Term
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Definition
| A division of the Colorado Department of Regulatory Agencies, is composed of 5 members appointed by the Governor of Colorado. It protects the public by regulating the industry through licensing and examination, maintaining The master file on all licensees, investment and enforcement, auditing and education. |
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Term
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Definition
| Is any legal entity who engages in the act of selling, renting, exchanging, buying, negotiating, offering to sell or listing real estate, for compensation or in consideration of compensation. |
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Term
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Definition
| Maintained by the state treasurer, under the direction of the commission, for judgments that arise out of civil suits, and only covered unpaid out of pocket losses, unpaid court costs, and attorney fees. This fund was "swept" by the legislature during the economic crisis and is no longer solvent. No new cases are being accepted and in fact the final payment out of the recovery fund has been made. In essence this fund no longer exists in Colorado. |
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Term
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Definition
| Federal law passed in 1994, creating a registration and notification procedure to alert the public as to The presence of certain types of convicted sex offenders living in a neighborhood. |
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Term
| What is a Single Licensing State |
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Definition
| All real estate licensees are brokers |
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Term
| Employing Broker Definition |
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Definition
| Under Colorado law the 'employing broker' is responsible for supervision over new broker licensees. New associate brokers cannot work independently until they have been supervised by an employing broker for a period of two years. |
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Term
| Responsibilities of an Employing Broker (4) |
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Definition
1) Maintain trust accounts and trust account records.
2) Maintain company transaction records.
3) Develop an office policy manual and ensure compliance with it.
4) Supervise all new licensees. |
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Term
| What laws cover ethical standards |
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Definition
| Not license law. The law of crimes (public wrongs) and of torts (private wrongs) controls the behavior of individuals as it relates to their conduct with others. A Code of Ethics is voluntarily adopted and imposed on members of organizations. REALTORS® is such an organization. |
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Term
| How does the Real Estate Commission protect the public? (4) |
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Definition
1. Regulating the industry through licensing and examinations;
2. Maintaining a Master File on all licensees;
3. Enforcement of license law by investigating complaints and taking disciplinary action;
4. Auditing broker escrow/trust accounts and transaction records |
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Term
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Definition
A real estate broker license must be held by a legal entity who engages in the following acts for compensation or in consideration of compensation.
1. Selling, renting, exchanging, buying real estate or any interest therein.
2. Negotiating the sale, rent, or exchange of real estate or any interest therein
3. Offering to sell rent, exchange or buy real estate or any interest therein.
4. Listing to sell rent, exchange or buy real estate or any interest therein.
5. Auctioning real estate or any interest therein.
6. Dealing in options to sell, rent, exchange or buy real estate or any interest therein.
7. Or a fee collected to help tenants find, or inform about, possible housing.
8. All of the above pertains also to leases.
9. Selling, exchanging, or buying businesses if the businesses affect real property or leases.
10. Performing the above as an employee of an owner of real estate. (See exemptions below) |
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Term
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Definition
| An option dealer is any person or other legal entity that, for compensation, offers or uses an option of any real estate interest for the purposes of purchasing, selling, exchanging, renting or leasing real estate or interests therein. |
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Term
| Length of Initial License |
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Definition
| Three years, commencing on the issuance date and expiring three years from the date of issuance |
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Term
| Who does not need a real estate license (8) |
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Definition
1) Any person, firm, partnership, limited liability company or association acting personally on its own behalf. (This includes regularly salaried employees and officers of corporations.)
2) Attorney-in-fact (power of attorney) without compensation.
3) Public official doing his duties.
4) Trustee, administrator, etc., doing his authorized duties.
5) Dealing in oil and gas leases.
6) A regularly salaried employee of an apartment building.
7) On-site mangers of condominiums carrying out their regular duties and who are regularly salaried.
8) A real estate broker licensed in another state who receives a payment in a co-op relationship. |
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Term
| Who must appoint an active broker to be the designated broker |
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Definition
| Corporations, limited liability companies, and partnerships must appoint an active broker to be its designated broker. The broker does not need to be a manager of a partnership or officer of the corporation. The requirements are the same as for any other broker license. |
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Term
| Reasons the Commission can punish a broker (16) |
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Definition
1) Knowingly making any misrepresentation or false or misleading advertising.
2) Influencing, persuading or inducing another person with false promises.
3) Violating the "Colorado Consumer Protection Act," Article 1 of Title 6, C.R.S.
4) Acting for more than one party without all parties' acknowledgment.
5) Acting for more than one party in a transaction without the knowledge of all parties thereto.
6) Not placing, as soon as possible, any deposit money with the employing broker.
7) Failure to keep good accounting of deposit money.
8) Commingling of funds of others with broker's own money; diverting funds of others; failure of keeping other's funds in an escrow or trustee account.
9) Failure in providing a purchaser/seller a closing statement.
10) Failure to maintain possession of Commission prescribed documents for a period of four years.
11) Paying a commission to an unlicensed person for carrying out real estate activities. There is an exception for a finder's fee paid to an out-of-state broker.
12) Violating the Colorado or Federal Fair Housing laws.
13) Failure to exercise reasonable supervision over the activities of licensed employees.
14) Receiving any secret or undisclosed amount of compensation.
15) Causing any payment to be made from the recovery fund.
16) Failure to document the completion of the continuing education requirements. |
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Term
| How many votes are needed from the Commission to deny, suspend, or revoke a license |
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Definition
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Term
| Who can pay a commission to a licensed broker and when is it due |
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Definition
| All commissions must be paid to the brokerage company. It is unlawful for a licensed broker associate to receive any compensation from anyone other than the employing broker (brokerage company). Disputes over payment to the broker associate by the employing broker are a matter for the courts, not the Real Estate Commission. A commission is not due the broker until a ready, willing, and able purchaser actually completes the purchase or at such time as the seller refuses to allow said purchaser to purchase. No commission is due if the sale does not occur because of title defects. |
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Term
| What is the Recovery Fund |
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Definition
| The state treasurer has maintained a Real Estate Recovery fund, which is under the direction of the Real Estate Commission. The fund was maintained for judgments arising out of civil suits, and only covered unpaid out-of-pocket losses, unpaid court costs, and unpaid reasonable attorney fees. |
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Term
| Maximum Liability of Recovery Fund |
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Definition
| The fund is liable for a maximum of $50,000 per transaction (no matter how many individuals, licensees or parcels make up the transaction). A licensee can only account for a maximum of $150,000 of fund monies no matter how many transactions. |
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Term
| Implications of payment from the Recovery Fund |
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Definition
| The license of the broker shall be automatically revoked if any payment is made from the recovery fund. |
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Term
| Future of the Recovery Fund |
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Definition
| At this time no new fees are being collected from new licensees to replenish the recovery fund, and the recovery fund will cease to exist once all currently pending transactions are completed. |
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Term
| Mortgage Broker Licensing Requirements |
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Definition
| As of January 1, 2008, The Mortgage Brokers Registration Act requires all persons acting as Mortgage Brokers to apply for licensure every three years. An applicant for licensure must submit, along with the application fee, a criminal history background check from CBI and disclosure of all administrative discipline taken against the applicant. All applicants are required to post a bond of twenty-five thousand dollars, to be maintained at all times. Applicants shall be issued or denied within twenty-one days. Applicants will also be required to maintain Errors and Omission Insurance. |
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Term
| Mortgage Broker Duties (3) |
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Definition
A mortgage broker shall have a duty of good faith and fair dealing in all transactions with a borrower, including:
1) The duty to not recommend or induce the borrower to enter into a transaction that does not have a reasonable, tangible net benefit to the borrower.
2) The duty to make his/her best efforts to recommend, broker, or originate a residential mortgage loan that takes into consideration the borrower’s income, existing debts and other obligations.
3) The duty not to commit any unconscionable act or practice. |
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Term
| Persons Exempt from a Mortgage Broker License (3) |
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Definition
1) Government employees
2) Sellers offering private financing
3) Banks and attorneys rendering service in the course of practice |
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Term
| Requirements when acting as a Mortgage Broker and a Real Estate Broker (6) |
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Definition
1) Before providing mortgage services to the borrower, a mortgage broker shall make a full and fair disclosure to the borrower.
2) Carry on such mortgage broker business activities and shall maintain such person’s mortgage broker business records separate and apart from the real estate broker activities. Such activities shall be deemed separate and apart even if they are conducted at an office location with a common entrance and mailing address.
3) Each business must be clearly identified by a sign visible to the public.
4) Each business is physically separated within the office facility.
5) No deception of the public as to the separate identities of the broker business firms shall result.
6) Every contract between a mortgage broker and a borrower shall be in writing and shall contain the entire agreement of the parties. |
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Term
| Disclosure Requirements of a Mortgage Broker |
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Definition
| Within three business days after receipt of a loan application or any moneys from a borrower, a mortgage broker shall provide to each borrower a full written disclosure containing an itemization and explanation of all fees and costs that the borrower is required to pay in connection with obtaining a residential mortgage loan, and specifying the fee or fees that inure to the benefit of the mortgage broker. A good-faith estimate of a fee or cost shall be provided if the exact amount of the fee or cost is not determinable. |
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Term
| Mortgage Broker Compensation Rules |
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Definition
A mortgage broker shall not receive a fee, commission, or compensation of any kind in connection with the preparation, negotiation, or brokering of a residential mortgage loan unless a borrower actually obtains a loan from a lender on the terms and conditions agreed to by the borrower and mortgage broker. If the borrower fails to close on the loan through no fault of the mortgage broker, the mortgage broker may charge a fee, not to exceed three hundred dollars.
A mortgage broker may solicit or receive fees for third-party provider goods or services in advance. Fees for any goods or services not provided shall be refunded to the borrower, and the mortgage broker may not charge more for the goods and services than the actual costs of goods or services charged by the third-party provider. |
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Term
| Requirements to get a Real Estate Brokers License (4) |
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Definition
1) Pass the exam.
2) Have a certification of completion (Form REC-33) for all educational requirements from a qualified school
3) A completed Fingerprint Card No. FD-258 submitted to the Colorado Bureau of Investigation for the purpose of conducting a state and national criminal history record check prior to submitting an application for a license.
4)•A written explanation covering any convictions (or nolo contendere) for misdemeanors or felony (or pending charges) or for a deferred judgment or sentence within the last 10 years. |
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Term
| Real Estate Broker required hours of study (Six Areas) |
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Definition
1) 48 hours in Real Estate Law and Practice.
2) 48 hours of Colorado Contracts.
3) 24 hours of Real Estate Closings.
4) 8 hours of Trust Accounts and Record Keeping.
5) 8 hours on Current Legal Issues
6) 32 hours in Practical Applications. |
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Term
| Continuing Education Requirements |
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Definition
| 24 hours every 3 years. The Commission requires you to take three 4-hour 'Annual Commission Update' classes in a three-year license cycle. The remaining 12 hours of CE credit can be selected from a variety of approved elective courses. You are not allowed to take more than 8 hours of CE credit in any given day. |
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Term
| Continuing Education Alternatives |
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Definition
| You can take the 24-hour Broker Reactivation Course once in any six year period (two license cycles) in lieu of the 24-hour requirement, or you can take and pass the state specific portion of the Colorado broker exam in lieu of taking any CE courses. |
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Term
| What is Rule E-42: BPO Commission Rule |
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Definition
When a real estate licensee prepares a comparative market analysis (CMA) for any reason other than the anticipated sale or purchase of the property (i.e. broker price opinion), the licensee must include a notice stating:
The preparer of this evaluation is not registered, licensed, or certified as a real estate appraiser by the state of Colorado." |
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Term
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Definition
| This rule applies to residential transactions when a licensee personally measures real estate or provides information from another source of measurement. The licensee listing property is responsible for accurately representing any source of square footage. |
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Term
| Sources of Measurement for a property |
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Definition
1) Licensee measurement. A licensee is not required to measure the square footage of a property. If the licensee takes an actual measurement it does not have to be exact, however, the licensee's objective must be to measure accurately and calculate competently in a manner that is not misleading, and:
2) Other sources of square footage. If a buyer or seller is provided information from another source for square footage, that source (whether an actual measurement, building plans, prior appraisals, assessor's office, etc.) must be disclosed in writing by the licensee, in a timely manner, including date of issuance. Such disclosure must advise the recipient to verify the information. A licensee may not provide information to a person from a source known to be unreliable and is responsible for indications pointing to obvious mis-measurement by others.
3) A licensee working with a buyer may rely on a representation of square footage by a listing broker; however, such licensee is responsible for indications of obvious mis-measurement by others. |
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Term
| Requirements if Broker Measures Property (3) |
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Definition
1) The standard, methodology or manner in which the measurement was taken must be disclosed;
2) The buyer and seller must be advised that the measurement is for purposes of marketing and is not a measurement for loan, valuation, or any other purpose; and
3) The buyer and seller must be advised that if exact square footage is a concern, the property should be independently measured. |
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Term
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Definition
| The Commission allows the supervising broker to receive confidential information so long as it has been authorized by the parties to the contract. This transferring of confidential information does not change the brokerage company's relationship with the buyer or seller (it does not make the company an Agent or T-B or the buyer or seller). |
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Term
| What is Rule E-46: Affiliated Business Arrangement |
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Definition
| Licensed Colorado real estate brokers must disclose affiliated business arrangements to any client so referred and to the Colorado Division of Real Estate. The statute requires brokers to disclose to the Commission upon entering into or changing an affiliated business arrangement. It also requires employing brokers to report such arrangement(s) at least annually. Commission Rule E-46 further requires disclosure at the time of a new application for active licensure or at the time of activation of an inactive license. |
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Term
| What is an Affiliated Business Arrangement |
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Definition
| A relationship with, or an ownership interest (more than 1%) by one provider of settlement services (real estate broker, title insurer, lender, attorney, surveyor, etc.) in another provider of settlement services. These two providers (or their associates) then refer business to one another and benefit financially from such referrals. |
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Term
| What is CP-1: HOMEBUILDER'S EXEMPTION FROM LICENSING |
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Definition
| The employee must be a regularly salaried employee and not paid on a commission basis (commission payment may be made over the base salary). The salary cannot be a draw on commissions, and deductions will be made which include state and federal withholding taxes and FICA taxes. |
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Term
| What is the Commissions positions on earned commissions |
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Definition
License law forbids a broker from paying a commission or valuable consideration, for performing brokerage functions, to any person who is not licensed as a real estate broker. Brokerage functions include negotiating the purchase, sale or exchange of real estate.
Therefore, any unlicensed person who directly or indirectly brings a buyer and seller together, is negotiating and would need a broker’s license in order to be compensated. This includes, but is not limited to, such activities as referring potential time-share purchasers to a developer or referring potential purchasers to a homebuilder. |
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Term
| What is the Commissions positions on when referral fees can be paid |
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Definition
A real estate broker can pay a referral fee if reasonable cause for payment exists. Reasonable cause exists when:
1) An actual introduction of business has been made;
2) A contractual referral fee relationship exists; or
3) A contractual cooperative brokerage relationship exists. |
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Term
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Definition
| Any fee paid by a licensee to any person or entity, other than a cooperative commission offered by a listing broker to a selling broker or vice versa. |
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Term
| What governs referral fee payments in transactions involving a federally related mortgage loan? |
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Definition
| Section 8 of the Real Estate Settlement Procedures Act (“RESPA”), governs the payment of referral fees. |
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Term
| What fees does RESPA permit? (7) |
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Definition
1) A payment to an attorney at law for services actually rendered:
2) A payment by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance;
3) A payment by a lender to its duly appointed agent or contractor for services actually performed in the origination, processing, or funding of a loan;
4) A payment to any person of a bona fide salary or compensation for goods or facilities actually furnished or for services actually performed;
5) A payment pursuant to cooperative brokerage and referral arrangements or agreements between real estate brokers (all parties must be acting in a real estate brokerage capacity);
6) Normal promotional and educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident thereto; or
7) An employer’s payment to its own employees for any referral activities. |
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Term
| What is the "Sign Crossing Rule" |
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Definition
The only time a licensee may be in contact with a seller or buyer who is currently under an exclusive listing, is when that seller/buyer makes the initial contact. The Commission wants (1) "to prevent brokers from interfering with existing listing contracts to the detriment of the owner and (2) to protect the owner from possible claims that two commissions are owed."
If the seller/buyer contacts the licensee, the licensee is allowed to negotiate the terms of a future listing. |
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Term
| What is the commissions position on interest bearing trust accounts |
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Definition
| Brokers may place entrusted money in an interest bearing account. However, the interest does not belong to the broker. On a sales contract the interest belongs to the seller if the sale is successful and to the buyer if the contracts fails. Tenants receive the benefits of interest on security deposits. ( |
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Term
| What is the commissions position on security deposits |
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Definition
| All money belonging to others, which a broker receives, must be placed in an escrow or trust account. If the broker is not going to hold the security deposit, notice to the tenant must be given in the lease (or separate written notice) so that the tenant knows who will be holding his money. Notice to tenant must also be made if the brokerage is changing hands. |
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Term
| What is the commissions position on what to do with earnest money if a dispute arrases |
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Definition
| If there is a dispute between the parties, the broker must get written instructions from the parties on what to do with the earnest money. The Commission's Earnest Money Release form should be used if all parties are to sign off after the dispute has been handled. |
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Term
| What is the commissions position on closing costs |
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Definition
| Real estate licensees must bear the cost of legal documents that the licensee has prepared. However, the licensee is not required to pay for any legal documents that are prepared by attorneys for either the buyer or seller. The Commission allows for the broker (or a third party) to charge for closing costs that do not include preparation of legal documents, so long as all parties to the contract have agreed to those costs. |
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Term
| What is the commissions position on assignment of contracts and escrowed funds |
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Definition
| Listing contracts cannot be assigned without permission of the principals. All parties to a contract must be informed of any assignments and all beneficiaries of escrowed funds must be informed of any transfer of escrowed funds. The right of entitlement of a broker to a commission, pursuant to a contract between the broker and a seller, is assignable. Earnest money is not transferable to any party except to a closing agent as immediately prior to closing as is practicable unless written authorization by seller/buyer is given. If earnest money is transferred to a new licensee, the new licensee is bound by the same Commission rules covering earnest money. (This could occur on sale of a brokerage company). |
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Term
| what documents must be kept in the broker's files |
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Definition
| Copies of all documents concerning a real estate transaction must be kept in the broker's files if the document is one that required the signature of the parties, (except deeds, notes, trust deeds and mortgages). Except for the listing contract, the selling broker on a cooperative sale must also have copies of all the documents that are signed. |
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Term
| What is the commissions position on compensation between brokers and salespersons |
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Definition
| An employing broker's relationship with broker associates concerning earned commissions is not in the purview of the Commission. The Commission will not take any action against the employing broker. |
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Term
| What is the commissions position on assignments of brokers rights to a commission |
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Definition
| Only the employing broker has any rights concerning commissions. Employed brokers cannot receive commission money from anyone except from their employing broker. Earnest money received by employed brokers must be deposited with the employing broker as soon as possible (third business day). The employing broker, after a successful closing, may assign the commission. |
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Term
| What is the commissions position on broker's payment or rebating a portion of the earned commission |
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Definition
| Rebates to purchasers/sellers are allowed, as they are parties to the contract. If a purchaser is to receive a rebate, great care must be taken as to; a) not jeopardize the sale (lenders may not allow because it could be seen as price reduction, loan-to-value ratio change, etc.) and b) should be disclosed as purchaser could hold seller liable if agent does not pay. |
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Term
| What is the commissions position on single party listings |
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Definition
A single-party listing, when placed on a Commission approved form for an Exclusive Right-to-Sell or Exclusive Agency, should have inserted in the space provided for additional provisions, one, two, or all of the following limitations:
The provisions of this listing contract shall apply only in the event a sale is made to__(name of person(s)______.
The termination date shall not be extended by the "holdover" period of this listing contract.
In the event a sale is made by the owner or their broker to any other party than the above names, this listing contract is void. |
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Term
| License laws on Modular Home sales |
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Definition
| If land is part of the transaction, then license law takes into effect and the brokerage (employing broker) is responsible for all parts of the transaction. If an owner of land just wants to purchase a modular home to put on his land, then the license law is not put into effect. |
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Term
| License laws on sales of items other than real estate |
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Definition
| The Commission takes no position when the licensee engages in selling items or services unconnected with real estate sales. If services are connected to a sale or part of property management, full disclosure should be made. |
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Term
| Can a licensee be licensed in the name of a corporation |
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Definition
| A licensee cannot be licensed in the name of a corporation; however, commissions and fees earned may be payable to the individual's corporation provided it is owned solely by the individual licensee. |
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Term
| What does license law prohibit unlicensed assistants from doing |
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Definition
| Practicing real estate brokerage, which includes negotiating the sale, exchange or lease of real property on behalf of another person. An unlicensed assistant should promptly disclose to brokers, other industry professionals (i.e. loan originators, lenders, appraisers, property inspectors, etc.) and consumers that he or she is not a broker, and disclose the name of the broker for whom the assistant works. |
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Term
| What does license law allow unlicensed assistants to do (9) |
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Definition
1) Complete forms prepared for, and as directed by a broker. Unlicensed assistants cannot independently draft legal documents such as listing or sales contracts, and they cannot offer opinions, advice or interpretations of these documents.
2) Distribute preprinted, objective information prepared by the broker about a property listed for sale.
3) Perform clerical duties, including gathering information for a listing.
4) If authorized by the seller, provide access to property, conduct showings or open houses.
5) Deliver paperwork to other brokers, buyers or sellers.
6) Deliver paperwork that requires signatures in regard to financing documents that are prepared by lending institutions.
7) Prepare market analyses on behalf of the broker, if the analyses are approved and submitted by the broker to the client with a disclosure that the market analyses were prepared by the unlicensed assistant. The broker must ensure that market analyses comply with Commission Rule E-42.
8) Collect and receipt for earnest money deposits, security deposits or rents.
9) Schedule property repairs on behalf of the broker, if there is an existing agreement that authorizes the broker to make repairs to the property. |
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Term
| What must an office policy manual contain (11) |
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Definition
Procedures for:
1) Typical real estate transactions
2) Review of contracts
3) Handling of earnest money deposits, including the release thereof
4) Back-up contract
5) Closings
6) Non-qualifying assumptions and owner financing
7) Guaranteed buyouts
8) Investor purchases
9) Identifying brokerages relationships offered to public
10) Procedures for designation of brokers who are to work with a seller, landlord, buyer or tenant, individually or in teams (Rule E-38). (Does not apply to brokerage firms that consist of only one licensed natural person.)
11) Identify and provide adequate means and procedures for the maintenance and protection of confidential information (Rule E-39) |
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Term
| What is a Licensee Buy-Out addendum |
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Definition
Basically, if a licensee is purchasing a property as an inducement to help the seller buy a different property, or plans to continue marketing the property after purchase, or the licensee uses the buy-out addendum concurrent with the listing of such property, the Commission approved form, Licensee Buy-out Addendum to the Contract to Buy and Sell Real Estate is to be used. If the licensee is truly buying for his/her personal account, it is not considered a "buy-out."
Unless one of the above situations exists, licensees are not required to use the Buy-out Addendum. If the listing licensee or broker is the purchaser then licensee must: (1) clearly sever their agency or listing relationship in writing; (2) renounce the right to any commission, fee or compensation in conjunction with acquisition of the listed property; and, (3) advise the owner to seek other assistance, representation or legal advice. |
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Term
| Commission position on preparations of market analysis and real estate evaluations used for loan purposes |
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Definition
Licensees are allowed to give "valuations" or "estimates of value" but not appraisals. The Commission will look on the competency of the licensee as to the complexity of the valuation. An Appraiser is defined as 'any person who provides for a fee or a salary an estimate of the nature, quality, value, or utility of an interest in, or aspect of, identified real estate and includes one who estimates value and who possesses the necessary qualifications, ability, and experience to execute or direct the appraisal of real property.';
"NOTICE: The preparer of this appraisal is not registered, licensed or certified as a real estate appraiser by the State of Colorado." should be part of the valuation. |
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Term
| Who can run a real estate auction |
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Definition
| There can be a third party crying the auction, but a broker must run the auction to handle all real estate matters |
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Term
| Commission position on leasing vs. property management |
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Definition
| Leasing is a onetime activity in which the broker acts as a special agent, while property management is an ongoing relationship in which the broker is a general agent. If a Broker is performing leasing, the Broker may list a property for lease, advertise the property, help screen tenants and/or help negotiate a lease. Once the lease is signed by the landlord and tenant, the Broker’s duty to the landlord or tenant is complete. With property management, a broker’s obligations continue beyond the formation of the lease. A Broker performing property management duties may also perform leasing duties; where a Broker only performing leasing duties is not performing property management duties. |
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Term
| Employing broker supervisory duties in property management |
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Definition
| The employing broker is responsible for maintaining all trust accounts and all transaction records, and the employing broker is responsible for exercising authority, direction and control over the Broker’s conformance to statutes and Commission rules. Employing broker is responsible for reviewing all contracts to ensure competent preparation and reviewing all transaction files to ensure that required documents exist |
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Term
| Which form is used when a broker provides leasing services to a tenant |
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Definition
| Exclusive Tenant Listing Contract |
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Term
| Which form is used when a broker provides ONLY leasing services to a landlord |
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Definition
| Exclusive Right to Lease Listing Contract |
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Term
| Which form is used when a broker provides leasing and management services to a landlord |
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Definition
| Brokerage Duties Addendum to Property Management Agreement with a property management agreement drafted by an attorney |
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Term
| What must be included in a property management agreement (11) |
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Definition
1) Duration of the relationship;
2) The parties;
3) Identify the property to be managed;
4) General duties performed by the Broker, including the signing of leases.
5) Fees for the manager’s services, including disclosure of any mark-ups. Before a mark-up can be charged, the Broker must obtain prior written consent to assess and receive mark-ups and/or other compensation for services performed by any third party or affiliated business entity;
6) Tenant selection criteria. If the decision to lease will be based on criminal history or financial worthiness, the property management agreement should indicate who is responsible for collecting this data and what sources will be used. Additionally, the Broker must ensure compliance with the Fair Housing and Fair Credit Acts.
7) Posting of eviction notices. If a Forcible Entry and Detainer (a/k/a eviction) is necessary, an attorney should represent the landlord in the filing of the Forcible Entry and Detainer. A Broker that files a Forcible Entry and Detainer without the assistance of an attorney may be practicing law without a license;
8) Ownership Interest. The Broker must disclose a Broker’s direct or indirect ownership interest in any company which will be providing maintenance or other services to the landlord, and any other conflicts of interest
9) Identity of the entity responsible for holding the security deposit, and if interest is earned on security deposit escrow accounts, who benefits from such interest and consent to transfer the interest to the beneficiary;
10) Process to be followed for any subsequent transfer of the landlord’s monies, security deposits, keys and documents;
11) Requirement that the landlord receive regular monthly accounting of all funds received and disbursed. |
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Term
| What form should be used by a broker prior to engaging in any services with a tenant |
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Definition
| Brokerage Disclosure to Tenant form should be used to disclose the brokerage relationships available. |
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Term
| What are broker duties when performing property management related to Trust Accounts and Record Keeping |
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Definition
| Broker account for and remit, within a reasonable time, any moneys coming into the Broker’s possession that belong to others. Rule E-1(g) defines money belonging to others as including, but not limited to, funds received by a Broker in connection with property management agreements, rent or lease contracts, and money belonging to others that is collected for future investment or other purposes. |
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Term
| How long does a property manager broker have to deposit other peoples money into an escrow account |
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Definition
| 5 business days of receipt |
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Term
| What type of account must a property manager broker deposit others money into |
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Definition
| If a Broker is going to deposit rent or security deposits into the employing broker’s trust account(s), the Broker is required to keep records relative to these monies. Rule E-1 requires that all money belonging to others that is accepted by Broker be deposited in one or more accounts separate from money belonging to the Broker, employing broker or brokerage entity. Separate trust accounts must be maintained in the name of the employing broker, or the employing broker and the licensed business entity, and the maintenance of the separate accounts is the responsibility of the employing broker. This includes rent checks. A Broker who manages fewer than seven residences may deposit rental receipts and security deposits, and disburse money for such purposes, in the “sales escrow” account, although this is not recommended. A better practice is to maintain separate accounts for property management. |
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Term
| What is the recommended number of trust accounts a broker should have for property management |
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Definition
| Two. One for security deposits and one for operating trust monies.As an alternative to trust accounts, a Broker may deposit rent monies or security deposits directly into an account owned and controlled by the landlord. |
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Term
| Can a broker deposit security deposits in a landlords account |
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Definition
| Not unless the tenant provides written authorization |
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Term
| What must be maintained in brokers record keeping system, how must it be maintained, and for how long |
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Definition
an “escrow or trust account journal”, a “ledger” and a “bank reconciliation worksheet”. The Broker must also maintain supporting records that detail all cash received and disbursed under the terms of the management and rental agreements. If a Broker has deposited personal funds into the trust account to open and maintain the trust account, the journal and “broker’s ledger record” must contain entries documenting this money. The Broker’s personal funds must also be included in the bank reconciliation worksheet.
The Broker is required to retain accurate, on-going records which verify disclosure of and consent to any mark-ups assessed or received, and fully account for the amounts or percentage of compensation assessed or received.
For Commission purposes, brokers may maintain their records in electronic format as long as the records are stored in a format that can be continually retrieved and legibly printed Brokers must maintain possession of their records for four years. |
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Term
| What sort of accounting method is required for record keeping |
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Definition
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Term
| How long can a security deposit be held |
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Definition
| The security deposit must be returned to the tenant within one month after a lease is terminated or the premises have been vacated and accepted, whichever occurs last. The lease may indicate a longer period of time to return the security deposit to the tenant; however state law does not allow this extension of time to exceed sixty days. |
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Term
| What can a security deposit be retained for |
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Definition
| nonpayment of rent, abandonment of the premises, or nonpayment of utility charges, repairs or cleaning contracted for by the tenant in the lease. If there is cause to retain any portion of the security deposit, the tenant must be provided with a written statement listing the exact reasons why all or a portion of the security deposit is being retained |
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Term
| What must be included in a property management file (6) |
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Definition
1) Copy of existing lease
2) Copy of check-in condition report
3) Keys
4) Outstanding tenant balances
5) Tenant(s) security deposit(s)
6) Owner’s funds (subject to outstanding obligations) |
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Term
| Can a broker manage their own property |
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Definition
| A Broker who manages his or her own rental property needs to disclose known conflicts of interest and that the Broker possesses a Colorado real estate broker’s license. The Broker also needs to use a lease drafted by an attorney for the transaction, along with disclosing in writing to the tenant the brokerage relationships under Colorado law. |
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Term
| If a broker is managing their own property, do they need to place the security deposit in an escrow account |
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Definition
| No. When a Broker personally receipts for a security deposit on his or her own property, the license law does not require that the security deposit be placed in an escrow account. Additionally, a Broker cannot deposit rental proceeds into the brokerage firm’s escrow account(s) for properties owned by the Broker |
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Term
| What is the Brokerage Relationships Act |
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Definition
| The Brokerage Relationships Act imposes duties on agents to promote the interests of their buyers or sellers with the utmost good faith as well as to counsel their principals on material benefits or risks of a transaction. A Transaction-broker must exercise reasonable skill and care, advise the parties and keep the parties fully informed regarding the transaction. Whether working as an agent or a Transaction-broker, these duties include disclosing the accessibility of and actual access to a property or properties. |
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Term
| How much can sellers or other 3rd parties contribute to buyer's closing costs or loan charges |
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Definition
| HUD permits sellers or other third parties to contribute up to 6% of the sales price towards the buyer's actual closings costs and loan charges. Other expenses, such as a credit to replace a furnace, are considered inducements to purchase. In this case the sale price is reduced by the inducement amount to determine the loan amount. |
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Term
| Transaction Broker Disclosure requirements |
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Definition
| A Transaction-broker should disclose any previous relationships and should seriously look at whether neutrality is possible. When buying for self or helping a relative, it is not possible to act as a Transaction-broker. |
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Term
| What are examples of expert advise a broker should advise a client to receive |
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Definition
| Expert advice includes, but is not limited to, the brokering of a mortgage, performing title searches and issuing insurance, appraising real property, surveying and issuing improvement location certificates, performing property inspections and other due diligence (including environmental) and practicing law (which also includes analyzing the legal implications of the foregoing). |
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Term
| Who should make final selection of settlement service provider |
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Definition
| The consumer, not the broker |
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Term
| Broker Earnest Money responsibilities |
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Definition
| The listing broker is required to deposit the money in the broker’s escrow or trust account in a recognized depository no later than the third business day following the day on which the broker receives notice of contract acceptance. If the selling broker receipts for a promissory note, or thing of value, such note or thing of value must be delivered with the contract to the listing broker to be held by the listing broker. Any check or note must be payable, or assigned, to the listing broker. Upon receipt of the earnest money, the listing broker must complete the Earnest Money Receipt as the Earnest Money Holder. A copy of the receipt must be retained by the broker to ensure compliance with Commission Rule E-4 |
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Term
| What are the minimum services a broker engaged by a seller or landlord to act as a seller's agent or a landlord's agent (12) |
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Definition
1) To perform the terms of the written agreement made with the seller or landlord;
2) To exercise reasonable skill and care for the seller or landlord;
3) To promote the interests of the seller or landlord with the utmost good faith, loyalty, and fidelity, including, but not limited to:
4) Seeking a price and terms which are acceptable to the seller or landlord; except that the broker shall not be obligated to seek additional offers to purchase the property while the property is subject to a contract for sale or to seek additional offers to lease the property while the property is subject to a lease or letter of intent to lease:
5) Presenting all offers to and from the seller or landlord in a timely manner regardless of whether the property is subject to a contract for sale or a lease or letter of intent to lease;
6) Disclosing to the seller or landlord adverse material facts actually known by the broker;
7) Counseling the seller or landlord as to any material benefits or risks of a transaction which are actually known by the broker;
8) Advising the seller or landlord to obtain expert advice as to material matters about which the broker knows but the specifics of which are beyond the expertise of such broker;
9) Accounting in a timely manner for all money and property received; and
10) Informing the seller or landlord that such seller or landlord shall not be vicariously liable for the acts of such seller's or landlord's agent that are not approved, directed or ratified by such seller or landlord.
11) To comply with all requirements of this article and any rules promulgated pursuant to this article; and
12) To comply with any applicable federal, state, or local laws, rules, regulations, or ordinances including fair housing and civil rights statutes or regulations. |
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Term
| What are the minimum services a broker engaged by a buyer or tenant to act as a buyer's or tenant's agent (12) |
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Definition
1) To perform the terms of the written agreement made with the buyer or tenant;
2) To exercise reasonable skill and care for the buyer or tenant;
3) To promote the interests of the buyer or tenant with the utmost good faith, loyalty, and fidelity, including but not limited to:
4) Seeking a price and terms which are acceptable to the buyer or tenant; except that the broker shall not be obligated to seek other properties while the buyer is a party to a contract to purchase property or while the tenant is a party to a lease or letter of intent to lease;
5) Presenting all offers to and from the buyer or tenant in a timely manner regardless of whether the buyer is already a party to a contract to purchase property or the tenant is already a party to a contract or a letter of intent to lease;
6) Disclosing to the buyer or tenant adverse material facts actually known by the broker;
7) Counseling the buyer or tenant as to any material benefits or risks of a transaction which are actually known by the broker;
8) Advising the buyer or tenant to obtain expert advice as to material matters about which the broker knows but the specifics of which are beyond the expertise of such broker;
9) Accounting in a timely manner for all money and property received; and
10) Informing the buyer or tenant that such buyer or tenant shall not be vicariously liable for the acts of such buyer's or tenant's agent that are not approved, directed, or ratified by such buyer or tenant;
11) To comply with all requirements of this article and any rules promulgated pursuant to this article; and
12) To comply with any applicable federal, state, or local laws, rules, regulations, or ordinances including fair housing and civil rights statutes or regulations. |
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Term
| What are the minimum services of a transaction broker (12) |
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Definition
1) To perform the terms of any written or oral agreement made with any party to the transaction;
2) To exercise reasonable skill and care as a transaction-broker, including, but not limited to:
3) Presenting all offers and counteroffers in a timely manner regardless of whether the property is subject to a contract for sale or lease or letter of intent;
4) Advising the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction-broker knows but the specifics of which are beyond the expertise of such broker;
5) Accounting in a timely manner for all money and property received;
6) Keeping parties fully informed regarding the transaction;
7) Assisting the parties in complying with the terms and conditions of any contract including closing the transaction;
8) Disclosing to prospective buyers or tenants any adverse material facts actually known by the broker including but not limited to adverse material facts pertaining to the title, the physical condition of the property, any defects in the property, and any environmental hazards affecting the property required by law to be disclosed;
9) Disclosing to any prospective seller or landlord all adverse material facts actually known by the broker including but not limited to adverse material facts pertaining to the buyer's or tenant's financial ability to perform the terms of the transaction and the buyer's intent to occupy the property as a principal residence; and
10) Informing the parties that as a seller and buyer or as landlord and tenant they shall not be vicariously liable for any acts of the transaction-broker;
11) To comply with all requirements of this article and any rules promulgated pursuant to this article; and
12) To comply with any applicable federal, state, or local laws, rules, regulations, or ordinances including fair housing and civil rights statutes or regulations. |
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Term
| What is the Commission Position on Survey and Lease Objections to the Contract to Buy and Sell Real Estate |
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Definition
| Buyer has a right terminate the Contract due to objections with any Survey (Existing or Current) or to any Lease. Seller has no right to cure any objection to the Survey or Lease |
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Term
| What is the commissions position on lease options, lease purchase agreements and installment land contracts |
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Definition
| Real estate brokers are prohibited from drafting a contract document that would reflect the terms of such a transaction as it would exceed their level of competency and is a matter requiring the expertise and advice of an attorney. Additionally, such behavior may be construed as the unauthorized practice of law by the real estate broker and subject to civil penalties. The contracts for these transactions should not be prepared by a real estate broker; rather, the documents should be drafted by a licensed Colorado attorney-at-law engaged for each particular transaction. |
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Term
| Rules on Brokerage Team advertising |
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Definition
| Real estate brokers that function as teams should not advertise teams using the terms "realty", "real estate", "company", "corporation", "corp.", "inc.", "LLC" or other similar language that would indicate a company other than the employing brokerage firm. Advertising includes, but is not limited to, websites, signage, property flyers, mailings, business cards, letterhead and contracts. The advertising of team names should never give the impression that the team is an entity separate from the licensed real estate brokerage. |
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Term
| What are the duties of the broker designated to act as the broker for any partnership, limited liability company or corporation, i.e. the employing broker (7) |
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Definition
1) Maintain all trust accounts and trust account records;
2) Maintain all transaction records;
3) Develop an office policy manual and periodically review office policies with all employees;
4) Provide for a high level of supervision for newly licensed persons pursuant to Rule-32;
5) Provide for a reasonable level of supervision for experienced licensees pursuant to Rule E-31;
6) Take reasonable steps to ensure that violations of statutes, rules and office policies do not occur or reoccur;
7) Provide for adequate supervision of all offices operated by the broker, whether managed by licensed or unlicensed persons. |
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Term
| What are the duties of an unlicensed on-site apartment manager |
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Definition
1) Performance of clerical duties, including gathering information about competing projects.
2) Obtain information necessary to qualify perspective tenants for a lease. This includes obtaining and verifying information regarding employment history, credit information, references and personal information as necessary.
3) Provide access to a property available for lease and distribute preprinted, objective information prepared by a broker as long as no negotiating, offering or contracting is involved.
4) Distribute preprinted, objective information at an on-site leasing office that is prepared by an owner or broker, as long as no negotiating, offering or contracting is involved.
5) Quote the rental price established by the owner or the owner’s licensed broker.
6) Act as a scrivener to the owner or the broker for purposes of completing predetermined lease terms on preprinted forms as negotiated by the owner or broker.
7) Deliver paperwork to other brokers.
8) Deliver paperwork to landlords and tenants, if such paperwork has already been reviewed by the owner, or a broker or has been prepared in accordance with the supervising broker’s instructions.
9) Collect and deposit rents and security deposits in accordance with the owner’s lease agreement or the brokerage firm’s written office policy.
10) Schedule property maintenance in accordance with the brokerage firm’s management agreement or the owner’s lease agreement. |
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Term
| When can an unlicensed on-site manager sign and execute leases |
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Definition
| if the owner has executed a Power of Attorney form or a written delegation of authority that authorizes the unlicensed, on-site manager to sign and execute leases on behalf of the owner |
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Term
| When do supervisory duties apply to employing brokers in relation to on-site managers |
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Definition
| Supervisory duties apply whether the on-site manager is an employee or independent contractor of the broker or brokerage firm, or if the on-site manager is a regularly salaried employee of the apartment building or complex owner. |
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Term
| What are the five alternatives available to address property condition issues in a sales transaction |
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Definition
1) the seller can repair the property prior to closing;
2) the seller can agree to pay a concession or contribution, for example, a portion of the buyer’s closing costs;
3) after closing, the buyer can make the repair without assistance from the seller;
4) the buyer and the seller can negotiate a modification to the sales price; or
5) at closing, the seller can escrow funds or pay a contractor (if allowed by the lender). |
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Term
| What forms should be used when there is an issue that arises during inspection (Notice and memorializing terms) |
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Definition
Inspection Objection form (Only a notice form and not a part of the contract)
The terms can be memorialized with the Inspection Resolution form or the Agreement to Amend/Extend the Contract. |
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Term
| What is the Urban Commercial Code |
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Definition
| Law adopted in all 50 states requiring specific documents (security agreements and financing statements) when personal property is used to secure a commercial loan. Relates to real estate only in notifying all persons of the security interest in the fixtures separate from the realty. |
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Term
| What is the Licensee Buyout Addendum |
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Definition
| A Commission-approved addendum to the Contract to Buy and Sell Real Estate required when a licensee purchases a property concurrent with the listing, or in order to facilitate the owner's purchase of another property or continues marketing the property after purchase. |
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Term
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Definition
| An owner, promoter or sales agent who promotes, sells, or leases all or part of a subdivision. |
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Term
| What tis the Uniform Power of Attorney Act |
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Definition
| Colorado statute creating a standard form by which a principal appoints an attorney-in-fact to act for the principal. Includes signature authority. Must be recorded to be valid for use in real estate transactions. |
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Term
| What is the Statue of Frauds |
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Definition
| A uniform law in most states requiring that all contracts for a leasing of more than one year, or for the sale of any land is void unless the contract, or some note or memo thereof, is in writing |
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Term
| What is the Colorado Fair Housing Act |
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Definition
| State statute complementing the Federal Fair Housing laws, and adds three protected classes: Creed, Ancestry and Marital Status. |
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Term
| What is a Holdover Period |
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Definition
| A clause in listing contracts. It is a negotiated period of time after the listing has expired during which the seller is still liable for a commission if the seller sells to a buyer with whom the broker had negotiated during the listing period, and whose name the broker provided to the seller in writing at the end of the listing period. |
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Term
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Definition
| Any property that is divided into 20 or more residential interests. |
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Term
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Definition
| Governs the contracts and forms that must be used by Colorado real estate brokers. |
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Term
| What is a commission position statement |
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Definition
| Commission explanatory guidance on a specific topic without the force of law or Commission rule. |
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Term
| What is an employing broker |
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Definition
| A broker who is shown in real estate commission records as employing or engaging another broker. Employing brokers have certain duties to their licensees such as supervision and record keeping. |
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