Fiduciary Duty of Reasonable Care and Diligence
September 27, 2018
Every real estate agent in Utah owes their clients the fiduciary duty of reasonable care and diligence. Out of all the fiduciary duties, which include loyalty, obedience, and confidentiality, reasonable care and diligence is probably the most difficult to define. So what is reasonable care and diligence and how do you meet this obligation for your clients?
In its simplest definition, reasonable care and diligence is the degree of care that an ordinary prudent person (in this case a real estate agent) would exercise under the same or similar circumstance. Real estate agents are expected to be thoroughly competent to represent the affairs of their clients. They are expected to perform tasks that apply their licensing education and familiarity with the real estate purchase contract.
The most fundamental way I believe residential real estate agents best meet the fiduciary duty of reasonable care and diligence is to know the REPC. I know that many of you are vigilant in this area and are asking questions to ensure you are doing things correctly. In fact, over 40% of our legal hotline calls this month were questions about the REPC.
My advice is to be familiar with its language and highlight to your clients the ramifications of the REPC sections. Highlight deadlines and contractual obligations. As a word of caution, be very very very very (emphasis added) careful in drafting contractual language via the blank addendum. If a real estate agent drafts ambiguous language, then there is a high risk that real estate agent has breached their fiduciary duty of reasonable care and diligence. Check first to see if the UAR has an addendum that addresses the very language you are trying to create.
If you have any questions about the fiduciary duty of reasonable care and diligence or the REPC, feel free to call the UAR’s Legal Hotline at 801-676-5211 on Monday, Wednesday, or Friday from 8:30 a.m. to 4:00 p.m.