Broker Ethan represents seller Williams under a listing agreement. Buyer Davis, who has no broker, approaches Ethan directly and asks him to also represent Davis as a buyer's agent. Ethan provides both parties with the required written dual agency disclosure, and both sign consent forms. During negotiations, Davis tells Ethan that he is willing to pay up to $520,000 for the property, though his initial offer will be $480,000. Williams has separately told Ethan he will not accept less than $490,000. Ethan does not disclose either party's confidential information. The deal closes at $495,000. Which statement most accurately describes Ethan's conduct?
Correct Answer
C) Ethan acted properly by maintaining confidentiality for both parties while facilitating the transaction
Ethan acted in full compliance with Colorado's dual agency rules (C.R.S. § 12-10-401 et seq.). A dual agent must maintain confidentiality of each party's negotiating position and financial motivations, and may not use one party's confidential information to benefit the other. By keeping Davis's maximum price confidential from Williams and keeping Williams's minimum price confidential from Davis, Ethan fulfilled his duty of confidentiality to both parties. The transaction closed at a mutually acceptable price, and Ethan's conduct was proper.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
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