Colorado broker Lisa represents seller Dan under a seller agency agreement. During a showing, the prospective buyer tells Lisa that he is going through a divorce and must purchase a home quickly, and that he could pay significantly more than the asking price if needed. What must Lisa do with this information?
Correct Answer
B) Disclose the information to Dan because her fiduciary duty of disclosure runs to her client
Lisa represents Dan as a seller-client, so her fiduciary duties — including the duty of disclosure — run to Dan, not to the buyer. The buyer's urgent motivation and willingness to pay above asking price are material facts that directly affect Dan's negotiating position and decision-making. Under Colorado's agency law (C.R.S. § 12-10-403), Lisa must disclose all known information that is material to the client's transaction. The buyer has no agency relationship with Lisa, so the buyer's shared information is not protected by confidentiality owed to the buyer.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
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