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 topic begins with one mnemonic, OLD CAR, and one distinction: the difference between what you owe a client and what you owe a customer. Learn both frameworks and many fiduciary-duty questions become much easier.

What are fiduciary duties?

A fiduciary duty is the high level of trust and good faith an agent owes the principal they represent. OLD CAR summarizes the common-law duties for exam study. The client relies on the agent's honesty, skill, and loyalty, but putting the client first never authorizes illegality, dishonesty to another party, concealment of information that must be disclosed, or conduct outside the agency's lawful scope.

The six fiduciary duties: OLD CAR

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.

Many fiduciary-duty scenarios become easier once you identify which OLD CAR duty is involved. Study them in three natural pairs.

Obedience and loyalty

Obedience means carrying out the client's lawful instructions faithfully and promptly. The limit is the word lawful. If a client instructs an agent to discriminate, conceal a required disclosure, or commit another illegal act, the agent must refuse.

Loyalty means placing the client's interests above the agent's own without violating the law or duties owed to others. It bars self-dealing and undisclosed conflicts, such as secretly buying the client's property through a relative. When a scenario shows personal gain competing with the client's interest, loyalty is usually the tested duty.

Disclosure and confidentiality

These two duties move information in opposite directions. Disclosure runs toward the client: an agent must share material information that could affect the client's decision, such as a stronger offer or a known transaction issue. Withholding material information from the client can breach 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. Under the common-law exam model, the duty not to misuse a former principal's confidential information survives termination of the agency. Do not equate termination automatically with closing: the agreement and facts determine when agency ends, and accounting, recordkeeping, payment, or other obligations can continue. TRELA does not state a universal duration for OLD CAR confidentiality, so this point is labeled as common-law exam doctrine rather than a quoted Texas statute.

What Texas does say about confidential information

Section 1101.651(d) is the statutory version, written for a broker acting as intermediary and for any license holder appointed under Section 1101.560. It prohibits three specific disclosures:

1. telling the buyer or tenant that the seller or landlord will accept a price less than the asking price, unless otherwise instructed in a separate writing by the seller
2. telling the seller or landlord that the buyer or tenant will pay a price greater than the price submitted in a written offer, unless otherwise instructed in a separate writing by the buyer
3. disclosing any confidential information, or any information a party has specifically instructed the broker in writing not to disclose

The third one has three exceptions, and the last is the one candidates miss. The prohibition does not apply where the license holder is instructed otherwise in a separate writing, where disclosure is required by TRELA or a court order, or where the information materially relates to the condition of the property.

Read that last exception carefully. In Section 1101.651(d)'s intermediary context, the confidentiality prohibition expressly yields when information materially relates to the property's condition. More generally, a client's confidentiality instruction never authorizes a license holder to conceal a fact that current law requires the holder to disclose.

The same paragraph adds two more prohibitions for an intermediary: do not treat a party dishonestly, and do not violate the chapter.

Can a listing agent reveal that the seller is desperate or divorcing?

Usually no. A seller's urgency, divorce, financial pressure, job transfer, illness, and lowest acceptable price are classic examples of information that can weaken the seller's negotiating position. If the listing broker represents the seller, protecting that information falls under confidentiality and loyalty.

The clean exam answer is this: do not reveal the seller's motivation or bargaining limit without authorization unless disclosure is legally required.

Scenario: the seller needs a fast sale

The seller tells the listing agent, “I accepted a job in another state. I have to sell this month, and I would take $25,000 less.” A buyer's agent asks whether the seller is flexible.

The listing agent may present offers and negotiate under the seller's instructions. The agent should not volunteer the relocation deadline or bottom-line price. Those facts belong to the seller, and revealing them could damage the seller's position.

If the seller gives permission to disclose a specific fact, the agent must follow the scope of that permission. In an intermediary transaction, Section 1101.651(d) uses the stricter phrase separate writing for permission to reveal price flexibility or other confidential information.

Scenario: the seller is getting divorced

A buyer asks why the owners are selling. The listing agent knows the owners are divorcing and want to close quickly.

The personal reason for selling is not automatically a property-condition fact. The agent should not treat curiosity as permission to disclose it. A safe answer can describe only information the seller authorized for marketing or negotiation.

A separate issue arises if a divorce affects title, signatures, authority to sell, or closing requirements. Those facts may require attention from the broker, title company, or an attorney. A license holder should not interpret a divorce decree or give legal advice. The important distinction is between private motivation, which is normally protected, and a transaction or title problem that must be handled lawfully.

Scenario: the seller wants a defect kept secret

The seller tells the agent not to mention recurring foundation movement because “the buyer did not ask.” This is not ordinary negotiating confidentiality. A client cannot use confidentiality or obedience to force a license holder to hide information that current law requires the holder to disclose.

Use this three-question filter:

Accounting and reasonable care

Accounting covers money and property. An agent who handles earnest money, deposits, or other funds must account for them, keep money belonging to others separate, and report it accurately. This connects directly to trust accounts and commingling.

Reasonable care is the competence duty. Missing a contract deadline, failing to present an offer, or giving careless advice can breach it. The standard is not perfection. It is the skill and diligence reasonably expected of a real estate professional.

Client versus customer duties

Full fiduciary loyalty and advocacy run to the client, the principal the agent represents. A customer does not receive that loyalty, but the license holder must deal honestly and fairly, convey accurate information, and make disclosures current law requires. The exact disclosure duty depends on the fact, role, transaction, and governing provision.

An agent must never misrepresent facts or conceal information the law requires to be disclosed. Texas specifically permits discipline for failing to disclose a known significant defect to a potential buyer. That does not turn the customer into a client or create a duty to advocate for the customer's negotiating position. See material facts and disclosure for the defect rules.

What does a buyer's agent owe an unrepresented seller?

A buyer's agent owes OLD CAR duties to the buyer, not to an unrepresented seller. The agent must make the representation clear, treat the seller honestly and fairly, provide accurate information, make required disclosures, and respond within two calendar days. The agent must not give the seller negotiating advice or imply that the seller receives fiduciary confidentiality.

For example, if the seller asks, “What price should I accept?” the buyer's agent should explain that the agent represents the buyer and cannot advise the seller. The agent may deliver communications, answer factual questions without misleading the seller, and suggest independent brokerage or legal help. If the seller volunteers a bottom-line price, the agent's disclosure duty runs to the buyer-client, but the agent must not trick or mislead the seller into revealing it.

The agency relationships guide and Texas minimum-services guide cover representation, non-representation, and duties to other parties in depth.

How Texas frames these duties

Texas states minimum duties in its own words, and they are not the six OLD CAR labels. The Information About Brokerage Services notice, which Texas license holders provide when the law requires it, prints A BROKER'S MINIMUM DUTIES REQUIRED BY LAW and lists four:

1. Put the interests of the client above all others, including the broker's own interests
2. Inform the client of any material information about the property or transaction received by the broker
3. Answer the client's questions and present any offer to or counter-offer from the client
4. Treat all parties to a real estate transaction honestly and fairly

Line those up against OLD CAR and the fit is partial, which is the point worth learning.

What the statutory four leave out

Notice what is missing from the statutory four: obedience, confidentiality, and accounting. That does not make them irrelevant, since they come from the common law of agency and from other TRELA provisions. It does mean a Texas question asking what the law requires as a minimum has a different answer from a question asking for the fiduciary duties.

Notice also that the fourth duty is not owed to the client alone. Honesty and fair dealing run to all parties, which is the statutory version of the client-versus-customer line above.

Two Texas rules beyond the mnemonic

Rule 535.156 confirms that the principal relationship is fiduciary, requires significant information to flow to the principal, and requires honesty, fairness, and accurate information when dealing with others. Rule 535.157 adds a two-calendar-day response requirement for the principal, another party's license holder, or an unrepresented party. A response may be an acknowledgment. It does not require legal advice, negotiation, or a completed decision.

For the exam, treat OLD CAR and these Texas rules as related layers, not identical lists. The duties to clients and minimum services guide covers the statutory details.

How to study fiduciary duties for the exam

Study fiduciary duties with the OLD CAR mnemonic and one distinction. Memorize the six common-law exam duties: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Then hold the client-versus-customer line: full fiduciary loyalty goes to the client, while honesty, fairness, accurate information, and legally required disclosure protect others. Remember that obedience covers lawful instructions only and that the common-law confidentiality duty can survive termination of agency.

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 common-law exam mnemonic for Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. It is a useful national-exam framework, not a claim that one Texas statute codifies a six-item list. Texas separately states minimum duties through the IABS notice, TRELA, and TREC rules.

Which fiduciary duty continues after the transaction closes?

Confidentiality is the expected exam answer. More precisely, the common-law duty not to misuse confidential information can survive termination of agency. Closing and termination are not always the same event, and accounting, recordkeeping, payment, or other obligations may also remain. TRELA does not state a universal OLD CAR confidentiality period.

What is the difference between a client and a customer?

A client is the principal the agent represents and receives fiduciary loyalty and advocacy. A customer does not receive that loyalty, but the license holder must treat the customer honestly and fairly, provide accurate information, and make disclosures current law requires. Texas reinforces the distinction on the IABS notice, whose fourth minimum duty is to treat all parties honestly and fairly.

Can a client instruct an agent to keep a defect quiet?

No instruction authorizes concealment of a fact the law requires the license holder to disclose. In the specific intermediary and appointed-license-holder context of Section 1101.651(d)(3), the confidentiality restriction expressly contains an exception for information that materially relates to the property's condition.

Can a listing agent tell a buyer that the seller is desperate or divorcing?

Not without the seller's authorization unless disclosure is legally required. Motivation, urgency, personal circumstances, and a bottom-line price can weaken the seller's negotiation and are normally protected. A property defect, title problem, court order, or other legally significant fact must be analyzed separately.

Practice questions

1. An agent's client privately says they will accept as low as $290,000, though the property is listed at $310,000. After the agency ends, 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. 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 teaches exam-level concepts, not legal advice. It was reverified September 1, 2026 against IABS 1-2 effective January 1, 2026, current TRELA, TREC Rules 531.2, 535.156, and 535.157, TREC's 2026 guidance, and Pearson VUE outline #094401. Common-law doctrine is labeled as such, and Texas requirements are tied to their controlling provisions.

• The six fiduciary duties captured in OLD CAR, their definitions, and the client-versus-customer distinction come from the common law of agency as applied to real estate. There is no Texas statute that lists six duties, and none is cited here.
• The rule that confidentiality survives the end of the agency is likewise common law and standard practice. TRELA and the TREC rules do not state it and put no duration on the duty. It is identified as such on the page rather than presented as Texas law.
• The four minimum duties required by law are printed on the Information About Brokerage Services notice, TREC No. IABS 1-2, which is adopted by reference at 22 TAC Section 531.20.
• That the license holder's relationship with the principal is that of a fiduciary, the duty to convey all known information affecting the principal's decision on offers, and the written-agreement carve-out once the principal is under contract, are TREC Rule 22 TAC Section 535.156. The two-calendar-day response deadline is 22 TAC Section 535.157.
• The prohibitions on disclosing that a seller will take less or a buyer will pay more, the prohibition on disclosing confidential information, and the three exceptions including where the information materially relates to the condition of the property, are Texas Occupations Code Section 1101.651(d).
• The duty to inform a party of material information including the receipt of an offer, and to answer questions and present offers, is Section 1101.557(b).

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, What Changes in 2026 About Buyer and Tenant Representation
• 22 TAC Chapters 531 and 535, TREC Rules
• Pearson VUE Texas Real Estate Content Outlines

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.