Colorado broker associate Nina has been working with buyer-clients for three months to find a home. The clients finally go under contract on a property in Boulder. After the transaction closes, the clients call Nina and ask her to recommend a contractor for renovations. Nina refers them to her brother-in-law's construction company without disclosing the family relationship. Which fiduciary duty has Nina most likely violated?
Correct Answer
A) Duty of loyalty, by failing to disclose a personal interest that could affect her recommendation
The duty of loyalty requires a Colorado broker to place the client's interests above all others, including the broker's own personal or financial interests. By referring clients to her brother-in-law without disclosing the family relationship, Nina has a personal interest in the referral that could influence her recommendation. Even if the referral was well-intentioned, the failure to disclose the conflict of interest violates the loyalty duty. Under Colorado law, brokers must disclose any personal interest they have in a recommendation or transaction that could affect their objectivity.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
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