Key Takeaways
- Transaction-broker is Colorado's default relationship - unique among states
- Transaction-brokers owe limited duties to BOTH parties equally
- TB cannot advocate for either party or disclose confidential information
- Transaction-brokers must treat all parties honestly and fairly
- The relationship can be created by default or by written agreement
Transaction-Broker Relationships
The transaction-broker relationship is unique to Colorado and is the DEFAULT relationship when no written agency agreement exists.
What is a Transaction-Broker?
A transaction-broker:
- Assists both parties to complete the transaction
- Does NOT advocate for either party
- Remains neutral throughout the transaction
- Provides limited services to both sides
Transaction-Broker vs. Dual Agent
| Transaction-Broker | Dual Agent (Other States) |
|---|---|
| No advocacy for either party | May attempt to balance advocacy |
| Limited duties only | Attempts full fiduciary to both |
| Default relationship | Requires consent |
| Neutral facilitator | Conflicted representative |
Key Distinction: Transaction-brokers never have fiduciary duties - they have LIMITED statutory duties. This is different from dual agency where a broker attempts (often unsuccessfully) to owe fiduciary duties to both parties.
Creating Transaction-Broker Relationship
By Default
- Occurs automatically without written agency agreement
- When broker begins working with a party without signing listing or buyer agency
By Written Agreement
- Parties can choose transaction-brokerage
- May be used when same brokerage works with both buyer and seller
- Documented in writing
Transaction-Broker Duties (Statutory)
Per C.R.S. 12-10-407, transaction-brokers must:
| Duty | Description |
|---|---|
| Perform terms of agreement | Honor any written commitments |
| Present all offers | Timely submission required |
| Disclose adverse facts | Material facts about condition |
| Account for money | Proper handling of deposits |
| Use reasonable skill | Competent assistance |
| Keep information confidential | Cannot share party's confidential info |
| Suggest professional assistance | Recommend attorneys, inspectors, etc. |
What Transaction-Brokers CANNOT Do
No Advocacy
Transaction-brokers cannot:
- Advise either party on negotiation strategy
- Tell seller what price to accept
- Tell buyer what price to offer
- Suggest terms favorable to one party
- Help one party gain advantage over the other
Confidential Information
Transaction-brokers must NOT disclose:
| Never Disclose | Protected Information |
|---|---|
| To Seller | Buyer's highest price, motivation, urgency |
| To Buyer | Seller's lowest price, motivation, urgency |
| To Either | Financial weaknesses of the other |
What TB CAN Provide
- Factual market data (comparables, days on market)
- General information about process
- Access to properties
- Help completing standard forms
- Coordination of inspections, appraisals, closing
In-House Transactions
When one brokerage has both buyer and seller:
Option 1: Transaction-Brokerage for Both
- Both parties receive transaction-broker services
- No advocacy for either
- Most common solution in Colorado
Option 2: Designated Brokerage
- Different brokers assigned to each party
- Each broker provides single agency
- Employing broker becomes neutral
Option 3: Refer One Party
- One party is referred to different brokerage
- Maintains single agency for remaining party
- May involve referral fee
Liability Considerations
Transaction-brokers still face liability for:
- Failure to disclose adverse material facts
- Misrepresentation
- Failure to present offers
- Trust account violations
- Unauthorized practice of law
What is a key characteristic that distinguishes transaction-broker from dual agency?
A transaction-broker learns the buyer can afford $50,000 more than their offer. The broker should: