What's 'fiduciary' duty of real estate agent?

Q. I heard recently that financial advisers must now be fiduciaries, and that real estate agents have always been. Exactly what does that mean?

A. State laws can vary in this matter, but usually the real estate agent has a special fiduciary relationship to the principal (the client) for whom he or she is acting. Years ago, this principal was almost always the seller of real estate, but now some brokers represent buyers instead.

The other party in a transaction is merely a customer, to whom only fairness and honesty are owed - and sometimes an honest answer might be "I can't tell you that."

To the principal are owed a set of fiduciary duties, which include obedience to the principal's lawful instructions, for example: "Don't tell anyone I have to sell this week or face foreclosure."

The duty of loyalty requires putting the client's interests above anyone else's, including the agent's.

Disclosure involves keeping the principal aware of everything in the transaction that the agent knows - or in some cases, should have known.

The duty of accounting covers the handling and disclosure of any money involved in a transaction.

And the agent owes the principal confidentiality, which means the agent may not discuss the principal's personal information with customers.

The buyer needs to assume that everything said to a seller's real estate agent may be reported to the seller. In the same fashion, sellers wouldn't tell anything to a buyer's agent that they wouldn't want the buyer to know.

One exception: Anything anyone knows about a serious hidden defect in the property must be disclosed to potential buyers, no matter for whom the agent is working.

Q. We've been looking at houses for several weeks now, and we found one we like. Do you have any advice about what to do next? Prompt attention will be appreciated.

A. By now, you may be experts on the appropriate price for your target house. If not, ask the real estate agent for information about comparables, similar homes in the neighborhood that recently changed hands. Don't bother asking how much the owners paid for the place - that's not relevant.

It's time to fill out a purchase offer. Oral agreements don't count.

You may need to make your promise to buy contingent on or subject to obtaining your loan, or a satisfactory inspector report, or your father's approval - all within a specific, short time.

If you have a home to sell before you can buy, that might tie up the seller's home for longer. For such a contingency it's customary to include an escape clause (a kick out). It gives the seller the right to continue showing the house. If another good written offer comes in, you could be required to remove the contingency and make your offer firm or else drop out.

Other matters set out in your purchase offer will include the specifics on items you expect to remain, things that might be regarded as the seller's personal property. You head off misunderstandings by listing carpeting, fireplace equipment, wood stoves, swingsets and the like, if you want them.

Your printed contract will provide for complications you probably haven't thought of. What if the place were to burn down just before the closing? What if your lender's appraiser thinks it isn't worth what you offered? What if there's a full tank of heating oil in the basement?

Your offer is typically accompanied by a substantial deposit, known as a binder or earnest money. This proves you mean business. It should be held by a broker or lawyer, not the seller.

You ask for a prompt answer, within a day or two. And good luck!

Q. My dad came to live with us after his second wife passed away. At the time, he was 79 years old, and now he is 92. Since he has been with us, he has not filed income tax. I heard that after 70 you do not have to file. Is this true? Will it be taxed after he passes? Or how does that work?

A. For once I'm not going to say, "See a lawyer." This time it's "See a tax accountant. Promptly."

In the unlikely event you find out that what you heard was true, please let me know. Promptly.

I'm your father's age, and here I've been paying income tax all along.

• Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.

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