Contracts Flashcards
(184 cards)
1
Q
What is the difference between the function of CREC and the Division of Real Estate?
A
CREC (Colorado Real Estate Commission) interprets the laws, creates policy, and disciplines licensees found guilty of violations.
The Division of Real Estate handles administrative aspects of licensing, such as the maintenance of a master database.
2
Q
The commission requires that brokers keep all transactional records for a certain amount of time. How long is the required retention period?
A
4 years
3
Q
When seeking to reverse or modify the decision of an administrative law judge, a party should submit a __, which is that part of the official record designated as relevant to the decision review.
A
When seeking to reverse or modify the decision of an administrative law judge, a party should submit a Designation of Record, which is that part of the official record designated as relevant to the decision review.
4
Q
If a broker commits a crime or violates real estate license law, who has the authority to revoke the broker’s license?
A
The Colorado Real Estate Commission (CREC)
5
Q
If disciplinary actions are levied against a licensee, what’s one alternative to an administrative hearing?
A
Using the expedited settlement program
6
Q
The entities that administer license law in Colorado
A
The Division of Real Estate and the Colorado Real Estate Commission
7
Q
Number of members on the Colorado Real Estate Commission
A
Five members: three brokers and two members of the public, each serving a three-year-term
8
Q
What is the purpose of a Commission Policy Statement?
A
To clarify real estate laws and rules
9
Q
Number of years a new broker in Colorado must be supervised by an employing broker before going independent
A
Two
10
Q
Requirements a licensee must fulfill to obtain an employing broker level license
A
At least two years of experience as a broker and proven supervisory experience in the relevant area of expertise
11
Q
Other than during the transition period, the date of license renewal for all licensees
A
December 31
12
Q
Period of time brokers must retain transactional records
A
4 years
13
Q
Serious complaints about a licensee to the commission may be referred to a hearing presided over by __________
A
An administrative law judge
14
Q
No referral fees may be accepted between ____________ providers.
A
Settlement services
15
Q
What was the purpose for CREC’s adoption and promulgation of Chapter 7?
A
It required all Colorado licensed real estate brokers to use commission-approved forms.
16
Q
The case of __ is a historical case in Colorado, which affected real estate brokers’ ability to prepare legal documents.
A
The case of Conway-Bogue is a historical case in Colorado, which affected real estate brokers’ ability to prepare legal documents.
17
Q
What is the overarching principle of the Parole Evidence Rule
A
The overarching principle: A written agreement is the final expression of an agreement between parties, and no other “deals,” whether written or verbal, can come into play if not part of the signed contract. The purpose is to prohibit a claimant stating in a court of law that the signed, written agreement isn’t what he or she had intended.
18
Q
What is the purpose of the Uniform Electonic Transactions Act?
A
UETA established that electronic documents and signatures have the same legal equivalence as physical records and writing.
this is allowed in CO, but not required
19
Q
What is Rule F
A
Requires Colorado licensed real estate brokers to use standard commission approved forms
20
Q
What does Colorado’s statute of frauds say about real estate contracts?
A
Sales contracts are void unless they’re in writing and signed by sellers.
21
Q
Who has the responsibility to adopt rules that concern the Colorado’s Uniform Electronics Transaction Act?
A
Colorado’s Secretary of State
22
Q
This act created the Office of Fair Housing and Equal Opportunity.
A
Fair Housing Act of 1968
23
Q
This act prohibits discrimination in lending by requiring lenders to give equal access to credit.
A
Equal Credit Opportunity Act
24
Q
HUD enforces the portion of this act that applies to public housing, housing assistance, and housing referrals.
A
Americans w/ Disabilities Act
25
This act recognizes all persons born in the U.S. as citizens.
Civil Rights Act of 1866
26
What conditions need to be met in order for senior housing to not be considered discriminatory?
For senior housing to not be considered discriminatory under federal fair housing laws, 80% of the residents must be at least 55 or older, and there must be a policy to keep it that way.
27
Which act was the first to prohibit any exceptions for discrimination based on race or color?
Civil Rights Act of 1866
28
What law requires local authorities to publish the whereabouts of registered sex offenders?
Megan's Law
29
Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?
Department of Housing and Urban Development
30
Which entity is responsible for enforcing Colorado’s Fair Housing Act?
The Colorado Civil Rights Division enforces the state’s fair housing laws.
31
Any person who feels that he or she has been discriminated against should file a complaint with the Colorado Civil Rights Division (CCRD). How long does an aggrieved person have to file a complaint with the CCRD?
A person who feels that he or she has been discriminated against has one year from the occurrence to file a complaint with the CCRD.
32
What is the difference between the Colorado Civil Rights Division (CCRD) and the Colorado Civil Rights Commisssion?
the Colorado Civil Rights Division (CCRD) enforces the Colorado Fair Housing Act and conducts investigations of fair housing complaints in Colorado. An aggrieved person has one year to file a complaint with the Colorado Civil Rights Division and up to two years to file a court action.
The Coolordo Civil Rights Commission comprises seven members, four of whom belong to protected groups that might face or once faced discrimination.
They:
- Investigate discrimination claims
- Examine appeals of cases that CCRD dismissed
- Implement regulations that enforce CO's anti-discrimination laws
33
What's significant about Colorado's anti-discrimination laws of 1959?
Colorado was the first state to take such anti-discrimination action, nine years ahead of the federal laws.
34
Colorado's fair housing laws include additional protected classes not covered by federal regulations. What are these?
Creed and ancestry
35
What are the four Colorado cities that have made age discrimination illegal?
Aspen, Crested Butte, Denver, and Telluride
36
What is the Colorado Common Interest Ownership Act (CCIOA)?
An act that provides guidelines for the efficient and effective governance of homeowners' associations (HOAs), and gives HOAs the right to lien the property of unit owners for nonpayment of dues and assessments
37
What is the Colorado Real Estate Appraiser Licensing Act
Allows licensed real estate brokers to perform certain real estate valuation-related activities without being registered, licensed, or certified as real estate appraisers
38
In CO, When working with parties in the same transaction, a licensee can act as a transaction-broker for one party or both. A licensee can’t act as a single agent for one party and a transaction-broker for the other party in the same transaction.
39
What is the difference between uniform duties and additional duties that single agents owe buyers/seller?
A single agent representing a buyer or seller owes the client **uniform duties**, including reasonable skill and care, performing the terms of the contract, maintaining confidentiality, and keeping the seller informed about the transaction (among other things).
Uniform duties are 17 duties that apply to both single agents and transaction-brokers; established by statute in Colorado
Single agents also owe seller/buyer **additional duties**, such as promoting the interests of their client, seeking a price/terms acceptable to the client, and counseling the client about benefits and risks the agent knows about.
Additional duties are three additional duties that single agents owe their clients. They do not apply to transactional brokers
40
What is the difference between express authority, implied authority, and apparent authority in relation to an agency relationship?
Express Authority exists when a contract, either written or oral, is in place; sets specific duties and responsibilities of the parties to the contract; Colorado only recognizes written express authority.
Implied authority isn't written into a contract; recognizes that a broker may need to take certain actions in order to carry out express authority duties.
Apparent authority Exists when someone's words or actions might lead a reasonable person to believe that person is acting as an agent; shouldn't be an issue in Colorado as agency relationships can only be created via written express authority.
41
A __ form is used when a licensee must go from a single agent relationship with a client to a transaction-broker relationship.
A Change of Status form is used when a licensee must go from a single agent relationship with a client to a transaction-broker relationship.
42
__ are provided to customers to acknowledge the type of relationship that does or doesn’t exist.
Brokerage Disclosures are provided to acknowledge the type of relationship that does or doesn’t exist.
43
__ outlines the relationship a consumer could enter into with a licensee.
Definitions of Working Relationships outlines the relationship a consumer could enter into with a licensee.
44
What is the difference between marketable title and insurable title?
Marketable title has no defects or clouds. It's not necessarily a perfect title. Sellers can convey marketable title if the title search reveals no doubt about property ownership and there aren't any liens, debts, or encumbrances that won't be cleared at closing. For a title to be marketable, both the evidence of title and the absence of clouds are required.
Insurable title is one in which there may be known defects (such as an easement), but the title company has notified the parties of the defect and has agreed to insure against it and not list it as a policy exception.
A key concern is that sellers who offer insurable title rather than marketable title may not have to clear up the title problems that come up before closing.
The safest decision is for buyers to receive marketable title that is backed by title insurance.
45
What is the difference between title insurance and abstract of title?
An abstract of title is a report based on what was found in a title search, which is an investigation of the legal records concerning the title to ta property.
Title insurance is an insurance policy that covers various defects in the title that may be discovered after closing
46
What is the general process of getting to an issued title policy?
- title search is conducted. The title company should be able to identify a chain of title
- an abstract of title is created, which is a report based on what was found in the title search
- A certificate of title is then provided by the title company or an attorney, which is a statement of opinion regarding the status of the title
- The certificate of title is used to create the title commitment - which is an agreement by a title insurer to issue the final title insurance policy.
47
All listing contracts start with either the exclusive right-to-sell or exclusive right-to-lease contract. Then, if the seller
desires exclusive agency or an open listing, the licensee adds the appropriate addendum.
48
The Exclusive Brokerage Listing Addendum documents that brokers will receive compensation in all situations except __.
The Exclusive Brokerage Listing Addendum documents that brokers will receive compensation in all situations except seller sales.
49
In Colorado, open listings are created with the __ as an addendum to the exclusive right-to-lease or right-to-sell contract.
In Colorado, open listings are created with the Open Listing Addendum as an addendum to the exclusive right-to-lease or right-to-sell contract.
50
if used with a listing contract, the Listing Contract Amend-Extend is used to change __
the listed price of a property or to extend the contract terms
51
What's the only required addendum for the Exclusive-Right-to-Sell Listing Contract in Colorado?
Closing Instructions
52
What is a transaction-broker?
A broker who facilitates a transaction without acting as an agent
53
How are leasing commissions usually structured?
Percentage of the gross rent, or a multiple of the square footage being leased
54
How is an exclusive agency relationship documented in Colorado?
By an addendum to the exclusive right-to-lease contract or exclusive right-to-sell contract
55
What does the Exclusive Brokerage Addendum provide regarding listing broker commission?
The listing broker will receive compensation in all situations except seller sales
56
How is an open listing agreement documented in Colorado?
With the Open Listing Addendum as an addendum to the exclusive right-to-lease contract or exclusive right-to-sell contract
57
What are two primary uses for the Agreement to Amend/Extend Contract with Broker addendum?
Extend the contract term, change the list or lease price
58
What’s true of the holdover period when using the Exclusive Brokerage Listing Addendum?
The holdover period must be negotiated.
59
In Colorado, licensees are required to keep copies of buyer and tenant contract forms on file with their broker in a secure, central location for a minimum of __ years.
In Colorado, licensees are required to keep copies of buyer and tenant contract forms on file with their broker in a secure, central location for a minimum of four years.
60
Licensees are required by Colorado law to provide consumers with the ___ form (Form DD25) upon request, and ask consumers to sign it as an acknowledgment of receipt.
Licensees are required by Colorado law to provide consumers with the Definitions of Working Relationships form (Form DD25) upon request, and ask consumers to sign it as an acknowledgment of receipt.
61
The CREC-approved form to establish the broker-tenant agency agreement is the ___ Contract.
The CREC-approved form to establish the broker-tenant agency agreement is the Exclusive Tenant Listing Contract.
62
The CREC-approved form to establish the broker-buyer agency agreement is the __ Contract.
The CREC-approved form to establish the broker-buyer agency agreement is the Exclusive Right-to-Buy Listing Contract.
63
In Colorado, the buyer representation agreement may be oral, but only if the broker is acting as a __.
In Colorado, the buyer representation agreement may be oral, but only if the broker is acting as a transaction-broker.
64
A “__ clause” prevents buyers/tenants from reaching an agreement with a seller/landlord on a property and then discarding their brokers so that neither party has to pay a broker commission.
A “protection clause” prevents buyers/tenants from reaching an agreement with a seller/landlord on a property and then discarding their brokers so that neither party has to pay a broker commission.
65
What are the additional duties that an agent has on top of the uniform duties that a transactional broker has?
- Being loyal to the client
- Negotiating on the client's behalf
- Providing the client with any known benefits or risks associated with the transaction
66
This form provides descriptions of the available working relationships that consumers may have with brokers. It must be provided upon request.
Definitions of Working Relationships
67
Definitions of Working Relationships
This form provides descriptions of the available working relationships that consumers may have with brokers. It must be provided upon request.
68
You’ll use this form when you’re assisting a buyer and you come into contact with a potential seller of a property and discuss its possible sale.
Brokerage Disclosure to Seller
69
Brokerage Disclosure to Seller
You’ll use this form when you’re assisting a buyer and you come into contact with a potential seller of a property and discuss its possible sale.
70
Brokerage Disclosure to Buyer
You’ll use this form when you’re assisting a seller and you come into contact with a potential buyer of a property and discuss its possible purchase.
71
You’ll use this form when you’re assisting a seller and you come into contact with a potential buyer of a property and discuss its possible purchase.
Brokerage Disclosure to Buyer
72
Brokerage Disclosure to Landlord
You’ll use this form when you’re assisting a tenant and you come into contact with a potential landlord of a property and discuss leasing the property.
73
You’ll use this form when you’re assisting a tenant and you come into contact with a potential landlord of a property and discuss leasing the property.
Brokerage Disclosure to Landlord
74
Brokerage Disclosure to Tenant
You’ll use this form when you’re assisting a landlord and you come into contact with a potential tenant of a property and discuss the tenant’s potential leasing of the property.
75
You’ll use this form when you’re assisting a landlord and you come into contact with a potential tenant of a property and discuss the tenant’s potential leasing of the property.
Brokerage Disclosure to Tenant
76
The __ form isn’t a contract; it’s a disclosure of the broker’s change from an agency relationship to a transaction-brokerage relationship.
The Colorado Change of Status form isn’t a contract; it’s a disclosure of the broker’s change from an agency relationship to a transaction-brokerage relationship.
77
Individuals who are licensed as real estate brokers and mortgage brokers must present the __ form to the buyer/borrower to obtain the buyer/borrower’s consent to act in a dual capacity.
Individuals who are licensed as real estate brokers and mortgage brokers must present the Colorado Dual Status Disclosure form to the buyer/borrower to obtain the buyer/borrower’s consent to act in a dual capacity.
The Colorado Dual Status Disclosure form informs a buyer/borrower that the broker in the transaction is licensed as both a real estate broker and mortgage loan originator.
78
Form used to disclose the broker's change from an agency relationship to a transaction-brokerage relationship
Change of Status
79
Form that informs a buyer/borrower that the broker in the transaction is licensed as both a real estate broker and a mortgage loan originator
Dual Status Disclosure
80
For how long must Colorado brokers retain most disclosure forms on file?
4 years
81
For how long must Colorado brokers retain the Dual Status Disclosure form on file? (this is for mortgage and broker dual status)
5 years
82
Colorado brokers can act as single agents or transaction-brokers when working with consumers, but are not allowed to use dual agency or sub-agency.
83
What is the difference between a sub agent, a single agent, and a dual agent?
A sub-agent works for the agent representing the seller, and also for the seller. This is illegal in Colorado.
A dual agent situation occurs when one agent represents both the buyer and seller in a transaction. This is illegal in Colorado.
A single agent represents only one party in the transaction. A seller's agent represents sellers, and a buyer's agent represents buyers.
84
When should a a broker use one of the brokerage disclosure forms?
Regardless of the relationship type, the appropriate brokerage disclosure form should be used when brokers come into contact with a potential second party whom they don’t represent, and with whom they discuss the possible sale/purchase of that property.
85
How many year(s) must a licensee keep Change of Status forms?
4
86
What’s the purpose of a contract addendum in general?
A contract addendum supplements information in a contract before it’s executed.
Different than an amendment!!
87
Used to meet the disclosure requirements for client relationships and also defines brokerage duties when brokers opt to use their own attorney-drafted property management agreement
Brokerage Duties Addendum to Property Management Agreement form
88
Brokerage Duties Addendum to Property Management Agreement form
Used to meet the disclosure requirements for client relationships and also defines brokerage duties when brokers opt to use their own attorney-drafted property management agreement
89
Agreement to Amend/Extend Contract with Broker form
Used to make an amendment to the original terms of an executed contract; once signed by both parties, it becomes part of the original contract
90
What’s a key difference between a contract addendum form and an amendment form?
Addenda supplement the contract information and are attached prior to contract execution.
Amendments are attached after a contract is executed to modify the terms of the original contract
91
When would you use the Brokerage Duties Addendum to Property Management Agreement form in Colorado?
To disclose the agency relationship established in a non-CREC property management contract
92
What’s the appropriate way to use an addendum?
Attach to a contract prior to execution
93
What commission-approved form would you use to disclose your agency relationship with an owner who wants to find tenants?
Brokerage Duties Addendum to Property Management Agreement
94
The __ form is an optional seller disclosure that’s used to highlight the energy-efficient features of the home. It allows the home to be listed as green on the MLS.
The Green Disclosure form is an optional seller disclosure that’s used to highlight the energy-efficient features of the home. It allows the home to be listed as green on the MLS.
95
Which government agency is one of the primary enforcers of green regulations on a national scale?
The Environmental Protection Agency
96
How long after buyers purchase a property that has a well do they have to submit the appropriate change of ownership forms?
60 days after the sale
97
__ means "let the buyer beware." In these states, the seller makes no representations about property conditions, and the burden is on the buyer to perform due diligence
Caveat emptor means "let the buyer beware." In these states, the seller makes no representations about property conditions, and the burden is on the buyer to perform due diligence
CO is a full disclosure state
98
What are caveat emptor states?
Let the buyer beware; states that apply caveat emptor don't require the seller to disclose known material defects unless asked directly. Colorado is not a caveat emptor state.
99
What is an adverse material fact?
A fact that would cause a reasonable buyer concern (about whether to purchase, what price to pay for the home, or what terms to offer)
100
Who can complete the Seller's Property Disclosure form?
Only the seller
101
What is a Green Disclosure?
An optional seller disclosure used to highlight the energy-efficient features of the home; allows the home to be listed as green on the MLS
102
What is a common interest community?
Real estate that is subject to a declaration containing lots (at least some of which must be residential or occupied for recreational purposes) and common areas; requires disclosure by seller to prospective buyers
Typically, has a HOA
103
What is an estoppel statement?
Discloses the terms and conditions of pre-existing leases and tenants that may be staying with the property when sold
The estoppel statement prohibits either the new landlord or tenant from claiming terms other than those defined in the statement and its attachments.
104
Sellers and landlords of properties built prior to ___ must provide the buyer with a lead-based paint disclosure as well as an EPA or Colorado pamphlet describing how to minimize the dangers of lead.
Sellers and landlords of properties built prior to 1978 must provide the buyer with a lead-based paint disclosure as well as an EPA or Colorado pamphlet describing how to minimize the dangers of lead.
105
How many days are sellers required to give buyers to conduct a risk assessment for lead-based paint or lead-based paint hazards?
10
106
In a residential transaction, who’s responsible for completing the CREC-approved Square Footage Disclosure form provided to the buyer and seller?
The seller’s broker
107
The ___ is the buyer's documented offer to the seller to purchase the property identified in the agreement.
The sales contract is the buyer's documented offer to the seller to purchase the property identified in the agreement.
108
Whats the difference between the Disclosure of Settlement Costs, Closing Instructions, and Closing in relation to a CBS residential?
The Closing section of the CBS residential is where the parties acknowledge that the deed must be delivered to the seller at closing (or before, if they agree on a date), and where they complete the information regarding where and when the closing will be held.
“Closing Instructions” states whether or not the CREC Closing Instructions form is being used with the transaction, while the “Disclosure of Settlement Costs” reminds the parties that different settlement providers offer various services, costs, and levels of quality.
109
The __ section of the CBS residential says that the seller must deliver to the buyer copies of all existing surveys seller has, and disclose all other title matters by the off-record title deadline.
The “Off-Record Title” section of the CBS residential says that the seller must deliver to the buyer copies of all existing surveys seller has, and disclose all other title matters by the off-record title deadline.
110
The __ section of the CBS residential says that the buyer has the right to review and object to abstract or title commitment or other title documents on or before record title deadline.
The “Record Title” section of the CBS residential says that the buyer has the right to review and object to abstract or title commitment or other title documents on or before record title deadline.
111
An __, which is similar to a survey, is a basic way to describe and locate property, and show where improvements, encumbrances, and easements are. It’s often required by lenders and title insurance companies.
An Improvement Location Certificate (ILC), which is similar to a survey, is a basic way to describe and locate property, and show where improvements, encumbrances, and easements are. It’s often required by lenders and title insurance companies.
112
Possession and closing usually occur on the same day. If the seller wishes to stay past that date, the parties will need to complete a ___
Possession and closing usually occur on the same day. If the seller wishes to stay past that date, the parties will need to complete a post-closing occupancy agreement.
113
__ are the fair share of expenses divided among the buyer and seller as of the closing date.
Prorations are the fair share of expenses divided among the buyer and seller as of the closing date.
114
__ is a non-binding, non-legal remedy where both parties select and pay for the services of a mediator to help them work out their differences. If the contract-related dispute isn’t resolved within 30 days, the obligation to mediate ends.
Mediation is a non-binding, non-legal remedy where both parties select and pay for the services of a mediator to help them work out their differences. If the contract-related dispute isn’t resolved within 30 days, the obligation to mediate ends.
115
___________ occurs when a party to a contract is in breach of that contract.
Default
116
What’s the “good faith” clause in the Colorado contracts to buy and sell?
A confirmation and acknowledgement of each party’s responsibility to perform all obligations described in the contract to the best of their ability and with the intention of behaving honestly.
117
The ___, which is part of the Contract to Buy and Sell Real Estate (Income – Residential), is provided by the tenant (or other occupant) to certify certain facts about the tenancy of the contracted property. Each statement must be attached to a copy of the lease to which it pertains. The buyer may terminate the sales contract on or before the estoppel statements termination deadline if she finds the estoppel statement(s) unsatisfactory.
The estoppel statement, which is part of the Contract to Buy and Sell Real Estate (Income – Residential), is provided by the tenant (or other occupant) to certify certain facts about the tenancy of the contracted property. Each statement must be attached to a copy of the lease to which it pertains. The buyer may terminate the sales contract on or before the estoppel statements termination deadline if she finds the estoppel statement(s) unsatisfactory.
118
Which fraudulent practice often involves the seller transferring title to the buyer, who refinances the home, removes the equity, and skips town?
Equity Skimming
119
The __ section of the CBS residential says that the buyer has the right to review and object to abstract or title
commitment or other title documents on or before record title deadline.
The "Record Title" section of the CBS residential says that the buyer has the right to review and object to abstract or title
commitment or other title documents on or before record title deadline.
120
The __ section of the CBS residential says that the seller must deliver to the buyer copies of all existing
surveys the seller has, and disclose all other title matters by the off-record title deadline.
The "Off-Record Title" section of the CBS residential says that the seller must deliver to the buyer copies of all existing
surveys the seller has, and disclose all other title matters by the off-record title deadline.
121
If buyers default on the purchase contract, sellers can take one of these actions:
- Take them to court to force them to honor the terms of the contract (specific performance),
- Terminate the contract and keep the buyers' earnest money (liquidated damages)
122
If the seller defaults on the purchase contract, the buyer can take one of these actions:
- Sue for specific performance
- Terminate the contract and receive their earnest money back.
123
What type of land survey provides the greatest level of detail and is commonly ordered in commercial property transactions?
ALTA/ACSM survey
124
Uses public record and previous reports to identify boundaries and improvements on the property, but does not confirm their existence with a physical inspection
Improvement location certificate (ILC)
125
This blueprint or map shows measurements, boundaries, and area of a property. The measurements are confirmed with a physical property inspection. This is sometimes required by lenders to ensure that no encroachments exist.
Survey
126
What CREC-approved form serves as a helpful tool in collecting information regarding a well on a property?
The Listing Firm’s Well Checklist can be used to collect important information regarding a property’s well.
127
What are the three timing methods for participating in a 1031 exchange?
- Delayed (or deferred) exchange, where a property is sold before the replacement property is identified. A qualified intermediary (QI) is required for a simultaneous or delayed 1031 exchange.
- Simultaneous exchange, where a relinquished and replacement property are exchanged and closed on simultaneously. Requires a QI
- Reverse exchange, where the replacement property is found before the current owned property is relinquished. Most complex method. An exchange accommodation titleholder (EAT) must be used to hold title on the replacement property that's already been closed on. An investor can't hold title on both properties at the same time
128
In a 1031 exchange, who is the exchanging party and who is the cooperating party?
The exchanging party (or exchanger) is the person doing (and benefiting from) a tax-deferred exchange.
The cooperating party is the party cooperating (but not benefiting from) a tax-deferred exchange
129
How long does someone who wants to do a tax-deferred exchange have to identify a replacement property?
45 days
130
How long does someone who wants to do a tax-deferred exchange have to close on a replacement property?
180 days
131
How many grace days does the IRS give for the deadlines of a tax-deferred exchange?
Zero
132
Does the IRS allow longer to identify a property or close on a replacement property to accommodate weekends or holidays?
No
133
What is a Qualified intermediary (QI) in a 1031 exchange?
A person or entity that facilitates a 1031 exchange by transferring the relinquished property and acquiring a replacement property in such a way that no funds change hands with the exchanger
134
What is an Exchange accommodation titleholder (EAT) in a 1031 exchange?
One who takes title to property to meet the requirements of IRS section 1031 and Treasury Revenue Ruling 2003-37 to facilitate a reverse exchange. Basically, they take ownership of the new property because the investor can't hold title to both properties at the same time.
135
What are the benefits of a 1031 exchange?
Deferred capital gains taxes, deferred recapture of depreciation
136
What's meant by "like-kind" in a tax-deferred exchange?
An investment property where proceeds of a relinquished investment property are used to purchase a replacement investment property
137
Brokerage firms have the option, when working with a 1031 exchange transaction, to use either an Exchange Addendum or the Additional Provisions section of the sales contract.
What is the main difference between these two approaches?
When using the Additional Provisions section of a sales contract to identify a 1031 exchange, a required legal statement must be included.
When preparing an Exchange Addendum for a 1031 exchange, the exchanging and cooperating parties must be identified.
138
Which timing method of a 1031 property exchange requires an exchange accommodation titleholder (EAT)?
A reverse exchange (buying a new property before selling current one)
139
If a seller needs to remain in the home for a week after closing and the buyer agrees, what Colorado form accomplishes this?
Post-Closing Occupancy Agreement
140
If a buyer intends to use part of his commercial property purchase as a residence, what form should you attach to the sales contract
Residential Addendum
141
What is Equity Skimming?
Equity skimming is a type of real estate fraud. It happens when a buyer purchases a home by assuming a distressed seller's existing loan, or by taking title to the property "subject to" the seller's existing loan, without the lender's permission. The buyer allows the seller to stay in the home and make rental payments, which the buyer is supposed to use to pay the mortgage. Instead, the new owner takes the rent payments and defaults on the loan. The home goes into foreclosure, but the buyer doesn't care because the seller is still liable for the loan.
In Colorado, equity skimming is a Class 5 felony.
142
What is a short sale?
A sale of real estate in which the sale proceeds fall short of the balance owed on the property's mortgage loan
143
What is the relationship between an Inspection Objection form and an Inspection Resolution form?
If the sales contract includes an inspection contingency, issues found on inspection that the buyer would like to have fixed are documented on the Inspection Objection form.
Once a buyer and seller negotiate what will satisfactorily resolve each item noted on the Inspection Objection form, it's documented on the Inspection Resolution form, which amends and becomes part of the contract.
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The ___, which was passed in 2006, gives distressed homeowners some protection against unethical practices by equity purchasers and foreclosure consultants.
The Colorado Foreclosure Protection Act (CFPA), which was passed in 2006, gives distressed homeowners some protection against unethical practices by equity purchasers and foreclosure consultants.
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A buyer and seller have signed the Colorado Contract to Buy and Sell Real Estate (Residential). After signing, the seller no longer wants to sell the house. The buyer sues the seller to force the sale in accordance with the contract. This is known as _________.
Specific performance
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A form required to be completed when the property being transferred is subject to a homeowners association
Status letter and record change
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What is the difference between liquidated damages and specific performance?
Liquidated damages is earnest money retained by the seller in the event of a buyer default.
Specific Performance is the legal enforcement of the terms of the contract (in the event of buyer default, may be pursued by the seller in lieu of liquidated damages; in the event of a seller default, the buyer's remedy against the seller)
148
What does MEC stand for when talking about contract deadlines? For example, a delivery deadline can be entered as "Within three days of MEC"
Mutual Execution of this Contract
149
The ___ section of the Colorado commercial sales contract allows buyers to request existing contracts, such as those with service companies that take care of HVAC and other building systems, cleaning, and grounds maintenance
The Due Diligence section of the Colorado commercial sales contract allows buyers to request existing contracts, such as those with service companies that take care of HVAC and other building systems, cleaning, and grounds maintenance
150
CREC lists three situations where the Licensee Buy-Out Addendum must be attached to the purchase contract. What are these three scenarios?
The licensee obtains a listing, and at the same time decides to purchase the property
The licensee agrees to buy a seller's property in order to facilitate the seller's purchase of another property that will earn the licensee a commission.
The licensee has a listing contract with the seller and agrees to purchase the property, but will continue to market that property under the listing contract until closing.
151
The two parties to a mortgage are the __ (borrower, who grants the lien on the property) and the __ (the lender).
The two parties to a mortgage are the mortgagor (borrower, who grants the lien on the property) and the mortgagee (the lender).
152
Which two security instruments include a promissory note?
Mortgage and Deed of Trust
153
What three parties are involved in a deed of trust?
The borrower is the **trustor** or **grantor** who grants the security interest in the property.
The lender is called the **beneficiary**.
The third party is the **trustee**, which is the entity that arranges for the property to be released from the lien and reconveyed to the property owner once the loan is paid off. If the borrower defaults, the trustee arranges for the foreclosure.
154
As you may recall, a deed of trust agreement involves three parties: the buyer/borrower (trustor), the lender (beneficiary), and a person known as the trustee. In Colorado, who does the deed of trust name as the party holding title to the property?
The county's public trustee
155
In what situation can a mechanic’s lien take precedence over a first mortgage?
A mechanic’s lien can take priority over a first mortgage lien if work began before the first mortgage was recorded. Mechanic's liens are effective as of the time work first commences.
156
What are vendor's liens and vendee's liens on property?
A vendor’s lien allows a seller involved in a purchase money mortgage to repossess a sold property until the buyer pays the full, agreed-upon purchase price.
When a seller involved in a purchase money mortgage defaults in performing a contract, the buyer has a vendee’s lien against the property for sale to receive an earnest money reimbursement.
157
The government can place a levy, called a __, against real property to help fund the cost of a specific improvement. A __ is a lien on a property until it’s paid.
The government can place a levy, called a special assessment, against real property to help fund the cost of a specific improvement. A special assessment is a lien on a property until it’s paid.
158
The parties to a contract for deed are the __ (the buyer/borrower) and the __ (the seller/lender).
The parties to a contract for deed are the vendee (the buyer/borrower) and the vendor (the seller/lender).
159
The parties to a mortgage agreement are the __ (the borrower, who grants the lien on the property) and the __ (the lender).
The parties to a mortgage agreement are the mortgagor (the borrower, who grants the lien on the property) and the mortgagee (the lender).
160
The parties to a deed of trust are the borrower ( __ ), the lender ( __ ), and a third party ( __ ) who arranges for the property to be released from the lien and re-conveyed to the property owner once the loan is paid off.
The parties to a deed of trust are the borrower (trustor or grantor), the lender (beneficiary), and a third party (trustee) who arranges for the property to be released from the lien and re-conveyed to the property owner once the loan is paid off.
161
What is the purpose of a promissory note?
A promissory note attached to a security instrument describes the loan amount and terms, and references the security instrument.
162
In Colorado, all deeds of trust used for real estate loans are expected to name the __ as the party holding title to the property.
In Colorado, all deeds of trust used for real estate loans are expected to name the county’s public trustee as the party holding title to the property.
163
Colorado is a __ theory state, but uses the __ to create a lien against the property.
Colorado is a lien theory state, but uses the deed of trust to create a lien against the property.
164
In a financing agreement, which document explains who owes money to whom, how much, and how it will be repaid?
Promissory note
165
Who are the parties to a contract for deed?
Vendee (buyer/borrower) and vendor (seller/lender)
166
In Colorado, a mechanic’s lien can take priority over which of the following liens if work began before other high-priority liens were recorded?
Deed of trust/first mortgage
167
In Colorado, if your property taxes for the year are more than $25 and you elect to pay them in one payment, when is that one payment due?
April 30
168
Which of the following liens may be placed against real property if the property owner fails to pay gift tax?
Federal Tax
169
What does the the title advisory provision in CREC’s Contract to Buy and Sell Real Estate (Residential) do?
The title advisory provision in CREC’s Contract to Buy and Sell Real Estate (Residential) puts buyers on notice that it’s their responsibility to review title documents carefully due to their impact on title, ownership, and use of the property.
170
Borrowers must receive the Closing Disclosure (CD) at least __ business days before closing on the loan.
Borrowers must receive the Closing Disclosure (CD) at least three business days before closing on the loan.
171
Borrowers must receive the Loan Estimate within __ business days of having submitted the loan application.
Borrowers must receive the Loan Estimate within three business days of having submitted the loan application.
172
Colorado usury law (C.R.S. 18-15-104) makes a finance rate that exceeds __% illegal.
Colorado usury law (C.R.S. 18-15-104) makes a finance rate that exceeds 45% illegal.
173
Colorado’s __ Act was passed in 2006. Prior to this, Colorado essentially had no regulatory oversight of mortgage loan originators.
This act requires mortgage brokers to have criminal background checks, post a surety bond, complete a registration application, and pay an application fee.
Colorado’s Mortgage Broker Registration Act was passed in 2006. Prior to this, Colorado essentially had no regulatory oversight of mortgage loan originators.
This act requires mortgage brokers to have criminal background checks, post a surety bond, complete a registration application, and pay an application fee.
174
When a seller qualifies as a creditor due to the more-than-five rule, the Colorado U.C.C.C. limits the finance rate to __% regardless of amount, unless the loan is for a residence secured by a first mortgage, in which case the maximum rate is 45%.
When a seller qualifies as a creditor due to the more-than-five rule, the Colorado U.C.C.C. limits the finance rate to 21% regardless of amount, unless the loan is for a residence secured by a first mortgage, in which case the maximum rate is 45%.
175
What is the difference between a Loan Estimate and a Closing Disclosure
The Loan Estimate shows what you may pay. The Closing Disclosure shows what you will pay.
176
What is the difference between a pre-qualification letter and a pre-approval letter?
A pre-approval letter is more solid than a pre-qualification letter. It means the lender has verified the income information the buyer provided, and has run the buyer's credit.
177
Lenders loan based on the lower of the __ or __.
Lenders loan based on the lower of the sales price or appraised value.
178
Explain vendee's lien and vendor's lien
When a seller involved in a purchase money mortgage defaults in performing a contract, the buyer has a vendee's lien against the property for sale to receive an earnest money reimbursement.
A vendor's lien allows a seller involved in a purchase money mortgage to repossess a sold property until the buyer pays the full, agreed-upon purchase price.
The contract for deed includes both the promise to repay and the security instrument within one document. The agreement creates a vendor's lien for the seller and a vendee's lien for the buyer.
A purchase-money mortgage is a mortgage issued to the borrower by the seller of a home as part of the purchase transaction. Also known as a seller or owner financing, this is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels.
179
What does the Colorado Uniform Commercial Credit Code (U.C.C.C.) do?
Establishes finance charge rate limitations for qualified consumer credit sales, consumer loans, and supervised loans (21% regardless of amount, unless the loan is for a residence secured by a first mortgage, in which case the maximum rate is 45%)
180
What is the "More-than-five rule" in relation to financing?
Sellers who provide financing for real property for more than five properties in a year qualify as consumer creditors under the U.C.C.C.
181
what is an option contract?
An option contract, or option, is an offer to purchase a specific piece of real estate, but without the obligation to buy it.
In an option contract, the potential buyer (optionee) is required to pay an option fee to the seller (optionor). If the optionee decides not to exercise the option and purchase the property, the optionor gets to keep the option fee.
To be valid, an option contract must be in writing and signed by the optionor and state the amount of consideration, the length of the option period, and the sales price of the property.
To remedy a breach of contract situation, an optionee can sue for specific performance or monetary damages.
182
What does the Record Title section of the CBS Resi say? What does the Off-Record Title section say?
The Record Title section of the CBS Resi says that the buyer has the right to review and object to abstract or title commitment or other title documents on or before record title deadline.
The Off-Record Title section says that the seller must deliver to the buyer copies of all surveys the seller has and disclose all other title matters by the offrecord title deadline.
183
Which agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations?
Office of Fair Housing and Equal Opportunity
Individuals who have experienced housing discrimination can file a complaint with the Office of Fair Housing and Equal Opportunity. The FHEO is charged with enforcing fair housing laws.
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