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Moving from State to State: The Role of Fiduciary Duty

by | Aug 22, 2023 | TC Review, TC Drafting

When moving from State-to-State, Buyers are often unaware that the legal obligations of real estate agents in the new, destination State will not necessarily mirror the legal obligations of agents in their old State. In other words, the legal environment you left may have little to do with the legal environment you encounter in the new State.

The Role of Fiduciary Duty

The biggest determinant of the agent’s role during the real estate transaction is whether the agent owes a fiduciary duty to their client. If the law requires agents to act as a fiduciary, the agent is required to put the client’s interests before their own. In these States, Listing and Buyer’s agents exercise an extra level of care because there can be legal consequences when they do not.

In States where agents do not owe a fiduciary duty to their clients, the law assumes the Buyer understands all aspects of the public document record as well as the purchase and sale agreement. Buyers assume more risk, which may help keep prices marginally lower overall. In these States, agents are glorified door openers.

The following is an overview of the different levels of fiduciary duty that real estate agents owe their clients in the United States:

  1. Single Agency: Highest level of fiduciary duty. Real estate agents are required to act in their clients’ best interests and provide undivided loyalty, confidentiality, and full disclosure of information.
  2. Dual Agency: Limited fiduciary duty. The agent represents both Buyer and Seller and is required to treat both parties impartially and fairly.
  3. Transaction Broker: No fiduciary duty. Real estate agent works with Buyer and Seller to facilitate the transaction while remaining neutral.
  4. Customer Relationship or Non-Agency: No fiduciary duty. Real estate agent works with Buyer or Seller to provide information and services only.

Timely Contract Solutions

Attorneys owe a fiduciary duty to their clients in all fifty States. A TC Certified attorney owes you a fiduciary duty, wherever your property is located. If you’re buying a property in a State where real estate agents have no fiduciary duty, you‘ll sleep better by involving an attorney in the transaction.

TC Review. If you’ve signed a contract, use TC Review to upload the signed document. Speak with legal counsel to identify your best options going forward.

TC Drafting. If you have not signed a contract, use TC Drafting to upload the unsigned document or template and discuss the transaction with legal counsel.

Use Timely Contract solutions to anticipate and avoid larger problems down the line … and to sleep better at night. 

The information in this Post is not legal advice. Legal advice is based on specific facts. This information is necessarily general in nature.

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