Chapter 3
Definition of Fiduciary Duties
Learning Objectives: What is a fiduciary duty?
How does CARLOAD pertain to agency?
What duties are owed a client?
What duties are owed a customer?
What is the definition of fiduciary: a relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.
A new home salesperson owes a fiduciary duty to the principal, who is the home builder. Remember the acronym CARLOAD and you will be able to remember the 7 elements of fiduciary:
• Confidentiality
• Accountability
• Reasonable Care
• Loyalty
• Obedience
• Advocacy
• Disclosure
Confidentiality: The duty of confidentiality requires that the new home salesperson maintain information received from the home builder in confidence. This becomes especially important during negotiations on price, but may come into play throughout the sales process.
Confidentiality Example: ABC Homes expresses to the salesperson, Mary, in writing that no offers for less than the asking price should be presented. Mary knows that the last 3 contracts accepted in that subdivision were for less than the asking price and would like to share this information with the buyer, Mr. Johnson.
What should Mary do?
Mary should honor her fiduciary duty of confidentiality to the seller. She should summarize all of the benefits of the purchase to Mr. Johnson, and make every effort to write the contract for the full asking price.
