Fiduciary responsibilities vs. personal responsibility

Written by Posted On Sunday, 08 December 2013 05:12


One of the bedrocks of the real estate business is the concept of the real estate agent as a fiduciary for the client in the transaction. The Fiduciary duties of a Realtor® are well defined on the site. I like their little memory jogger OLD CAR. The duties that they outline are Obedience, Loyalty, Disclosure, Confidentiality, Accounting and Reasonable Care. With the exception of having to qualify the first one as being obedient so long as what the client asks the agent to do is not illegal, most of the rest are fairly easy to understand. The last one – Reasonable Care – is perhaps the one that is most nebulously defined, mainly because it encompasses the concept that the licensed Realtor is supposed to know much more about the process and thus should be able to guide and  advise the client on all aspects of the process.


That’s fair enough on the surface, but just below that surface is a conflict between fiduciary responsibility and personal responsibility. A real estate transaction is a big deal, likely the biggest deals that the clients will ever make in their personal lives. Yet I have had many clients tell me that they aren’t worrying about things like the documents that they must sign, because as they put it “that’s what I have you for.” That’s a red flag to me that we need to have a discussion about my fiduciary responsibilities vs. the client’s own personal responsibilities.


I certainly try my best to watch out for the interests of my clients, but I also tell them, “Look, you’re the one signing these documents and making this purchase, not me. I’ll be looking them over too, but you need to read then and understand what you are signing.” On rare occasion I might get a client who realizes later that he perhaps should have looked closer at what he/she was signing and will ask, “How could you let me sign that?” The normal answer is that I gave it to them to read over before signing and asked if they had any questions. I’m careful to make sure that I explain that the documents involved are contracts and not just a bunch or words on paper. Contracts have consequences if they are broken


I believe in total transparency in my real estate dealings; so, there are no side emails or conversations between me and the other Realtor involved that are not shared with my client. Anything that I know, my client knows – that is part of the Disclosure duty in my fiduciary role. I never answer on behalf of my clients. I confer with them and then transmit their answer. They may ask me for my opinion and I will freely share that with them; however, the decision is always theirs to make.


I have occasionally hit agents who make statements like, “I’m not going to let my clients do that.” While I may express a strong reservation or provide additional information to help with a decision, I do not make that decision for them.  Even first-time buyers should never be treated like children who can’t make their own decisions. First-time buyers many times just need a more detailed explanation of the issues and the choices and potential consequences of each choice. I take the time to go over that with my clients. I suppose that falls generally under the Reasonable Care duty, but it is one that is often ignored, especially by “seasoned” agents who don’t feel that they have the time to explain every decision. Instead they either make the decision for the client or cajole them into their own point of view.


But, back to the central point; no matter what type of client or agent is involved; it is ultimately the buyers and sellers who are signing all of the documents at closing – they are responsible for their own actions. Having a fiduciary agent does not preempt or replace personal responsibility. An agent could be trying their absolute best to perform their fiduciary duties and still let something slip by them. If it ever came to it, a court might fault them for not catching the error, but it is unlikely to hold them legally responsible, unless evidence of gross negligence or obvious fraud or malfeasance is found.


Brokers and agents have Errors and Omissions insurance to cover inadvertent mistakes and part of the coverage provided by the Title Insurance also might come into play, if the error involves something that Title Company should have caught. If the agent was trying their best, they will have fulfilled their fiduciary duties. The buyer or seller must also have been fulfilling their duty to themselves of exercising good personal responsibility. That’s not what you had me there for.


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Norm Werner

Norm Werner is a Realtor at the Milford office of Real Estate One serving the southeastern Michigan area of Oakland and Livingston Counties. Norm specializes in residential real estate. Norm lives and works in Milford Michigan and is married to Carolyn Werner. Norm and Carolyn live in a historic home just three blocks from downtown Milford, with their two dogs - Sadie and Skippy. Norm specializes in the historic homes of Milford and the surrounding area and is on the Board of Directors of the Milford Historical Society. Norm especially enjoys working with first time buyers and those at the other end of the real estate spectrum who are downsizing into their retirement home. 

In addition to his web site, Norm also owns and m,aintains web site, the web site. He is also the webmaster for and the web site and the MilfordCar web site, as well as his church web site - In addition to blogging about real eastate, Norm has a personal blog - - on which he shares inspirational messages and the occasions personal observation about life.

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