by George Bigelow
Special to Realty/Builder Connection
Did you ever take time to meditate on what the word “fiduciary” really means? If not, Google it up. Do it yourself. No twittering. I’ll wait and hum the Jeopardy theme song while you read.
Okay. Welcome back.
Hopefully, you have now infused yourself with a defined meaning of the noble word, fiduciary. Notice I write, “defined.” I offer this because simply knowing the definition of fiduciary is worth about as much as 1,000 shares of Circuit City stock as collateral if you don’t make a concentrated effort to understand how fiduciary duty may apply to you and your clients.
Since nothing serves better than obvious bad examples, here are a few that may indicate your fiduciary meter needs oiling. Please know I’m using “your” as a generic adjective.
1. Your buyers tell you they’re expecting triplets, both mother-in-laws are moving in with them, they’ve decided to raise a herd of organic-fed buffalo and you ask if they’d consider a condo.
2. Your seller tearfully confides in you about personal matters in a divorce. All he wants to do is move on with his life and pursue his dream of installing bay windows in birdhouses. You immediately post: “Dream seeker desperate to sell and fly away! Bring all offers, no matter how silly” on Craig’s List.
3. You are related to 75 percent of the parties in a transaction and you don’t bother to disclose this fact in writing because the majority of the people already know you, they think you’re a snappy dresser and they invite you over for the holidays, even though you suspect it’s because you always bring that big shrimp ring deli tray.
4. A prospective listing call comes in. You find out the sellers are hopelessly “upside down” on their mortgage. You decide to pass on the listing. You then tell a festive story about the details of your savvy decision (including the caller’s address) to your colleagues because, hey, no signed contract — no fiduciary duty!
Having an uncanny grasp for the obvious, I would say that 1, 2 and 3 aren’t putting your client’s best interest in mind and your fiduciary duty (and listening skills) needs the oil can. However, are you questioning No. 4? Let’s pause and review…
I’m confident you all looked up the meaning of fiduciary? Just in case, I’ll light a scented candle and defer to a higher authority, i.e., a law dictionary.
(One moment please to get the standard ad hoc disclaimer out of the way: No, I am not an attorney and I am not giving legal advice; however, I did consider going to law school in 1993 for about 20 minutes until I found out it involved a lot of reading.)
Black’s Law Dictionary, Fifth Edition states: Fiduciary or confidential relation: “A very broad term embracing both technical fiduciary relations and those informal relations which exist wherever one [person] trusts in or relies upon another. One founded on trust or confidence reposed by one person in the integrity and fidelity of another. A “fiduciary relation” arises whenever confidence is reposed on one side and domination and influence result on the other; the relationship can be legal, social, domestic or merely personal…”
I also recall an acronym for real estate fiduciary duty from years ago: OLD CAR. Obedience, Loyalty, Disclosure, Confidentiality, Accountability and Responsibility. I’m sure there is some version of this you can find on the Internet.
Pop Quiz:
Question: What makes us different as real estate agents?
Answer: We are licensed and held to a higher standard. Remember? It was on the test. I’m pretty sure it was choice 5 — all of the above.
Consider this, fellow/fellowette keepers of the beautifully blue “R” pin: even though you do not have a signed contract, if you speak to a prospective client like a duck, advise him/her like a duck and listen to his/her personal issues like a duck, even though you (presumably) aren’t a duck — you may have waddled yourself into an arguable “implied” agency with that individual.
If that unsigned, prospective client shares confidential information with you and that personal information gets repeated back to that prospective client by a third party, it could be deemed that agency was implied by your assumed role, confidentiality was broken and fiduciary duty was violated.
Does that sound far-fetched in this litigious world we live in? Someone spilling hot coffee in his lap at a fast-food drive-thru might not think so.
After speaking with a potential client on any personal level, I always try to post an extra-sticky mental note on my brain to remind me that fiduciary duty might be viewed as applicable without a signed contractual agreement.
For those of you who have been licensed for a few years, you know how small the world of real estate can be.
Always take the professional and ethical high road. Once a person has disclosed personal/confidential financial information to you as an agent — keep it confidential. It’s also the honorable thing to do. If there is any question, confer with your broker.
So, how do you spell the nine-letter word, fiduciary? It depends on how deeply you perceive your duty. Just don’t court any possibilities that may lead you to spell it with another nine-letter word: d-e-f-e-n-d-a-n-t.