Key Takeaways
- OLD CAR captures the six fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable Care.
- Single agency minimizes conflicts; dual agency is prohibited in several states and requires written consent where permitted.
- The NAR Code of Ethics supplements state law with 17 Articles of professional conduct.
- RESPA prohibits kickbacks for settlement service referrals with significant criminal penalties.
This lesson reviews the key concepts from Track 1 of Ethics and Fiduciary Responsibility. You have studied the core fiduciary duties, agency relationship models, advanced conflict scenarios, and the NAR Code of Ethics. Test your understanding with the review questions below.
Key Stakeholders
Fiduciary Duties Recap
The six core fiduciary duties — Obedience, Loyalty, Disclosure, Confidentiality, Accountability, and Reasonable Care (OLD CAR) — form the foundation of the agent-client relationship. Each duty addresses a specific dimension of the trust placed in the agent by the client. Violations of any duty can result in disciplinary action, civil liability, and license revocation.
Loyalty and confidentiality are particularly critical because they directly affect the client's negotiating position and financial outcomes. Agents must never prioritize their own financial interests over their client's needs, and they must protect confidential information even after the agency relationship has ended.
Agency Relationships Recap
The five primary agency models — seller's agency, buyer's agency, dual agency, designated agency, and transaction brokerage — each create different duty structures and conflict profiles. Single agency provides the strongest fiduciary protections. Dual agency creates inherent conflicts and is banned in several states. Transaction brokerage eliminates fiduciary duties entirely in favor of a neutral facilitator role.
Agency relationships can be created expressly through written agreements or impliedly through conduct. The manner of creation does not affect the duties owed — an implied agency relationship creates the same legal obligations as an express one. This is why timely agency disclosure is critical.
Key Takeaways
- ✓OLD CAR captures the six fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable Care.
- ✓Single agency minimizes conflicts; dual agency is prohibited in several states and requires written consent where permitted.
- ✓The NAR Code of Ethics supplements state law with 17 Articles of professional conduct.
- ✓RESPA prohibits kickbacks for settlement service referrals with significant criminal penalties.
Sources
- NAR Code of Ethics and Standards of Practice(2025-03-01)
- ARELLO State Regulatory Agency Directory(2025-03-01)
Common Mistakes to Avoid
Memorizing fiduciary duties without understanding how they apply in practice.
Consequence: Agents pass licensing exams but fail to recognize real-world situations that trigger fiduciary obligations, leading to inadvertent violations.
Correction: Study each duty through practical scenarios and case studies, not just definitions. Understand how duties apply in common situations like dual agency, competing offers, and personal transactions.
Relying on verbal agency disclosures instead of written documentation.
Consequence: Verbal disclosures are difficult to prove in disputes and may not satisfy state requirements, leaving the agent exposed to liability.
Correction: Always provide written agency disclosure, obtain client signatures, and retain copies in the transaction file. Written records are essential for legal protection.
Test Your Knowledge
1.Which fiduciary duty prohibits an agent from sharing a seller's willingness to accept a lower price with a prospective buyer?
2.What is the maximum criminal penalty per violation under RESPA for illegal kickbacks?
3.In which agency model does the real estate professional assist both parties without establishing a fiduciary relationship with either?
4.Which duty requires an agent to deposit earnest money in a designated trust account rather than their personal account?