Colorado Real Estate Broker Exam — All Questions
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A real estate licensee owes a client the duties of loyalty, confidentiality, obedience to lawful instructions, and full accounting. These duties arise from the:
- a.Doctrine of caveat emptor
- b.Fiduciary relationship created by agency✓
- c.Statute of limitations
- d.Rule against perpetuities
When an agency relationship is formed, the agent owes the principal fiduciary duties, often summarized as care, obedience, loyalty, disclosure, accounting, and confidentiality. These duties place the client's interests ahead of the agent's own. Caveat emptor, by contrast, is a limitation on what buyers can expect and is not the source of agent duties.
An agent represents the seller in a transaction. Which action would most clearly breach the agent's duty of loyalty to that seller?
- a.Presenting all written offers to the seller
- b.Disclosing known material defects to a buyer
- c.Following the seller's lawful pricing instructions
- d.Telling a buyer the seller will accept far less than the list price without the seller's authorization✓
The duty of loyalty and confidentiality means the agent must not reveal the seller's bargaining position, such as the lowest price the seller will accept, without authorization. Presenting all offers and following lawful instructions are proper duties owed to the seller. Disclosing known material defects to a buyer is required by law and is not a breach.