Real Estate · General Principles of Agency

What duties does an agent owe to their principal?

Correct answer

Fiduciary duties including loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care (OLD-CAR)

  1. A Only honesty
  2. B Fiduciary duties including loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care (OLD-CAR)
  3. C Only the duties spelled out in writing
  4. D No specific duties beyond getting a deal done

Why this is the answer

An agent owes fiduciary duties to their principal — the highest standard of care recognized in law. The mnemonic OLD-CAR captures the duties: Obedience to lawful instructions; Loyalty (acting in the principal's best interest, not the agent's); Disclosure (sharing all material facts known to the agent); Confidentiality (protecting the principal's private information); Accounting (handling money carefully); and Reasonable care (using skill and diligence). These duties apply whether the agent represents a buyer or a seller. They do not apply to the other party in the transaction — to whom the agent owes only honesty and disclosure of material defects. Dual agency (representing both sides) is allowed in some states with full informed consent of both parties, but compromises some of these duties.
Source: Real Estate Principles, Agency Relationships

Practice more questions

This question is from our Real Estate License Practice Tests practice test. Take the full practice test to test your knowledge across all General Principles of Agency and other topics.

Take the Salesperson (National) practice test →

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

Related questions

State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.