What is a fiduciary relationship in real estate?

A fiduciary relationship in real estate refers to a professional connection where one party, typically an agent or broker, has an obligation to act in the best interests of their client. This relationship is built on trust and involves various responsibilities, including loyalty, confidentiality, full disclosure, accounting, and obedience. The agent is required to prioritize the client's interests above their own and must handle all dealings with honesty and integrity.

In contrast, the other options do not accurately capture the essence of a fiduciary relationship. An agreement between parties might suggest a more casual or equal partnership without the critical elements of trust and loyalty that characterize fiduciaries. A contract for services focuses on transactional aspects rather than the deeper duty owed by one party to another. A mutual understanding of terms implies a shared consensus without the inherent responsibility that a fiduciary relationship requires. Thus, the definition of a fiduciary relationship as an obligation to act for the benefit of a client captures the core principles and legal implications that govern this professional dynamic in real estate.