction. This means that an agent can never disclose any personal information about their client(s), unless they have been asked to do so. For example, an agent cannot mention to someone that their clients are getting a divorce, unless for some reason their clients have agreed to disclose that information.

Accounting:

Agents must keep accurate records, including receipts, contracts, and communication, and protect the client’s information accordingly.

Reasonable care and diligence:

It’s necessary that an agent competently assist their client and exhibit superior professional skills and expertise. An agent needs to work efficiently to spot any possible red flags, investigate when needed, and refer clients to specialized experts if necessary (including inspectors, electricians, accountants, etc.).

It’s important to note that Arizona contracts stipulate that agents are not inspectors, and therefore held harmless if an unrecognized issue later arises. That’s why it’s key for clients to understand that the due diligence period (which typically ends 10 days after an offer is accepted) is an important opportunity to take every step possible to make sure this is the house for you. The Arizona Association of Realtors’ Buyer Advisory covers in detail what buyers should be looking into themselves during this time.

If you have any questions about fiduciary duties or the dynamics of the agent-client relationship, contact me.

Julia Van Valkenburg, REALTOR

OMNI Homes International

julia@buyselltucsonhomes.com

520-275-3514 

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