Real Estate Brokers, Escrow and Title Insurance
Real estate brokers (and real estate agents) have a special relationship with their clients. This is called an “agency relationship”. The relationship is created when the client authorizes the broker to conduct a transaction with third persons on behalf of the client and to exercise a degree of discretion in effecting the purposes of the client. The relationship establishes a fiduciary relationship. As a fiduciary the broker has the same obligations of diligence and faithful service as a trustee. The real estate broker becomes a fiduciary in relations with the client and assumes duties of skill, care and diligence, obligations, and high standards of good faith.
An escrow is where a legal document is delivered by a seller to a third person to be held until the occurrence of a condition, at which time the legal document is handed over to the buyer. Any deposit of money or documents into escrow becomes irrevocable once there is a binding and enforceable contract between the parties supported by adequate consideration (or value). The seller retains the risk of loss for damage to the property by fire or other calamity until either title or possession is transferred to the buyer. Title insurance is a contract of indemnity that indemnifies (or holds harmless) the insured against a loss for a condition or fact that existed on the date the policy was issued. Common policy provisions indemnify for defects, liens, encumbrances, and easements of record, and provide for marketability of title.
Real estate brokers (and real estate agents) have a special relationship with their clients. This is called an “agency relationship”. The relationship is created when the client authorizes the broker to conduct a transaction with third persons on behalf of the client and to exercise a degree of discretion in effecting the purposes of the client. The relationship establishes a fiduciary relationship. As a fiduciary the broker has the same obligations of diligence and faithful service as a trustee. The real estate broker becomes a fiduciary in relations with the client and assumes duties of skill, care and diligence, obligations, and high standards of good faith.