What is a fiduciary duty?

A fiduciary duty refers to an agent's legal obligation to act in the best interest of their client. This relationship is built on trust and confidence, where the agent is expected to prioritize the interests of their client above their own. Fiduciaries must exhibit loyalty, full disclosure, confidentiality, and care, ensuring that their client is provided with the best possible outcomes in all transactions. For instance, in real estate, when a realtor represents a buyer or seller, they are bound to advocate vigorously for the client's needs, keep their information confidential, and provide all material facts regarding the transaction.

The focus on the individual's needs and best interests is what distinguishes fiduciary duties from other types of professional responsibilities, such as contracts or ethical guidelines that may not carry the same legal weight. Although ethical guidelines exist and constitute a vital part of a real estate agent's responsibilities, they do not inherently create a legal obligation as fiduciary duties do. Similarly, while there may be contractual obligations between parties in a real estate transaction, these are different from the overarching fiduciary responsibility that emphasizes trust and loyalty in the client-agent relationship.