Property Management
A West Virginia property manager is offered a referral fee from a maintenance contractor for sending business their way. Accepting this fee without disclosing it to the property owner is:
AAcceptable as an industry standard practice
BA breach of fiduciary duty and potentially illegal✓ Correct
CPermitted if the fee is less than $500
DAllowed with verbal consent from the property owner
Explanation
Accepting undisclosed referral fees from contractors is a breach of the property manager's fiduciary duty of loyalty to the property owner. Such fees must be disclosed to and approved by the property owner or they constitute an illegal secret profit.
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Key Terms to Know
Fiduciary Duty
The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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