In Colorado, an agent's 'duty of disclosure' requires disclosing all material facts to:
Why B. The party the agent represents and also disclosing known material facts adversely affecting the property to the other party Is Correct
Answer B: B. The party the agent represents and also disclosing known material facts adversely affecting the property to the other party
In Colorado, a seller's agent owes duties to the seller, but the agent also must disclose to any prospective buyer all adverse material facts actually known by the broker, subject to the psychologically-impacted-property statute (C.R.S. 12-10-404(3)). The agent must disclose to the seller adverse material facts actually known to the broker. The duty rests on actual knowledge, and the broker has no duty to inspect the property for the buyer. A broker cannot conceal known defects from a buyer, even when representing the seller.
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
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Key Terms to Know
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
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.
State-Specific Concepts
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