What defines a fiduciary relationship?

A fiduciary relationship is fundamentally characterized by trust and confidence, where one party is obligated to act in the best interest of another. In real estate, this often occurs between a broker and a client, where the broker is entrusted with the client's financial and personal interests regarding property matters. This relationship requires the fiduciary to provide loyalty, full disclosure, and care in handling the client’s affairs.

Given this context, defining a fiduciary relationship as one of trust and confidence is accurate because it emphasizes the ethical obligations and responsibilities involved. The parties enter this relationship with the expectation that the fiduciary will prioritize the principal’s interests above their own. This contrasts significantly with the other options, which do not capture the intrinsic nature of a fiduciary relationship. For example, a relationship based solely on monetary transactions lacks the depth of trust required; a legally binding contract, while important, does not inherently establish trust; and a temporary agreement does not encompass the ongoing commitment and accountability that characterize fiduciary duties.