Fiduciary Duty Real Estate


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Fiduciary Duty in Real Estate

Fiduciary duty in real estate encompasses the legal responsibilities of a real estate agent. Learn more in this comprehensive overview.

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Author: Stan Faulkner, Founder, Perigon Legal Services, LLC

Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on February 25, 2022. Updated on April 23, 2024.

Fiduciary duty in a real estate transaction refers to the legal responsibilities of a real estate agent to the client, not the customer. The relationship between them (the client and the real estate agent) is called a fiduciary relationship.

One should not assume that the person showing the property is representing them. These agents represent clients who have signed an agency agreement.

One of the real estate agent’s salient fiduciary duties is the obligation to deliver on their responsibility with utmost honesty and act in the interests of their clients and, at times, the buyer. When representing both the buyer and seller in real estate transactions, the agent will spend most of their time working independently for the client.

At the same time, a broker steps into the buyer’s shoes when negotiating business opportunities. So, on the other side, the broker can be the buyer’s agent or the seller’s agent.

A representative from the Perigon Legal Services can analyze the contract and oversee the closing. That may be necessary, especially if the real estate agent breaches their fiduciary duty.

Basic Parts of Fiduciary Duty in Real Estate

Fiduciary is defined as something relating to confidence or being held in trust. Although a fiduciary relationship often concerns money, it can apply to any situation where one individual places confidence in someone else and trusts that they will act in their best interests.

According to the National Association of Realtors, the basic parts of fiduciary duty in a real estate transaction consist of obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence. Real estate brokers are responsible for conducting their business honorably.


The seller’s agent is obligated to obey all lawful orders and instructions given by the client. For example, a seller receives two offers. Both buyers offer almost the same price. Your seller instructs you to accept the “Buyer Two” offer because they do not like “Buyer One.” Even if you feel it is unfair to the other party, you must work as a faithful servant of your seller.

In a different instance, your seller instructs you to consider buyer two because “Buyer One” is of a certain race. It will be considered illegal to follow such an instruction.



An agent should give undivided loyalty to the client and should avoid self-dealing. Agents should always put the interest of their clients first before their own interests. For example, you receive a bonus from the purchase brokers as a bribe. Giving preference to a purchaser because of a bonus is considered disloyalty.

Another example is house flipping, whereby a broker buys your property for a lower price and sells it for a higher price. Selling it for a higher price is stealing the client’s opportunity in the estate market.

Full Disclosure

Realtors are obligated to fully disclose material facts on the property to their clients. Material facts are those that might cause a change in the sale or purchase of a property when disclosed to buyers or sellers.

The proxy is obligated to fully disclose any information within their control that may be important in the decision-making process among the parties involved. This will go a long way in fostering a solid relationship between them.



Information given to the proxy by the client should remain confidential, significantly if it were damaging to the client during a negotiation. You should not disclose any information about your client’s business, financial affairs, or personal affairs.

You can only disclose the information if a court of law instructs you to do so. In this regard, any acts of self-dealing would significantly damage the confidence levels between the parties if detected.



All documents entrusted to the agent, property, and funds in the transaction should be accounted for. You should accurately report all the funds used concerning the transaction and their ultimate disposition.


Reasonable Care and Diligence

A real estate broker must have the proper knowledge to advise and guide clients through the sale process without harm. An agent must use their skills diligently on behalf of their client. It’s important to note that a fiduciary owes their client their best efforts. The proxy should know how to market a property, show houses, negotiate to sell, and give relevant advice.

Statute of Limitations on Real Estate Breach of a Fiduciary Duty 

Georgia does not have a specific statute of limitations for breach of fiduciary duties claims. Georgia courts look into the damage caused to the sellers and the factors that led to the claim to determine the appropriate statute of limitation.

Breach of duties can arise in many instances, such as taking advantage of a senior; therefore, it is difficult to determine the appropriate statute for limitations. It is crucial to seek advice from a law firm with practice areas that handle the type of breach. For example, you should consult an elder law attorney upon discovering cause to bring a breach of fiduciary claim against an agent for misusing information from an older adult.

How can a real estate agent fulfill their fiduciary duties to their clients?

A real estate agent can fulfill their fiduciary duties to clients by always acting in the client’s best interest, disclosing all material information that could influence their decisions, and maintaining confidentiality.

This includes ensuring that the client is fully informed about any conditions of the property, the terms of the sale, and other documents involved in the transaction.

Following guidelines set by the National Association of Realtors, agents must also provide accurate advice, avoiding conflicts of interest, to help the average person navigate the complexities of real estate transactions effectively.


Comprehensive Overview of Fiduciary Duties in Real Estate

In real estate, fiduciary duties encompass a broad spectrum of responsibilities that agents owe to their clients, crucial for maintaining trust and legality in transactions.

Firstly, the duty of care requires agents to leverage their expertise and skills diligently, ensuring that clients make informed decisions based on accurate information. For instance, an agent must disclose any known issues with a property that could affect its value.

Secondly, the duty of loyalty demands exclusivity in representing a client’s interests without any conflicting personal gains. This includes avoiding situations where an agent might benefit from a transaction at the expense of the client, such as purchasing a listed property to flip it for profit.

Lastly, the duty of disclosure obliges agents to provide all relevant information that could influence a client’s decision-making process, including real estate trends and market data.

Consequences for Breaching Fiduciary Duties

If the real estate agent doesn’t perform their fiduciary duties, there will be certain consequences. But, when it comes to penalties, they will be determined by a judge and court of law.

Sometimes, if the client is harmed by the breach of fiduciary responsibilities by their real estate agent, he or she can sue the agent. In that case, the real estate agent will, most likely, be responsible for paying damages. For example, if it turns out that the residential real estate or commercial real estate the client bought has a defect that the real estate agent didn’t disclose, he or she will have to pay for the repairment cost.

In some states, if fiduciary duty breaches were especially egregious, the jury can award punitive damages. These damages are intended to punish and discourage the real estate agent from committing the same mistake in the future. However, punitive damages are typically awarded in intentional misconduct or fraud cases.
If the real estate agent doesn’t respect their fiduciary obligation, they can sometimes lose compensation received as the buyer’s or seller’s agent. Being convicted of a crime due to breaching a fiduciary duty can also result in losing a license.

These situations can be confusing, so it’s best to consult a real estate lawyer on how to proceed and whether you should file a civil lawsuit.

When Do Fiduciary Duties End Real Estate

They don’t continue indefinitely, and before signing anything, you might want to know when fiduciary duties end in real estate. In some cases, there is a written agreement between the real estate agency and the client that clarifies when the relationship ends.

If there is no written agreement, then an agency relationship ends when

  1. The contract expires.
  2. The performance of the brokerage agreement is completed.
  3. The realtor or client terminates the brokerage agreement.

Any termination should be put in writing, and a copy of the same should be stored in a file.


Does Real Estate Fiduciary Duty Change With Contract?


Depending on the type of property on the market, the real estate fiduciary duties may change with the contract. Real estate contracts spell out various aspects of the law and how they affect the parties. In other words, the phrasing of the contract’s language must be precise. Otherwise, it is open to interpretation, and a change in the wording may invalidate the contract.

Breach of Fiduciary Duty Real Estate Agents

A breach of fiduciary duty by real estate agents occurs when agents are not acting in the client’s best interest. Examples of real estate agent breach of duty include:

  • Receiving a bonus or other payments with no disclosure to the client. An example of this is when the seller needs to renovate their house before putting it on the market; the broker might receive a bribe from a contractor to get the job. 
  • Failure to disclose material defects of a property to the buyer
  • Dual representation or facilitating the sale of property by acting as a broker for both the seller and buyer without the knowledge and agreement from both parties
  • Realtors are paid to disclose a client’s confidential information to another person without their knowledge or permission. 
  • Declining or accepting an offer without the client’s advice, permission, or approval.
  • The representative fails to inform the offers on the table to the seller after an offer has been accepted on the property.

These breaches may lead to a bad deal and severe losses. A client should follow various processes if a breach occurs according to the law. If you have been sued for breach of duty, contact an estate planning attorney in Marietta for a free consultation.

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