Contracts

Question 1

What is the difference between the function of CREC and the Division of Real Estate?

Answer 1

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.

Question 2

The commission requires that brokers keep all transactional records for a certain amount of time. How long is the required retention period?

Answer 2

4 years

Question 3

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.

Answer 3

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.

Question 4

If a broker commits a crime or violates real estate license law, who has the authority to revoke the broker’s license?

Answer 4

The Colorado Real Estate Commission (CREC)

Question 5

If disciplinary actions are levied against a licensee, what’s one alternative to an administrative hearing?

Answer 5

Using the expedited settlement program

Question 6

The entities that administer license law in Colorado

Answer 6

The Division of Real Estate and the Colorado Real Estate Commission

Question 7

Number of members on the Colorado Real Estate Commission

Answer 7

Five members: three brokers and two members of the public, each serving a three-year-term

Question 8

What is the purpose of a Commission Policy Statement?

Answer 8

To clarify real estate laws and rules

Question 9

Number of years a new broker in Colorado must be supervised by an employing broker before going independent

Answer 9

Two

Question 10

Requirements a licensee must fulfill to obtain an employing broker level license

Answer 10

At least two years of experience as a broker and proven supervisory experience in the relevant area of expertise

Question 11

Other than during the transition period, the date of license renewal for all licensees

Answer 11

December 31

Question 12

Period of time brokers must retain transactional records

Answer 12

4 years

Question 13

Serious complaints about a licensee to the commission may be referred to a hearing presided over by __________

Answer 13

An administrative law judge

Question 14

No referral fees may be accepted between ____________ providers.

Answer 14

Settlement services

Question 15

What was the purpose for CREC’s adoption and promulgation of Chapter 7?

Answer 15

It required all Colorado licensed real estate brokers to use commission-approved forms.

Question 16

The case of __ is a historical case in Colorado, which affected real estate brokers’ ability to prepare legal documents.

Answer 16

The case of Conway-Bogue is a historical case in Colorado, which affected real estate brokers’ ability to prepare legal documents.

Question 17

What is the overarching principle of the Parole Evidence Rule

Answer 17

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.

Question 18

What is the purpose of the Uniform Electonic Transactions Act?

Answer 18

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

Question 19

What is Rule F

Answer 19

Requires Colorado licensed real estate brokers to use standard commission approved forms

Question 20

What does Colorado’s statute of frauds say about real estate contracts?

Answer 20

Sales contracts are void unless they’re in writing and signed by sellers.

Question 21

Who has the responsibility to adopt rules that concern the Colorado’s Uniform Electronics Transaction Act?

Answer 21

Colorado’s Secretary of State

Question 22

This act created the Office of Fair Housing and Equal Opportunity.

Answer 22

Fair Housing Act of 1968

Question 23

This act prohibits discrimination in lending by requiring lenders to give equal access to credit.

Answer 23

Equal Credit Opportunity Act

Question 24

HUD enforces the portion of this act that applies to public housing, housing assistance, and housing referrals.

Answer 24

Americans w/ Disabilities Act

Question 25

This act recognizes all persons born in the U.S. as citizens.

Answer 25

Civil Rights Act of 1866

Question 26

What conditions need to be met in order for senior housing to not be considered discriminatory?

Answer 26

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.

Question 27

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Answer 27

Civil Rights Act of 1866

Question 28

What law requires local authorities to publish the whereabouts of registered sex offenders?

Answer 28

Megan’s Law

Question 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?

Answer 29

Department of Housing and Urban Development

Question 30

Which entity is responsible for enforcing Colorado’s Fair Housing Act?

Answer 30

The Colorado Civil Rights Division enforces the state’s fair housing laws.

Question 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?

Answer 31

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.

Question 32

What is the difference between the Colorado Civil Rights Division (CCRD) and the Colorado Civil Rights Commisssion?

Answer 32

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

Question 33

What’s significant about Colorado’s anti-discrimination laws of 1959?

Answer 33

Colorado was the first state to take such anti-discrimination action, nine years ahead of the federal laws.

Question 34

Colorado’s fair housing laws include additional protected classes not covered by federal regulations. What are these?

Answer 34

Creed and ancestry

Question 35

What are the four Colorado cities that have made age discrimination illegal?

Answer 35

Aspen, Crested Butte, Denver, and Telluride

Question 36

What is the Colorado Common Interest Ownership Act (CCIOA)?

Answer 36

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

Question 37

What is the Colorado Real Estate Appraiser Licensing Act

Answer 37

Allows licensed real estate brokers to perform certain real estate valuation-related activities without being registered, licensed, or certified as real estate appraisers

Question 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.

Question 39

What is the difference between uniform duties and additional duties that single agents owe buyers/seller?

Answer 39

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

Question 40

What is the difference between express authority, implied authority, and apparent authority in relation to an agency relationship?

Answer 40

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.

Question 41

A __ form is used when a licensee must go from a single agent relationship with a client to a transaction-broker relationship.

Answer 41

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.

Question 42

__ are provided to customers to acknowledge the type of relationship that does or doesn’t exist.

Answer 42

Brokerage Disclosures are provided to acknowledge the type of relationship that does or doesn’t exist.

Question 43

__ outlines the relationship a consumer could enter into with a licensee.

Answer 43

Definitions of Working Relationships outlines the relationship a consumer could enter into with a licensee.

Question 44

What is the difference between marketable title and insurable title?

Answer 44

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.

Question 45

What is the difference between title insurance and abstract of title?

Answer 45

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

Question 46

What is the general process of getting to an issued title policy?

Answer 46

• 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.

Question 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.

Question 48

The Exclusive Brokerage Listing Addendum documents that brokers will receive compensation in all situations except __.

Answer 48

The Exclusive Brokerage Listing Addendum documents that brokers will receive compensation in all situations except seller sales.

Question 49

In Colorado, open listings are created with the __ as an addendum to the exclusive right-to-lease or right-to-sell contract.

Answer 49

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.

Question 50

if used with a listing contract, the Listing Contract Amend-Extend is used to change __

Answer 50

the listed price of a property or to extend the contract terms

Question 51

What’s the only required addendum for the Exclusive-Right-to-Sell Listing Contract in Colorado?

Answer 51

Closing Instructions

Question 52

What is a transaction-broker?

Answer 52

A broker who facilitates a transaction without acting as an agent

Question 53

How are leasing commissions usually structured?

Answer 53

Percentage of the gross rent, or a multiple of the square footage being leased

Question 54

How is an exclusive agency relationship documented in Colorado?

Answer 54

By an addendum to the exclusive right-to-lease contract or exclusive right-to-sell contract

Question 55

What does the Exclusive Brokerage Addendum provide regarding listing broker commission?

Answer 55

The listing broker will receive compensation in all situations except seller sales

Question 56

How is an open listing agreement documented in Colorado?

Answer 56

With the Open Listing Addendum as an addendum to the exclusive right-to-lease contract or exclusive right-to-sell contract

Question 57

What are two primary uses for the Agreement to Amend/Extend Contract with Broker addendum?

Answer 57

Extend the contract term, change the list or lease price

Question 58

What’s true of the holdover period when using the Exclusive Brokerage Listing Addendum?

Answer 58

The holdover period must be negotiated.

Question 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.

Answer 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 four years.

Question 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.

Answer 60

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.

Question 61

The CREC-approved form to establish the broker-tenant agency agreement is the ___ Contract.

Answer 61

The CREC-approved form to establish the broker-tenant agency agreement is the Exclusive Tenant Listing Contract.

Question 62

The CREC-approved form to establish the broker-buyer agency agreement is the __ Contract.

Answer 62

The CREC-approved form to establish the broker-buyer agency agreement is the Exclusive Right-to-Buy Listing Contract.

Question 63

In Colorado, the buyer representation agreement may be oral, but only if the broker is acting as a __.

Answer 63

In Colorado, the buyer representation agreement may be oral, but only if the broker is acting as a transaction-broker.

Question 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.

Answer 64

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.

Question 65

What are the additional duties that an agent has on top of the uniform duties that a transactional broker has?

Answer 65

• Being loyal to the client
• Negotiating on the client’s behalf
• Providing the client with any known benefits or risks associated with the transaction

Question 66

This form provides descriptions of the available working relationships that consumers may have with brokers. It must be provided upon request.

Answer 66

Definitions of Working Relationships

Question 67

Definitions of Working Relationships

Answer 67

This form provides descriptions of the available working relationships that consumers may have with brokers. It must be provided upon request.

Question 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.

Answer 68

Brokerage Disclosure to Seller

Question 69

Brokerage Disclosure to Seller

Answer 69

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.

Question 70

Brokerage Disclosure to Buyer

Answer 70

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.

Question 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.

Answer 71

Brokerage Disclosure to Buyer

Question 72

Brokerage Disclosure to Landlord

Answer 72

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.

Question 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.

Answer 73

Brokerage Disclosure to Landlord

Question 74

Brokerage Disclosure to Tenant

Answer 74

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.

Question 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.

Answer 75

Brokerage Disclosure to Tenant

Question 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.

Answer 76

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.

Question 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.

Answer 77

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.

Question 78

Form used to disclose the broker’s change from an agency relationship to a transaction-brokerage relationship

Answer 78

Change of Status

Question 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

Answer 79

Dual Status Disclosure

Question 80

For how long must Colorado brokers retain most disclosure forms on file?

Answer 80

4 years

Question 81

For how long must Colorado brokers retain the Dual Status Disclosure form on file? (this is for mortgage and broker dual status)

Answer 81

5 years

Question 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.

Question 83

What is the difference between a sub agent, a single agent, and a dual agent?

Answer 83

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.

Question 84

When should a a broker use one of the brokerage disclosure forms?

Answer 84

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.

Question 85

How many year(s) must a licensee keep Change of Status forms?

Answer 85

4

Question 86

What’s the purpose of a contract addendum in general?

Answer 86

A contract addendum supplements information in a contract before it’s executed.

Different than an amendment!!

Question 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

Answer 87

Brokerage Duties Addendum to Property Management Agreement form

Question 88

Brokerage Duties Addendum to Property Management Agreement form

Answer 88

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

Question 89

Agreement to Amend/Extend Contract with Broker form

Answer 89

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

Question 90

What’s a key difference between a contract addendum form and an amendment form?

Answer 90

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

Question 91

When would you use the Brokerage Duties Addendum to Property Management Agreement form in Colorado?

Answer 91

To disclose the agency relationship established in a non-CREC property management contract

Question 92

What’s the appropriate way to use an addendum?

Answer 92

Attach to a contract prior to execution

Question 93

What commission-approved form would you use to disclose your agency relationship with an owner who wants to find tenants?

Answer 93

Brokerage Duties Addendum to Property Management Agreement

Question 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.

Answer 94

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.

Question 95

Which government agency is one of the primary enforcers of green regulations on a national scale?

Answer 95

The Environmental Protection Agency

Question 96

How long after buyers purchase a property that has a well do they have to submit the appropriate change of ownership forms?

Answer 96

60 days after the sale

Question 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

Answer 97

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

Question 98

What are caveat emptor states?

Answer 98

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.

Question 99

What is an adverse material fact?

Answer 99

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)

Question 100

Who can complete the Seller’s Property Disclosure form?

Answer 100

Only the seller

Question 101

What is a Green Disclosure?

Answer 101

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

Question 102

What is a common interest community?

Answer 102

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

Question 103

What is an estoppel statement?

Answer 103

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.

Question 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.

Answer 104

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.

Question 105

How many days are sellers required to give buyers to conduct a risk assessment for lead-based paint or lead-based paint hazards?

Answer 105

10

Question 106

In a residential transaction, who’s responsible for completing the CREC-approved Square Footage Disclosure form provided to the buyer and seller?

Answer 106

The seller’s broker

Question 107

The ___ is the buyer’s documented offer to the seller to purchase the property identified in the agreement.

Answer 107

The sales contract is the buyer’s documented offer to the seller to purchase the property identified in the agreement.

Question 108

Whats the difference between the Disclosure of Settlement Costs, Closing Instructions, and Closing in relation to a CBS residential?

Answer 108

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.

Question 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.

Answer 109

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.

Question 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.

Answer 110

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.

Question 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.

Answer 111

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.

Question 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 ___

Answer 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 post-closing occupancy agreement.

Question 113

__ are the fair share of expenses divided among the buyer and seller as of the closing date.

Answer 113

Prorations are the fair share of expenses divided among the buyer and seller as of the closing date.

Question 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.

Answer 114

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.

Question 115

___________ occurs when a party to a contract is in breach of that contract.

Answer 115

Default

Question 116

What’s the “good faith” clause in the Colorado contracts to buy and sell?

Answer 116

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.

Question 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.

Answer 117

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.

Question 118

Which fraudulent practice often involves the seller transferring title to the buyer, who refinances the home, removes the equity, and skips town?

Answer 118

Equity Skimming

Question 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.

Answer 119

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.

Question 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.

Answer 120

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.

Question 121

If buyers default on the purchase contract, sellers can take one of these actions:

Answer 121

• 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)

Question 122

If the seller defaults on the purchase contract, the buyer can take one of these actions:

Answer 122

• Sue for specific performance
• Terminate the contract and receive their earnest money back.

Question 123

What type of land survey provides the greatest level of detail and is commonly ordered in commercial property transactions?

Answer 123

ALTA/ACSM survey

Question 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

Answer 124

Improvement location certificate (ILC)

Question 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.

Answer 125

Survey

Question 126

What CREC-approved form serves as a helpful tool in collecting information regarding a well on a property?

Answer 126

The Listing Firm’s Well Checklist can be used to collect important information regarding a property’s well.

Question 127

What are the three timing methods for participating in a 1031 exchange?

Answer 127

• 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

Question 128

In a 1031 exchange, who is the exchanging party and who is the cooperating party?

Answer 128

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

Question 129

How long does someone who wants to do a tax-deferred exchange have to identify a replacement property?

Answer 129

45 days

Question 130

How long does someone who wants to do a tax-deferred exchange have to close on a replacement property?

Answer 130

180 days

Question 131

How many grace days does the IRS give for the deadlines of a tax-deferred exchange?

Answer 131

Zero

Question 132

Does the IRS allow longer to identify a property or close on a replacement property to accommodate weekends or holidays?

Answer 132

No

Question 133

What is a Qualified intermediary (QI) in a 1031 exchange?

Answer 133

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

Question 134

What is an Exchange accommodation titleholder (EAT) in a 1031 exchange?

Answer 134

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.

Question 135

What are the benefits of a 1031 exchange?

Answer 135

Deferred capital gains taxes, deferred recapture of depreciation

Question 136

What’s meant by “like-kind” in a tax-deferred exchange?

Answer 136

An investment property where proceeds of a relinquished investment property are used to purchase a replacement investment property

Question 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?

Answer 137

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.

Question 138

Which timing method of a 1031 property exchange requires an exchange accommodation titleholder (EAT)?

Answer 138

A reverse exchange (buying a new property before selling current one)

Question 139

If a seller needs to remain in the home for a week after closing and the buyer agrees, what Colorado form accomplishes this?

Answer 139

Post-Closing Occupancy Agreement

Question 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

Answer 140

Residential Addendum

Question 141

What is Equity Skimming?

Answer 141

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.

Question 142

What is a short sale?

Answer 142

A sale of real estate in which the sale proceeds fall short of the balance owed on the property’s mortgage loan

Question 143

What is the relationship between an Inspection Objection form and an Inspection Resolution form?

Answer 143

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.

Question 144

The ___, which was passed in 2006, gives distressed homeowners some protection against unethical practices by equity purchasers and foreclosure consultants.

Answer 144

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.

Question 145

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 _________.

Answer 145

Specific performance

Question 146

A form required to be completed when the property being transferred is subject to a homeowners association

Answer 146

Status letter and record change

Question 147

What is the difference between liquidated damages and specific performance?

Answer 147

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)

Question 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”

Answer 148

Mutual Execution of this Contract

Question 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

Answer 149

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

Question 150

CREC lists three situations where the Licensee Buy-Out Addendum must be attached to the purchase contract. What are these three scenarios?

Answer 150

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.

Question 151

The two parties to a mortgage are the __ (borrower, who grants the lien on the property) and the __ (the lender).

Answer 151

The two parties to a mortgage are the mortgagor (borrower, who grants the lien on the property) and the mortgagee (the lender).

Question 152

Which two security instruments include a promissory note?

Answer 152

Mortgage and Deed of Trust

Question 153

What three parties are involved in a deed of trust?

Answer 153

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.

Question 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?

Answer 154

The county’s public trustee

Question 155

In what situation can a mechanic’s lien take precedence over a first mortgage?

Answer 155

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.

Question 156

What are vendor’s liens and vendee’s liens on property?

Answer 156

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.

Question 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.

Answer 157

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.

Question 158

The parties to a contract for deed are the __ (the buyer/borrower) and the __ (the seller/lender).

Answer 158

The parties to a contract for deed are the vendee (the buyer/borrower) and the vendor (the seller/lender).

Question 159

The parties to a mortgage agreement are the __ (the borrower, who grants the lien on the property) and the __ (the lender).

Answer 159

The parties to a mortgage agreement are the mortgagor (the borrower, who grants the lien on the property) and the mortgagee (the lender).

Question 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.

Answer 160

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.

Question 161

What is the purpose of a promissory note?

Answer 161

A promissory note attached to a security instrument describes the loan amount and terms, and references the security instrument.

Question 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.

Answer 162

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.

Question 163

Colorado is a __ theory state, but uses the __ to create a lien against the property.

Answer 163

Colorado is a lien theory state, but uses the deed of trust to create a lien against the property.

Question 164

In a financing agreement, which document explains who owes money to whom, how much, and how it will be repaid?

Answer 164

Promissory note

Question 165

Who are the parties to a contract for deed?

Answer 165

Vendee (buyer/borrower) and vendor (seller/lender)

Question 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?

Answer 166

Deed of trust/first mortgage

Question 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?

Answer 167

April 30

Question 168

Which of the following liens may be placed against real property if the property owner fails to pay gift tax?

Answer 168

Federal Tax

Question 169

What does the the title advisory provision in CREC’s Contract to Buy and Sell Real Estate (Residential) do?

Answer 169

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.

Question 170

Borrowers must receive the Closing Disclosure (CD) at least __ business days before closing on the loan.

Answer 170

Borrowers must receive the Closing Disclosure (CD) at least three business days before closing on the loan.

Question 171

Borrowers must receive the Loan Estimate within __ business days of having submitted the loan application.

Answer 171

Borrowers must receive the Loan Estimate within three business days of having submitted the loan application.

Question 172

Colorado usury law (C.R.S. 18-15-104) makes a finance rate that exceeds __% illegal.

Answer 172

Colorado usury law (C.R.S. 18-15-104) makes a finance rate that exceeds 45% illegal.

Question 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.

Answer 173

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.

Question 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%.

Answer 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 21% regardless of amount, unless the loan is for a residence secured by a first mortgage, in which case the maximum rate is 45%.

Question 175

What is the difference between a Loan Estimate and a Closing Disclosure

Answer 175

The Loan Estimate shows what you may pay. The Closing Disclosure shows what you will pay.

Question 176

What is the difference between a pre-qualification letter and a pre-approval letter?

Answer 176

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.

Question 177

Lenders loan based on the lower of the __ or __.

Answer 177

Lenders loan based on the lower of the sales price or appraised value.

Question 178

Explain vendee’s lien and vendor’s lien

Answer 178

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.

Question 179

What does the Colorado Uniform Commercial Credit Code (U.C.C.C.) do?

Answer 179

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%)

Question 180

What is the “More-than-five rule” in relation to financing?

Answer 180

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.

Question 181

what is an option contract?

Answer 181

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.

Question 182

What does the Record Title section of the CBS Resi say? What does the Off-Record Title section say?

Answer 182

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.

Question 183

Which agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations?

Answer 183

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.