Real Property Disputes

Fiduciary Duties Of Real Estate Brokers

A Fiduciary Duty is the high duty of good faith and fair and honest dealing that a real estate broker or agent owes to their clients. By the way, Attorneys also owe fiduciary duties to their clients.

The broker or agent (called the fiduciary) is required to put the interests of their clients ahead of their own. The California Civil Jury Instructions contains a jury instruction specifically directed towards a real estate broker’s duty of disclosure, which reads:

“As a fiduciary, a real estate broker must disclose to his or her client all material information that the broker knows or could reasonably obtain regarding the property or relating to the transaction. The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of the transaction, the knowledge and experience of the client, the questions asked by the client, the nature of the property, and the terms of sale. The broker must place himself or herself in the position of the client and consider the type of information required for the client to make a well-informed decision.”

Breach of fiduciary duty commonly occurs when a broker or agent intentionally fails to inform the client of a known material fact or is negligent in performing his or her duties. If these actions cause damages or loss to a buyer or seller, then the client may bring a claim for breach of fiduciary duty, along with claims such as negligence (which can trigger insurance coverage). The following are common examples of property affected by breach of fiduciary duty:

• Unpaid taxes
• Structural defects
• Modifications made without required permits
• Real estate: Breach of Fiduciary Duties

Relief and compensation from real estate agents or brokers may be sought through the agents’ errors and omissions’ insurance (as well as through their brokerage and possibly other sources).

What Are Some Key Issues To Consider When Reviewing A Contract To Purchase Real Property In California?

The California Association of Realtors (C.A.R.) uses a standardized form that contains a lot of information and a lot of boxes to check when it comes to reviewing a contract for a real estate transaction, and these contracts are commonly used. Buyer and sellers face different issues. A buyer should have an option to take the title to the property in the name that is written down, whether it’s a husband and wife or a company, or to their assignee, should they decide to create a trust or entity like an LLC to hold title. A seller would prefer to have an arbitration provision to decide disputes. Buyer or Seller should get legal advice, as agents often have their own interests at a higher concern than their client’s concerns.

If you feel your broker or agent has breached their fiduciary duty to you, or you have questions about what to do in the middle of a purchase or sale where you are having problems in escrow, please contact us at (310) 477-7767 or fill out the form here to discuss your potential case today.