Colorado broker associate Ryan is working as a buyer's agent for clients purchasing a mountain property near Steamboat Springs. The seller's listing sheet does not mention water rights. Ryan knows that in Colorado, water rights are separate from land ownership. Which fiduciary duty requires Ryan to investigate and inform his buyers about the water rights situation before closing?
Correct Answer
B) Duty of reasonable care and diligence, because competent representation includes knowing Colorado water law
The duty of reasonable care and diligence requires a Colorado broker to exercise the level of skill and knowledge expected of a competent real estate professional in Colorado. Because Colorado follows the prior appropriation doctrine (C.R.S. § 37-92-101 et seq.), water rights are entirely separate from surface land ownership and can be sold independently. A competent Colorado broker representing buyers of rural or mountain property must investigate and disclose the status of water rights, as failing to do so could result in the buyers purchasing land without any legal water access — a potentially catastrophic omission.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A relationship where a listing broker authorizes other brokers to act as agents of the seller, extending the seller's agency relationship to cooperating brokers.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
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