Agency and Fiduciary Duties Flashcards

A seller's agent learns that the seller is willing to accept $20,000 less than the asking price. What must the agent do with this information?

Answer: Keep it confidential as it belongs to the seller

A seller's agent must maintain confidentiality of the seller's minimum acceptable price, as disclosing it would breach the fiduciary duty of confidentiality owed to the seller.

What is a 'dual agency' situation in real estate?

Answer: When one agent or brokerage represents both buyer and seller in the same transaction

Dual agency occurs when the same agent or brokerage represents both the buyer and seller in a single transaction, creating potential conflicts of interest.

Which fiduciary duty requires an agent to place the client's interests above their own personal interests?

Answer: Loyalty

The duty of loyalty requires an agent to act solely in the client's best interest and avoid any self-dealing or conflicts of interest.

A buyer's agent discovers that the home has foundation issues the seller hasn't mentioned. The agent must:

Answer: Disclose the defect to the buyer client

A buyer's agent owes the duty of disclosure to their client and must reveal all material facts that could affect the buyer's decision, including known defects.

An agent who follows a client's lawful instructions even when they personally disagree is fulfilling which duty?

Answer: Obedience

The duty of obedience requires an agent to follow all lawful instructions given by the principal, even if the agent personally disagrees with them.

When does a buyer's agency relationship typically begin?

Answer: When a buyer-broker agreement is signed

A formal buyer's agency relationship is established when a buyer-broker agreement is signed, creating enforceable duties between the parties.

Which of the following is NOT one of the traditional fiduciary duties owed by an agent to their client?

Answer: Profitability

Profitability is not a fiduciary duty; the traditional duties are loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care (LODCAR).