If a broker authorizes a sales associate to deal with the principal, who holds fiduciary duties?

• A. Only the broker has fiduciary duties
• B. Both the broker and sales associate have fiduciary duties
• C. Only the sales associate has fiduciary duties
• D. Neither has fiduciary duties

Answer: (B)

When a broker authorizes a sales associate to deal with the principal, fiduciary duties extend to both parties. The broker owes fiduciary duties to the client because the broker is the licensed representative directly entrusted with the client’s interests. The sales associate, acting under the broker’s authority, is also bound by fiduciary duties as an agent of the broker, so these duties flow to the client through the broker. This means both must act with loyalty, confidentiality, full disclosure of known material facts, obedience to lawful instructions, and careful handling of funds—under the broker’s supervision to ensure the duties are fulfilled. In short, the client is protected by the fiduciary obligations of both the broker and the sales associate in the transaction.