TL;DR
Real estate agents who represent you as a single agent owe fiduciary duties, meaning they must act in your best interest above all else. These duties typically include loyalty, confidentiality, disclosure, obedience, accounting, and reasonable care. However, not all agents have fiduciary obligations. Transaction brokers and dual agents operate under limited or no fiduciary standards. If an agent breaches their fiduciary duty, you may be entitled to damages, commission refunds, or even rescission of the sale. Understanding these distinctions before entering a real estate transaction protects your financial interests and ensures you receive the advocacy you deserve.
When you hire a real estate agent to buy or sell a home, you expect them to have your back. But do they have a legal obligation to act in your best interest? The answer depends on the type of agency relationship you establish. Fiduciary duty represents the highest standard of care in professional relationships, requiring agents to prioritize your interests above their own, their brokerage's, and all other parties.
Understanding whether your agent owes you fiduciary duties is critical because it determines the level of protection and advocacy you receive throughout one of the largest financial transactions of your life. This guide explains what fiduciary duty means in real estate, who owes it, what happens when agents violate these obligations, and how to protect yourself.
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Get Matched With Top AgentsWhat Is Fiduciary Duty in Real Estate?
A fiduciary relationship exists when one party places special trust and confidence in another, who accepts the responsibility to act primarily for the benefit of that trusting party. The word fiduciary derives from the Latin word "fiducia," meaning trust, confidence, and reliance. In real estate, this relationship forms when a buyer or seller enters into an agency agreement with a licensed agent who agrees to represent their interests.
Courts have long recognized fiduciary relationships in contexts requiring high degrees of trust, including attorneys and clients, trustees and beneficiaries, corporate officers and shareholders, and real estate agents and their clients. As one landmark court decision explained, real estate agents are held to the same standard of undivided service and loyalty that the law imposes on trustees in favor of beneficiaries.
Why Fiduciary Duty Matters
Without fiduciary obligations, an agent could legally prioritize their commission over your financial interests, share your confidential information with other parties, or steer you toward decisions that benefit them rather than you. Fiduciary duty creates legal accountability, ensuring you have recourse if your agent fails to act in your best interest.
This elevated standard means conduct that might be acceptable in ordinary business dealings becomes impermissible when a fiduciary relationship exists. An agent cannot simply act fairly; they must act with the highest good faith toward their client and avoid obtaining any advantage over the client by virtue of their position.
The Six Core Fiduciary Duties
Real estate fiduciary obligations are commonly summarized using the acronym OLDCAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care. Each duty addresses a specific aspect of the agent-client relationship and creates enforceable standards of conduct.
Loyalty
The duty of loyalty requires agents to put your interests above all others, including their own financial interests. This means never steering you toward deals that increase their commission at your expense or advancing interests adverse to yours.
Confidentiality
Agents must protect sensitive information you share, including your financial situation, motivation for buying or selling, and negotiating strategy. This duty survives the transaction and continues indefinitely.
Disclosure
Full and truthful disclosure of all material facts affecting the transaction is required. This includes property defects, competing offers, conflicts of interest, and any information that could influence your decision.
Obedience
Agents must follow your lawful instructions, even if they disagree with your decisions. They can advise against a course of action but cannot override your directives unless following them would be illegal.
Accounting
Proper handling and documentation of all funds and property is essential. Agents must safeguard earnest money deposits, maintain accurate records, and never commingle your funds with their personal or business accounts.
Reasonable Care
Agents must exercise the skill, care, and diligence expected of a licensed professional. This includes staying current on market trends, properly preparing documents, and providing competent guidance throughout the transaction.
How These Duties Apply in Practice
Consider how each duty translates to real-world scenarios. The duty of loyalty prevents a listing agent from encouraging you to accept a lower offer because it would close faster and secure their commission sooner. The duty of confidentiality means your buyer's agent cannot tell a seller that you are willing to pay more than your initial offer. The duty of disclosure requires your agent to inform you of known property defects, even if revealing them might jeopardize the sale.
These obligations apply from the moment you sign an agency agreement until the transaction closes. The duty of confidentiality extends beyond closing, protecting your private information indefinitely. Violating any of these duties can result in legal consequences for the agent and potential remedies for you.
Who Actually Owes You Fiduciary Duty?
Not every real estate professional owes you fiduciary obligations. Understanding the different types of agency relationships helps you know what level of protection you have in your transaction.
Single Agency: Full Fiduciary Protection
When an agent represents only you in a transaction, operating as a single agent, they owe you complete fiduciary duties. This is the gold standard for client representation. Your agent works exclusively for your benefit, advocating for your interests without competing obligations to any other party.
Single agency relationships are typically established through written agreements: a buyer-broker agreement for buyers or a listing agreement for sellers. These documents outline the agent's duties and confirm their fiduciary obligations to you.
Dual Agency: Compromised Fiduciary Duty
Dual agency occurs when the same agent or brokerage represents both the buyer and seller in a transaction. This creates an inherent conflict of interest because the agent cannot fully advocate for either party without potentially harming the other. In dual agency situations, fiduciary duties become limited.
A dual agent cannot share confidential information, provide negotiation advice, or advocate for the best price for either side. They essentially become neutral facilitators rather than true advocates. Some states require written disclosure and consent before dual agency can occur, while eight states prohibit dual agency entirely because of these conflicts.
Transaction Brokers: No Fiduciary Duty
Transaction brokers, also called facilitators or non-agents, do not represent either party. They provide limited services to help complete the transaction but owe no fiduciary duties to anyone. In some states like Florida, transaction brokerage is the default relationship unless otherwise specified in writing.
Transaction brokers must still deal honestly, disclose known material facts, and account for funds. However, they are not required to be loyal, keep information confidential, follow your instructions, or advocate for your interests. This represents a significantly lower standard of care than a true fiduciary relationship.
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Find Your AgentAgency Relationships Compared
Understanding how different agency relationships affect your representation is essential before entering any real estate transaction. The following comparison highlights the key differences between single agency, dual agency, and transaction brokerage.
| Characteristic | Single Agent | Dual Agent | Transaction Broker |
|---|---|---|---|
| Who They Represent | Only you | Both buyer and seller | Neither party |
| Fiduciary Duty | Full fiduciary duties | Limited fiduciary duties | No fiduciary duties |
| Loyalty | Complete loyalty to you | Cannot favor either party | No loyalty obligation |
| Confidentiality | Protects your information | Cannot share either party's secrets | No confidentiality obligation |
| Negotiation Advocacy | Actively negotiates for you | Cannot negotiate for either side | Does not negotiate |
| Disclosure Requirements | Discloses all material facts | Discloses material facts | Discloses known material facts |
| Best For | Maximum protection | When other options unavailable | Experienced buyers/sellers |
Single Agency
- Agent works exclusively for you
- Full fiduciary protection
- Active negotiation on your behalf
- Protects your confidential information
- Must disclose all material facts
- Follows your lawful instructions
Dual Agency
- Agent represents both parties
- Limited fiduciary duties
- Cannot negotiate for either side
- Cannot share confidential info
- Requires written consent
- Illegal in 8 states
Transaction Brokerage
- Agent represents no one
- No fiduciary duties owed
- Neutral facilitation only
- Must deal honestly
- Default in some states
- Lower level of service
When Agents Breach Their Fiduciary Duty
A breach of fiduciary duty occurs when an agent fails to fulfill their obligations to you, resulting in harm to your interests. Breaches can range from negligent oversights to intentional misconduct, but all can have serious financial consequences for clients.
Common Examples of Fiduciary Breach
Failure to Disclose Material Facts
An agent who knows about structural defects, water damage, or other property issues but fails to inform the buyer has breached their disclosure duty. This is one of the most common bases for fiduciary breach lawsuits.
Secret Profits or Undisclosed Compensation
Agents who receive undisclosed payments from inspectors, contractors, or other parties in the transaction violate their duty of loyalty and disclosure.
Sharing Confidential Information
Telling a seller that a buyer can afford to pay more, or revealing a seller's motivation to sell quickly, breaches the confidentiality duty and can cost clients thousands of dollars.
Failing to Present All Offers
A listing agent who withholds offers from a seller, perhaps hoping for a higher offer that increases their commission, has breached their fiduciary duty.
Undisclosed Dual Agency
Representing both parties without proper disclosure and consent is a serious breach that can lead to rescission of the sale and significant damages.
Acting Against Client Instructions
Accepting or rejecting offers without client approval, or failing to follow lawful directives, violates the duty of obedience.
Real-World Breach Cases
Courts have found agents liable for fiduciary breaches in numerous situations. In one Texas case, a jury awarded damages when an agent modified a sales contract to reduce the buyer's down payment without the seller's knowledge, misrepresenting that the changes were approved. In Mississippi, an agent who gave termite inspection reports only to sellers while representing both parties was found to have breached fiduciary duty to the buyers. A South Dakota court ruled against a buyer's agent who failed to inform clients that the seller was legally required to provide a property condition disclosure form, resulting in the buyers discovering undisclosed defects years later.
A recent California appellate decision established that fiduciary breach claims related to property and financial interests can be assigned to third parties, expanding accountability for agents who fail their clients. This ruling reinforced that agents who pressure clients into unfavorable deals or fail to disclose dual agency arrangements face significant legal exposure.
Your Legal Remedies for Fiduciary Breach
When an agent breaches their fiduciary duty and causes you harm, multiple legal remedies may be available depending on the nature and severity of the breach.
Compensatory Damages
Courts can award monetary damages to compensate for losses caused by the breach, such as the cost of repairs for undisclosed defects or the difference between the price you received and what you should have received.
Punitive Damages
In cases involving fraud or intentional misconduct, courts may award punitive damages to punish the agent and deter similar behavior. These can significantly exceed compensatory damages.
Commission Forfeiture
Agents who breach fiduciary duties may forfeit their right to commission, requiring them to return any fees already paid.
Rescission
In severe cases, courts can void the entire transaction, restoring both parties to their pre-sale positions as if the sale never occurred.
License Revocation
State real estate commissions can suspend or revoke licenses for agents who violate fiduciary duties, ending their ability to practice.
Equitable Remedies
Courts can order disgorgement of secret profits, impose constructive trusts, grant equitable liens, or cancel fraudulent documents.
Proving a Fiduciary Breach Claim
To succeed in a fiduciary breach lawsuit, you must prove three elements: duty, breach, and damages. First, you must establish that the agent owed you a fiduciary duty, typically through an agency agreement. Second, you must show that the agent breached one or more specific duties through their actions or inactions. Third, you must demonstrate that you suffered actual damages as a direct result of the breach.
In fiduciary breach cases, courts apply a presumption of unfairness when an agent self-deals or gains an advantage in a transaction. This shifts the burden to the agent to prove the transaction was fair. Additionally, when a fiduciary relationship exists, clients are entitled to compensation for all detriment proximately caused by the breach, whether anticipated or not.
Steps to Take If You Suspect a Breach
Document all communications and gather relevant contracts, agreements, and transaction records. Question the agent about the suspected breach and consider discussing the issue with their supervising broker. Review your agency agreement for any dispute resolution provisions. Consult with a real estate attorney to evaluate your options. You may also file a complaint with your state's real estate commission, which can investigate and discipline the agent.
How to Protect Yourself
Taking proactive steps before and during your real estate transaction can help ensure you receive proper fiduciary representation and reduce the risk of agent misconduct.
Before Signing Any Agreement
Ask prospective agents directly about their fiduciary obligations. A quality agent will welcome this conversation and explain their duties clearly. Review the agency disclosure forms required in your state, which explain the different types of agency relationships available. Understand what you are signing before you sign it, including whether you are entering a single agency, dual agency, or transaction brokerage relationship.
Research agent history through your state's real estate commission website, which may show disciplinary actions or complaints. Interview multiple agents and ask about their approach to representing clients. Pay attention to how they communicate and whether they seem to prioritize your needs over closing deals quickly.
Choosing the Right Representation
Whenever possible, work with a single agent who represents only your interests. Avoid dual agency situations, which limit the protection you receive. If dual agency is unavoidable, ensure you receive proper written disclosure and understand exactly what the agent can and cannot do for you.
Consider working with an exclusive buyer's agent if you are purchasing a home, as these agents never represent sellers and have no conflicting loyalties. Similarly, work with experienced listing specialists when selling, as they will be most effective at advocating for your interests against buyers.
During the Transaction
Maintain open communication with your agent and document important conversations in writing. Ask questions about anything you do not understand and request explanations for all recommendations. Review all documents carefully before signing and do not let anyone pressure you into decisions you are not comfortable making.
Pay attention to red flags such as agents who seem more interested in closing quickly than getting you the best outcome, pressure to make decisions without adequate time to consider, reluctance to provide information or answer questions, or suggestions to waive inspections or other protections. Trust your instincts; if something feels wrong, seek a second opinion from another real estate professional or real estate attorney.
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Find Top-Performing AgentsFrequently Asked Questions
No, not all real estate agents owe fiduciary duties. Only agents acting in a single agency capacity, where they represent exclusively you, have full fiduciary obligations. Transaction brokers do not owe fiduciary duties to either party, and dual agents have limited fiduciary duties that are compromised by their representation of both sides. The type of agency relationship you establish determines the level of fiduciary protection you receive.
A Realtor is a real estate agent who is a member of the National Association of Realtors and has agreed to follow their Code of Ethics, which includes standards beyond basic fiduciary duties. However, both Realtors and non-member agents owe the same fiduciary duties when acting as single agents under state law. The key difference is that Realtors have additional ethical obligations and can face disciplinary action from NAR for violations, providing an extra layer of accountability.
Dual agency is legal in most states but is prohibited in eight states: Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming. In states where it is permitted, dual agency requires written disclosure and informed consent from both the buyer and seller. Even where legal, dual agency significantly limits the representation you receive because the agent cannot fully advocate for either party.
Yes, the duty of confidentiality survives the termination of the agency relationship and continues indefinitely. Your former agent may never disclose information about your financial situation, motivation, negotiating strategy, or other confidential matters shared during your relationship, even years after the transaction closes. This perpetual obligation protects your privacy and prevents past agents from using your information to benefit themselves or others.
Yes, you can sue your agent for breach of fiduciary duty if they failed to fulfill their obligations and you suffered damages as a result. To succeed, you must prove that a fiduciary duty existed, the agent breached that duty, and you suffered actual financial harm because of the breach. Remedies can include compensatory damages, punitive damages in cases of fraud, commission forfeiture, and in severe cases, rescission of the entire transaction.
Start by documenting everything and gathering all relevant communications, contracts, and transaction records. Discuss the issue directly with your agent and their supervising broker, as some matters may be resolved through discussion. Review your agency agreement for dispute resolution provisions. Consult with a real estate attorney to evaluate your legal options. You can also file a complaint with your state's real estate commission, which can investigate and take disciplinary action against the agent.
Request a single agency relationship and get it in writing before working with any agent. Review the agency disclosure forms your state requires and ensure you understand what type of representation you are receiving. Ask the agent directly to confirm their fiduciary obligations and request that any dual agency or transaction brokerage arrangement be clearly disclosed. If you want maximum protection, work with an exclusive buyer's agent when buying or a dedicated listing agent when selling.
A transaction broker is a real estate professional who facilitates transactions without representing either the buyer or seller. Transaction brokers do not owe fiduciary duties to either party. They must deal honestly, disclose known material facts, and account for funds properly, but they have no obligation to be loyal, maintain confidentiality, follow your instructions, or advocate for your best interests. In some states like Florida, transaction brokerage is the default relationship unless you specifically request single agency representation.
Finding Agents Who Prioritize Your Interests
Fiduciary duty is more than a legal concept; it represents the foundation of trust that should exist between you and your real estate agent. When an agent takes on fiduciary responsibilities, they commit to placing your interests above all others, including their own. This elevated standard of care provides essential protection during what may be the largest financial transaction of your life.
Understanding the distinctions between single agency, dual agency, and transaction brokerage empowers you to make informed decisions about your representation. Whenever possible, seek single agency representation to ensure you receive full fiduciary protection and an advocate who is legally bound to work for your benefit.
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Find Your Top Agent TodayDisclaimer: This article provides general educational information about fiduciary duties in real estate and should not be construed as legal advice. Real estate laws vary by state, and specific fiduciary obligations depend on your agency agreement and applicable state regulations. If you believe your agent has breached their fiduciary duty, consult with a qualified real estate attorney in your jurisdiction to evaluate your specific situation and legal options.
