Fiduciary Duties (OLD CAR) for the Texas Exam

Fiduciary duties are what an agent owes the client they represent, and they are among the most tested ideas in the Contracts and Agency area. This spoke builds on the agency relationships and types spoke, which explains who the client is, and it is part of the Contracts and Agency area.

The whole topic fits one mnemonic, OLD CAR, plus one distinction: the difference between what you owe a client and what you owe a customer. Learn those, and the questions answer themselves. Let us build it.

What are fiduciary duties?

Snippet answer: A fiduciary duty is the high level of trust and good faith an agent owes the principal they represent. It means putting the client's interests ahead of the agent's own and everyone else's. These duties arise from the agency relationship, so they are owed to the client, not to the other party. The six duties are captured in the mnemonic OLD CAR.

A fiduciary is someone entrusted to act in another person's best interest, and a real estate agent is a fiduciary for the client they represent. That trust is the reason the law holds agents to a high standard: the client relies on the agent's honesty, skill, and loyalty.

Because these duties flow from the agency relationship, they are owed to the client, the principal the agent represents. The other party in the deal, the customer, is owed a lower set of duties covered later. For now, hold the frame: fiduciary duties are what you owe the person you represent.

The six fiduciary duties: OLD CAR

Snippet answer: The six fiduciary duties are remembered as OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. Obedience means following lawful instructions. Loyalty means putting the client first. Disclosure means telling the client material facts. Confidentiality means protecting the client's private information. Accounting means handling money properly. Reasonable care means acting competently.

The mnemonic OLD CAR holds all six duties, so learn it cold.

Every fiduciary question is really asking which of these six a scenario involves. Once you can name the duty in a fact pattern, the answer usually follows. Take them in three natural pairs.

Obedience and loyalty

Snippet answer: Obedience means an agent must promptly follow the client's lawful instructions, but not any unlawful ones, such as an instruction to discriminate. Loyalty is the strongest duty: the agent must act solely in the client's best interest, ahead of the agent's own interest and everyone else's. Loyalty bars self-dealing and undisclosed conflicts, like an agent secretly buying the client's listing.

These two are the put-the-client-first duties. Obedience means you carry out the client's lawful instructions faithfully and promptly. The limit is the word lawful. If a client instructs you to do something illegal, like refuse to show the home to a protected class, obedience does not require it, and following it would violate the law.

Loyalty is the heart of the fiduciary relationship. You must act solely in the client's best interest, placing it above your own and above the other party's. That bars self-dealing, like buying the client's property yourself without full disclosure, and it bars undisclosed conflicts of interest. When an exam scenario shows an agent putting personal gain first, loyalty is the duty being tested.

Disclosure and confidentiality

Snippet answer: Disclosure means the agent must tell the client all known material facts that could affect the client's decision, such as a better offer or a defect. Confidentiality means the agent must protect the client's private information, like their motivation or bottom-line price. Confidentiality is unique because it survives after the relationship ends, so an agent cannot reveal a former client's secrets even after closing.

These two duties are about information, and they pull in opposite directions. Disclosure runs toward the client: you must share everything material you know that could affect their decision, like the arrival of a stronger offer or a fact about the buyer. Withholding material information from your own client breaks this duty.

Confidentiality runs the other way: you must guard the client's private information from the other side. That includes their motivation to sell, their lowest acceptable price, and personal circumstances. The exam point that matters most is duration. Confidentiality survives the end of the agency, so you cannot reveal a past client's bottom line even after the deal closes. Most duties end at closing, but confidentiality continues.

Accounting and reasonable care

Snippet answer: Accounting means the agent must properly handle and report all money and property belonging to others, keeping funds separate and never commingling them. Reasonable care means the agent must act with the competence, skill, and diligence of a capable real estate professional, protecting the client from foreseeable harm. Careless mistakes, like missing a deadline, can breach the duty of reasonable care.

Accounting covers money and property. An agent who touches earnest money, deposits, or other funds must account for every dollar, keep client money separate from the agent's own, and report it accurately. This ties directly to the rules on trust accounts and commingling, where mishandling funds becomes a violation.

Reasonable care is the competence duty. You must bring the skill and diligence of a capable professional, protecting the client from foreseeable harm. Blowing a contract deadline, failing to present an offer, or giving careless advice can breach it. The standard is not perfection, but the ordinary competence expected of a real estate professional.

Client versus customer duties

Snippet answer: Full fiduciary duties are owed only to the client, the party the agent represents. A customer, the other party, is owed a lower set: honesty, fair dealing, and disclosure of known material facts about the property. The key difference is loyalty and confidentiality, which are owed only to the client. An agent must be honest with a customer but does not put the customer's interests first.

This distinction decides many exam questions, so keep it sharp. The client is the principal you represent, and they get the full OLD CAR treatment. The customer is the other party, and they get honesty, fairness, and disclosure of material facts about the property, but not loyalty or confidentiality.

So an agent must never lie to a customer or hide a known defect, because honesty and material-fact disclosure are owed to everyone. But the agent still works for the client, not the customer. The duty to disclose defects to a customer connects to material facts and disclosure.

How Texas frames these duties

Snippet answer: Texas reinforces the common-law fiduciary duties with statutory rules. Under TRELA, a broker who represents a party must provide certain minimum services, and license holders must deal honestly and disclose material information. The fiduciary duties in this spoke and the statutory minimum services work together, so a Texas agent must satisfy both the common-law OLD CAR duties and the Occupations Code requirements.

Texas does not replace the fiduciary duties, it reinforces them. The common-law OLD CAR duties still apply, and on top of them the Texas Occupations Code adds statutory obligations, including the minimum services a broker who represents a party must provide and the duty to deal honestly.

For the exam, treat the two layers as complementary. The duties to clients and minimum services guide covers the Texas statutory side, while this spoke covers the underlying fiduciary duties. A Texas agent is expected to meet both.

How to study fiduciary duties for the exam

Snippet answer: Study fiduciary duties with the OLD CAR mnemonic and one distinction. Memorize the six duties: obedience, loyalty, disclosure, confidentiality, accounting, reasonable care. Then hold the client-versus-customer line, where full duties go to the client and only honesty, fairness, and material-fact disclosure go to the customer. Remember that obedience covers lawful instructions only, and confidentiality survives the deal.

Lock in OLD CAR first, then practice naming the duty in a scenario. An agent following an illegal instruction is an obedience limit. An agent buying the client's home in secret is loyalty. Hiding a client's bottom line is confidentiality, and revealing it later still breaks it.

Keep this spoke tied to its neighbors. The agency relationships and types spoke sets up who the client is, the minimum services guide adds the Texas statutory duties, and the Contracts and Agency hub ties the area together.

Frequently asked questions

What does OLD CAR stand for? OLD CAR is the mnemonic for the six fiduciary duties an agent owes a client: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. Obedience is following lawful instructions, loyalty is putting the client first, disclosure is sharing material facts, confidentiality is protecting private information, accounting is handling money properly, and reasonable care is competent, diligent work.

Which fiduciary duty continues after the transaction closes? Confidentiality. Most fiduciary duties, like obedience and reasonable care, end when the agency relationship ends, usually at closing. But confidentiality survives, so an agent may not reveal a former client's private information, such as their motivation or lowest acceptable price, even after the deal is done.

What is the difference between a client and a customer? A client is the party the agent represents and is owed all six fiduciary duties. A customer is the other party and is owed only honesty, fair dealing, and disclosure of known material facts about the property. The key difference is that loyalty and confidentiality are owed only to the client, not to the customer.

Must an agent obey every instruction from a client? No. The duty of obedience covers only lawful instructions. If a client directs the agent to do something illegal, such as refusing to show a property to a protected class or concealing a known material defect, the agent must not follow it. Obedience never requires breaking the law.

Practice questions

1. An agent's client tells the agent, privately, that they will accept as low as $290,000, though they are listed at $310,000. After closing, the agent tells a friend the client's bottom line. Which duty did the agent breach? A. Accounting B. Obedience C. Confidentiality D. Reasonable care

Answer: C. Confidentiality protects the client's private information, including their bottom-line price, and it survives after the relationship ends. Accounting concerns money handling (A), obedience concerns lawful instructions (B), and reasonable care concerns competence (D).

2. A seller instructs their agent not to show the home to buyers of a certain religion. What should the agent do? A. Obey, because of the duty of obedience B. Refuse, because obedience covers only lawful instructions C. Obey, but disclose it later D. Ask the broker to obey instead

Answer: B. The duty of obedience applies only to lawful instructions. Refusing to show a home based on a protected class is illegal discrimination, so the agent must not follow the instruction. Obedience never requires an unlawful act.

3. Which duty is owed to a customer, the party the agent does NOT represent? A. Loyalty B. Confidentiality C. Full advocacy of the customer's interests D. Honesty and disclosure of known material facts

Answer: D. A customer is owed honesty, fair dealing, and disclosure of known material facts about the property. Loyalty, confidentiality, and full advocacy (A, B, C) are fiduciary duties owed only to the client the agent represents.

4. An agent secretly buys their client's listed property through a relative without telling the client. Which fiduciary duty is most directly breached? A. Loyalty B. Accounting C. Reasonable care D. Obedience

Answer: A. Loyalty requires acting solely in the client's best interest, which bars self-dealing and undisclosed conflicts like secretly buying the client's property. Accounting concerns funds (B), reasonable care concerns competence (C), and obedience concerns instructions (D).

Sources and methodology

This guide was written from general agency-law principles and Texas sources, and reverified on July 21, 2026. It teaches the exam-level concepts, not legal advice.

• The six fiduciary duties, captured in the OLD CAR mnemonic, and their definitions come from the common law of agency as applied to real estate and as described by the National Association of Realtors and state license law.
• The rule that confidentiality survives the end of the agency, while other active duties end at closing, comes from agency-law principles.
• The client-versus-customer distinction, where full fiduciary duties are owed to the client and honesty and material-fact disclosure are owed to a customer, comes from agency law and real estate practice.
• The Texas statutory layer, including broker minimum services and honest-dealing duties, comes from the Texas Occupations Code, Chapter 1101 (TRELA), and TREC rules.

Verify all duty rules against the current Texas statutes and TREC guidance before you rely on them in practice.

Official source links

• Texas Occupations Code Chapter 1101 (TRELA)
• TREC, Information About Brokerage Services
• TREC, Rules and Laws
• NAR, Fiduciary Duties Guidance

This article is exam-prep education for the Texas real estate sales agent license. It is not legal advice, and it does not create an agency relationship. Fiduciary duties and Texas statutory obligations are technical and depend on current law and the specific facts. Always confirm the current Texas statutes and TREC rules and work under the supervision of your sponsoring broker before acting.