A Colorado broker who represents a buyer in the purchase of a commercial property should advise the buyer to:
Why B. Consult with appropriate experts — including an attorney for legal matters, a CPA for tax implications, and engineers for physical condition — beyond what the broker can provide Is Correct
Answer B: B. Consult with appropriate experts — including an attorney for legal matters, a CPA for tax implications, and engineers for physical condition — beyond what the broker can provide
In Colorado, a broker engaged by a buyer must promote the buyer's interests, counsel the buyer on material benefits and risks the broker actually knows about, and advise the buyer to obtain expert advice on material matters that are beyond the broker's expertise (C.R.S. 12-10-405). In a commercial purchase, that points the buyer to an attorney for legal issues, an accountant for tax questions, and engineers or inspectors for physical condition. A broker should not tell the buyer to rely only on the broker.
Exam Tip: Agency
Agency questions are among the most tested on the exam. Focus on the difference between client and customer, and memorize the fiduciary duties (OLD CAR). Watch for questions that try to blur the line between a general agent and a special agent.
Key Agency Terms in This Question
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
1031 ExchangeA tax-deferred exchange allowing investors to sell one investment property and reinvest proceeds in a like-kind property while deferring capital gains taxes.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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Key Terms to Know
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
1031 ExchangeA tax-deferred exchange allowing investors to sell one investment property and reinvest proceeds in a like-kind property while deferring capital gains taxes.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Math Concepts
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