Agency Relationships and Disclosures Practice Question
Question
An investor is comparing two properties involving fiduciary duty of loyalty. Which statement best describes fiduciary duty of loyalty? (Item 61)
Answer choices
- A. Put the client’s interests ahead of the licensee’s personal interest.
- B. It applies only to commercial property and never to residential transactions.
- C. It is controlled only by local custom rather than by law, contract, or professional duty.
- D. It is valid only when the buyer pays cash and no lender is involved.
Correct Answer
A. Put the client’s interests ahead of the licensee’s personal interest.
Explanation
The correct answer is A because fiduciary duty of loyalty requires candidates to put the client’s interests ahead of the licensee’s personal interest. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: easy
- Domain: Agency Relationships and Disclosures
- Objective: fiduciary duty of loyalty