Tom is a Colorado licensed broker associate representing a seller in Adams County. During a walkthrough, Tom personally observes what appears to be staining consistent with a prior oil spill near the detached garage, though the seller has not mentioned it and the Seller's Property Disclosure form does not reference it. The seller insists there is nothing to disclose and instructs Tom to proceed with marketing. Under Colorado law, what is Tom's most appropriate course of action?

Correct Answer

C) Advise the seller that the observed staining is a potential material fact that may require disclosure, and if the seller refuses to address it, Tom may need to withdraw from the representation

Under Colorado license law (C.R.S. § 12-10-201 et seq.) and CREC rules, a broker associate has duties that include avoiding misrepresentation and not assisting a client in concealing material facts from buyers. Tom's personal observation of staining consistent with an environmental spill constitutes potential knowledge of a material fact. Tom must advise the seller that this condition may be a material fact requiring disclosure on the CREC Seller's Property Disclosure form. If the seller refuses to disclose a known or reasonably apparent material environmental condition, Tom faces a conflict between his client's instructions and his professional and legal obligations, and withdrawal from the representation may be necessary to avoid participating in a misrepresentation or omission that could harm buyers.