What is a Realtors Fiduciary Duty?

Real Estate Agents and Fiduciary Duty
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Published By Jennifer Jewell

Question: What is a Realtors Fiduciary Duty?
Answer: Fiduciary duty requires real estate agents to act in the best interests of their clients, prioritizing their clients’ interests above their own.

Realtors and Fiduciary Duty – The Fiduciary Role of Real Estate Agents

In the realm of real estate transactions, a fiduciary duty refers to the legal obligation of a real estate agent to act in the best interest of their client. This duty is the foundation of the relationship between the agent and the client, as it requires the agent to prioritize the client’s interests above their own. In this article, we will explore the fiduciary duties owed by real estate agents to their clients, the importance of these duties, and the potential consequences of breaching them.

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Key Fiduciary Duties of Real Estate Agents

While the specific fiduciary duties of real estate agents may vary depending on the jurisdiction and the nature of the agency relationship, the following are the most common fiduciary duties that agents owe to their clients:

  • Loyalty:

    The agent must act in the best interest of their client, putting the client’s interests above their own and avoiding any conflicts of interest that could compromise the client’s interests.
  • Confidentiality:

    The agent is obligated to protect the client’s confidential information, such as personal or financial details, and must not disclose this information to third parties without the client’s consent or as required by law.
  • Full Disclosure:

    The agent must disclose all material facts and information related to the property or transaction that could influence the client’s decision-making process. This includes known property defects, potential conflicts of interest, and relevant market conditions.
  • Obedience:

    The agent is required to follow the client’s lawful instructions, provided that doing so does not violate any legal or ethical obligations.
  • Reasonable Care and Diligence:

    The agent must exercise a reasonable level of care and diligence in representing the client. This involves staying informed about market conditions, providing accurate and timely information, and acting promptly on the client’s behalf.
  • Accounting:

    The agent is responsible for accurately managing and accounting for any funds or property entrusted to them by the client, such as earnest money deposits or personal property included in a sale. [ 1 ]

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Related Article: What are Some of the Legal Obligations of Real Estate Agents?

The Importance of Fiduciary Duties in Real Estate Transactions

Fiduciary duties are essential to ensuring the integrity and professionalism of the real estate industry, as well as protecting the interests of clients during property transactions. Adherence to fiduciary duties helps to establish trust between the agent and the client and promotes a successful working relationship. Here are some key reasons why fiduciary duties are important in real estate transactions:

  • Protecting Client Interests:

    Fiduciary duties ensure that the agent prioritizes the client’s interests above their own, safeguarding the client’s financial and personal interests throughout the transaction process.
  • Maintaining Professionalism:

    By adhering to fiduciary duties, real estate agents demonstrate a commitment to ethical behavior and professional conduct, which helps to maintain the reputation and credibility of the real estate industry.
  • Ensuring Informed Decision-Making:

    The duty of full disclosure requires agents to provide clients with all relevant information about a property or transaction, enabling clients to make well-informed decisions.
  • Minimizing Conflicts of Interest:

    By upholding their fiduciary duties, agents are better equipped to identify and address potential conflicts of interest that could compromise their clients’ interests.
  • Promoting Trust:

    Adherence to fiduciary duties helps to foster trust between the agent and the client, which is essential for a successful and productive working relationship.

Potential Consequences of Breaching Fiduciary Duties

Failure to fulfill fiduciary duties can have significant consequences for real estate agents, both professionally and legally. Some potential consequences of breaching fiduciary duties include:

  • Loss of Client Trust:

    Clients may lose trust in an agent who breaches their fiduciary duties, potentially leading to the termination of the agency relationship and damage to the agent’s professional reputation.
  • Disciplinary Action:

    Real estate agents who breach their fiduciary duties may face disciplinary action from their licensing board or professional association, which could result in fines, suspension, or revocation of their license.
  • Civil Liability:

    Agents who breach their fiduciary duties may be held liable for damages in a civil lawsuit, potentially resulting in financial compensation being awarded to the affected client.
  • Criminal Liability:

    In some cases, particularly severe breaches of fiduciary duties may result in criminal charges, such as fraud or embezzlement, which can lead to fines or imprisonment.

Best Practices for Upholding Fiduciary Duties

To ensure that they fulfill their fiduciary duties and maintain the highest standards of professional conduct, real estate agents should consider implementing the following best practices:

  • Stay Informed:

    Agents should stay up-to-date on relevant laws, regulations, and industry trends, as well as any changes to their jurisdiction’s fiduciary duty requirements.
  • Establish Clear Communication:

    Agents should maintain open and transparent communication with their clients, providing regular updates and ensuring that clients are fully informed throughout the transaction process.
  • Document Diligently:

    Agents should maintain thorough and accurate records of all communications, disclosures, and transactions related to their clients, which can serve as evidence of their compliance with fiduciary duties.
  • Seek Legal Advice:

    If agents are uncertain about their fiduciary duties or face a potential conflict of interest, they should consult with a legal professional for guidance on how to proceed in the best interests of their clients.

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Fiduciary duties form the foundation of the relationship between real estate agents and their clients, ensuring that agents act in the best interests of their clients throughout the property transaction process. By understanding and adhering to these duties, real estate agents can maintain the highest ethical standards, protect their clients’ interests, and contribute to the integrity and professionalism of the real estate industry.


1. https://www.mondaq.com/canada/real-estate/1039056/emerging-competition-data-privacy-issues-for-real-estate-organizations

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