New York Real Estate Salesperson ExaminationLaws of AgencyMedium
An agent is preparing an offer for a buyer client. The agent includes a clause stating that the offer is contingent upon the buyer obtaining financing at an interest rate not exceeding 6%. This type of clause is an example of the agent fulfilling which fiduciary duty?
- ADuty of loyalty
- BDuty of disclosure
- CDuty of accounting
- DDuty of obedience
Show answer & explanationAnswer & explanation
Correct answer: A. Duty of loyalty
By including a financing contingency that protects the buyer's financial interests, the agent is acting in the 'best interests' of their client, which is the core of the duty of loyalty. It ensures the buyer is not bound to a deal that would be financially detrimental.
Why the other options are wrong
- B. Duty of disclosure involves revealing material facts, not drafting protective clauses.
- C. Duty of accounting deals with handling money, not contract clauses.
- D. Duty of obedience would be to follow the buyer's instruction to include such a clause, but the *initiative* to protect the client's interest falls under loyalty.
Duty of Loyalty (Protective Clauses)
An agent's obligation to act in the best interest of their client by including protective clauses or advising on terms that safeguard the client's position.
- Agent advocates for client's best outcome.
- Includes negotiating favorable terms.
- Goes beyond mere instruction following.
Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.