In Colorado, real estate brokers and their salespersons are required to disclose the type of working relationship they have with buyers in a real estate transaction.
There are several types of relationships that are possible and you should understand these at the time a broker or salesperson provides specific assistance to you in buying real estate. There are (1) seller's agent, (2) buyer's agent and and (4) transaction broker.
The first two of these are commonly referred to as agency relationships and carry with them the legal duties and responsibilities on the broker/salesperson as well as on the buyer and seller. The transaction broker places the broker in the role of a "middleman" who assists both the parties in the transaction. The buyer is advised to consult legal counsel before entering into any agency or transaction broker relationship.
A seller's agent acts solely on behalf of the seller. A seller's agent has fiduciary duties to the seller which includes reasonable care, undivided loyalty, confidentiality and full disclosure. Seller's agents often work with buyers, but do not represent the buyer. However, in dealings with a buyer, a seller's agent must act honestly and fairly. A seller's agent must also disclose any defects of a material nature affecting the physical condition of the property which are actually known by the broker.
A buyer's agent acts solely on behalf of the buyer. A buyer's agent has fiduciary duties to the buyer which include reasonable care, undivided loyalty, confidentiality and full disclosure. However, in dealings with a seller, a buyer's agent must act honestly and fairly and may not give false information concerning the financial condition of the buyer.
A buyer wishing to be represented by a buyer's agent is advised to enter into separate buyer agency contract.
Transaction Broker (Non-Agency)
The concept of the transaction broker is new in Colorado. The transaction broker does not represent either purchaser or seller in a fiduciary capacity as agent, but assists the buyer separately, or the buyer and seller together, in the transaction. A broker or salesperson acting as a transaction broker has the duty to act fairly and honestly to both buyer and seller, but does not owe fiduciary dues to either side. A Broker or salesperson acting as a transaction broker must obtain the expressed written consent of the buyer, or both parties if both are to be assisted. Any agreement to act as a transaction broker must state (1) that the broker or salesperson does not represent either buyer or seller; (2) the specific types of assistance the transaction broker will offer; and (3) what information, if any, the transaction broker is allowed to disclose to the other party.