Implications of Zimmerman on Buyer Brokerage in Colorado
| Jurisdiction | Colorado,United States |
| Citation | Vol. 13 No. 6 Pg. 992 |
| Pages | 992 |
| Publication year | 1984 |
1984, June, Pg. 992. Implications of Zimmerman on Buyer Brokerage in Colorado
In May 1983, the Colorado Court of Appeals issued an opinion in the buyer brokerage case of Velten v. Robertson v. Zimmerman,(fn1) the repercussions of which have spawned numerous uncertainties, especially among those in the real estate profession. Several representatives of the real estate community have published articles concerning the impact of the Zimmerman case. Some of these articles have raised specific questions about the amount of legal, as well as fiscal, liability that brokers may be exposing themselves to when they deal with both the seller and buyer in a brokerage situation. This article attempts to quell some concerns and issue some precautions manifested by the Zimmerman decision.
Initially, it is important to review the specific facts of the case, because the case turns particularly on those facts.
Zimmerman, a real estate salesperson, contacted the seller to see if she would be willing to sell her apartment building. (The opinion implies that there had been no previous contact between Zimmerman and the buyers; in other words, Zimmerman contacted the seller first.) The seller would not give Zimmerman an exclusive listing, but did indicate that she might consider selling the property. Zimmerman then contacted the buyers to see if they were interested in the property. The initial contact with the seller was one of the factors which formed the basis for the existence of the principal-agent relationship.
Zimmerman and the buyers prepared a receipt and option contract, which the buyers signed. These actions form the basis for a principal-agent relationship between Zimmerman and the buyers. Zimmerman then presented the contract to the seller, who also signed.
The seller suggested some changes in the contract and an addendum was written. Both the buyers and seller signed the addendum. There was no provision in either the contract or the addendum relating to the payment of a commission by the seller because Zimmerman indicated to the seller that the buyers would pay.
Unknown to the seller, the buyers agreed to execute a note and deed of trust in favor of Zimmerman for $5,000 (in lieu of a cash commission) and also agreed that if the property were sold within one year, Zimmerman could receive 50 percent of the profits. Neither the salesperson nor the buyers disclosed the details of this arrangement to the seller.
When the seller refused to close, the buyers sued for specific performance. The seller argued before the trial court and on appeal that specific performance should not have been granted because Zimmerman failed to disclose his personal financial interest in the property. She further argued that, because Zimmerman was her agent and the agent of the buyers, he breached his fiduciary duty to disclose.
...
To continue reading
Request your trial