As a fiduciary, a real estate broker is held by law to owe specific duties to his/her principal (the person who they are representing), in addition to duties or obligations set forth in a listing agreement, buyer representation agreement, or other contract of employment. Subagents of the broker also owe the same fiduciary duties to the broker's principal.
The Larose Team realtors master the "Fiduciary" role in Real Estate:
- We focus on educating and guiding the client through the entire process
- We anticipate our client's needs through a needs analysis
- We accept total responsibility for everything that happens
- We own the results
- We are accountable
- We advise and consult like all great specialists
- We always exceed expectations and aim to create big fans! We communicate and listen because we care and have a real passion for our work.
- We have a high level of integrity/honesty, as well as being trustworthy and confident
The 6 Fiduciary Duties:
Must do everything possible to gain an advantage for the Seller and/or Buyer
Must obey all lawful instruction of the Seller and/or Buyer is not obligated to obey instructions from the Buyer/Seller
> The Seller's agent must reveal any known material defects in the property.
> The Buyer's agent must tell the buyer everything they can find out about the Seller including the motivation for selling and any reasons the Seller may have for wanting a quick sale. Must tell Buyer everything they can find out about the property.
> The Seller's agent must tell the Seller everything they can find out about the Buyer, including all financial details they can obtain. They must conceal anything about the Seller that would help the Buyer gain an advantage, such as impending foreclosure, need to move in a hurry, need to sell to settle divorce, etc.
> The Buyer's agent must keep all information about the Buyer confidential, including the Buyer's ability or willingness to pay more for the property that they are offering as well as the Buyer's motivation for buying.
5. Reasonable Care and Diligence
Must prepare themselves through education and study to competently represent the Seller and/or Buyer in all matters.
Must account to Seller and/or Buyer for any money or documents entrusted to them
An average agent only performs the "Functionary" role in Real Estate:
- Tells and sells
- Only responds to a need when asked
- Assumes little responsibility
- Completes the "task" only
- Delivers information
- Meets expectations
- Becomes replaceable
The duty of care to a client involves everything done (or that ought to be done) by the agent (i.e., brokerage) for the client. A relationship is established via a representation agreement. As such, the brokerage owes the client fiduciary obligations under agency/common law, and regulatory obligations, as set out in the Real Estate and Business Brokers Act, 2002, and associated Regulations.
The duty of care to a customer is more limited because there is no representation agreement. However, a customer may enter into a service agreement with the brokerage. The duties owed to customers include honesty, providing accurate information and responding to questions, and performing functions to which the brokerage has agreed.