Colorado broker Rachel is working as a transaction broker assisting buyer Mike in purchasing a condo. During her research, Rachel discovers that the HOA has a pending special assessment of $8,000 that has not been publicly announced yet. What is Rachel's obligation regarding this information?
Correct Answer
B) Rachel must disclose the adverse material fact to Mike because transaction brokers owe this duty to all parties.
Under C.R.S. § 12-10-401 et seq., even in a transaction brokerage relationship, the broker has a statutory duty to disclose all adverse material facts actually known to the broker. A pending special assessment of $8,000 is clearly an adverse material fact that would affect the buyer's decision. This duty applies to transaction brokers even though they do not act as advocates for either party.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
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