Agency & Representation

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.

Full Definition

A fiduciary duty is the highest duty recognized in law, requiring an agent to place the principal's interests above their own and above those of any third party. In real estate, fiduciary duties are remembered using the acronym OLD CAR: Obedience (follow lawful instructions), Loyalty (put the client first), Disclosure (reveal all material facts), Confidentiality (protect sensitive information), Accounting (handle client funds properly), and Reasonable Care (use professional skill and diligence). These duties exist only with the agent's principal — a licensee owes only honesty and fair dealing to third parties.

Real-World Example

An agent who learns that their seller client is in financial distress must keep that information confidential from buyers. Disclosing it would violate the duty of confidentiality.

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How Fiduciary Duty Appears on the Real Estate Exam

Common question types, tested concepts, and what to watch out for

Memorize OLD CAR. Exam questions frequently test which duty was violated in a scenario. Confidentiality survives the end of the agency relationship — it does not expire at closing.