3/27/14

Question 1

A broker working under a buyers agency or buyers transactions-broker agreement must disclose material facts about the buyer that might affect the transaction.
Ex: Will the buyer occupy the property as a principle residence? Is the buyer financially able to complete the transaction as set forth in the purchase agreement?

Answer 1

When working under a buyer agency or buyer transaction-broker agreement, what must be disclosed to the seller of a property being considered by the buyer?

Question 2

What are the rights of a homeowners or condominium owners association relative to first right of refusal or approval clause in a purchase contract?

Answer 2

A right of first refusal clause gives the owners association the right to purchase the subject property by meeting the same price and terms as stated in the purchase contract. The approval clause gives the association the right to approve the contract re: owner occupancy versus tenant occupancy.

Question 3

What are a home owners options as to the payment dates for general ad valorem property taxes.

Answer 3

General property taxes for the preceding year are due January 1st and may be paid in two halves. The 1st half is due no later than the end of February, the second half no later that June 15th. If the first half is not paid when dou, the entire amount must be paid by the end of April. All taxes are delinquent on June 16th.

Question 4

If a dispute arises concerning a security deposit which is held by a broker, to whom should the broker give the security deposit?

Answer 4

An owner must establish the right to the security deposit before he may claim ownership of it. In the absence of an agreement to the contrary with the tenant, the security deposit should remain in escrow account in the name of the broker until a final determination is made concerning the rights of the tenant and the owner.

Question 5

Does the sale of a business opportunity require a real estate brokers license in Colorado.

Answer 5

The sale of a business opportunity requires a real estate brokers license when the transaction involves a change of ownership of any interest in real estate including a leasehold interest.

Question 6

If a licensee has received written notification from the Real Estate Commission that a complaint has been filed against him, what must a licensee do?

Answer 6

A licensee who has received written notification from the Real Estate Commission that a complaint has been filed against him, must submit a written response to the Real Estate Commission.

Question 7

When must a developer register with the Colorado Real Estate Commission?

Answer 7

A developer must register with the Real Estate Commission before negotiating to sell, lease or transfer any subdivision or part thereof which constitutes 20 or more building sites, not intended for commercial or industrial use, which are contiguous or which were formerly part of an undivided parcel.

Question 8

If a broker has earned a commission, but the owner fails refuses, neglects or is unable to consummate the transaction, may the broker keep a portion of the earnest money deposit for his compensation?

Answer 8

When the owner fails, neglects, or is unable to consummate a transaction, and through no fault of the purchaser the transaction cannot be completed, the broker must return any earnest money deposit to the purchaser at once. The broker must seek compensation from the owner.

Question 9

What must be disclosed to a buyer of a listed property?

Answer 9

A buyer must be told of anything of a material nature that relates to the property.

Question 10

What must be presented as a part of the application for an active real estate license?

Answer 10

Proof of truthfulness, honesty, and good moral character, as well as the appropriate license fee and a properly completed set of fingerprints, education certification, test results and proof of Errors and Omissions Insurance must be presented as a part of the application for a Colorado real estate license.

Question 11

Within what period of time must a landlord return a security deposit?

Answer 11

Within one month after the termination or surrender of a lease, whichever occurs last, a landlord must return to a tenant the full security deposit, unless the lease agreement specifies a longer period of time, not to exceed 60 days.

Question 12

How many zones are there in the Colorado Coordinate System?

Answer 12

Colorado had been divided into a North Zone, a Central Zone, and a South Zone.

Question 13

Who appoints public trustees in Colorado?

Answer 13

In larger countries the public trustee is appointed by the governor and in smaller counties the county treasurer serves as a public trustee.

Question 14

Does the death of either party automatically terminate the buy and sell contract? May this contract be assigned?

Answer 14

Death of either the buyer or seller does not terminate the buy and sell contract. The contract may not be assigned by the purchaser without the prior, written approval of the seller unless the box is checked in the contract assignable.

Question 15

When a licensee sells, buys, or leases real property on his own account, what must he do?

Answer 15

When a licensee (active or inactive) sells, buys, or leases real estate for him/her it must be disclosed, in the contract itself or in a separate writing, that he/she has a real estate license.

Question 16

Define Vicarious Liability

Answer 16

Vicarious Liability is a legal concept based on the responsibility of a “master” for the acts of a “servant”. In Colorado a person may be responsible for the acts of his broker when those acts are directed, approved or ratified by the buyer or seller, landlord or tenant.

Question 17

When must documents relating to a condo or homeowners association be provided to a buyer?

Answer 17

Documents relating to a condo or homeowners association must be provided to a buyer by the date specified in sales contract.

Question 18

Under the Contract to Buy and Sell, who bears the risk of damage by fire or other casualty prior to the time of closing?

Answer 18

In the event of damage by fire or other casualty prior to closing, in an amount of not more than 10% of the purchase price, the seller is obligated to repair the damage before closing.
In the event the damage, cannot be repaired before closing, or if the damage exceeds 10% of the purchase price, the contract can be cancelled at the option of the purchaser.

Question 19

When the indebtedness secured by a trust deed has been paid, what procedure is followed to procure a release of the deed of trust?

Answer 19

The procedure to procure a release of a deed of trust is; The beneficiary must execute (1) a request for a release of deed of trust and present it to the public trustee, together with (2) the original cancelled note and (3) the deed of trust, whereupon the public trustee will execute the release of deed of trust, upon payment of his fee.

Question 20

What does the exclusive right to sell listing contract provide with regard to the forfeiture of payments made by a prospective purchaser?

Answer 20

In the event of a forfeiture of payments made by a prospective purchaser, the exclusive right to sell listing contract provides that they will be divided evenly between the broker and the owner, but the brokers share may never exceed the commission which he would have received had the property been sold.

Question 21

In Colorado, what must a subdivider do before he can sell from a map or plat?

Answer 21

It is unlawful for any subdivider to sell from a map or plat in Colorado until it is recorded in the county of its location. Subdivisions must have the boundaries surveyed and monumented before recording.

Question 22

How would a broker become a “default” transaction broker?

Answer 22

Default transaction brokerage may be created by providing a disclosure form. The Brokerage Disclosure to Buyer/Tenant, or the Brokerage Disclosure to Seller (FSBO)

Question 23

When must a licensee disclose to a prospective buyer their relationship to the seller?

Answer 23

A licensee must disclose to a prospective buyer their relationship with the seller before the licensee elicits or accepts confidential information from the buyer related to the buyers needs, motivations or financial qualifications.

Question 24

What must a real estate licensee recommend before the closing of a real estate transaction?

Answer 24

A real estate licensee must recommend, before the closing of a real estate transaction: (1) The examination of title; and (2) the use of legal counsel.

Question 25

What evidence of title will be provided according to the Contract to Buy and Sell?
Who provides chooses and pays for the policy?

Answer 25

Evidence of title might be either an abstract of title, or a commitment for and a title insurance policy.
Either the buyer or seller will choose the title company and pay for the policy.

Question 26

Before property in a subdivision can be sold or leased, what must be obtained?

Answer 26

Unless exempt, before property in a subdivision shall register with the Real Estate Commission.

Question 27

What is the fundamental purpose of the Colorado Uniform Consumer Credit Code (U.C.C.C.)? What are the similarities to the federal Truth-In-Lending Act? What are the major distinctions?

Answer 27

The fundamental purpose of the UCCC is to protect the consumer (borrower) in consumer credit transactions. The UCCC contains provisions for disclosure, the right of recession, and advertising similar to Regulation Z of the Truth-In-Lending Act. The major distinction is that the UCCC established finance charge (usury) limitations, while Truth In Lending does not.

Question 28

If a subdivision developer has received written notification from the Real Estate Commission that a complaint has been filed against him, what must he do?

Answer 28

A subdivision developer who has received written notification from the Real Estate Commission that a complaint has been filed against him must submit a written answer to the Commission within a reasonable time set by the Commission.

Question 29

When must the Commission approved Seller’s Property Disclosure form be used?

Answer 29

The Commission Approved Seller’s Property Disclosure form must be used when the seller is working with a Colorado real estate licensee and the licensee furnishes the form to the seller.

Question 30

How many hours of continuing education are required for each 3 year license renewal.

Answer 30

Each three year license renewal requires completion of 24 hours of Commission approved continuing education courses. All 24 hours may be completed via home study or in the classroom. The 24 hours includes at least three 4-hour annual update courses within each three years.

Question 31

What procedures create a default transaction broker relationship when a licensee is not working under a written agreement?

Answer 31

If a licensee intends to work with a party without a written agreement, the licensee must provide either the Brokerage Disclosure to Seller to create a default transaction broker relationship.

Question 32

Any changes in business address by a licensee requires what action

Answer 32

A licensee must notify the Real Estate Commission in writing of any changes in business address or the license will be automatically cancelled.

Question 33

May a licensee receive a placement fee, commission or other valuable consideration for placing a loan with a mortgage lender, in a transaction in which the licensee is entitled to receive a commission?

Answer 33

A licensee may not accept consideration for placing a loan with a mortgage lender in any real estate transaction in which the licensee is entitled to receive a commission as a result of the sale of property, unless the licensee obtains prior written consent of the purchaser and seller in the transaction. Federal Law (RESPA) does not allow a broker to accept consideration from a lender unless the broker actually does work to earn the fee paid.

Question 34

What does the sales contract provide with regard to the failure of fixtures or services after the contract has been signed but before closing?

Answer 34

If any fixtures or services fail between the date of the contract and the date of possession or date of closing, whichever is earlier, the seller is responsible for either: the repair or replacement of such fixtures or services with a unit of similar size, age, and quality; or an equivalent credit.

Question 35

What does the sales contract provide with regard to the failure of fixtures or services after the contract has been signed but before closing?

Answer 35

If any fixtures or services fail between the date of the contract and the date of possession or date of closing, whichever is earlier, the seller is responsible for either: the repair or replacement of such fixtures or services with a unit of similar size, age, and quality; or an equivalent credit.

Question 36

Must every listing contract have a definite termination date?

Answer 36

A definite date for termination must be provided in every written listing.

Question 37

What principal meridians are used for land descriptions in Colorado?

Answer 37

Most of Colorado uses the 6th Principal Meridian, which is located near Lincoln, Nebraska. It’s baseline is the 40 degree line of latitude.
A large section of southwestern Colorado uses the New Mexico Principal Meridian and the New Mexico Baseline.
Certain portions of Mesa and Delta countries use the Ute Meridian, located just east of Grand Junction.

Question 38

What are the three differences between Federal Fair Housing Law and Colorado Fair Housing Law?

Answer 38

Colorado Fair Housing Law 1) applies to both residential and commercial property, 2) adds marital status as a protected class and 3) adds sexual orientation as a protected class.

Question 39

What is the basic difference between Exclusive Brokerage (Seller) Listing and Open (Seller) listing?

Answer 39

In an Exclusive Brokerage listing the seller reserves the right to find their own buyer without the assistance of the broker of the obligation to pay the broker. The seller will hire only on broker (exclusive).
In an open seller listing the seller will pay a commission to whichever broker brings the buyer. A seller may hire any number of brokers under open listing agreements.

Question 40

How does net seller proceeds appear below the double line on the closing settlement worksheet?

Answer 40

The net seller proceeds appears as a debit seller, credit broker on the Closing Settlement Worksheet.

Question 41

How is a brokerage firm’s commission determined?

Answer 41

Compensation is determined by agreement between the buyer or seller and brokerage firm.
It is presumed that the employing broker sets the commission rate, and the commission rate is then negotiable between the parties to the agreement.

Question 42

When must a licensee perform Uniform Duties to a party to a transaction?

Answer 42

The Uniform Duties are owed to all parties where the licensee has entered into a written agreement, either transaction broker or agent.

Question 43

Do option dealers and business opportunity brokers need real estate licenses in Colorado?

Answer 43

The legislature specifically included under the licensing law: 1) option dealers, and 2) business opportunity brokers, where the sale of a business involves a transfer to others any interest in real estate, including a leasehold interest.

Question 44

When must the original license be renewed? When must it renewed thereafter?

Answer 44

The original license is issued for a three year period and must be renewed three years from the date of licensure. Licenses must then be renewed every three years thereafter.

Question 45

When may a licensed Colorado broker pay a finders fee, or a share of the commission, to a broker who is licensed in another state but is not licensed in Colorado?

Answer 45

A licensed Colorado broker may share compensation with an out-of-state broker provided, The out-of-state broker resides and maintains an office in the other state, all advertising, negotiations, contracting and conveyancing done in Colorado are performed in the name of the Colorado broker, and all money collected prior to the closing is deposited in the name of the licensed Colorado broker in Colorado trust account.

Question 46

What is required prior to delivering earnest money to a title insurance company?

Answer 46

Before a licensee is allowed to deliver earnest money to a title insurance company the parties to the transaction must agree to the title insurance company as the earnest money holder. The broker must obtain a signed Earnest Money Receipt when delivering earnest money to any third party earnest money holder.

Question 47

Define “Transaction-Broker”

Answer 47

A Transaction-broker is non-agent (no fiduciary relationship whatsoever-neutral) professional intermediary working with one of both partied to a transaction.

Question 48

Is it acceptable to be licensed using an alias rather than your legal name?

Answer 48

A women may be licensed using a maiden name. In all other instances a legal name must be used.

Question 49

When working under a single party listing agreement, what modifications are recommended to the listing contract?

Answer 49

When taking a single party listing, language should be added to Additional Provisions naming the buyer, removing the Holdover Provisions, and voiding the listing if the seller finds their own buyer or lists with another broker.

Question 50

When the specific performance provision has been checked on the Commission Approved Contract to Buy and Sell Real Estate, what are the sellers remedies if the buyer defaults?

Answer 50

If the specific performance provision has been checked in the purchase agreement, the seller, if the buyer defaults, may either retain the earnest money as liquidated damages and sue for damages or sue the buyer for specific performance and/or damages.

Question 51

Do construction contracts for the sale of newly constructed houses containing builder warranties fall under the purview of Real Estate Commission Rule F.

Answer 51

Construction contracts or contracts for the sale of newly constructed houses containing warranties, do not fall within the purview of Commission Rule F.

Question 52

If the seller defaults, what remedies are provided for the buyer by the Contract to Buy and Sell Real Estate (Residential)?

Answer 52

Under the Contract to Buy and Sell, if the seller defaults, the buyer has the option of recovering such damages as may be proper, including return of the earnest money or may pursue the seller in a suit for specific performances/damages.

Question 53

Is a water right real or personal property?

Answer 53

A water right is considered real property, it is subject to taxation as real property, and it may be mortgaged with or apart from the land where it is located. In Colorado, it is presumed that a party to a conveyance of land does not intend a water right to be passed as an appurtenance, if not mentioned in the deed. A purchaser might overcome this presumption by evidence of different intent.

Question 54

How must deletions be made on approved forms? May an exclusive right to sell listing be altered to create an open listing or an exclusive agency contract?

Answer 54

If any portion of an approved form is crossed out, the deletion should be made so as not to obscure the language that has been crossed out.
To create either an Exclusive Brokerage or Open Listing, attach the appropriate Commission approved addendum to the Exclusive Right to Sell Listing Contract.

Question 55

May title insurance companies practice law by preparing legal instruments in Colorado?

Answer 55

The Colorado Supreme Court, at the time of the Conway-Bogue case, decided that the title insurance companies may not practice law in Colorado by preparing legal instruments. A title insurance company may prepare settlement sheets for a closing, but if the title insurance company prepares legal instruments it is doing it merely as the scrivener for a real estate broker.

Question 56

When must the parties submit to mediation if a dispute arises relating to a listing or sale contract?

Answer 56

Under Colorado listing and buy and sell contracts, any dispute between parties must be submitted to mediation before entering into either arbitration or litigation. If the dispute is not resolved within 30 Calendar days from the date written notice requesting mediations is sent by one party to the other, then unless agreed otherwise, the mediation shall terminate.

Question 57

What entry is shown on line 211 of the HUD-1 Closing Settlement Statement?

Answer 57

The property taxes are entered on line 211 of the HUD-1 Closing Settlement statement.
(note: the broker commission is shown on line 711)

Question 58

What is the purpose of the Colorado Real Estate Licensing Law?

Answer 58

The purpose of the Colorado real estate licensing laws is to protect the people of the State of Colorado.

Question 59

In a promissory note, an acceleration clause:

Answer 59

Allows a lender to call the remaining balance due if certain event happens.
Ex: nonpayment of taxes or hazard insurance if not escrowed.

Question 60

What form may earnest money take?

Answer 60

any form the seller will accept - any form that is agreed to by the parties.

Question 61

In Colorado the most common instrument used to secure a real estate loan is a:

Answer 61

Deed of Trust
Colorado has passed legislation making us a deed of trust state, and established the office of the public trustee in every country. In some small counties, the treasurer may take this responsibility.

Question 62

How long may a landlord hold a tenant’s security deposit after termination an surrender of the premise.

Answer 62

30 days unless the lease calls for a longer period up to 60 days.
The longest period a landlord may hold a deposit established by law is 60 days.

Question 63

Under Colorado Law, if you don not have a written agreement or a specific disclosure with a party to a transaction, you are considered to be a/an:

Answer 63

Transaction-Broker

Without an agreement or disclosure you are considered to be a statutory transaction broker under license law.

Question 64

A Counterproposal:

Answer 64

must be securely attached to the original offer

since the counter now supersedes the offer, it is attached on top of the offer.

Question 65

If the seller and buyer have a legal dispute regarding the approved Contract to Buy and Sell Real Estate what must they do:

Answer 65

Submit the matter to mediation and seek resolution within 30 days.
The contract determines that before parties can arbitrate or litigate, they must first submit to mediation.