Colorado buyers and brokers: transaction-broker, agent or customer

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Kooky

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A buyer who walks into a home with a Colorado broker may be that broker's client, may be assisted by a neutral go-between, or may simply be a customer of someone who works for the seller. The three positions look the same from the doorstep. They differ in what the broker owes, in what the broker may keep to itself, and in who ends up paying the fee.

Colorado's statute does not start from agency. Under section 12-10-403 of the Colorado Revised Statutes, a broker is a transaction-broker unless a written agreement makes the broker an agent, and section 12-10-406 forbids dual agency outright. The Colorado Real Estate Commission then supplies the paperwork: a set of definitions, a disclosure form for buyers who have not signed an agency agreement, and a binding buyer contract whose current version became mandatory on 1 January 2026.

This guide follows those texts in order: the default, the three statuses a buyer can hold, the forms that record them, the way a firm with several brokers handles both sides of one sale, and the compensation terms of the Commission's Exclusive Right-to-Buy Listing Contract. The statute sections were read on a third-party republication of the Colorado Revised Statutes, not on the General Assembly's own site, in an edition marked current through Fall 2025; their wording is paraphrased here and has not been compared with the official text.

The starting point: a transaction-broker unless agreed otherwise

Section 12-10-403 says a broker may act in a transaction in one of two ways: as a single agent, or as a transaction-broker. Its second subsection supplies the default. The broker is a transaction-broker unless a written agreement between the broker and the party to be represented establishes a single agency relationship.

The consequence for a buyer follows from that default: on the wording of the subsection, it is the written agreement, and not the broker's help with viewings or an offer, that makes the broker the buyer's agent.

The same section allows relationships to differ from one deal to the next. A broker may work with the same person as a seller's agent in one sale and as a transaction-broker or a buyer's agent in another, provided each relationship is set up as the statute requires. It also lets the parties sign written contracts that add duties beyond those the statute lists.

Brokers are not obliged to offer every relationship. Section 12-10-408 requires anyone acting as a broker to adopt a written office policy that identifies and describes the relationships the firm offers the public, and says a broker need not offer any or all of them. A firm may therefore work only as a transaction-broker, or only as an agent. If a member of the public asks about a relationship the firm does not offer, the same section requires the broker to hand over a written definition of it, in the wording issued by the Commission.

Three positions a Colorado buyer can be in

The Commission's Definitions of Working Relationships form sets out the vocabulary. A buyer's agent, it says, works solely on behalf of the buyer, promotes the buyer's interests with the utmost good faith, loyalty and fidelity, and negotiates on the buyer's behalf as an advocate. A transaction-broker assists the buyer or the seller or both throughout a transaction without being an agent or advocate for any of the parties. A customer is a party with whom the broker has no brokerage relationship at all, because that party has not engaged the broker either as agent or as transaction-broker.

The form also marks the paperwork threshold for each. A separate written buyer agency agreement is required for agency. For a transaction-broker, it states that no written agreement is required.

The customer position deserves a second look, because it is the one a buyer can fall into without noticing. As an illustration of the form's definition, and not a rule quoted from it: a buyer who calls the broker named on a for-sale sign is talking to someone already engaged by the seller, and where that buyer has not engaged the broker, the buyer is a customer.

What a transaction-broker owes

Section 12-10-407 opens by saying that a transaction-broker is not an agent for either party. It then lists what the broker must do all the same. The broker must perform the terms of any written or oral agreement made with a party, and must exercise reasonable skill and care. The statute spells that care out: presenting all offers and counteroffers promptly; advising the parties and suggesting expert advice on material matters beyond the broker's own expertise; accounting promptly for money and property received; keeping the parties fully informed; and helping them comply with the contract through to closing.

Two disclosure duties run in opposite directions. To prospective buyers, a transaction-broker must disclose adverse material facts it actually knows, including facts about title, physical condition, defects and environmental hazards. To prospective sellers, it must disclose adverse material facts it actually knows about the buyer's financial ability to perform, and about whether the buyer intends to occupy the property as a principal residence. Actual knowledge sets the limit. The section adds that the broker has no duty to inspect the property, to verify statements, or to investigate the buyer's finances.

What a buyer does not get is an advocate. The Commission's definition says so in terms, and the confidentiality list in section 12-10-407 shows how the neutrality works in practice. Without the informed consent of all parties, a transaction-broker may not disclose that a buyer would pay more than the price offered, that a seller would accept less than the asking price, what motivates either party, or that a party would accept financing terms other than those offered. The broker holds both sides' bargaining positions and gives neither away.

The section also confirms what a transaction-broker remains free to do: show a buyer other properties, list competing properties, show the same property to other prospective buyers, and act as a single agent or transaction-broker in other transactions. It may not create subagents.

What changes when the broker is the buyer's agent

Section 12-10-405 describes a broker engaged by a buyer as a limited agent. Some duties repeat those of a transaction-broker: performing the written agreement, using reasonable skill and care, presenting offers promptly, accounting for money. The difference lies in one sentence. The buyer's agent must promote the interests of the buyer with the utmost good faith, loyalty and fidelity.

The statute gives that phrase content. The agent must seek a price and terms acceptable to the buyer, must advise the buyer on the material benefits and risks of a transaction that the agent actually knows about, and must recommend expert advice where a matter goes beyond the agent's expertise. A transaction-broker advises the parties. A buyer's agent advises the buyer.

Confidentiality is also one-sided. Without the buyer's informed consent, the agent may not disclose that the buyer would pay more than the offered price, the buyer's motivations, the buyer's readiness to accept other financing terms, or material information about the buyer, unless the law requires disclosure or silence would amount to fraud.

Agency does not buy everything. The section states that a buyer's agent owes the seller no duty except one: to disclose adverse material facts the agent actually knows, including facts about the buyer's financial ability to perform and whether the buyer intends to live in the property as a principal residence. A buyer's agent in Colorado therefore cannot conceal a known weakness in the buyer's finances. The agent has no duty to inspect the property or to verify the seller's statements, and need not look for other properties while the buyer is under a purchase contract. The agent may show the same home to competing buyers.

The paperwork, in the order it arrives

Section 12-10-408 fixes when each document appears, and the trigger is the same every time: before the broker performs any of the brokerage activities the licensing statute lists.

For the first and third cases, the statute requires a signature block so that the buyer can acknowledge receipt, and it states that the disclosure and the acknowledgment do not, by themselves, form a contract. If the buyer declines to sign, the broker notes the refusal on a copy and keeps it. Signing an acknowledgment is therefore a record of having been told, not a commitment.

For the seller's-agent case, the written disclosure must also tell the buyer that the buyer is not vicariously liable for the agent's acts unless the buyer approves, directs or ratifies them. And a broker who already has a relationship with one party must promptly tell other potential parties that it exists.

All written disclosures must state that different relationships are available.

Reading the Brokerage Disclosure to Buyer

The Commission's Brokerage Disclosure to Buyer is the form a buyer sees when no agency agreement has been signed. The copy published by the Colorado Division of Real Estate carries the mark "Mandatory 8-24". It says in capitals that it is not a contract, and it records that broker and buyer have not entered into a buyer agency agreement.

One box, and only one, is ticked from three:

• Customer. The form lists the tasks the broker will perform for this buyer: showing a property, and preparing and conveying written offers, counteroffers and agreements to amend or extend the contract. It adds that the broker is neither the agent nor the transaction-broker of the buyer.
• Customer for the broker's listings, transaction-brokerage for other properties. On homes the broker has listed, the buyer is a customer. On every other home, the broker assists the buyer as a transaction-broker. The broker is not the buyer's agent in either case.
• Transaction-brokerage only. The broker assists the buyer as a transaction-broker throughout, and is not the buyer's agent.

A second pair of boxes records whether the firm has several licensed brokers or one, a point taken up in the next section. The form also has the buyer consent to confidential information being passed to the supervising broker for supervision.

The form's last page is easy to miss and matters most to the buyer's purse. It is a Buyer's Broker's Compensation Agreement, which lets a transaction-broker and a buyer fix a fee without an agency contract. It states that compensation charged by brokerage firms is not set by law and is fully negotiable. The fee is a success fee, a percentage of the purchase price or a dollar amount, earned when the broker's services produce a contract acceptable to the buyer and payable at closing. It is waived if the sale fails to close because the seller defaults through no fault of the buyer, and not waived if the buyer defaults. The broker may ask the seller's firm or the seller to pay it, and the buyer owes any unpaid part only if the broker disclosed that amount in writing before the buyer contracted with the seller.

One firm, both sides: designated brokerage and the dual agency ban

Section 12-10-406 is a single sentence: a broker shall not establish dual agency with any seller, landlord, buyer or tenant. No consent form cures it. The question is then how a firm proceeds when its own listing attracts its own buyer.

The answer in section 12-10-403 is designation. In a firm with more than one licensed individual, the employing broker, or an individual broker it employs or engages, is designated to work with the party; more than one individual may be designated. The relationship and its duties belong to the designated broker alone. They do not extend to the employing broker, to the firm, or to other brokers who were not designated. Knowledge is not imputed to those who were not designated either.

Two designated brokers in one firm may therefore each act as a single agent, one for the seller and one for the buyer, in the same sale, and the statute says this does not create dual agency for the employing broker. Section 12-10-408 requires any written agreement to say that the relationship exists only with the designated broker, and both sections preserve the employing broker's duty to supervise and its vicarious liability.

Where the same individual is on both sides, the statute leaves two routes. The broker may be a transaction-broker for both parties. Or the broker may be a single agent for one party and treat the other as a customer. Being a single agent for both is excluded.

The Commission's buyer contract turns this into choices made in advance. If the buyer's designated broker later has a relationship with the seller, the contract's standard buyer-agency clause keeps the broker as the buyer's agent with the seller as a customer, and provides that a written "Change of Status" notice converts the broker into a transaction-broker for both. A buyer who does not want that conversion can tick a "Buyer Agency Only" option instead.

The Exclusive Right-to-Buy Listing Contract

Where the disclosure form is a notice, this is a contract, and it says so in capitals: it is a binding contract. The Commission adopted the current version, form BC60, on 7 October 2025 and made its use mandatory from 1 January 2026. Its first section describes it as an exclusive, irrevocable contract between the buyer and the brokerage firm.

Despite its name, the form is not only an agency agreement. Two boxes at its head read Buyer Agency and Transaction-Brokerage, and the relationship follows the box ticked. If neither is ticked, the transaction-broker clause applies, which mirrors the statutory default.

The contract defines its own scope. It carries its own definition of a purchase and a clause on lease options. The listing period starts on a date the parties fill in and runs to the earlier of a completed purchase or the stated expiry date, plus any written extensions. A day ends at 11.59 pm Mountain Time. Whether a deadline that falls on a weekend or a holiday moves to the next day depends on a box; if no box is ticked, it does not move.

The buyer takes on duties too. The buyer agrees to negotiate for the property only through the broker, and states whether an agreement with another broker is already in force. The broker will not order surveys, inspections or other outside services unless the buyer agrees in writing to pay for them. The buyer's identity is not disclosed to third parties unless the buyer ticks the box that permits it.

Ending the contract early is tied to default: section 12 deals with default and cancellation. Disputes go to mediation, which ends after 30 calendar days, and the contract has a clause awarding fees to the prevailing party. Anything typed into the "Additional Provisions" section, the form warns, has not been approved by the Commission.

How the contract sets the fee, and who pays it

Section 7 of the contract offers a menu of ways to set the fee.

The success fee follows the same default rules as the short compensation agreement: waived if the seller defaults without fault of the buyer; not waived if the buyer defaults, in which case it is payable on default and no later than the scheduled closing date.

Who pays is a separate choice. Under the first option, the broker may ask the seller's brokerage firm or the seller to pay, and the buyer is obliged to pay whatever part of the success fee they do not, but only if the broker discloses that amount in writing before the buyer contracts with the seller. Under the second, the buyer pays the whole fee and the firm may not take compensation from the seller's side or any other source unless the buyer agrees in writing. If no box is ticked, the first option applies. Section 8 adds that the firm takes no compensation or mark-ups from third parties without the buyer's written consent.

A worked example shows the first option at work. Assume a purchase price of US$600,000 and a success fee written in at 2.5 per cent: the fee is US$15,000. Assume the seller agrees to pay 2 per cent, or US$12,000. The unpaid part is US$3,000. Under the contract the buyer owes that US$3,000 only if the broker disclosed it in writing before the buyer signed with the seller. These percentages are illustrative; the form prints none.

The holdover clause extends the fee past expiry. It applies to a property the broker negotiated on and whose address or description the broker submitted to the buyer in writing during the listing period, if the buyer contracts for it within a number of calendar days that the parties fill in. A further box decides whether the fee is owed when another firm, under its own exclusive agreement, earns compensation on that property during the holdover. If that box is left empty, the buyer owes nothing in that case.

In Colorado the form a buyer signs decides the relationship, and the boxes ticked on it decide the fee. An unticked box is still a choice, made by the form's default.

What the texts leave open

The statute and the forms set the framework and leave the figures blank. No source read for this guide fixes a rate, a length for the listing period or a number of holdover days; each is negotiated and written in.

Nor do these texts say which relationship suits a given buyer. A firm's office policy may narrow the choice before the conversation starts, and the designated-broker rules mean the answer can differ between two brokers under one roof.

The penalties a broker faces for breaching these sections, and the Commission's detailed rules on the timing of written disclosure, were not among the pages read and are left out here. Forms are revised from time to time, as the January 2026 buyer contract shows, so the version date printed on a form is the first thing to check against the Commission's current list.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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