A Realtor's Reminder: We must never forget. There are consequences!
Have we forgotten the debt we owe to our principals? As Real Estate Professionals, our debt owed to our principal is called fiduciary. It appears as if some have forgotten.
According to the DRE (Department of Real Estate), multiple Real Estate Bulletins some have forgotten and are being penalized. We must never forget! We must be informed! Currently there have been multiple Realtor's Disciplinary actions. The violations consist of
1. REVOKED LICENSES
2. REVOKED WITH RIGHT TO A RESTRICTED License
3. SUSPENDED
4. SUSPENDED WITH STAY
5. LICENSE SURRENDER
6. PUBLIC REPROVAL
7. INDEFINITE SUSPENSIONS (under Recovery Acct provisions)
We are occupiers of trust. We have 5 basic fiduciary duties to carry out:
Utmost care
Obedience and good faith
Accounting
Loyalty and
Disclosure of material facts
Utmost Care: As Real Estate professionals, we owe the principal the duty in carrying out the agency. We are to act with the highest level of professional care and skill. Failing to meet the standards of NAR Ethical code may find us liable for any harm to the principal that results from our negligence.
Obedience and Good Faith: As Real Estate professionals, we must become a close friend of good faith, honesty and integrity. We must go above and beyond the call of duty to obey our principal's instructions. Failing to obey the clients' instructions, the agent, (or the agent's broker) could cause us to be held liable for any loss to the client that results.
Accounting: As Real Estate Professionals, we must be able to account to the principal's funds-all of them (or other valuables) entrusted to our care. Real Estate law requires brokers to report to their principals on the status of all trust funds on a regular basis. We must also avoid mixing or commingling trust funds with our own funds.
Loyalty: The duty of loyalty means that a Real Estate Professional must be able to put the interests of their principals above their own interests and above the interests of any other party. A Real Estate Professional must not make any secret profits from the agency. For example: It is a breach of agency duty (of a broker) to list a property for less than its worth; secretly buy it from the client through an intermediary; and then sell it for a profit.
One of the most important aspects of the duty of loyalty is the requirement of confidentiality. An agent may not disclose any confidential information about the principal, even after the agency relationship terminates.
Disclosure of Material Facts: While a Real Estate Professional must not disclose the principal's confidential information to third parties, the agent is required to disclose all material facts that they maybe aware of to the principal.
For a Real Estate Professional, a material is any information that affects the value or desirability of the property, or that could affect the principal's decision as to whether or not to enter into a transaction. Material facts that must be disclosed to the principal include:
· All offers to purchase the property
· The true value of the property, and
· Any relationship between the agent and another party (conflicts of interest)
A seller's agent must present all offers to the client in a timely manner. It's the seller, not the agent, who decides whether an offer is acceptable. The duty to present all offers continues even after the property is subject to an existing contract.
As we strive each day to be better Realtors, we must realize the power and impact of our debt of Fiduciary. It is mandatory! We cannot be the best we can be without it! What say you?
To learn more: Check out the following Resources: www.dre.ca.gov
Real Estate Bulletin
Summer 2009 http://www.dre.ca.gov/pdf_docs/rebsummer_09.pdf
Disciplinary Action: December 08 - February 09
·December 2009 February 2010 http://www.dre.ca.gov/pdf_docs/rebsummer_10.pdf
·DRE Mortgage Loan Bulletin, Spring 2009 Disciplinary Action: October 08 - March 09 http://www.dre.ca.gov/pdf_docs/mlb_spr09.pdf
· Real Estate Bulletin, Summer 2010; Disciplinary action:
Various Code & Commissioner's Regulations
1.Commissioner's Regulations
2.Business and Professions Code
3.Financial Code
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