Do Real Estate Agents Have a Legal Duty to Protect Client Documents?

When a client hands you their bank statement showing proof of funds, they're trusting you with more than a number — they're trusting you with their Social Security number, account numbers, home address, and net worth.

But here's the question most agents never ask: What happens to that document after the transaction closes?

The Fiduciary Duty Most Agents Overlook

The REALTOR® Code of Ethics is clear: agents must "preserve the confidentiality of personal information provided by clients" — not just during the transaction, but after it ends.

This isn't just an ethical nicety. It's a legal obligation backed by state laws, federal regulations like FACTA, and an increasing patchwork of state data privacy laws.

What Information Must Be Protected?

According to NAR guidelines and state regulations, protected information includes:

• Social Security numbers
• Bank account numbers
• Financial records and balances
• Personal contact information
• Any information the client has designated as confidential

The Real Risk

Think about how many people see a proof of funds document in a typical transaction:

• Your assistant
• The listing agent
• The escrow officer
• The lender
• The title company

Each handoff is a potential exposure point. And if that document is stored in your email, CRM, or cloud drive without protection, you're one data breach away from a lawsuit.

The Simple Solution

Before sharing any client financial document, redact the sensitive information that isn't needed for the transaction. A proof of funds letter doesn't need to show full account numbers — just the balance and the bank's verification.

Modern redaction tools make this a 30-second task. The liability protection lasts forever.

But choose your tool carefully

Not all redaction tools are equal. Many require uploading your client's documents to remote servers — creating the same exposure you're trying to avoid.

When your fiduciary duty is on the line, the privacy of your tools matters.