New Jersey Real Estate Salesperson · General Principles of Agency
Fiduciary Duties
On this page 6 sections
In 30 seconds
An agent owes the client six fiduciary duties remembered as OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. The distinction most often tested is confidentiality versus material-fact disclosure: the client's private information stays private, but a known material fact about the property must be disclosed to everyone.
Why this matters
The exam tests whether a licensee knows that keeping a client's secrets never includes hiding a leaking roof from the other side.
The college version
In normal terms
- A fiduciary is someone trusted to act in another person's best interest, and OLD CAR lists the duties that trust requires.
- Both confidentiality and disclosure are fiduciary duties, but only confidentiality protects the client's own information, such as motivation or bottom line, while known material facts about the property are disclosed to all parties.
- Obedience never requires following an illegal instruction, and loyalty means the client's interests come ahead of the licensee's commission.
Concepts in this outline
- OLD CAR — memory device for the six fiduciary duties an agent owes a client: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care and diligence.
- O — Obedience — follow the client's lawful instructions promptly and faithfully, but never an instruction that is illegal or unethical.
- L — Loyalty — put the client's interests ahead of the licensee's own, avoiding secret profits, self-dealing, and undisclosed conflicts.
- D — Disclosure — tell the client every fact the licensee knows that could affect the client's decision, including all offers and the other party's position.
- C — Confidentiality — protect the client's private information, such as motivation and bottom line, during and after the relationship; never a known material fact about the property.
- A — Accounting — carefully handle, track, and report all funds and documents entrusted to the licensee, keeping them in the broker's trust account, never commingled.
- R — Reasonable care and diligence — perform with the skill and attention of a competent licensee, and refer matters outside that expertise to qualified professionals.
- Duty to disclose material facts versus duty to disclose confidential client information — known material facts about the property are disclosed to all parties; the client's private information is never disclosed without permission.
Eli explains
The same idea, in plain words
Explain it like I’m 10
When someone trusts you to handle something important, you become a fiduciary, a person who must put their interests ahead of your own. The six fiduciary duties an agent owes a client spell OLD CAR.
Obedience means following the client's lawful instructions, but never an illegal one, such as refusing to show the home to a family with children.
Loyalty means acting in the client's best interest, not your own: no secret profits, no steering the client toward a deal that pays you more.
Disclosure means telling the client everything that could affect their decision, including all offers.
Confidentiality means protecting the client's private information: why they are selling, how low they would go. That protection never covers a known material fact about the property, such as a wet basement, which must be disclosed to everyone (see Topic 06).
Accounting means carefully handling and reporting money and documents belonging to others, through the broker's trust account.
Reasonable care and diligence means using a competent licensee's skill and knowing when a question belongs to an attorney or inspector.
Worked example
Licensee Tomas lists a Bergen County split-level in Paramus for Elena, who tells him she is relocating for work and would accept ten thousand dollars under asking. A buyer's agent asks Tomas why Elena is selling and whether she is flexible. Tomas says only that all offers will be presented, keeping Elena's motivation and bottom line confidential. During the listing walk-through, Elena mentioned that the sump pump runs constantly in spring. That is a material fact about the property, so Tomas discloses it to every buyer who tours. Elena's secret stays a secret; the basement does not. Tomas has honored confidentiality and disclosure at the same time, which is exactly what OLD CAR asks.
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