Fiduciary Responsibilities

Fiduciary Responsibility Definition

Fiduciary Responsibilities are the duties owed by an agent to the principal. These responsibilities will vary by state. In general, the central fiduciary duties and responsibilities are as follows: Obedience, Loyalty, Disclosure, Confidentiality, Accounting and Reasonable Care.

Obedience: As long as it is legal, the agent must obey the instructions of the principal.

Loyalty: The agent must put the interest of the principal above the interest of all others, including their own interest.

Disclosure: An agent must disclose material facts to its principal. In many states, a real estate agent must disclose material facts to interested parties regardless of agency relationships.

Confidentiality: An agent must keep any information learned about the principal confidential unless otherwise authorized by the principal to disclose. Confidentiality is the one duty is always owed to the principal even after the agency relationship terminates.

Accounting: An agent recognizes that money received in an agency relationship belongs to the principal and the agent must provide a strict accounting to the principal of any money received.

Reasonable Care: An agent must use reasonable care and skill when acting on behalf of the principal. If the principal loses money as a result of the agent’s carelessness or incompetence, the agent may be liable for negligence. An agent should never take on a task beyond their ability nor should they provide advice on anything they are not knowledgeable about and comfortable with. The agent should recommend that the principal seek advice from an expert in that area of question.

 

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