Colorado - Real Estate Contracts Flashcards
1
Q
What is the effect of writing “N/A” or “Deleted” on any line of the Dates & Deadlines Section (3.1) of CBS1?
A
The corresponding section of the contract becomes void. Often NOT what is intended. Better to leave blank if unsure of date.
2
Q
What are Seller Concessions?
A
CBS-1 § 4.2 - Seller Concessions
If the Buyer is wishing to negotiate a credit from the seller at time of Closing for the Buyer’s Closing Costs (any loan-related fees, appraisal, pre-paid items, even HOA dues, inspection fees, etc.), this is the appropriate Section to identify the amount.
3
Q
Can Title Company hold the earnest money?
A
Yes. Most often earnest money is held by either the brokerage firm or title company.
4
Q
“Good Funds”
A
The equivalent to cash, such as a cashier’s or teller’s check, ETF, or certified check.
5
Q
“Inclusions”
A
2.5 Inclusions
If in doubt, clarify & write it here.
What buyer sees, buyer wants.
If it’s a condo, determine if the garage or storage unit is included with the property or leased separately.
If it’s a rental, determine if that washer & dryer (or AC unit) belongs to the tenant or the landlord.
6
Q
What happens the lender requires repairs to the propery… (2 )
A
- The buyer must give notice of the appraisal requirements.
- The seller has 3 days to terminate the contract (or negotiate cost of repairs with the buyer).
* This is distinct from the inspection deadline, which comes earlier. The lender is the demanding party here. More often seen with VA or FHA financing.
CBS-1, Section 6.3
7
Q
Appraisal:
If the purchase price exceeds the appraised value…
A
If the Purchase Price exceeds the valuation, the Buyer shall have the right to terminate the Contract on or before the Appraisal Objection Deadline, by sending written notice to the Seller.
Negotiation Alternatives:
Seller could come down in Purchase Price.
Buyer could bring the difference in Cash at Closing.
A combination of the two to meet somewhere in the middle.
CBS -1, Section 6.2.1
8
Q
Common Interest Community Disclosure
A
Section 7.1
Warns buyer if property is subject to HOA or other common interest community rules, declarations, bylaws etc.
Failure to pay association fees could result in a lien against the property.
9
Q
Who is obligated to provide CIC/HOA documents?
A
Seller must provide to Buyer.
- At seller’s expense.
- By the association documents deadline.
10
Q
Who selects the title insurance company?
A
Section 8.1
Can be buyer or seller.
Whoever selects Title Insurance Company also pays.
11
Q
What is Owners Extended Coverage?
A
Additional title insurance covering parties in possession, unrecorded easements, survey issues, unrecorded mechanic liens, tax assessments and any gap period.
Cost can be paid by either party or split.
12
Q
What’s included in title documents?
A
Copies of any recorded plats, decorations, covenants, conditions or restrictions burdening the property..
The same party responsible for paying for title insurance is responsible for any costs associated with these documents.
13
Q
CREC Property Disclosure Form
- Completed by whom?
- When
- Covers
A
Section 10.1
- Seller
- By deadline
- Adverse material facts actually known by Seller
* Update req’d if discovered before closing.
14
Q
Does Seller Warrant Condition of Home?
A
Default is no. Homes are sold “as is” unless otherwise specified. Some newly constructed homes will come with a warranty.
15
Q
If the Buyer objects to the conditions found upon inspection ..,
A
- Buyer must notify Seller by Deadline.
- Buyer may terminate or negotiate repairs, price adjustment, etc. by Inspection Resolution Deadline.
* If notice of objection is given and no resolution is in writing by resolution deadline, the contact terminates by default.
* Solution: amend to extend deadline, if parties are willing.
16
Q
Who pays for inspection, testing, engineering?
Who is responsible for any damage to the property during such inspections?
A
Buyer. (unless otherwise per cx)
17
Q
What are Due Dilligence documents?
A
If box is checked, Seller agrees to deliver these to Buyer, e.g. leases.
18
Q
Conditional Sale
A
Section 10.7
If Buyer unable to sell specified property (e.g. current home) by specified deadline, then can terminate contract with written notice.
Solely for benefit of Buyer.
19
Q
When is deed delivered?
A
At closing.
20
Q
Who can provide “settlement service”? (i.e. closing)
A
Attorneys, lenders, inspectors or title companies. “Quality & extent of service may vary.”
21
Q
Who pays for the closing service?
A
Section 15.2
Either party or split, depending on cx.
22
Q
Who pays any outstanding liens or encumberances?
A
Section 14
Seller, unless otherwise agreed in writing.
23
Q
Who is respondible to ask HOA for status letter?
A
Section 15.3
Seller.
Costs to change records with Association are allocated per cx.
24
Q
What is FIRPTA?
A
Tax law Allows the IRS to require any substantial portion of seller proceeds be withheld after closing if the Seller is a foreign person.
- If the Seller is not a Colorado resident, the Colorado Department of Revenue may also require proceeds to be withheld. Section 15.8.2
25
General real estate taxes & any personal property taxes are allocated how (default)?
These taxes are pro-rated.
| Meaning: if the property sells on June 30, one-half is paid by Seller and one-half is paid by Buyer.
26
What happens to existing leases and rents?
1. The seller must assign all leases to buyer.
| 2. Seller must transfer security deposits to Buyer and notify all tenants in writing.
27
HOA Assessments
Section 16.3
1. Any assessments paid in advance will be credited to seller.
2. Cash reserves for deferred maintenance are not credited to seller unless designated in Governing Documents.
3. Buyer may be required to pay reserves or working capital at closing.
4. Any special assessment prior to closing will be the application of the party designated in section 16.3, unless for improvements already installed (seller's obligation).
28
Risk of Loss
Section 19
1. If damage by I am or other perils is less than 10% of total purchase price and covered by insurance, then Seller repairs.
2. If damage is greater than 10% or not repaired by closing, the Buyer may terminate contact OR proceed and take assignment of rights to insurance proceeds etc. *better get a lawyer involved*
29
If property subject to sale is condemned ...
| e.g. flood or fire
Seller must notify.
Buyer can terminate.
If buyer proceeds with closing, buyer is entitled to a credit for all condemnation proceeds awarded to seller, but not relocation fees etc.
30
Time is of the Essence
Deadlines are 11:59 MST
First day is excluded last day is included.
If the deadline falls a holiday or weekend may be extended if Section 18.2 so provides.
31
Requirements for a Prescriptive Easement in Colorado
*hint COUGH
```
For a period of 18 Years:*
Continuous (with tacking)
Open
Use
Good faith belief they are the owner
Hostile
```
* 7 years with color of title
32
Written Disclosure of Brokerage Relationship must have ...
... a signature line for the client/customer to sign (but they aren't required to sign it)
33
If a buyer lacks the financial means to buy a home, who must disclose this?
Seller's agent.
Transaction broker.
Buyer's agent? - Yes
Buyer's inability to perform is an adverse material fact and must be disclosed.
34
Vicarious liability
Buyer or Seller can be held vicariously liable for the AUTHORIZED acts of their agent.
35
Fiduciary Duties
Owed by an agent to their client, NOT a transaction broker (neutral).
COLDER
```
Confidentiality*
Obedience
Loyalty
Dilligence
Exceptional disclosure
Reasonable care
```
36
Housing discrimination
1. Maximum civil fine
2. Criminal?
1. $10,000 first offense (25k, 50k)
| 2. Misdemeanor to discriminate in places of public accommodation. Up to 1 year jail.
37
CADA Colorado Anti-Discrimination Act
1. Protected Classes?
2. Leases covered?
1. GRAMPS
```
Gender
Race
Ancestry
Marital Status
Sexual Orientation
```
2. Colorado protects leases, Federal does not.
38
Define "Developer"
Someone who promotes the sale or lease of a subdivision.
39
What happens if a Developer fails to register with CREC?
1. A fine up to $2,500
2. Probation
3. Sales contracts are voidable
40
Defne "subdivision"
Any real estate holding with more than 20 interests.
41
When is a written contract required under Colorado law? (3)
1. Sale of real estate (Seller must sign).
2. Lease for > 1 year.
3. Property valued at $500+
42
Summarize the Conway-Bogue decision.
1. Colorado RE agents can prepare CREC approved legal documents. Fill out forms, not draft new ones. Advise to seek legal counsel. Cannot charge additional fees.
43
What is the Colorado broker license renewal period?
3 years
| "initial period" runs from date pass exam to 12/31 of that year
44
Continuing Education Requirements
24 credit hours every 3 years.
- 12 credits mandatory classes, one class each year worth 4 credits. Don't miss it!!
- 12 credits elective
45
How many years to become an employing broker?
2 years of being an employed agent. (+CE)
46
Who maintains the real estate recovery fund? (defunct)
State Treasurer
47
Consequences of practicing without a real estate license?
Charged/ prosecuted by district attorney.
48
Carbon monoxide detectors -
1. Where located?
2. When?
1. Within 15 feet of any sleeping quarters or per Code.
| 2. When marketed for sale.
49
Define "exclusive agency listing"
Brokerage has exclusive right to market, but if seller finds buyer independently, no commission is due.
50
Define "exclusive right to sell" listing.
Brokerage has exclusive right to market and gets commission even if seller finds buyer independently.
51
Define "Open Listing"
Whoever brings the buyer gets the commission. Lousy for listing agent. No incentive to spend $ marketing. Only happens in a low inventory, sellers' market.
52
Colorado Foreclosure Protection Act - When required?
| 2 conditions
Mandatory to use CBFS-1 contract when (a) when sellers are in foreclosure/ at-risk and (b) purchaser is an investor.
53
Colorado Foreclosure Protection Act - Effect
Gives sellers some time to change their minds and cancel the contract without any consequence.
54
Colorado Foreclosure Protection Act - Duty of Agent
Determine if seller is current on mortgage payments. If not, then must use CBFS-1 contract instead of CBS-1.
* Sections 11 and 31 are different.
55
Colorado Foreclosure Protection Act - Short Sale?
Do NOT CBFS-1 if the transaction is a short sale and a Short Sale Addendum (SSA) will be made a part of the contract. Instead, use a CBS1 with the Short Sale Addendum.
56
Purchase property "subject to" a loan means...
"Subject to" means that the buyer is taking the property without any responsibilities for the debt, NOT an assumption of the loan. Triggers Equity Skimming disclosure. SWF-30
57
Equity Skimming
Illegal scheme: An investor buys property at-risk of or already in foreclosure from a homeowner, in exchange for allowing the homeowner to stay in the property as a tenant. Harmful if there was equity in the property and seller unaware they have been fleeced of their equity. Class 5 felony in Colorado
58
Notice of Cancellation
NCF-34. Notice of Cancellation. If a seller wants to cancel a CBFS-1 contract, he/she only needs to sign, date and send it in first class mail to the purchaser. The buyer must give at least 3 business days for seller to decide.
59
Homeowner Warning
HWN-65. Identifies the seller's principal language and requires that the warning be translated if needed. Warns sellers to consult an attorney or call the foreclosure hotline.
60
Licensee Buy Out Addendum - When to Use
NOT for personal use/investments by Licensee.
IS required when offer to buy is
a) Concurrent with listing same property OR
b) Inducement to purchase another property listed by that Licensee OR
c) Licensee is going to continue marketing the property
Commission Position Statement CP-23
61
Seller Authorization Addendum
ROI for Lenders to release private information to title company, closing company, seller's attorney, & seller's broker.
62
Source of Water Addendum
Well? Tap? Water Company info. None of the Above?
63
Post Closing Occupancy Addendum
| - Maximum number of days
Allows Seller to remain in possession after closing for a period of time not to exceed 60 DAYS after closing.
64
Short Sale Addendum
In a Short Sale the Lien Holder releases its Lien against the property and either (1) accepts an amount less than the full amount Lien Holder is owed or (2) treats the debt differently than agreed upon in the original note (???). Sometimes, a Lien is released but the Lien Holder does not agree to release Seller from liability or reduce the amount owed. If so, the Seller and any guarantors may remain liable after Closing for that unpaid portion, despite the release of the Lien at Closing.
65
Who must agree to a Short Sale
Buyer
Seller
ALL Lien Holders
66
Post Closing Occupancy Addendum: Purpose
Intended to address major risks and responsibilities of a delayed possession following closing. Not intended to address a long-term occupancy (> 60 days) for which a lease & possibly a property management agreement is recommended.
67
Two Forms Required for a Short Sale
1. Short Sale Addendum to Seller Listing Contract
2. Short Sale Addendum to CBS-1
* DO NOT USE CBFS FOR SHORT SALE
68
The MARS Rule
Federal law (Mortgage Assistance Relief Services) Anyone assisting an individual with a short sale must provide certain disclosures. These are covered by the Short Sale Addendum to the Seller Listing Contract.
69
Closing Instructions
Closing Instructions are required with the Contract to Buy & Sell. CREC Form CL-8 is recommended.
70
Who agrees to the closing instructions?
Buyer & Seller
71
Who is engaged by the closing instructions?
The Closing Company (often the Title Company)
72
Title Policy Fee vs. Closing Fee
Title policy fee is the premium paid for the title insurance policy.
Closing fee is the service fee paid for performing the duties of closing.
73
Who holds responsibility for the proper drafting of the legal documents at closing?
The broker.
Unless the parties hire an attorney to draft the legal documents, the broker is responsible for the title company's work. So, be certain to review it carefully!
74
What happens during the inspection process?
1. Inspection performed (buyer selects/hires)
2. Buyer reviews report
3. Buyer give Notice of Termination or Inspection Objection (specifies repairs or credits proposed)
4a. Seller agrees. (Resolution)
4b. Seller counteroffers. (Resolution or Amend/Extend)
4c. Contract terminates.
75
Ways to Resolve an Inspection Issue
Buyer can accept the property with the issues.
Seller can repair the property prior to closing.
Seller can escrow/ pay a contractor at closing.
Buyer and seller can reduce the sales price.
Seller can agree to pay a concession at closing.
76
Inspection Resolution - Focus of CREC Updates
To make it clear that most Resolutions of an Inspection Objection are actually an amendment to the contract and that the Mortgage Loan Originator (the new loan Lender) needs to be informed.
77
Estoppel Statement
A form used by Buyer or Lender to ascertain the status of leases, typically in commercial or multi-family deals. Tenant affirms the lease & is estopped from later claiming different understanding / terms.
78
Section 1031 Exchange
Tax advantaged swap of properties, typically done to avoid the realization of capital gain on investment properties. Subject to strict rules under Federal Tax Code.
79
Brokerage Disclosure to Buyer
BDB24 - Explains the definition of various types of working relationships to Buyer. States there is NOT a buyer agency relationship between you & Buyer.
80
What is the Appraised Value Objection Notice?
The appraised value is less than the contract value.
81
Personal Property Agreement
Used for the sale of fully furnished units (common in ski towns or college towns). Assures Buyer of the transfer of personal property expected. Also, many Lenders are not willing to loan money to pay for personal property at secured mortgage rates.
82
The Personal Property Agreement is conditional upon ...
Closing
83
Does a Transaction Broker owe fiduciary duties to either party?
No.
A TB is neutral.
Facilitates the transaction.
Treats both parties as customers.
84
Liquidated Damages
Damages specified by the contract in advance if the buyer defaults. Typically binding on both parties. The amount may be more or less than the actual loss, but has been agreed upon by the parties as the sum that is agreeable to them both, the goal being to avoid litigation.
85
Mill Levy
A fraction of assessed valuation expressed as 1/10 OF ONE PENNY per dollar. Used to compute property taxes once the "Mill Rate" is established.
Example (85 mills = $0.085 or $85 of tax for each $1,000 of assessed valuation).
86
Title Insurance - Who Buys? How much?
Insurance protection against previous title defects that may become known in the future.
If Seller purchases policy, it usually insures up to contract price. If Buyer/New Loan Lender purchases the policy, it typically insures the balance of loan. Buyer can acquire additional coverage to full value of home (wise).
87
Who is responsible to fill out a Seller's Property Disclosure?
The Seller. Based on their knowledge.
CBS-1, § 10.1
88
What font type is to be used when filling in the blanks of of a CREC approved contract?
Different from the pre-printed portion.
89
1. Is mediation required?
| 2. Is arbitration required?
1. Good faith mediation is required, but you can still litigate concurrently.
2. Arbitration is not required.
CBS-1, § 23
90
By default, who pays for Inspection?
Can be Buyer or Seller. Check the box.
CBS-1, §6.4
91
Are electronic signatures acceptable?
Yes.
| There is no requirement for an original signature in the CBS unless added by the parties.
92
A Buyer's Agent showing a FSBO property must ...
provide Seller with the Broker Disclosure to Seller (FSBO version).
93
CREC forms generated by brokerage software must ...
be identical to the CREC pre-printed form, unless altered by the attorney REPRESENTING A PARTY.
94
What is the "Walk Through" Inspection?
With reasonable notice, the Buyer may walk through the property prior to closing to ensure that the condition of the property & inclusions complies with this Contract. *NOT A LAST CHANCE TO CHANGE YOUR MIND OR FIND NEW FAULTS
CBS-1, §19.4
95
If the contract is terminated, what should the Agent/Broker do with the Earnest Money?
Promptly return to Buyer, unless there is a dispute.
96
Who holds the Earnest Money?
Determined by the Contract.
CBS-1, §4.3
97
Software used to generate CREC approved forms must...
have safeguards to ensure the form itself isn't altered.
*The software itself doesn't have to be approved and Microsoft word is not required format.
98
When must a Lead Paint Disclosure be provided?
If building permit was issued before Jan 1, 1978.
99
Encroachments are discovered by means of ...
| 2 parts
1. Survey
| 2. Improvement Location Certificate
100
Watch for trick questions about whether something specified in the CBS in "mandatory".
CBS can be altered, crossed out, modified by counsel etc. It's provisions specify terms but they are not "mandatory". Parties can reach a different agreement.
101
Lead Paint - Options of Buyer
IF building permit was issued before Jan 1, 1978:
a. Buyer may conduct an assessment of the property for lead AND/OR
b. Buyer may terminate the contract by the applicable deadline based upon either the Disclosure or their own assessment.
102
Methamphetamines - Seller Duty
Seller has a duty to disclose if s/he knows knows that meth was ever manufactured, processed, cooked, disposed of, USED or STORED at the property.
103
Effect of the Licensee Buyout Addendum (4 parts)
1. Deletes certain provisions: appraisal condition, liquidated damages, seller default & buyer acknowledgement sections.
2. Licensee must continue to present offers on the original property to the non-Licensee, so they do not miss out on profit if the listing sells for more than the Guaranteed Price (i.e. this is a floor, not a ceiling).
3. If intended to facilitate purchase of a new house, Licensee can back out of purchasing old house if the non-Licensee doesn't close on the new house.
4. Also, may obligate non-Licensee to reimburse certain expenses incurred by Licensee.
104
When is a Residential Addendum used?
If executed a Land Contract and there is a residential structure on the land. Add in provisions like appraisal, potable water, carbon monoxide, lead paint, meth, foreclosure protection, home warranty disclosures etc.
105
Two Types of 1031 Exchange
1. Simultaneous ("like kind")
| 2. Non-Simultaneous ("Starker")(Qualified Intermediary)
106
Tax Consequences of Short Sale Loan Forgiveness
If the lien holder accepts less than full payment, the Seller may incur federal and state tax liability for the forgiven debt (a form of income).
107
Acceptance of Short Sale Terms - What if Terms Change
Short sale acceptance is conditional!
Any material change (sales price, date of closing, commissions, concessions,) require resubmission for approval.
= TIME DELAYS & RISK OF REJECTION
108
Define "Short Sale"
Any sale of real estate that generates proceeds that are less than the mortgage(s) owed.
An alternative to foreclosure.
109
What are the requirements for Closing Instructions?
Written, signed closing instructions are always required.
| But, the specific CREC form CL-8 is only required if Broker hosts closing.
110
Must earnest money be held in a trust account?
Yes.
| And parties must be notified who is holding it.
111
When will a Broker use the CREC approved Closing Statement?
When Broker is handling the closing. (Rare. Closing is usually held by Title Company or Attorney)
112
Inspection issues: When & How to Communicate with Lender
1. Early. Definitely before agreeing to a Resolution
| 2. In Writing
113
Does Fax or Email delivery count for Notices?
Yes. Unless otherwise agreed by parties in writing.
114
Should you use both a Inspection Resolution form and an Amend/Extend Contract form?
No. You can use either to resolve an Inspection Objection, but do not use both as it may cause ambiguity in the terms of the amended contract.
115
What concerns regarding Inspections did CP-43 address?
Complaints that Brokers were concealing property defects/ repairs from Lenders. CREC advises Brokers to advise Buyers to ask their Lender whether the resolution may (1) have a detrimental impact on the Buyer’s ability to get the loan; (2) cause delays in the lender’s processing and funding of the loan by Closing; and (3) require further inspections and repairs BEFORE they agree to a any Resolution or Amend/Extend.
116
Brokerage Disclosure to Buyer - What is it? (4 Parts)
1. Defines the terms, Seller Agent, Buyer Agent, Transaction Broker & Customer.
2. NOT engaged as Buyer's Agent, must fill in the blank concerning the default type of relationship (TB).
3. Check box: Multiperson Brokerage or Not
4. Check ONE box concerning your relationship to the Seller and Buyer.
** NOT APPLICABLE IF YOU ARE ENGAGED AS BUYERS AGENT OR GIVE ANYWAY FOR INFORMATION PURPOSES??**
BDB-24
117
Brokerage Disclosure to Seller - FSBO (4 Parts)
1. Defines the terms, Seller Agent, Buyer Agent, Transaction Broker & Customer.
2. NOT engaged as Buyer's Agent, must fill in the blank concerning the default type of relationship (TB).
3. Check box: Multiperson Brokerage or Not
4. Check ONE box concerning your relationship to the Seller and Buyer.
118
When talking to a potential Buyer, when must Broker
| disclose who they work for & nature of the relationship?
As soon as the Broker "elicits or accepts confidential information." (Rule 6.5)
119
"Affiliated Business Arrangement"
§12-10-218 C.R.S. an “affiliated business arrangement” includes any situation in which a provider of settlement services (S1) or an associate of a provider of settlement services (S1-A) has either an affiliate relationship with or a direct beneficial ownership interest of more than 1% in another provider of settlement services (S2). So if Broker refers business to a mortgage company owned by their spouse or Employing Broker.
120
Renewal Period for RE Licensees
| 2 parts
1. Your first year as a Licensee, your license will renew at then end of that calendar year.
2. Thereafter, renewals are every 3 years. Expires on December 31st.
121
3 Types of Real Estate Brokers in Colorado
1. EMPLOYING
2. ASSOCIATE
3. INDEPENDENT
122
What is "RESPA"?
The Real Estate Settlement Procedures Act (“RESPA”) is a series of federal consumer-protection statutes that impose rules upon all of the professions involved in an activity relating to a real estate settlement involving a federally related mortgage loan. The State of Colorado has adopted laws and regulations governing real estate brokers that impose similar rules.
123
Main Concerns of RESPA
Kickbacks and Unearned Fees
124
Criteria to Fall Under RESPA
1. Involves a federally related mortgage loan
2. Payment of a fee or "quid pro quo" in exchange for the referral of settlement service business; OR
3. Payment of an unearned fee.
125
RESPA: Define "Settlement Services"
```
§12 USCS § 2602
Settlement services includes “any service provided in connection with a real estate settlement including, but not limited to, the following:
- title searches,
- title examinations,
- title certificates,
- title insurance,
- legal counsel,
- drafting documents,
- property surveys,
- credit reports,
- appraisals,
- pest / environmental inspections,
- real estate agent or brokerage services,
- loan origination, processing, underwriting & funding
- closings
```
126
CREC Recovery Fund
Was a fund maintained by the CO state treasurer, under the direction of the CREC, for judgments that arise out of civil suits.
1. Only covered unpaid out of pocket losses, unpaid court costs, and attorney fees.
2. 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.
127
Define "Team"
2 or more brokers that cooperate on an ongoing basis.
128
What is included in a brokerage "TradeName"
Includes the brokerage name, entity and any franchise.
| Example: Suzy Bee Realty, LLC. RE/Max.
129
Does the rental manager at an apartment complex have to hold a real estate broker license?
No, provided they are on-site and paid a salary.
130
Brokerage Activities
Any selling, renting, exchanging, or buying of real estate or any interest in real estate.
131
Exclusions from Brokerage Activities
| 7
Acting on your own behalf (FSBO). *Includes entities.*
Uncompensated power of attorney
Trustee / Administrator of an Estate
Oil & Gas Leases.
Public official.
Out-of-state broker referral
On-site, salaried manager for condo or apartments.
132
Is the sale of business a brokerage activity?
Only if it includes interests in real estate (e.g. buyer taking over the restaurant lease or office buildings).
133
Is receipt of a "finders fee" paid by a landlord or tenant a brokerage activity?
Yes.
134
Is negotiating an option to buy property a brokerage activity.
Yes. Options are included as an interest in RE.
135
Define "designated broker"
The human being identified as the active broker for an brokerage entity. Does NOT have to be an owner or officer of the company.
136
How does CREC discipline licensees?
CREC may fine licensees.
| CREC may censure, suspend, revoke, or put a licensee on probation.
137
13 Deadly Sins - What leads to disciplinary action?
Hint: MCADACCDUHSSC
1. Knowingly making any misrepresentation, false promises or misleading advertising.
2. Violating the "Colorado Consumer Protection Act,"
3. Acting for more than one party without all parties' knowledge / acknowledgment
4. Not depositing $ with the employing broker asap.
5. Failure to account for deposit $ properly
6. Commingling personal funds / not using trust account
7. Failure to provide a closing statement
8. Failure to maintain req'd documents for 4 years.
9. Paying a commission to an unlicensed person for carrying out real estate activities.
10. Violating the Colorado or Federal Fair Housing laws
11. Failure to exercise reasonable supervision over the activities of licensed employees
12. Receiving any secret or undisclosed compensation
13. Failure to complete CE requirements
138
How many commissioners must vote to deny, suspend or revoke a license?
Majority vote.
139
How many members does CREC have?
5 members.
140
Who appoints members of CREC?
The Governor.
141
What is DORA?
The Colorado Department of Regulatory Agencies. CREC is a division of DORA.
142
When is a commission due?
At the closing.
OR
If seller refuses to allow the purchase, when the contract terms have been met.
143
What was the maximum payout from the Recovery Fund?
$50,000 per transaction
144
What was the maximum any single realtor could cause to be paid out from the Recovery Fund?
$150,000
145
What happened if a realtor caused a payment from the Recovery Fund?
License revoked for at least 1 year.
| Had to pay back the fund, plus interest.
146
Currently, how does a wronged party get paid for damages cause by a realtor's negligence?
E&O insurance.
147
Mortgage Broker requirements
1. License, renewed annually
2. $25,000 bond
3. E&O insurance
148
Can a real estate brokerage and a mortgage company have the same physical address?
Yes. But, steps must be taken to make it clear to the public that the two companies are separate.
- Separate signage.
- Separate records.
- Physically separated within the office space.
149
Can a real estate brokerage and a mortgage company share records?
No. They must maintain separate records.
| Also, every contract must be in writing.
150
If the sale does not close, what is the maximum fee a mortgage broker can collect?
$300
151
What is the criminal penalty to brokering mortgages with out a license?
M1 misdemeanor
152
What law governs mortgage brokerage activities?
Colorado Consumer Protection Act
153
If title company will be holding the earnest money, what must accompany the funds?
If title company will hold the earnest money, the $$ must be accompanied by written, signed closing instructions.
154
If there is a Title Related Objection, should the broker advise their client how to fill it out?
No. This crosses the line into the practice of law. Advise them to get an attorney's assistance with Title Related Objections.
155
What must accompany the Appraised Value Objection Notice? (2)
Must include a copy of the appraisal OR the lender verification.
156
What will the Lender do if the Appraised Value is lower than the purchase price?
Refuse to make the loan.
157
What third party MUST be notified any time there is an amendment to the contract?
The Lender.
The format doesn't matter, if an Amend/Extend or Resolution is signed, the Lender must be notified. Failing to do so can delay closing, result in lender backing out or even accusations of mortgage fraud.
158
When is a listing contract amend/extend used?
To amend the original listing contract, e.g. to lower the asking price or to extend the listing period.
159
If Buyer offers to assume the loan /current financing of the property, what rights does the Buyer have?
1. To review the loan documents.
2. To decide, by the applicable deadline, not to go forward with the purchase if the loan terms are not acceptable to Buyer.
* NOTICE REQUIRED BY DEADLINE
160
What is the default possession date/time in CBS-1?
There isn't any. It is specified by the Possession Date and Time in §3.1, Item 36 & 37.
161
Whose obligation is it to obtain CIC (HOA) Association documents?
Seller
162
Under CBS-1, is the Association authorized to provide documents to Buyer at Seller's expense?
Yes.
163
How can the Seller disclose the property's Source of Water?
1. Source of Water Addendum and/or
| 2. Seller's Property Disclosure
164
On what form may a broker may substitute the term "Landlord" for the term "Seller" and the term "Tenant" for the term "Buyer"?
Brokerage Disclosure to Buyer.
Brokerage Disclosure to Seller.
Definition of Working Relationships.
Rule F: A broker may substitute the terms in a lease transaction OR use the separate Brokerage Disclosure To Tenant form ((Why???))
165
What happens if the title commitment shows a defect in the title?
REVIEW THIS
166
What can buyers do, if the sellers remain in the home past the agreed upon possession date and time?
Evict + receive a daily charge specified in the contract.
167
What does a Deed of Trust do?
Gives the Public Trustee a right and process to foreclose without resorting to the courts in the event of default.
168
What is a Deed of Trust?
A document that conveys "naked title" or "legal title" to a third party as security for repayment of a note.
In Colorado, a Public Trustee holds the deeds of trust.
169
Are electronic signatures permitted?
Yes. But, either party can request original signatures.
170
What can constitute earnest money?
Anything buyer and seller are willing to agree upon.
171
What does an acceleration clause do?
Allows Lender to demand the remaining balance due under certain conditions (e.g. a missed payment).
172
In Colorado, the most common instrument used to secure a real estate loan is..
a Deed of Trust.
173
How long may a Landlord hold a Tenant’s security deposit after termination and surrender of the premises?
Thirty days, unless the lease calls for a longer period. Sixty days maximum by law.
174
How is a Counter Proposal delivered?
Attached to the original offer.
*In part because the Counter Proposal will only alter parts of the original offer and other parts remain in effect.
175
Can a Seller refused to provide the Sellers Property Disclosure?
ONLY if Seller removed this provision from CBS-1 by Counter Proposal.
176
What is the purpose of the Broker’s signature on the sales agreement?
Broker acknowledges receipt of the earnest money and confirms the brokerage relationship. Not a party to contract.
177
Who signs the Lead Based Paint Disclosure? When is it due?
Seller and Licensee must sign and deliver a Lead Based Paint Disclosure by the applicable deadline in the contract.
178
What is the maximum interest rate that can be charged in Colorado?
21%.
| Colorado’s Uniform Consumer Credit Code
179
Can you provide Earnest Money using a promissory note?
Yes.
CREC even has a form note.
Practice tip: Most Sellers will only accept a short-term solution since it doesn't function the same as cash.
180
Elements of a promissory note (9)
1. Names of note holder and borrower
2. Total amount to be paid
3. Interest rate
4. Payment period (monthly)
5. Amount of each payment.
6. Charges for late payments
7. Due date for payoff of loan.
8. Prepayment penalty, if any.
9. Statement whether the note is secured by deed of trust / additional rights.
181
3 Parties to a Deed of Trust (CO)
1. Borrower (Trustor)
2. Lender (Beneficiary)
3. Public Trustee
182
Who is the Mortgagor?
The borrower.
183
Who is the Mortgagee?
The lender.
184
What is the Maturity Date?
The date by which full payment of the loan is due.
185
Where is the Deed of Trust and Mortgage recorded?
The office of the Clerk and Recorder of the county in which the property is situated.
186
What is an acceleration clause?
A provision that allows the Lender to call the entire debt due if certain conditions are met (usually missed payment).
187
What does the Public Trustee do if the Borrower defaults on the mortgage loan?
The Public Trustee will sell the property, pay the Lender what is owed (which usually includes interest, penalties and foreclosure costs). Any remaining equity is paid to the Borrower/Owner.
188
What is the first step in a foreclosure?
A notice of intent to foreclose is mailed to the borrower in default.
189
In a foreclosure, what is a NED?
Notice of Election and Demand. In a foreclosure, NED is filed by Lender & recorded by the Public Trustee within 10 days.
190
What type of hearing must occur before a foreclosure sale?
A Rule 120 hearing must occur before the auction date.
191
How many weeks in total must the foreclosure auction be published?
Five weeks.
192
What does it mean to "cure" the default?
To pay what is owed, plus interest, penalties and foreclosure costs such as attorney fees.
193
When must Borrower notify the Trustee of their intent to cure?
15 days prior to the auction date.
194
Can the Borrower redeem or cure the default after the auction?
No.
Junior lienholders can redeem their interests in the property after auction, but the homeowner deadline is 15 days prior to auction.
195
When can the foreclosue sale occur:
a. Non-Agricultural
b. Agricultural
a. 120-125 days after Notice of Election & Demand (NED)
| b. 215 -230 days after NED
196
When are property taxes due? (CO)
Property taxes become due on January 1 following the year for which they are assessed.
Example: 2019 tax year, due Jan 1, 2020.
197
When can payment of property taxes be made without penalty?
EITHER
50% on Feb 28 & 50% on June 15
OR
100% on April 30
On or before, obviously.
In leap years, Feb 29.
198
What is the interest charge on unpaid taxes?
14% / per annum
199
When is Homeowner notified they are delinquent on their property taxes?
September 1st.
200
When will tax sales be held?
The second Monday of December at the Treasurer's office.
201
What is the Residential Assessed Valuation?
Estimated value X residential assessment percentage = RAV
202
What is the assessment percentage
a. Residential
b. Commercial
a. 7.15% (floats)
| b. 29%
203
What is the Gallagher Amendment?
It was a scale that kept residential taxes at 45% and commercial taxes at 55% of the overall base. Amendment B eliminated this.
204
What is a special taxing district?
An area that levies a tax within its borders, usually to pay for an improvement in that area.
205
How long after completion can a mechanics lien be filed?
4 months for G.C. or materials.
| 2 months for subcontractors or day laborers.
206
Practice tip: how to ensure the property is able to be sold?
1. Check for liens
2. Confirm taxes are paid-to-date.
3. Confirm loans are paid-to-date.
4. Inquire about repairs. Proof of payment.
5. Ask if any leases outstanding
207
Is E&O insurance mandatory?
Yes! You cannot have an active license without E&O.
208
What is the minimum coverage required?
The minimum coverage is $100,000.00 per claim & $300,000.00 annual aggregate.
209
Prior acts coverage?
Policy must cover prior acts, 10 years back so long as there is no lapse in coverage.
210
What is an ILC?
An alternative to a survey that is a lot less expensive. Usually a Lender will accept ILC if the property is part of a plat.
211
What is a plat?
A scaled map showing the subdivision of a larger parcel of land.
212
What is the doctrine of prior appropriation? (CO)
The right to divert the unappropriated waters of any natural stream (surface or underground) to beneficial use shall never be denied.
213
Water rights: priority
1. First to use & continue using
| 2. Domestic, then agricultural, then finally, industrial.
214
Are well permits required?
Yes, for residential property.
| State engineer issues.
215
Water rights: adjudication
When a Court determines your water rights.
216
When is adjudication necessary?
Adjudication is required to approve your use of well water from aquifer/ tributary sources to supply water for more than one residence or commercial use.
Not required for single-family residence (permit process instead).
217
What is the U.C.C.C. ?
The Uniform Consumer Credit Code.
| Colorado law.
218
How many loans per year make a Lender subject to U.C.C.C.?
5.
Like Regulation Z (Truth in Lending), if an individual makes more than 5 loans in any given year, the individual will be considered a Creditor and must make the required disclosures to the borrower.
219
What is a "carryback"?
Seller financing of a purchase.
220
Maximum interest rate (non-Creditor)
21% up to $3,000
| 45% over $3,000
221
Maximum interest rate (Creditor)(Non-Mortgage)
21%
222
Maximum interest rate (Mortgage)
45%
223
Mortgage servicing: when must borrower be notified if the loan is sold or servicer changes?
20 days
224
What disclosures are required by Mortgage Brokers at the time of the application?
1. All lender costs.
| 2. Terms of any guarantee / rate lock
225
What happens if a Landlord fails to provide a full accounting of how the security deposit was spent?
The Landlord forfeits the security deposit AND is liable for treble damages.
226
How long does a landlord have to repair a hazardous condition?
72 hours (3 business days)
227
If Landlord fails to repair a hazardous condition within the required timeframe?
Tenant can abandon the property & demand return of security deposit within 72 hours.
228
Property tax: What is mean by appropriation?
Budget, less estimated revenues from other sources = the amount of property tax that must be appropriated.
Each local taxing authority engages in this process.
229
Define aquifer.
Underground water. Typically permeable and porous rock that is saturated with water, and the water is usually extractable only by wells,
230
Water rights: what is an "acre foot"?
Volumetric measurement of water. This is the amount of water that will cover an acre of land at a depth of one foot. 325,851 gallons.
231
What is the penalty for brokering mortgages without a license?
M1 misemeanor
232
Can a client pay a commission to the agent directly?
No. Commissions myst be paid to the brokerage firm, not the associate broker.
233
How many members of the public sit on the CREC ?
2 Public
Bonus:
3 Realtors with at least 5 years experience including one who does property management.
234
How long do members sit on the CREC?
3 years
235
What professions are governed by the Department of Real Estate?
```
Brokers
Appraisers
Mortgage Loan Originators
Subdivision & Timeshare Developers
Homeowners Associations
```
236
Does Colorado offer reciprocity to RE agents?
Reciprocity with many states.
| 2 years experience required.
237
Serious discipline issues may also be referred to ...
District attorney
HUD
IRS
FBI
238
To appeal a disciplinary action
Object within 30 days.
| May be heard before an Admin. Law Judge
239
Define residential real estate...
```
Single-family
Multi-family less than 5 units
Condos
Townhomes
Subdivisions
```
240
Define commercial real estate
Everything that is not residential or agricultural
241
3 KEYS TO MAINTAINING THE PRIVILEGE OF PRACTICING LAW AS NONLAWYERS
(Conway-Bogue Realty vs, Denver Bar Assoc.)
1. Must be connected with the transaction as a broker.
2. No compensation for the preparation of legal forms other than your commission.
3. Use of “standard & approved” forms.
242
What is "Rule F"?
RULE F PRODUCES STANDARD FORMS
CREC adopted Rule F in 1971 and the Attorney General concluded that Rule F was constitutional.
Rule F covers forms for listing contracts, sales contracts, exchange contracts, disclosure forms, settlement sheets, extension agreements, and counterproposals. At the time of this writing, Rule F does not cover forms for business opportunity listing or sales contracts, management agreements, leases, warranty deeds, etc.
243
Modifying CREC Forms: How to Delete a Contract Provision
Any print that is deleted due to negotiation of the parties must be done by crossing through the print directly on the form without obscuring the print so it can still be read.
244
Modifying CREC Forms: Deadlines: What is the Effect of Crossing out a Deadline, Entering "N/A" or "Delete"?
This has the effect of deleting the entire paragraph attached to this deadline. Usually NOT what is intended.
245
Can parties hire attorneys to write up their own contracts?
Yes.
Parties can hire attorneys to draft custom contracts and/or write up their own contract pro se (but a lender may object to the latter).
246
What can be put into the Additional Provisions section of the Contract?
To be used for transaction-specific terms or acknowledgments that result from negotiation of the parties or instructions from one of the parties, e.g. to have the carpets professionally cleaned prior to closing.
Brokers may not insert 'common clauses' they like to use, unless they are a principal party to a contract. *
247
Can a brokerage hire an attorney to prepare addendums for their use?
Yes. BUT addendums cannot serve to protect or indemnify the brokerage firm. Addendums prepared by counsel for the broker must state "This addendum has not been approved by the Colorado Real Estate Commission. It was prepared by (insert licensed name of broker or brokerage firm's) legal counsel."
248
Can the brokerage firm add their logo & contact information to the Contract?
Yes. Firm name, address, telephone, e-mail, trademark or other identifying information may be added OUTSIDE THE BODY of the contract form.
249
Can an agent /brokerage add "intitials" at the bottom of each page?
Yes.
250
How are the entries into blanks of the contract visually distinguished from the pre-approved contract itself?
The STYLE OF TYPE used to insert data into the blanks must be clearly different than the type used in the approved form.
251
What was the ruling in Title Guaranty Co. v. Denver Bar Ass’n, 135 Colo. 423, 312 P.2d 1011 (1957), and Record Abstract & Title Co. v. Denver Bar Ass’n ?
* Companion cases.
Was the Title Company practicing law at closing?
Generally yes and could be enjoined.
Ultimately, the Broker is responsible for preparing closing documents and an exception is made allowing the Brokers to do this.
* Lender can prepare loan documents.
* Title company can be hired by Broker to host closing, but Broker is liable for the quality of their work.
252
Can a Title Company charge the parties a fee for closing?
I don't believe they can. (check this)
I think they can charge for the Title Policy and they can be directed by the Broker to host closing, using closing documents Broker prepares/approves, following written closing instructions.
253
Can CREC discipline a Licensee for actions taken outside of their role as Broker?
Yes.
If dishonest, fraudulent, fail to disclose material information, or negotiating a deal without disclosing you are an agent.
254
When is a written contract required in CO?
| 3
1. Real Estate Sale (Statute of Frauds)
2. Lease more than 1 year (Statute of Frauds)
3. Property value $500+ (UCC)
255
Who must sign a real estate contract?
Colorado oddity: CO Statute of Frauds only requires seller signature. (In practice both must sign.)
256
What happens if Seller does not sign real estate contract?
Contracts not signed by seller are VOID, not voidable.
257
What is the effect of a CBS-1 signed by Buyer only?
It is just an offer. It does not become a contract until the Seller signs.
258
Must agency listings and agency employment contracts be in writing?
Yes. (CO)
259
What is the parole evidence rule?
Only what is written within the four corners of the document is enforceable. Oral promises don't count.
260
Contract boxes:
What is the effect of checking a box?
What is the effect of not checking a box?
If a box is checked, the provision applies.
| If a box is not checked or a space or line is left blank, then it does NOT apply (the whole provision).
261
What is the difference between writing "N/A" in a blank vs. writing "None"?
Use NONE to keep the provision in place, but note that there aren’t any of the thing.
If you write "N/A" or "Delete" or "Omit" in a blank space, it deletes the entire paragraph. ** TRICKY** **BEWARE**
262
What is the effect of leaving a line blank within the body of the Contract?
It deletes the whole paragraph.
| Don’t leave blanks unless you intend to delete the paragraph.
263
What are the penalties for failing to register a subdivision?
Fines, felony 6, and voidable contracts are sanctions for failing to register.
264
What is a timeshare?
Time share use is a contractual right of occupancy that cannot be terminated for a period of time (possibly life of the owner).
265
Is a timeshare a contractual right or a property right?
Time share estate is considered a real property right, allowing lending options not otherwise available.
266
Fair Housing Laws:
| When was the federal Civil Rights Act passed?
1866.
| Amended in 1968.
267
When did Colorado pass its Fair Housing Act?
1959.
| First in the nation.
268
What does the Colorado Fair Housing Act prohibit?
The act prohibits discrimination based on race, creed, color, national origin or ancestry in the renting or purchasing of real property.
269
What is the Colorado Anti-Discrimination Act of 2008? (
```
CADA made sexual orientation and gender identity a protected class in housing.
§ 24-34-301(7) CRS
```
270
Name 5 additional classes of persons protected from housing discrimination by CADA?
1. Sex
2. Marital status *
3. Religion
4. Disability (physical and mental disabilities)
5. Sexual orientation & gender identity
* Discrimination based on marital status is allowed if complying with local zoning ordinances. (???)
271
Describe the "low volume" exception to Colorado's Fair Housing Act.
Does NOT include a single-family dwelling where the owner/lessee occupies the home and is renting out a room.
272
How does the federal Fair Housing Act and Colorado's version differ?
Unlike the federal law that covers only residential property, the Colorado Law covers ALL PROPERTY, including commercial leases.
273
Is it discriminatory to market housing that is designed to benefit the disabled (e.g. ramps, widened doors, bathroom stability bar)?
No.
274
Is it discriminatory if a single family homeowner refuses to sell or lease to a person in protected class?
Does NOT apply to selling or leasing single family homes, if less than 3 units owned and only 1 transaction per year.
275
IF the buyer's earnest money check bounces ...
```
Immediately contact the seller & ask for instructions.
- try again
-contact buyer / agent
-terminate the contract
etc.
```
276
When must earnest money be deposited?
Within 72 hours of the notice of acceptance of buyer's offer.
277
How long must a broker hold onto records?
4 years
278
If a seller wants to counter an offer, what document should they sign.
Just the counter-proposal.
| Don't sign the original CBS. But do attach a copy.
279
If the independent or employing broker dies...
contracts between clients and the firm become void (personal services contract).
* If they Buyer or Seller dies, their heirs are not required to continue to operate under the listing contract or buyer's agency contract either.
280
Who is responsible to investigate whether property is in a special taxing district?
Buyer (primary duty)
| Buyer's Agent (fiduciary duty)
281
Equitable title vs. Legal title
Upon acceptance of buyer's offer, buyer acquires equitable title.
What does the Owner hold while loan is outstanding?
What does the Lender hold while loan is outstanding?
282
Redlining
An outlawed practice by which Lenders used to refuse to originate mortgages within a certain neighborhood predominantly populated by a racial minority.
283
Unless otherwise specified, what type of deed is Seller expected to convey?
General warranty deed.
| Special warranty or Quit claim deeds are rare and must be agreed upon in writing.
284
Pro-ration: Who pays for the closing day?
1. National PSI
2. Colorado
1. Seller pays for closing day.
| 2. Buyer pays for closing day.
285
Gross Rent Multiplier (formula)
Price / Annual Rent = Annual GRM
Sample:
$250,000 /$50,000 = 5 A great value!
$500,000 / $50,000 = 10
$1,000,000 /$50,000 = 20 Overpriced?
Most GRMs are between 5 - 20.
286
Gross Rent Multiplier (convert to monthly)
Two methods:
Either convert annual rent to monthly rent (divide annual rent by 12) and then divide price by monthly rent.
OR
Calculate annual GRM and multiply annual GRM by 12.
*Practice our 12 times tables.
287
Purpose of GRM?
We use the GRM to help us value commercial properties.
Compare to the GRM of similar properties in the area. Rents generated tell us how much the property is worth (or if Landlord is just no good at negotiation).
288
Nonconforming use means...
continuing a prior use after a zoning change.
aka "grandfathering"
289
What is a variance?
allows for a use other than the primary zoning category, and may be granted after review by the zoning authorities.
290
Compare a conditional use, or special use to a variance...
A conditional use, or special use is more restrictive & may be revoked (permit).
291
What is spot zoning?
small area in question is actually rezoned to allow it to coexist within an area of different zoning
292
What are "housing codes"?
Synonym for building codes in some parts of U.S. Govern construction within a certain zoning district.
293
Define "Special Study Zones"
contain one or more geological hazards (flooding, avalanche ...) or endangered species habitat or environmental hazards (mining) defined for closer review by federal, state or municipal authorities.
May be subject to special construction or insurance requirements. Use restrictions may apply.
294
What may happen if property is in a wetland or contains habitst for an endsngered species?
This is another type of special study zone & may restrict construction or use. Advise clients.
295
What are riparian rights?
use of a flowing watercourse, such as a river, pond, or lake that borders the property or a stream that crosses one’s land. This term is generally understood to refer to a commercially nonnavigable waterway, and gives an owner who borders on it ownership to its middle.
* Not Colorado
296
Define "littoral rights"
rights of property owner with frontage on an ocean, sea, or large lake giving ownership of frontage or coast to the high-water mark.
* ownership of such fromtsge may change as water action reshapes the edge
297
Terms of reduction of property through natural processes (3)
erosion, avulsion, or deliction
298
Terms for addition of land through natural processes (4)
accession, accretion, alluvial, or dereliction
299
Does MLS offer to split commission with Buyer's Agents or TBs?
Yes.
300
If an individual has a criminal history, can they become a licensed real estate broker in Colorado?
Yes, provided there is (a) explanation of any conviction including a deferred sentence within the last 10 years satisfactory to the CRED and (b) there is full disclosure to the employing broker.
301
Can an undocumented immigrant become a real estate broker in Colorado?
No. Must be lawfully present in the U.S.
302
What kind of background check is run on Colorado real estate brokers?
Fingerprint-based CBI.
303
What are the continuing education requirements for Colorado brokers?
24 credits / 3 years
304
Comparative Market Analysis (CMA): If prepared for any reason other than anticipated sale/purchase what is required?
A statement that the preparer is NOT certified as a real estate appraiser. (e.g. for marketing )
A broker CMA cannot be used for lending purposes.
305
Employing Broker Duties (5)
1. Supervise associate brokers & unlicensed employees
2. Train / Guide associate brokers
3. Maintain trust accounts / accounting
4. Maintain transation records for 4 years from closing
5. Develop written firm policies
Source: CREM Rule 6
306
What is the standard for supervision of new associate brokers (2 years or less experience)?
```
"High level supervision"
specific policies and procedures,
availability to consult
assistance preparing contracts
monitor transactions
review documents before closing
attend closings
```
307
Can an employing broker delegate supervisory duties to an associate broker?
Yes. EB can delegate duties to an associate broker with 2+ years of experience.
308
What is the standard of supervision for experienced associate brokers (over 2 years experience)?
"Reasonable supervision"
office policy manual SIGNED by each broker
review contracts
309
For what purposes can a RE broker provide measurements of square footage?
For marketing purposes only.
310
What is the standard of accuracy for broker square foot measurements?
Good faith effort.
Must not be misleading.
Tip: Advise clients to obtain an exact measurement by an independent appraiser.
311
What are the broker's duties if relying on a third party for the square footage calculation? (DDA)
Disclose the source.
Date the source
Advise clients to obtain an exact measurement by an independent appraiser.
312
Can the associate broker share confidential information with the employing broker?
Yes. This is authorized by the contract with the client.
313
Does AB sharing confidential information with their EB extend the brokerage relationship to the EB?
No.
The brokerage relationship remains limited to the designated broker and their client. Other agents in the firm and the employing broker can continue to represent other client's and don't owe fiduciary duties to your client.
314
When must affiliated business arrangements be disclosed?
1. annually
2. if they change
3. when your license renews
315
Does the EB's affiliated business arrangements extend to their ABs?
Yes. Disclose all affiliated business arrangements to your clients and to the Division of Real Estate on your paperwork.
316
What can unlicensed assistants do? (8)
Complete forms under a broker's direction.
Distribute pre-printed info prepared by broker
Clerical duties
Deliver paperwork
Prepare CMA under direction & disclosed (useless)
Collect money & give receipts
Schedule repairs with written authorization of Owner
Write & place advertisements under direction
317
What are unlicensed assistants prohibited from doing? (6)
Negotiate
List
Sell
Prepare forms WITHOUT broker
Offer opinions, advice or interpretations
Provide info on property OTHER than written in advance by broker.
318
Can an unlicensed assistant host an Open House?
- In Colorado
- Elsewhere
1. In Colorado yes, but has to stick to the written script.
| 2. Many other states do not allow.
319
CP 1 - Must a homebuilder be exempt to sell a house s/he built?
Homebuilders are exempt.
Selling land & house together.
Salaried salespersons.
Bonuses tied to sales are OK.
320
CP 2 - Are referral fees to unlicensed folks allowed?
Yes, provided (a) actual business introduction is made and (b) a written contract.
Buying lists of potential customers is also allowed. Referral seller is limited to providing name/contact info.
321
CP-2 What limitations on referral fees are imposed when house purchase will be funded by a federally regulated mortgage loan?
NO referrals of settlement services under RESPA.
(Fee splitting is key here. Think kickback.)
Freeman v. Quicken Loans.
Administrative fees for services actually rendered are OK.
322
CP-2 Examples of federally regulated lenders (3)
FannieMae, FreddieMac, Veterans Administration
323
Freeman v. Quicken Loans, U.S. Supreme Ct. (2012)
Explains that the transactions prohibited by RESPA are not any fee charged to consumers for settlement services actually rendered. Intended to prohibit kickbacks only.
"Held: In order to establish a violation of §2607(b), a plaintiff mustdemonstrate that a charge for settlement services was divided between two or more persons. "
324
Can a brokerage firm engage in cooperative advertising with a lender?
Yes.
| Cannot compel a client to use a preferred lender or title company.
325
CP-3 What is the sign crossing rule?
A broker should not knowingly solicit a listing with an owner already under and exclusive listing contract BUT if the owner initiates the conversation you may discuss services to be rendered when the exclusive contract EXPIRES.
326
CP-3 Must a broker inquire whether a potential listing client is already under contract with another broker?
Yes.
327
CP-4 Who owns the interest on an brokerage escrow account?
Unless otherwise specified in writing (don't), interest belongs to the Seller if closing occurs or Buyer forfeits the earnest money. Interest belongs to Buyer if the contract fails in good faith (earnest $ not forfeited).
328
CP-5 Who owns the interest on a lease-related escrow account?
- Security deposit
- First month rent
Security deposit - Renter *
Prepaid rent - Landlord
* Interest on mobile home security deposits may be kept by the Landlord. (why?!)
329
CP-5 If Broker accepted security deposit, can s/he transfer the funds to the Landlord?
Only if notice is given to the tenant in the lease or a separate written document AND
Landlord must sign a contract agreeing to take full responsibility for the return of the security deposit to the owner.
330
CP-5 What information must be given to tenant concerning their security deposit holder? (3)
Name (Landlord or Registered Agent)
Contact information
Instructions on how to get money back.
331
CP-5 Is Broker required to keep a copy of lease and notices?
Yes. Maintain in file.
332
CP-6 When is earnest money returned to Buyer if there is no dispute?
Immediately.
Practice Tip: first confirm there is actually no dispute. Formal releases aren't required.
333
If the parties dispute who is entitled to earnest money , what should the Broker do?
1. Seek releases from both or a court order. If the parties are stalled you have two options:
a. You can deposit money with the court & interplead the parties. You may recover court costs if listing/agency contract permits.
b. Give notice to both parties, you have 120 days to file your suit or I'm giving the money back to the Buyer.
334
What if the Buyer disappears after giving you earnest money?
Turn the money over to the Colorado State Treasurer per the "Unclaimed Property Act".
335
CP-7 Is the Broker required to prepare legal contracts for closing?
No, but if you don't provide this service you must disclose it in advance. Clients will need an attorney (additional cost).
Practice tip: not typical
336
CP-7 Can the brokerage firm hold closings?
Yes, and brokerage firm can charge fees for closing services other than the legal document preparation.
337
CP-8 Can listings / agency contracts be assigned?
Maybe.
| Owners of listed properties must consent.
338
CP-8 What if a broker dies while a sale is pending?
The sale goes through. Contract is still binding. The broker isn't a party to the sales contract. The right to the commission is assignable.
339
CP-9 Can records be stored electronically?
In general, yes. Must be legible.
| *Except Deeds & Title Commitments.
340
CP-15 Can a broker accept compensation for items, repairs, remodeling, or appliances?
- Connected to a sale/lease/property mgmt
- Not connected to a sale/lease/property mgmt
Yes.
- If connected with a sale/lease/property mgmt contract then compensation must be paid to employing broker.
- If not connected with sale/lease/property mgmt contract, (i.e. side gig) then broker may be paid directly.
341
CP-12 Can a listing agent rebate part of their commission to secure a listing (i.e. discount)?
Yes, to secure the listing.
342
CP-12 Can a buyer's agent rebate part of their commission?
Yes, but disclosure is recommended.
| Post-closing gifts don't count.
343
CP-16 What kind of access to listed real property is the Seller obligated to provide?
Access is dictated by the seller, pursuant to the listing contract. Seller decides whether there will be:
- lock box
- MLS listing
- open houses
- signs
- advertising
- photos
344
CP-16 Who is liable if property listed for sale is damaged?
The listing agent is responsible to safeguard access. Contract governs liability for damage due to broker's negligence.
The buyer's agent may NOT give access codes to any third party (inspector, appraiser, customer). CBS-1 holds buyers responsible for any damage done during inspection.
345
CP-18 Can an employing broker pay compensation to a corporation wholly owned by an associate broker?
Yes, although it seems to violate statute CREC takes the position it does not. EB is NOT relieved of the obligation to supervise AB just because there is a corporation interposed.
346
CP-19 Can a broker engage in short-term occupancy agreements?
- Where must funds belonging to others be held?
Yes
| Funds belonging to others must be held in a trust account, EVEN IF arising from NON-BROKERAGE ACTIVITIES.
347
CP-23 When must the Licensee Buyout Addendum be used?
1. Broker to buy property concurrent with the listing of such property. (beginning of listing)
2. Broker to buy property to facilitate the property owner’s purchase of another property listed by Broker.
3. Broker to buy property from an owner, while continuing to market that property on behalf of the owner under an existing listing contract (middle of listing).
348
CP-24 Can a broker call a CMA an "appraisal"?
No.
349
CP-25 Can a broker file a lien against a listing to protect their commission?
No.
| Your only recourse is to sue if you are not paid.
350
CP-26 Who can operate a real estate auction?
Public trustee, if a foreclosure.
Otherwise, must be a Licensee.
*You can hire a "crier" for the entertainment value, but you are in charge.
351
Where do you find the approved Colorado lease form?
You don't. It doesn't exist. Use an attorney.
352
How soon after tenancy is surrendered must the security deposit be returned?
60 days is the maximum allowed delay.
353
What duties apply to a Broker who manages personal rental properties? (3)
1. Disclose any conflicts of interest
2. Use a lease drafted by an attorney
3. Do no put funds in your EB's fund account, you have to open your own trust account & follow the rules for Landlords.
354
CP-40 What precautions must real estate teams take?
Teams must not confuse the public about the identity of the brokerage. Cannot use the term "LLC" or "Realty"
355
CP-46 Define "adverse material fact"
A reasonable person would consider this fact relevant.
| Examples: title, physical condition, environmental hazards
356
CP-46 True or False: If your are exclusive agent & the material adverse fact is damaging to your client, you can withhold the information?
False.
Brokers are obligated to disclose material adverse facts known to them, (or knowable through reasonable diligence) without regard to who they represent!
357
True or False: In order to sell RE options, you must hold a securities & exchange license.
False. You must hold a RE license to sell options in RE.
358
Describe the senior housing exception to Colorado's Fair Housing Act.
Exempts
Housing solely created for persons 62 and older OR
80% of units occupied by at least one person per unit who is 55 or older.
359
What kind of legal relief is available for violations of the Fair Housing Act? (6)
```
Attorney fees and costs
Actual and punitive damages
Affirmative action as may be appropriate
Permanent or temporary injunction
Back pay and rehiring
Reimbursement of the offended party for any actual expenses incurred
Assess a civil penalty
```
360
What civil penalties can be imposed for violations of the Fair Housing Act?
$10,000 maximum first offense
$25,000 max if 2nd offense within 5 year period
$50,000 max if 3rd offense or more in 7 year period
361
What is the statute of limitations for filing a complaint alleging violation of the Fair Housing Act?
Depends where you are filing the complaint
1. Colorado Civil Rights Commission: 1 year.
2. Attorney General: 18 months.
3. District Court: 2 years.
362
Are there any criminal penalties for violation of public accommodations / civil rights law?
M1 misdemeanor. Fines or up to a year in jail.
363
ADA: True/ False: A disabled tenant can be prohibited from making any changes to the rental unit structure.
False. A disabled tenant is allowed to make modifications to a rental to allow use.
364
ADA: True/ False: A disabled tenant can be required to use a licensed contractor to remodel a rental unit to allow use.
True.
365
ADA: True/ False: A Landlord must retain any alterations to the rental unit that make it handicap friendly.
False. Actually, the Landlord can require tenant to return to original state upon lease end.
366
ADA: True/False: 1940's "walkup" apartment buildings that only have staircases are in violation of ADA.
False. Common areas of NEW rental properties must be designed to be handicap accessible. Older properties are exempt.
367
ADA: True/False: It's okay if your brokerage office is not handicap accessible.
False. Public accommodations must allow entry by handicap persons. (Handicap parking, at least one main door to building is wide enough for wheelchair, etc.)
368
ADA: True/False. If you don't like dogs, you can prohibit all dogs from entering your place of business.
False. Guide dogs must be allowed in public accommodations. (includes brokerage offices)
369
The 4 major governmental limitations on property ownership rights are:
*hint: PETE
1. police power – the right to impose reasonable limitations to protect and promote the health, safety and general welfare of the public;
2. eminent domain – the right to take private property for public use in return for payment of just compensation;
3. taxation – the right to impose taxes for governmental support and to proceed against the land for non-payment; and
4. escheat – the right to acquire title to property owned by a person who dies without leaving a will (intestate) or heirs-at-law.
370
The 4 major private limitations on property ownership rights are:
*hint MELD
1. mortgages – a security claim of the mortgagee (lender) upon the property preventing use or change that would injure the property’s value;
2. easements – a right to cross over the property of the fee holder without interference.
3. leases – suspends the fee-holder’s right to use and possess for some period of time
4. deed restrictions – imposed by a grantor, such as requiring that all structures built upon the land must be of brick veneer, or that the property may only be used for a specific purpose.
371
In Colorado, can you give your spouse a life estate in the marital home?
No. Entailment (“fee tail”) and life estates are abolished in Colorado
372
The two ways to hold title with another person in Colorado are:
1. Joint tenancy & right of survivorship. (JTWROS)
2. Tenants in common TIC can hold unequal interests. No right of survivorship. Ownership passes under the TIC’s will or according to intestatacy laws.
373
What were the common law requirements for joint tenancy with right of survivorship? (4)
(1) The joint tenants own an undivided interest in the property as a whole; all joint tenants hold EQUAL SHARES. Cannot be uneven.
(2) The estates of the joint tenants are VESTED for exactly the same period of time.
(3) The joint tenants hold their property under the SAME TITLE.
(4) The joint tenants all enjoy the SAME RIGHTS until one of them dies.
374
What is the amount of Colorado's homestead exemption?
$60,000.
| $90,000 if elderly or disabled.
375
Define easement appurtenant.
It attaches to and benefits the land owned by the easement holder.
(e.g. right to cross land to reach the road)
376
Define easement in gross.
It belongs to and benefits the easement owner personally, apart from his/her/its land holdings.
(e.g. Utility Co's right to run wires across your farm)
377
What does it mean to say an easement "runs with the land"?
The easement cannot be separated from the dominant estate & sold separately.
378
What is a servient estate?
One that is burdened by an easement appurtenant.
| Opposite: dominant estate
379
Can an easement in gross be transferred?
Yes. No limits on who you can sell it to.
| e.g. mining rights
380
What time period is required for adverse possession in Colorado?
18 years.
| Lowers to 7 years with color of title.
381
What are the elements that must be proved for adverse possession in Colorado?
*COUGH
```
Hostile
Open
Continuous (with tacking)
Use
Good faith, reasonable belief they owned the land*
```
*added in 2008
382
What is the standard of proof for adverse possession?
Clear & convincing evidence.
383
True/False: If one member of a team is seller's agent, they all are.
True.
| Team members are not subagents of the team leader. Colorado has abolished sub-agents.
384
When will the broker/client relationship end?
| 4
1. Expiration
2. Consummation
3. Mutual agreement
4. One year from engagement
385
Without written consent, an agent should never disclose:
| 3
1. Client is willing to lower/raise price offered.
2. Client's motivating factors for the sale
3. Psychologically disturbing or stigmatizing history of property (ghosts)
386
Buyers agent: Can you brag that your client can qualify for way more than seller's asking price?
No. Do do not reveal the buyer is capable of qualifying for more than the sales price.
387
Buyer's agent: If you know your client cannot afford the house, do you say anything?
Yes. Qualification for financing is considered a material fact. If the buyer cannot qualify and the broker knows, it must be disclosed.
388
What duties does an agent owe their client AFTER the transaction is complete?
Subject to contract +
a. Accounting for all moneys and property connected to the transaction.
b. Keeping all information confidential, unless
- receive written consent to disclose,
- disclosure is required by law, or
- the information has already become public
389
What duties doe a TB owe their clients AFTER the transaction is complete?
Subject to contract +
| Just accounting for all moneys and property connected to the transaction.
390
What is the key difference between an "exclusive right to sell" listing and an "exclusive agency" listing?
In an exclusive agency listing, the Seller can compete with the broker by seeking out their own Buyer. If the Agent is not the procuring cause of the sale, no commission is earned.
391
What is an "open listing"?
Seller notifies all brokers that only if the broker is procuring cause and there is a successful sale, then broker will receive a fee. Seller may still sell on his/her own behalf and not pay a fee.
* Imagine an FSBO that hasn't been successful but isn't ready to give up yet.
392
What is an "exclusive right-to-buy" contract?
Broker as Agent or Transaction-Broker is involved and responsible for all aspects of helping client purchase property. Broker receives payment upon sale for fulfilling contract duties.
393
Can a broker explain to a potential client that 6% is the "going rate" for brokerage services in Colorado?
No.
| Antitrust.
394
How many days to deposit earnest money after the contract is accepted by seller?
Earnest money must be deposited no later than the THIRD BUSINESS DAY once the contract is accepted.
395
If buyer discovers the property is part of the special taxing district, hell long do they have to get out of the deal?
The earlier of Closing or 10 days after receipt of the Tax Certificate notifying them of the property's inclusion in a special taxing district.
396
If Buyer objects to "on record" title defects, when must this occur?
a. By the Record title objection deadline.
BUT IF title documents are not received by the buyer by the Record Title Deadline or there is an exception or modification to the Title Abstract or Title Commitment, then buyer can object by the earlier of Closing or 10 days after receipt.
397
If there's a fire & it damages 10% or less of the property, can seller repair before closing and require buyer to perform under the contact?
Yes, if damage is less than or equal to 10% and repairs are completed BEFORE Closing.
If not repaired or damage is greater than 10%, buyer has the right to terminate BEFORE the closing date.
398
What is the default hold over. In a listing contract or exclusive right to buy contract?
None.
The "holdover period" i.e. the period of time after the expiration of the brokerage relationship during which the broker must be paid a commission, is completely negotiable.
399
A truth in lending disclosure is triggered by an advertisement that includes...
The amount or percentage required for down payment.
* APR is a red herring
400
Must Colorado listing contracts contain a definite date for termination?
Yes.
| Regulation 6.14 (D)
401
How long after termination of a management contract must an Common Interest Community Manager maintain a copy of the records?
3 years.
A copy of the common interest community’s documents and association records maintained and produced during the management of the common interest community must be kept for a minimum period of 3 years following termination of the management agreement.
402
Does the Square Foot Disclosure explain how Listing Agent came up with the square footage?
Yes.
Method used to measure yourself or the "reasonable source" you relied upon.
And the date.
403
How long must a Broker retain trust account records?
4 years.
404
In the event of a security deposit dispute, may the Broker reveal the Landlord's true name and address.
Yes.
This is specified in the agreement required before a Broker can turn over the security deposit to the Landlord, as well as Landlord's agreement to be solely responsible for returning the security deposit to the Tenant.
405
The legal "means" or "process" of taking water from a private owner for public use, together with compensation to the owner is known as:
Condemnation
406
The legal process of taking water from a private owner for public use, together with compensation to the owner is known as:
Condemnation
* You wanted to call it eminent domain but that only applies to the taking of land, not water.
