Colorado Contracts #108891-Discussion & Results of the Case

Video Transcription

So, what is an adverse material fact? If information is contrary to the interest of one of the parties, then the broker must disclose it to all of the parties.  Keeping that in mind, what should have been done here? To the extent the broker was unclear about whether the known fact affected the physical  property was either adverse or material, the broker should have erred on the side of disclosing the fact.  Circumstances that may psychologically impair or stigmatize real property need not be disclosed.  And without the informed consent of the client, brokers must not disclose facts or suspicions regarding circumstances which may psychologically impact or stigmatize real property.  This would include homicide on the property or another felony, a suicide, or a resident who had HIV or AIDS.  In this case, the invoice should have been relayed in its entirety, the broker should have disclosed adverse material facts to all parties, and the broker should have ensured  that the seller was aware of their obligations to repair or replace defective systems. And what were the results of this case?  The licensee's violations were unworthy incompetent practice, 1210.217.1QCRS, disclosure of a material fact, misrepresentation, and violation of any commission rule.  The results of the case were a fine of $5,000, coursework in ethics and contracts, a public  censure, license suspension, and the licensee was placed under a high level of supervision. The licensee, the listing agent in this case, put the seller at risk and failed in their  fiduciary duties. The seller was subject to civil damages from the buyer. Do you believe that the seller agent is subject to civil suit from the seller?  Keep in mind in all real estate transactions, brokers are obligated to disclose known material facts to all of the parties involved in the transaction.  This is set forth in Colorado revised statutes under 1210.404, 1210.405, 1210.407, and 1210.407.2B,  covering single agents engaged by sellers, landlords, buyers, or tenants, as well as transaction brokers.

Video Summary

The video discusses the concept of adverse material facts in real estate transactions. It explains that if information is contrary to the interest of any party involved, brokers must disclose it to all parties. The video emphasizes that brokers should disclose facts even if they're unsure about their impact on the property. However, certain circumstances that may psychologically impair or stigmatize the property need not be disclosed without the client's consent. In a specific case discussed, the broker failed to disclose adverse material facts, resulting in violations and penalties, including a $5,000 fine, ethics and contracts coursework, license suspension, and supervision. The seller faced potential civil damages from the buyer. The video highlights the obligation of brokers to disclose known material facts to all parties involved in a transaction.

Keywords

adverse material facts

real estate transactions

brokers

disclosure

obligation