When a real estate agent represents you under a signed listing or buyer agreement, the law treats them as your fiduciary. That means six specific duties real estate agents owe clients: loyalty, confidentiality, full disclosure, obedience, reasonable care and diligence, and accounting.1National Association of REALTORS®. Vocabulary: Agency and Agency Relationships Each one is enforceable. An agent who breaks any of them can lose their commission, their license, and money in a lawsuit.
Loyalty: Your Interests Come First
Your agent must put your financial goals ahead of their own. That is the line that separates a fiduciary from a salesperson. Self-dealing is the clearest violation. An agent who quietly arranges for a friend or relative to buy your property at a discount, or who steers you to a contractor paying them a referral fee, has broken this duty. Any profit the agent earns from your transaction beyond their disclosed commission has to be transparent. Secret kickbacks from title companies, lenders, or repair vendors are prohibited outright.
Conflicts don’t need to involve cash. If your listing agent’s spouse wants to bid on your home, the agent has to disclose the relationship and get your informed consent before going further. The same rule applies when an agent has a financial interest in a competing listing or a personal relationship with the buyer. Agents who ignore this can forfeit their commission and face a damages suit.
Net Listings and Built-In Conflicts
A net listing is an arrangement where you agree to accept a fixed dollar amount from the sale and the agent keeps everything above that number. The incentive is misaligned by design: the agent profits from selling higher, but has no reason to share that upside with you. Most states prohibit or heavily restrict net listings. Where they remain legal, the agent still has to seek the highest possible price and fully disclose the structure. If your agent proposes one, treat it as a signal to consult a real estate attorney.
Confidentiality: What Your Agent Can’t Repeat
Your agent must protect the sensitive details you share while working together. A seller’s rock-bottom price, the personal reason behind a move, a buyer’s maximum budget — anything the other side could use as leverage. Leaking those facts hands your negotiating position to the opposing party.
This protection outlasts the transaction. Unlike other fiduciary duties that end at closing, confidentiality typically continues indefinitely, even after the agency agreement is over.2National Association of REALTORS®. Law Supersedes Seller Confidentiality Requirement in Code A former agent cannot later use what they learned about your finances to help someone else or themselves.
There is a hard limit. Physical property conditions are never confidential. A cracked foundation, water damage, roof problems, or lead-based paint must be disclosed to buyers regardless of what the seller prefers. Material defects are facts the buyer has a right to know, and no seller instruction overrides that. Agents who leak confidential financial details face civil lawsuits and discipline from their state licensing board.
Full Disclosure: Every Fact That Could Change Your Decision
The other side of confidentiality is that your agent must share every fact that could influence your decisions. If you’re a seller, that means the agent must present every written offer they receive, no matter how low the number or how unfavorable the terms.3National Association of REALTORS®. Code of Ethics and Arbitration Manual – Part 4 – Appendix IX – Presenting and Negotiating Multiple Offers Filtering out “bad” offers because the agent doesn’t want to deal with them is a violation.
Any personal or financial relationship your agent has with another party in the transaction must be disclosed in writing. Article 7 of the NAR Code of Ethics specifically prohibits accepting compensation from more than one party in a transaction without disclosing it and getting the client’s informed consent.4National Association of REALTORS®. 2026 Code of Ethics and Standards of Practice
Material facts affecting a property’s value or desirability also fall under this duty. Stigmatized properties — those affected by an event like a death or crime with no physical impact on the structure — are a gray area that varies by state. In many states, agents have no obligation to volunteer information about a death or crime on the property unless you ask.5National Association of REALTORS®. Stigmatized Properties If you ask directly, the agent has to answer honestly.
Obedience: Following Your Lawful Instructions
Your agent must follow your instructions on showing schedules, marketing strategy, and negotiation. Those are your calls; the agent’s job is to carry them out.
The word that matters is lawful. An agent must refuse any instruction that would violate federal, state, or local law. Fair housing is where this comes up most often. If a seller tells their agent to reject offers based on race, religion, national origin, sex, familial status, or disability, the agent has to refuse. First-time Fair Housing Act violations pursued through HUD carry administrative penalties of up to $26,262 per discriminatory act.6eCFR. 24 CFR 180.671 – Assessing Civil Penalties for Fair Housing Act Cases When the Department of Justice brings a civil action, the ceiling rises to $50,000 for a first violation and $100,000 for subsequent ones.7Office of the Law Revision Counsel. 42 USC 3614 – Enforcement by Attorney General Agents who comply with discriminatory instructions share that liability.
Reasonable Care and Diligence: Professional Competence
Your agent is expected to perform at the level of a competent, experienced professional. That means more than accurate paperwork, though accuracy on purchase agreements and settlement statements is part of it. Your agent should be tracking every deadline in your contract: earnest money due dates, inspection contingency expirations, financing deadlines. Timelines vary by contract and jurisdiction, so there is no universal standard, but missing them can cost you thousands or kill a deal outright.
The care standard also covers market knowledge. Your agent should give you informed guidance on pricing, comparable sales, and property conditions so you don’t overpay as a buyer or underprice as a seller. An agent who misses a recorded easement restricting how you can use the property, or a zoning limitation blocking your planned renovation, may be liable for professional negligence.
Broker Liability for Agent Mistakes
The supervising broker is on the hook too. In most states, brokers can be held vicariously liable for the acts and omissions of agents working under their license when those acts occur within the scope of the agent’s work. If an agent fails to disclose a known defect or misrepresents a condition, courts routinely hold the broker accountable as well. Brokers are expected to maintain real systems for reviewing contracts, disclosures, and communications.
Accounting: Handling Your Money
Every dollar that passes through your agent’s and broker’s hands during the transaction must be tracked. Earnest money deposits go into a designated escrow or trust account, never into the brokerage’s general operating account.
Commingling and Conversion
Mixing client funds with brokerage money is called commingling, and it is a serious violation even if no money goes missing. The mixing itself is the offense. Consequences typically include license suspension or revocation and possible fraud charges.
Conversion is worse. That is when a broker actually spends client funds on personal or business expenses. If a broker deposits your $10,000 earnest money into the trust account and then uses it to cover rent, that is conversion. It is treated as theft and can bring criminal prosecution on top of license revocation.
When These Duties Shrink or Disappear
The full set of duties only applies when you actually have an agency relationship. Two situations reduce or eliminate them.
Dual Agency
Dual agency happens when one agent, or one brokerage, represents both buyer and seller in the same transaction. It is legal in most states with proper disclosure, though about eight states ban it outright. The core problem is unavoidable: your agent cannot fight for the highest price for you as a seller while also fighting for the lowest price for the buyer.
Consenting to dual agency means giving up your right to undivided loyalty. The agent can no longer use your information to advance your interests at the other party’s expense. Confidentiality still applies, so the agent can’t reveal your bottom line, but they also can’t leverage what they know to push harder for you. The agent becomes a neutral facilitator. Before proceeding, the agent must get written acknowledgment from both parties confirming they understand the limitations and know they can hire their own agent instead.8New York Department of State. Legal Memorandum LI12 – Be Wary of Dual Agency
Designated agency is the common workaround. The managing broker assigns separate agents inside the same firm to each side, and each owes full fiduciary duties to their assigned client.1National Association of REALTORS®. Vocabulary: Agency and Agency Relationships Both agents still work under the same broker, but it preserves more of your protections than true dual agency.
Customers and Transaction Brokers
Not everyone working with a real estate professional gets fiduciary protections. The NAR Code distinguishes a client (someone with a formal agency or recognized non-agency relationship) from a customer (someone who receives information or services but has no contractual relationship).9National Association of REALTORS®. NAR Code of Ethics – Duties to Clients Agents owe customers honesty, but not loyalty, confidentiality, or any of the other fiduciary duties.
Some states recognize transaction brokerage, where the professional facilitates the deal without representing either side. A transaction broker has no fiduciary duties. They handle paperwork and keep the process moving, but they are not in your corner. If you haven’t signed a representation agreement, you are likely a customer or working under a transaction brokerage arrangement, and the protections in this article largely don’t apply to you.
What the 2024 NAR Settlement Changed
Starting in August 2024, a national legal settlement reshaped how buyer representation works. The changes reinforce the disclosure duties agents already owed and affect anyone buying or selling now.
Sellers and their agents can no longer advertise offers of compensation to buyer agents through the MLS.10National Association of REALTORS®. Summary of 2024 MLS Changes Previously, a listing typically included a built-in offer to pay the buyer’s agent, and buyers often had no clear picture of what their agent earned or who paid it.
Any buyer working with an agent must now sign a written buyer agreement before the agent tours a home with them. The agreement must include:
- A specific compensation amount, either as a rate or dollar figure, disclosed conspicuously.
- An objective, non-open-ended figure. Vague language like “whatever the seller offers” is not allowed.
- A cap: the agent cannot receive more from any source than the amount agreed to in the buyer agreement.
- A statement that commissions are not set by law and are fully negotiable.
For sellers, listing agents must now separately disclose, and get the seller’s written authority for, any payment the seller or listing agent will make to a buyer’s representative. That disclosure has to specify the amount or rate and happen before any payment or agreement to pay.10National Association of REALTORS®. Summary of 2024 MLS Changes
What You Can Do If Your Agent Breaches These Duties
When an agent violates a fiduciary duty, you have two tracks: professional discipline and civil litigation. The two are independent, and you can pursue both.
For REALTORS® (agents who belong to NAR), the local association can impose discipline ranging from a warning letter to termination of membership, with fines that scale to the severity of the violation.11National Association of REALTORS®. Code of Ethics and Arbitration Manual – Part 4, Appendix VII – Sanctioning Guidelines State licensing boards can revoke or suspend an agent’s license independently of any civil suit.
Courts offer broader relief. You can pursue actual damages, including economic losses like the difference between what you sold for and what the property was worth, and in some jurisdictions noneconomic damages. If your agent earned a secret profit, a court can order disgorgement, forcing them to surrender every dollar. Commission forfeiture is a common remedy: courts have ordered agents to refund their entire fee when it wasn’t earned through good-faith performance.
Punitive damages may be available in egregious cases, particularly where the conduct was intentional rather than merely negligent. Some states also maintain real estate recovery funds that compensate consumers when an agent lacks the assets to pay a judgment, with per-claim caps typically somewhere between $10,000 and $50,000 depending on the state. In the most serious cases, such as an undisclosed conflict of interest that tainted the deal from the start, a court can order rescission and unwind the transaction entirely. Rescission is rare, but it remains available when lesser remedies cannot make you whole.