A broker is a fiduciary to his or her clients. “Fiduciary” means a highly trusted and confidential relationship. Attorneys are fiduciaries for their clients. Business partners are fiduciaries to each other. A trustee is a fiduciary to the beneficiary of the trust.
To be a fiduciary, means that one will be held to a high ethical standard. A fiduciary must not put his or her own self-interest ahead of that of the client. As a fiduciary, a broker must disclose to the client all information that may affect the client’s affairs or decision. The broker must disclose all of his or her profits in a transaction. The broker cannot compete with the client on matters relating to the agency. The broker cannot represent other principals whose interests are adverse to those of the client. The broker must obey all instructions from the client. The broker must use reasonable skill, care and diligence on behalf of the client.
A broker’s fiduciary duties arise from two sources. First, a broker is an agent, and as such is a fiduciary. There is a large body of law, concerning the fiduciary duty of agents, which applies to real estate brokers. Second, the California Real Estate Law defines many of a broker’s fiduciary duties. California Business & Professions Code, Section 10176 (a)-(e), (g) and (i).