2.2 Fiduciary Duties

OLDCAR: The Six Fiduciary Duties

A fiduciary owes the highest standard of legal duty to a client. Minnesota agents memorize them with OLDCAR. These duties are owed to a client (a represented buyer or seller) — not to a customer working with a facilitator.

O — Obedience

Follow the client's lawful instructions. The limit is sharp: a licensee must refuse any instruction that is illegal or unethical, such as a seller's demand to conceal a known structural defect or to steer buyers by race. Obeying an unlawful order is itself a violation.

L — Loyalty

Put the client's interests above the licensee's own and above third parties. No self-dealing: a listing agent cannot secretly buy the client's property, profit from an undisclosed side fee, or favor a buyer who pays a referral bonus. Loyalty is the most heavily tested duty.

D — Disclosure

Reveal to the client all material facts the licensee knows or should know — for example, that a buyer is willing to pay more, or that comparable sales suggest the list price is low.

C — Confidentiality

Protect the client's private information, such as a seller's bottom-line price or a buyer's maximum budget and motivation. This duty continues indefinitely after the relationship ends — a defining exam point.

Accountability, Reasonable Care, and Duties to All

A — Accountability

Account for all money and property entrusted to the licensee. Earnest-money checks and deposits must be promptly placed in the broker's trust (escrow) account, never commingled with personal or operating funds, and a written accounting provided. Commingling earnest money is a classic Minnesota discipline trigger.

R — Reasonable Care and Skill

Exercise the competence of a prudent licensee: research facts, verify square footage and tax data, recommend inspections, and refrain from offering legal or engineering advice outside one's expertise. Negligently giving wrong information breaches this duty even without bad intent.

Duties Owed to EVERY Party

Regardless of representation — and even to a customer in a facilitator relationship — every Minnesota licensee owes:

Worked Scenario

A seller's agent learns the basement floods every spring. The buyer is unrepresented (a customer). The agent owes the seller loyalty and confidentiality, but still owes the buyer honest disclosure of the known material defect. The agent must reveal the flooding. Confidentiality protects the seller's negotiating position and personal secrets, never a hidden physical defect — confusing the two is a frequent exam trap.

Consequences of Breach

Applying the Duties: Conflicts, Disclosure, and Dual Agency

The exam rarely asks you to simply name a duty; it asks you to apply the right one to a fact pattern. The most common conflicts arise where loyalty, confidentiality, and disclosure collide.

Loyalty vs. Self-Interest

Whenever the licensee's personal interest could affect advice, disclosure plus consent is required. Examples that demand written disclosure: the agent (or a relative) wants to buy the listing; the agent owns a stake in the buyer's lender or title company; or the agent stands to earn a bonus tied to a particular outcome. Proceeding without disclosing the conflict breaches loyalty, even if the client ultimately gets a fair price.

What Counts as a Material Fact?

A material fact is one a reasonable buyer or seller would consider important in deciding to act. The duty to disclose material defects runs to all parties; the duty to disclose negotiating advantages runs only to the client.

The Dual-Agent Tightrope

When a brokerage acts as a dual agent with written consent, the OLDCAR duties shrink to a neutral core. The dual agent:

• Cannot disclose the seller's lowest acceptable price to the buyer, or the buyer's top price to the seller;
• Cannot advise either party on offer strategy;
• Must still disclose material defects and handle funds with accountability;
• Must present all offers and treat both sides honestly and fairly.

Worked Scenario

Under dual agency, the seller privately tells the agent, "I'll take $300,000 if pushed." The buyer asks, "What will they really accept?" The dual agent must answer that they cannot disclose that confidential information. Revealing it would breach confidentiality to the seller; refusing protects the neutral posture that dual agency requires. This single fact pattern appears repeatedly on the Minnesota state portion.