Understanding a Real Estate Agent’s Fiduciary Duties – Honesty and Reasonable Care

Today, we continue our series on real estate professionals’ fiduciary duties. Attorney, Laura Ferret, examines the duty of honesty and reasonable care. Understanding reasonable care and what is expected goes a long way in assisting the real estate professional in navigating the complex fiduciary requirements placed on the agent or broker.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing managing shareholder Keith Dunnagan at kbdunnagan@bpelaw.com.

Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation, please contact me to set up a date and time.

Understanding a Real Estate Agent’s Fiduciary Duties –
Honesty and Reasonable Care
By: Laura Ferret, Esq.

In part four of this series on the fiduciary duties of real estate brokers and salespersons, we discussed the duty to investigate and disclose. Today, we will examine the agent’s duty to exercise reasonable care and honesty.

What exactly is reasonable care, and how is it measured? A real estate agent has the fiduciary duty to act with reasonable care and diligence. This is not a standard that is measured by each individual agent, but rather an industry standard related to how a reasonable and prudent agent should act. The agent’s duty of reasonable care requires that they exercise their duties with competency and that they display the skills expected of someone who holds a real estate license.

One very important aspect of the agent’s exercise of reasonable care is the necessity of recognizing when an issue falls outside of that agent’s expertise. An agent should only advise their clients on real estate matters. If an issue arises that falls outside of the agent’s purview, the agent should exercise reasonable care to refrain from offering advice on that matter and should instead refer their client to seek advice elsewhere.

If an agent breaches their duty of reasonable care, they may be exposed to liability for negligence. Liability for a breach of the duty of reasonable care also often arises when a broker either intentionally or unintentionally misleads a client as to the effect of some aspect of the transaction. This issue further implicates another duty of the agent-the duty of honesty.

An agent has the duty to be honest and truthful in all activities for which a real estate license is required. (See Business and Professions Code Sec. 10152, 10176(a-c), (i)). The duty of honesty isn’t strictly a fiduciary duty-agents only owe fiduciary duties to their own clients. Conversely, the duty of honesty applies not only to an agent’s dealings with their own clients, but also with other parties in a transaction.

In the context of the agent’s duties, the meaning of honesty is extremely broad. Honesty includes strict adherence to the standards of the real estate profession; fairness and transparency; integrity; truthfulness; and avoidance of fraud. To put it another way, a real estate agent must tell the truth, the whole truth, and nothing but the truth.

An agent’s breach of the duty to disclose known defects in the property can also be considered a breach of the duty of honesty. To read more about the agent’s duty to investigate and disclose defects of the property, refer back to part four of our series on fiduciary duties of real estate agents and brokers.

Stay tuned — in our next installment on fiduciary duties, we will examine the duty of Brokers to supervise salespersons.


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.