Understanding Fiduciary Duties of Agents in Massachusetts

Last updated: April 2026

When studying for the Massachusetts real estate salesperson or broker exam, few topics are as critical as agency law. The Massachusetts Board of Registration of Real Estate Brokers and Salespersons places a heavy emphasis on understanding the legal and ethical obligations you owe to your clients. These obligations are known as fiduciary duties. This article will break down the exact fiduciary responsibilities you must memorize, how they apply under Massachusetts law, and how they will be tested on your exam.

For a comprehensive overview of all exam topics, be sure to bookmark our Complete Massachusetts Exam Guide.

The Core Fiduciary Duties: The "OLD CAR" Acronym

In real estate, a fiduciary relationship is one of utmost trust and confidence. When a consumer hires you as their agent, you become their fiduciary. To easily remember the six fiduciary duties for the exam, use the acronym OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accountability, and Reasonable Care.

Obedience

As an agent, you must promptly and willingly obey all lawful instructions from your principal (client). However, the keyword here is lawful. If a seller instructs you to violate the Massachusetts Fair Housing laws (e.g., "Don't show my house to families with young children"), you must refuse. Obedience never trumps the law.

Loyalty

Loyalty dictates that you must put your client's interests above all others—including your own. You cannot act in a way that benefits yourself at the expense of your client. For example, if you are a buyer's agent and you know a property is overpriced, you must advise your client accordingly, even if a lower purchase price means a smaller commission check for you.

Disclosure

The duty of disclosure requires agents to affirmatively disclose all material facts regarding a property. In Massachusetts, this is heavily regulated by M.G.L. Chapter 93A (The Consumer Protection Act). A material fact is anything that might influence a buyer's decision to purchase or the price they are willing to pay.

Massachusetts Specific Rule: Massachusetts law distinguishes between physical defects and "stigmatized" properties. While you must disclose a known leaky roof or lead paint, Massachusetts law dictates that psychological stigmas (e.g., a murder occurred in the home, or it is allegedly haunted) are not material defects. You do not have to volunteer this information, but if a buyer asks you directly, you must answer truthfully.

Confidentiality

You must keep your client's sensitive information strictly confidential. This is often remembered as PTM: Price, Terms, and Motivation. If you know your seller is facing foreclosure and is desperate to sell, you cannot disclose this to a buyer unless the seller gives you written permission. Crucially for the exam, remember that the duty of confidentiality survives the closing. It never expires.

Accountability

Accountability refers to the safeguarding of any money or property entrusted to you by a client. In Massachusetts, this typically involves earnest money deposits. Under 254 CMR 3.10, brokers must maintain strict escrow account records. Mishandling funds, known as commingling (mixing client funds with operating funds), is strictly prohibited and is a fast track to losing your license. Understanding how to handle these funds properly is vital, as mishandling them is one of the common mistakes candidates make on the exam and in practice.

Reasonable Care and Skill

You are expected to perform your duties with the competence and expertise of a licensed professional. This means properly pricing properties, advising clients to seek legal counsel when necessary, and ensuring paperwork is accurate. For instance, drafting contracts improperly violates this duty; you can brush up on this by reviewing contract essentials and elements.

Massachusetts Agency Disclosure Requirements

Under Massachusetts law (254 CMR 3.00), agents are required to present the Mandatory Licensee-Consumer Relationship Disclosure form to consumers.

When must this be presented? At the first personal meeting where a specific property is discussed. This form is not a contract; it is a disclosure that explains the types of agency relationships available so the consumer understands who represents whom before sharing confidential information.

Types of Agency Relationships in Massachusetts

The fiduciary duties you owe depend entirely on the type of agency relationship established.

1. Single Agency

In a single agency, you represent only one party in the transaction (either the buyer or the seller). You owe all six "OLD CAR" fiduciary duties to your client.

2. Dual Agency

A dual agent represents both the buyer and the seller in the same transaction. Because it is impossible to offer full Loyalty and Disclosure to two opposing parties, dual agency requires agents to remain neutral. In Massachusetts, dual agency is strictly prohibited unless the agent obtains prior written informed consent from both the buyer and the seller.

3. Designated Agency

To avoid the limitations of dual agency, a broker can appoint one agent in the office to exclusively represent the seller, and another agent to exclusively represent the buyer. These agents are "designated agents" and owe full fiduciary duties to their respective clients, while the employing broker acts as a dual agent.

4. Facilitators (Non-Agents)

A facilitator (also known as a transaction broker) assists the buyer and seller in reaching an agreement but does not represent either party. A facilitator does not owe the duties of Obedience, Loyalty, or Disclosure, but they do owe the duty of Confidentiality regarding price, terms, and motivation, as well as Accountability for funds.

Common Fiduciary Breaches

To give you an idea of where real estate professionals most often run into trouble, the following chart illustrates the primary causes of fiduciary-related complaints filed with regulatory boards.