"Fiduciary duty" is required in a number of professional fields of practice, both as a result of statutory standards sometimes as a matter of regulatory law. It is often misunderstood or under-practices, however. It is important for buyers and sellers of real estate to understand and demand compliance.
Members of the National Association of REALTORS®) have voluntarily assumed fiduciary obligations to their clients for many years by virtue of a Code of Ethics that was first adopted in 1913. That is a vitally important distinction between REALTORS® and other agents and brokers who may be licensed by their state governments to assist consumers to buy and sell real property but have not chosen to join NAR. Not all real estate agents are REALTORS®.
The idea of fiduciary obligations go back a very long time -- perhaps to 1754 BC and the Code of Hammurabi. It has been codified in many ways since then. Ethical conduct among REALTORS® has been important for more than 100 years, but it occurs in its current form in our Code of Ethics in Standard of Practice 11-2:
"The obligations of the Code of Ethics in respect of real estate disciplines
other than appraisal shall be interpreted and applied in accordance with
the standards of competence and practice which clients and the public
reasonably require to protect their rights and interests considering the
complexity of the transaction, the availability of expert assistance, and,
where the Realtor® is an agent or subagent, the obligations of a fiduciary.
What does being a fiduciary really mean? Here is a thorough definition from one source (US Legal):
"A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf.
"When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter. The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill, care and diligence at his disposal when acting on behalf of the client. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client."
I have been part of REALTOR® Professional Standards committees for many years, and I have served on numerous hearing panels dealing with complaints against NAR members by other members or by consumers. It is a very thorough and formal process, with the parties and all witnesses sworn in, digital recordings of all proceedings captured, and careful deliberations of the hearing panel afterward. If a respondent is found to have violated the Code, discipline can range from a warning or a reprimand, to required education and financial penalties, to suspension or removal of multiple listing service (MLS) privileges.
Those hearings often involve other parts of the Code of Ethics, but misunderstandings about fiduciary duties do arise, and every hearing is an opportunity to improve the performance of our industry. The Preamble to our Code of Ethics ends with this:
"The term Realtor® has come to connote competency, fairness, and high
integrity resulting from adherence to a lofty ideal of moral conduct in
business relations. No inducement of profit and no instruction from clients
ever can justify departure from this ideal.
"In the interpretation of this obligation, Realtors® can take no safer guide
than that which has been handed down through the centuries, embodied
in the Golden Rule, 'Whatsoever ye would that others should do to you,
do ye even so to them.' " ”
Words to live by. I take them seriously, and I hope that all of my colleagues do too. Please let me know if you have any questions about what this means.