Saturday, August 9, 2008

What Does Fiduciary Responsibility Mean?

Prime Properties and its employees have a legal fiduciary responsibility to our clients. What does this mean?

A fiduciary responsibility is comprised of these basic elements: care, obedience, accounting, loyalty, and disclosure.

Care: This is the first most obvious, we must provide our efforts and experience in the area which our client has hired us. It is important that a client understand our business expertise and specialties to determine if our business processes are aligned with their goals. This leads to element #2, obedience.

Obedience: Our job is to help you meet your goals. We must place your goals above our personal goals and assist in following your directions. There are limits to this. One of the limits is we cannot assist a client in breaking a law. Another is that we are not married to a client, and if our business processes are not set up to best assist a client in a unique set of goals we reserve the right to terminate the relationship for the good of the client.

Accounting: We handle client's funds and must faithfully document and report on the handling of the funds. We "close" our books and produce reports no less frequently than once a month. We follow good business and accounting practices and produce reports which are designed to provide accurate information as required by the government.

Loyalty: We represent our clients interests first above all others. I stated under "obedience" we must place our clients interests above our own, we also place our clients interests above other parties. Our ethical obligations under our business license require us to be fair to all parties, but we only provide advice to our clients, not to other parties. Our requirement to be fair means we must follow disclosure rules, but we must not provide advice to other parties on how to use disclosed information.

Disclosure: We must disclose any information which might have a material impact on how a decision is made. Put another way, if an ordinary person might make a different decision based on the information then the information is material and should be disclosed. Our policy is, when is doubt, disclose. This also ties together with care and loyalty because, as experts in our field, we often know better what is material and what is not.

Realtors and Real Estate Brokerages have these obligations to our clients and it is a very important reason for hiring a Realtor to assist you in your real estate goals. We have to tell you the things you need to know, even when you don't want to hear them. We must watch out for your best interests even when your decision making may be tainted by temporary issues. And most important, you have an expert in your corner, on your side, fighting for you!

There are five relationships I take great care in deciding, 1) my spouse 2) my doctor 3) my employer 4) my attorney and 5) my realtor. If a realtor did not have a fiduciary responsibility to me then this profession would not make the list. Not all Realtors are equal. You should take the time to determine if the person fighting for you is all you want them to be.

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