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Loyalty

A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his principal. This duty
obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of
all other interests, including the broker’s own self-interest. A corollary of this duty of loyalty is a duty to
avoid steadfastly any conflicts of interest that might compromise or dilute the broker’s undivided loyalty to
his principal’s interests. Thus, a real estate broker’s duty of loyalty prohibits him from accepting
employment from any person whose interests compete with, or are adverse to, his principal’s interests.
A classic example of breach of this duty of loyalty by a real estate broker is a broker who purchases property
listed with his firm and then immediately resells it at a profit. Such conduct ordinarily is perfectly
appropriate and lawful by persons acting “at arm’s length.” But a fiduciary will be deemed to have “stolen” a
profit opportunity rightfully belonging to his principal and thus to have breached his duty of loyalty.

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