When you’re buying or selling a home, you engage in a fiduciary relationship with your real estate agent, giving them the power to make decisions in your best interests. The agreement is legally binding, but open to interpretation, and contain many subtleties and complexities that potential buyers and sellers should be aware of.

How Fiduciary Agreements Affect the Buyer/Seller Relationship

What is a real estate agent’s fiduciary duty?

Real estate agents must disclose everything to you during the negotiation process, even if it means jeopardizing the deal. The agreement also extends into finances. Any money you’ve entrusted to your agent must never become involved with the agent’s (or the broker’s) personal money. Above all, the fiduciary relationship is a confidential one—as their client, the agent must keep your information completely private.  

What actions breach the agreement?

Real estate agents can breach the agreement in several ways, including failing to conduct due diligence on a property, or by putting their best interests ahead of yours. For instance, if the agent purposely misrepresented the home you’re buying for the sake of making their commission, then they have violated the fiduciary bond. If your agent discloses information about you without your consent—for example, disclosing you would be willing to pay more if the living room was refloored—would also constitute a breach of the fiduciary agreement.

When should you seek legal advice?

If you aren’t sure what falls under fiduciary obligation, or if you believe that your real estate agent has broken your agreement, you should consult an attorney’s opinion. In some situations, breaking a fiduciary relationship is grounds for a lawsuit. The agent at fault might lose their commission, and may have to pay damages to their client. For instance, if the seller makes offer better to the one that was agreed to, but the agent never reported it, they would have to pay the difference between both offers.

How does the fiduciary breach affect the buyer/seller deal?

The courts (or the buyer and seller) may agree to a rescission—canceling the real estate contract between them. This allows the buyer’s earnest money to be returned, and to reset the situation before any deal was agreed to. The buyer and seller will have to determine together if they want to restart the process.

If you believe you are unclear about your real estate agent’s fiduciary obligations, and acted against your best interests, contact the lawyers of Lane, Felix & Raisbeck CO, LPA. Serving the Cincinnati, OH area since 1982, their lawyers have over 60 years of combined experience across a wide range of legal fields. As general practice attorneys, they put their clients first by offering expertise in areas such as probate, criminal defense, and personal injury law. For a full list of their many practicing areas, consult their website. To schedule a consultation, reach out to them at (513) 922-7700.