Fiduciary Duty: What does this mean anyway?
As licensed brokers, we at R&R Properties of Eugene hold the Code of Ethics and our Fiduciary duties to the highest standard and respect. We feel confident that you will feel the same way.
Definition of Fiduciary: An individual, corporation or association holding assets for another party, often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party. A real estate broker who represents a buyer or a seller is deemed to be a fiduciary. As a fiduciary, a real estate agent is held by law to a standard of specific duties to his or her principal (person who designates another (agent) to act on his or her behalf). These fiduciary duties include but are not limited to:
• Loyalty
• Obedience
• Disclosure
• Confidentiality
• Reasonable care and diligence
• Accounting
Loyalty
One of the most critical of all fiduciary duties is to at all times act solely in the best interests of the principal, excluding all other interests, including those of the broker. As an agent of real estate, a Listing Agent (Seller’s agent) must do everything possible, within the parameters of the law, to gain advantage for the Seller, while a Buyer’s Agent must do the same for his or her Buyer.
Obedience
An agent is obligated to obey all lawful instructions of his or her principal that apply to the agency relationship. Unlawful instructions, such as to misrepresent, fraud, falsifying information, or discount of the Fair Housing Act do not apply.
Disclosure
An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. This includes any and all facts affecting the desirability and/or value of the property. It also includes relevant information pertaining to the transaction, such as the other party’s willingness to negotiate the terms of the sale (i.e. price, contingencies, repairs, etc.). The duty of disclosure should not be confused with a real estate broker’s duty to disclose any known material facts about the property itself to non-principals. The duty to disclose know material facts, including defects, is based on a real estate broker’s duty to treat all persons honestly. The duty of honesty does not depend on the existence of an agency relationship.
As a Listing Agent it is his/her responsibility to disclose any known defects of the property. They are not required to disclose reasons for selling, crime in the neighborhood, economic conditions, quality of schools or majority of race in particular areas. A Buyer's Agent is required to find out all reasonable information on the property. On the Buyer’s side of the equation, a Buyer’s Agent must tell the Buyer everything he or she can find out about the Seller and property. Questions you should ask your agent as a buyer are: reasons for selling, crime in the area, school quality and location, location to shopping, general traffic patterns, motivation of seller and any other interest you have pertaining to the community, location of home or to gain purchasing power.
Confidentiality
An agent is obligated to insure security to his or her principal’s lawful shared information. Any information that may weaken a principal’s bargaining position must be kept confidential. For example the Listing Agent is not to share the information pertaining to the seller’s willingness to take an offer below listed price. This also pertains to the buying agent disclosing what terms the buyer is willing to accept including price.
Reasonable Care and Diligence
An agent is obligated to use the degree of care that a reasonably prudent person would use under like circumstances (reasonable care) and the care a reasonable person should take before entering into an agreement or a transaction with another party (diligence) when pursuing the principal’s affairs. As a licensed real estate agent he or she is considered to have skill and expertise concerning real estate matters superior to that of the average person. The agent is then expected to use their superior skill and knowledge while representing the principal with respects to real estate.
Accounting
An agent is obligated to account for all money, documents or property which belongs to his or her principal and which has been entrusted to that agent.
Code of Ethics:
Definition of Fiduciary: An individual, corporation or association holding assets for another party, often with the legal authority and duty to make decisions regarding financial matters on behalf of the other party. A real estate broker who represents a buyer or a seller is deemed to be a fiduciary. As a fiduciary, a real estate agent is held by law to a standard of specific duties to his or her principal (person who designates another (agent) to act on his or her behalf). These fiduciary duties include but are not limited to:
• Loyalty
• Obedience
• Disclosure
• Confidentiality
• Reasonable care and diligence
• Accounting
Loyalty
One of the most critical of all fiduciary duties is to at all times act solely in the best interests of the principal, excluding all other interests, including those of the broker. As an agent of real estate, a Listing Agent (Seller’s agent) must do everything possible, within the parameters of the law, to gain advantage for the Seller, while a Buyer’s Agent must do the same for his or her Buyer.
Obedience
An agent is obligated to obey all lawful instructions of his or her principal that apply to the agency relationship. Unlawful instructions, such as to misrepresent, fraud, falsifying information, or discount of the Fair Housing Act do not apply.
Disclosure
An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. This includes any and all facts affecting the desirability and/or value of the property. It also includes relevant information pertaining to the transaction, such as the other party’s willingness to negotiate the terms of the sale (i.e. price, contingencies, repairs, etc.). The duty of disclosure should not be confused with a real estate broker’s duty to disclose any known material facts about the property itself to non-principals. The duty to disclose know material facts, including defects, is based on a real estate broker’s duty to treat all persons honestly. The duty of honesty does not depend on the existence of an agency relationship.
As a Listing Agent it is his/her responsibility to disclose any known defects of the property. They are not required to disclose reasons for selling, crime in the neighborhood, economic conditions, quality of schools or majority of race in particular areas. A Buyer's Agent is required to find out all reasonable information on the property. On the Buyer’s side of the equation, a Buyer’s Agent must tell the Buyer everything he or she can find out about the Seller and property. Questions you should ask your agent as a buyer are: reasons for selling, crime in the area, school quality and location, location to shopping, general traffic patterns, motivation of seller and any other interest you have pertaining to the community, location of home or to gain purchasing power.
Confidentiality
An agent is obligated to insure security to his or her principal’s lawful shared information. Any information that may weaken a principal’s bargaining position must be kept confidential. For example the Listing Agent is not to share the information pertaining to the seller’s willingness to take an offer below listed price. This also pertains to the buying agent disclosing what terms the buyer is willing to accept including price.
Reasonable Care and Diligence
An agent is obligated to use the degree of care that a reasonably prudent person would use under like circumstances (reasonable care) and the care a reasonable person should take before entering into an agreement or a transaction with another party (diligence) when pursuing the principal’s affairs. As a licensed real estate agent he or she is considered to have skill and expertise concerning real estate matters superior to that of the average person. The agent is then expected to use their superior skill and knowledge while representing the principal with respects to real estate.
Accounting
An agent is obligated to account for all money, documents or property which belongs to his or her principal and which has been entrusted to that agent.
Code of Ethics:
- To be honest with all parties in the transaction. This is not limited to the agent's principal (person who designated another to act on his or her behalf), but also with the other real estate practitioner and his or her clients.
- To put the principal’s interests ahead of his or her own, at all times.
- To disclose all pertinent facts regarding the property and the transaction to both buyer and seller with regards to federal, state and real estate law.
- To be truthful in all communications with the public.
To learn more, read a summary of the principles embodied in the NATIONAL ASSOCIATION OF REALTORS®' Code of Ethics.
