Real Estate · General

Under state agency law, if an agent represents the seller, what duty does the agent owe to the BUYER (a customer, not a client)?

Correct answer

The duties of HONESTY and FAIR DEALING — including disclosing known material defects and not misrepresenting facts — even though the agent does not owe the buyer the fiduciary duties (loyalty, confidentiality) owed to the seller-client

  1. A No duties at all
  2. B The duties of HONESTY and FAIR DEALING — including disclosing known material defects and not misrepresenting facts — even though the agent does not owe the buyer the fiduciary duties (loyalty, confidentiality) owed to the seller-client
  3. C Full fiduciary duties
  4. D To always get the buyer the lowest price

Why this is the answer

DUTIES TO A CUSTOMER (the non-represented party): When an agent represents the SELLER (client), the BUYER is a CUSTOMER — the agent does NOT owe the buyer the full fiduciary duties (loyalty, confidentiality, full advocacy) owed to the seller; BUT the agent DOES owe the buyer (customer): HONESTY and FAIR DEALING; disclosure of known MATERIAL DEFECTS/facts about the property; NO MISREPRESENTATION or concealment of material facts; reasonable care in providing accurate factual information; FIDUCIARY DUTIES (owed only to the CLIENT/principal — OLD CAR): Obedience, Loyalty, Disclosure (of all relevant info to the client), Confidentiality, Accounting, Reasonable care — these go to the seller, not the buyer customer; KEY POINT: 'Customer' vs 'client' — the agent advocates for the client but must still treat the customer honestly and fairly and disclose material defects; the buyer should understand the agent represents the seller (hence agency disclosure); DUAL AGENCY/BUYER AGENCY: Different relationships where duties differ; the distinction between duties owed to a client (full fiduciary) vs a customer (honesty, fair dealing, material fact disclosure) is fundamental state agency law tested on the exam.
Source: Real Estate State — Agency, Duties to Customer

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