Colorado broker Kim represents buyer-client Greg in the purchase of a rural property in Weld County. Greg signs a buyer agency agreement. During the transaction, Greg instructs Kim to tell the seller that Greg has no financing contingency, even though Greg has not yet secured financing. Kim knows this statement is false. What is the correct analysis of Kim's duties in this situation?
Correct Answer
C) Kim must refuse to make the false statement because it would constitute misrepresentation, which is unlawful regardless of client instruction
In Colorado, the duty of obedience requires a broker to follow only lawful client instructions. Making a knowingly false statement to the seller — that Greg has no financing contingency when he actually does — constitutes misrepresentation, which is prohibited under C.R.S. § 12-10-217 and CREC rules. No fiduciary duty, including loyalty or obedience, requires or permits a broker to engage in fraudulent or misleading conduct. Kim must refuse the instruction and may need to counsel Greg on lawful negotiating strategies instead. Compliance with this unlawful instruction would expose Kim to license discipline, civil liability, and potential criminal liability.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.
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