As a Real Estate agent, the term Fiduciary relationship comes up on a regular basis.

A fiduciary relationship is a legal relationship that creates a position of trust and confidence.

The acronym ACOLD will help you remember your duties in a fiduciary relationship.

As an agent, you must:

be Accountable

use Care and skill

Obey legal instructions

be Loyal to your client

Disclose all pertinent information.

Loyalty means the principal’s interest must come before anyone else. It means keeping confidential information confidential, which is any information that would affect the bargaining position of the client.  An example of this would be to not disclose that the client is going through a divorce.

The Law of agency defines the rights, duties and responsibilities of all legal parties.

An agency relationship is a relationship in which an agent is authorized to perform certain acts on behalf of a principal.   If the agency relationship changes at any time during the transaction, the change must be disclosed in writing, and the party must consent to the change.  An agent is a party who acts for and in place of a principal.

A person can be a universal, special or general agent.

Universal agent

A universal agent is one who has been given full power to act on behalf of a person or business.

General agent

A general agent is authorized by the principal to perform any and all acts associated with the on-going operation of the job or business. A real estate licensee acting in the capacity of a property manager is a general agent to the owner.

Special agent

A special agent is one who has limited authority granted to him or her through a principal. The relationship with the principal is not expected to be continuous. The listing contract creates a special agency relationship with the seller. The authority is limited to the duties given in the listing contract, and the relationship ends when the terms have been fulfilled.

Attorney in fact

An attorney in fact is a person authorized to perform certain acts for another person, under power of attorney.

The term attorney-in-fact is commonly used in the United States, to make a distinction from the term attorney at law.

In most other common law jurisdictions, lawyers are not called attorneys. In those jurisdictions the term "attorney" is used instead of "attorney-in-fact".

As an agent, an attorney-in-fact is a fiduciary for the principal, so the law requires an attorney-in-fact to be completely honest with and loyal to the principal in their dealings with each other. If the attorney-in-fact is being paid to act for the principal, the contract is usually separate from the power of attorney itself, so if that contract is in writing, it is a separate document, kept private between them, whereas the power of attorney is intended to be shown to various other people.

Principal and Client

A principal is any person involved in a contract, such as a seller, buyer, principal broker, or an owner who has hired an agent as a property manager.

A client is a party who has signed an agreement with an agent, and this agreement creates a fiduciary relationship. A customer uses the services of a real estate licensee but has not signed an agreement with an agent. Even though there is not a fiduciary relationship with the customer, the lessee must act honestly and fairly with the customer.

When you list a property, you are representing the seller.   As licensed real estate professional it is your duty to make sure that the buyer understands that you represent the seller.

A seller who enters into a listing contract with a brokerage firm is a client of the listing agent’s company, not of the agent themselves.

The brokerage firm and the listing agent are required to act on behalf of the seller’s interest.

When a real estate broker enters into a contract with a buyer, the buyer becomes the client and the seller becomes the customer.

A buyer’s broker may be paid by the seller, the buyer, or both. Because of the contractual relationship, the agent is still a buyer’s agent if the seller pays the commission.

Transaction broker

A transaction broker provides the buyer and seller with the necessary paperwork to transfer the property, and both parties are customers of the broker. The seller and buyer negotiate the sale without the broker. The transaction broker must act honestly and fairly, disclose all property defects, but must not disclose confidential information to either party. A transaction broker is also called a non-agent, a facilitator, or an intermediary.

Some state Real Estate Commissions, notably Florida's  after 1992 (and extended in 2003) and Colorado's after 1994 (with changes in 2003), created the option of having no agency nor fiduciary relationship between brokers and sellers or buyers. Having no more than a facilitator relationship, transaction brokers assists buyers, sellers, or both during the transaction without representing the interests of either party who may then be regarded as customers.

Dual or limited agency

Usually the agent who obtained the listing becomes the designated agent of the seller, and no other licensee within the company would represent the seller.   If another agent from the same brokerage secures a buyer, that agent would be a buyer’s agent and the brokerage firm would be a dual agent.   A dual agency is legal as long as everything is disclosed and everyone agrees.

A dual agency is created when the licensee represents the buyer and seller as clients in the same transaction, or if the brokerage firm represents both.  In a dual agency, both the buyer and seller are clients.

Dual agency occurs when the same brokerage represents both the seller and the buyer under written agreements. Individual state laws vary and interpret dual agency rather differently.

Many states no longer allow dual agency. Instead, "transaction brokerage" provides the buyer and seller with a limited form of representation, but without any fiduciary obligations. Buyers and sellers are generally advised to consult a licensed real estate professional for a written definition of an individual state's laws of agency, and many states require written Disclosures to be signed by all parties outlining the duties and obligations.


Bundle of Rights  


Government Rights  

Police Power   

Eminent domain   



Real vs Personal Property




Trade Fixture   


    OR-EE Rule   


Freehold Estate   

Fee simple absolute   

Fee simple Defeasible   

Life estate   

Less than freehold estate   

Estate for Years   

Periodic Tenancy   

Estate at will   

Estate in sufferance   

Types of Leases   

Gross lease   

Net lease   

Percentage lease   

Lease option   

Property management


Essentials of a valid contract   

Capable parties  

Lawful object   


Offer and acceptance   

Types of Contracts   

Valid, Void & Voidable Contracts   

Implied contract   

Bilateral & Unilateral contacts   

Executed & Executory   

Option contract   

Land Contract   


Types of Listings contracts   

Exclusive Listing   

Exclusive Authorization and right to sell Listing   

Exclusive Agency Listing   

Open Listing   

Net Listing   

Listings with an option   

Multiple listing service   


Universal agent   

General agent   

Special agent   

Attorney in fact   

Principal and Client   

Transaction broker   

Dual or limited agency   

Practice and disclosure   

Stigmatized property   



Actual fraud   

Negative fraud   

Constructive fraud   


Federal Law   

Truth in Lending   

Fair Housing   



Sherman antitrust laws   


Easement in gross   

Implied easement   

Prescriptive easement   

Termination of Easement   



Property Transfer




Title insurance   

Forms of ownership   

Tenancy in common   

Joint tenancy   

Community property   





Time Shares   

Cluster housing   



Appraisal Principles   

Principle of Highest and Best Use   

Principle of Substitution   

Principle of Conformity   

Principle of Contribution   

Principle of change   

Market Value   

Steps in the appraisal   

Appraisal methodology   

Market data approach   

Capitalization (income) Approach   

Cap Rate   

Cost (replacement) approach   

Gross Rent Multipliers   


Physical Deterioration   

Functional Obsolescence   

Economic Obsolescence   



Primary mortgage   



Types of Loans   

Loans clauses   


Construction Terms   

Test Taking Tips