When a broker or intermediary acts as an agent for a client who is buying or selling a property in a transaction, the broker or intermediary is subject to certain legal obligations, known as fiduciary duties, and acts in the client’s best interests.
Fiduciary duties vary according to state real estate laws, but a typical example is the “confidentiality” of client information. A real estate broker or agent must protect client privacy and keep all information confidential unless a court requires disclosure.
OLDCAR
OLDCAR is an acronym for the critical fiduciary duties of a real estate professional acting as an agent for his or her client.
- Obedience: as your client’s agent, you must follow his instructions, except for any unlawful or unethical requests or requests not following the contract terms.
- Loyalty: As your client’s agent, you must be loyal and put your client’s interests before all other parties, including yourself. The amount of commission you may earn should not be considered, especially in competitive bidding situations, and it would not be loyal to your client.
- Duty to Disclose: In many states, the law requires a broker, whether acting as an “agent” or not, to disclose material facts to the client. If the buyer or seller is known, specific details could influence the transaction.
- Confidentiality: Your duty of confidentiality means that you will not disclose anything You learn about your consumer, their commercial enterprise, economic or non-public affairs, or reasons.
- Record keeping: A fiduciary must keep records of all documents and assets. Accurate reporting of the location of all funds involved in a transaction and their ultimate destination is a fiduciary duty.
- Reasonable diligence: particular attention should always be paid to this duty. In many cases, the words “reasonable diligence” aren’t completely described by means of a decision or jury till it’s miles too past due to alternate your moves. Still, they are essentially a duty that the trustee/brokerage firm must discharge to the client under state and joint federal Agency and federal regulatory laws.
How the Agency is set up
An express representation is created by an oral or written agreement between the principal and the agent. It reflects the express intention of all parties following this Representation Statute.
In real estate brokerage, the right of the Agency is created by a written listing agreement with the seller or a buyer’s brokerage agreement with the buyer. Some states allow oral agreements, but most do not.
Forms of customer representation
Almost all states require that you inform the client or potential client in some form about How you propose to symbolize them in a real estate transaction. The key to this communication is that you have a clear understanding of the rules in your state and the different ways in which you can act as their agent. Your roles and responsibilities to the client will vary considerably depending on the type of representation you have agreed to provide.
Know your state’s laws regarding what is meant by “agency.” When performing as an agent, you should recognize what’s anticipated of you and act for that reason with care and diligence. By no means offer recommendations or offerings for which you aren’t certified, but remember that court decisions have ruled that a real estate professional should have known where to send a client to get the information they need.
Secondary liability is the liability of one person for the actions of another. In real estate, this is the case when the broker is the “agent” of the seller or buyer. The client can be held liable for the actions of the broker and agent if he or she is aware of a wrongful or negligent act.
The brokering practice is no longer widespread, as most of us act as intermediaries in transactions. We still carry out some fiduciary duties, but we are not required to do so.
