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26 Cards in this Set
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True/False - According to CP-11 on Compensation between an Employed and Employing Broker, in the event of a commission dispute the Colorado Real Estate Commission will schedule a hearing and render a judgement. True False |
A: False The Real Estate Commission… “Has no legal authority to render a monetary judgment in a money dispute nor will it arbitrate such a matter”A dispute over a commission between the employed and employing broker must be settled between the parties or by a civil action in a court. |
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According to CP-22 Handling of Confidential Information, the sharing of confidential information is prohibited according to the rules set forth by ? Confidential Brokerage Secret Brokerage Designated Brokerage Seller Agency |
A: Designated Brokerage
CP-22 Commission Position Statement on Handling of Confidential Information in Real Estate BrokeragePrior to designated brokerage, it was common for brokers to share the motivations of a buyer or seller during office sales meetings, for example. Under designated brokerage, the law specifically prohibits sharing of such information.Confidential information, and the broker responsibility thereto, are defined in C.R.S. 12-61-804 (2), 12-61-805 (2), 12-61-807 (3), and Rules E-32 and E-39. Confidential information can include, but is not limited to, motivation of the parties. |
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True/False - According to Commission Position 1 on Homebuilders - Corporations that build structures on land they own may sell the land and building together without licensing True False |
A: True CP-1 Commission Policy on Homebuilder’s Exemption from LicensingCorporations that build structures on land they own may sell the land and building together without licensing, provided that the sales are made by corporate officers or regularly salaried employees. The land and building must be sold as a unit and the building must not have been previously occupied. This exemption is usually referred to as the homebuilder’s exemption. |
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According to CP-25 on Recording Contracts, should a listing broker decide her Seller client is attempting to cheat her out of a commission, the broker can: File a mechanics lien to ensure the brokers'' claim for the commission is honored Record the listing contract so that it would appear in any Title Commitment for the property File a lis pendens to warn any potential buyer that a legal action is pending Commence mediation, arbitration or a civil action |
A: Commence mediation, arbitration or a civil action CP-25 Commission Position on Recording ContractsOver the years the Commission has received many inquiries and complaints concerning the recording of listing contracts to protect claims for commissions. In addition, some licensees have attempted more “creative” ways of holding up a closing, such as filing mechanics liens or notices of lis pendens, as well as recording demand letters or purchase contracts. The end result is usually a cloud on the title and sometimes a slander of title action.Some states have passed statutes authorizing the filing of such liens. Colorado has not. Filings and recordings such as these are inappropriate and will result in Commission action.Here is a typical scenario: Broker lists a property at $125,000 for 120 days and actively markets it. No offers come in during the first 30 days. Broker advises her seller to lower the price by $5,000 to encourage some activity. The seller is adamant that the property is worth the list price and refuses. After another 15 days with no offers, the seller reluctantly lowers the price. He also tells the broker that he doesn’t feel she is trying hard enough to sell the property and he’s going to take it off the market if nothing happens.A week later an offer for $100,000 comes in from another company, which is presented and rejected. The seller is quite upset at the low offer and demands to be released from the listing. There is no further communication between the parties, but the listing is never formally terminated. Three weeks later the broker learns that the seller has entered into a contract with the same buyer for $110,000 and closing is set. The broker is very upset and wants to protect her commission. What can she do? 1. File a mechanics lien?ANS: No. Real estate licensees are not a protected class of lien claimant under the statute except as provided in C.R.S. 38-22.5 (Commercial Real Estate Brokers Commission Security Act). 2. File a lis pendens (notice of pending lawsuit)?ANS: No. A lis pendens relates to a title or ownership dispute involving the land itself. The broker has no legal interest in the real estate. 3. Record the listing contract?ANS: No. This will usually have the effect of clouding title to the property, which in turn affects the closing between buyer and seller. The broker should not interfere in the process of transferring title to property. 4. Escrow the disputed commission?ANS: Maybe. This is a touchy area. If the broker makes demand on the seller for the commission prior to closing and states her possible rights (mediation; arbitration; civil action) the parties may agree to an escrow pending settlement of the dispute. However, there is no legal requirement that the closing entity escrow funds absent an agreement.5. Commence mediation, arbitration or civil action (as appropriate).ANS: Yes. Nothing prevents a licensee from asserting any legal claim against a principal.A commission dispute is an emotional issue. Sometimes a licensee has put in considerable time on a listing only to be faced with a seller who refuses to pay, attempts to renegotiate or is outright deceitful. On the other side, the Commission has witnessed instances in which the licensee had no legitimate right to a commission and was using superior knowledge and scare tactics to force payment. Clearly this is a time to consult a good real estate attorney and avoid the risk of a complaint based on a hasty decision. |
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True/False - According to CP-20 on Personal Assistants, an unlicensed personal assistant may show homes, True False |
A: True CP-20... An unlicensed assistant may complete the following tasks:1. Complete forms prepared for, and as directed by a broker. Unlicensed assistants cannot independently draft legal documents such as listing or sales contracts, and they cannot offer opinions, advice or interpretations of these documents.2. Distribute preprinted, objective information prepared by the broker about a property listed for sale.3. Perform clerical duties, including gathering information for a listing.4. If authorized by the seller, provide access to property, conduct showings or open houses.5. Deliver paperwork to other brokers, buyers or sellers.6. Deliver paperwork that requires signatures in regard to financing documents that are prepared by lending institutions.7. Prepare market analyses on behalf of the broker, if the analyses are approved and submitted by the broker to the client with a disclosure that the market analyses were prepared by the unlicensed assistant. The broker must ensure that market analyses comply with Commission Rule E-42.8. Collect and receipt for earnest money deposits, security deposits or rents.9. Schedule property repairs on behalf of the broker, if there is an existing agreement that authorizes the broker to make repairs to the property. |
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Brian purchased a second home three years ago for $ 169,000. He sold it this year for $154,000. He decided to go ahead and sell it for a loss because his work schedule prevented him from enjoying the second property. His tax return will: reflect a loss of $15,000 not show any loss, as you cannot write off a loss on your personal residence not show a loss this year, but Brian may carry this loss over into a year when he shows a gain on the sale of a principle residence and write it off then not show a loss this year, but Brian may carry this loss over into a year when he shows a gain on the sale of a principle residence and write it off then if that happens within the next three years |
A: not show any loss, as you cannot write off a loss on your personal residence The IRS only plays with the owner of a personal residence if the house is sold at a profit; if there is a loss the IRS does not want to be your partner on your residence. |
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True/False - According to CP-14 Sale of Modular Homes,a licensee who sells land and a modular home to be affixed to the land, to the purchaser in concurrent or an arranged or pre-arranged or packaged transaction, is subject to the laws and rules of the Commission. True False |
A: True CP-11 The Commission is aware that many services rendered by licensees may or may not, in themselves, require licensing. Such services as collection of rents on real property, subdivision development services other than sales, or the general management of real property not involving renting or leasing may all be performed independently by an unlicensed person. When performed by a licensee, these services are all so integrated with real estate brokerage that all money received in connection therewith must be held or disbursed according to the law and rules of the Real Estate Commission.Therefore, it is the position of the Commission that a licensee who sells land and a modular home to be affixed to the land, to the purchaser in concurrent or an arranged or pre-arranged or packaged transaction, is subject to the laws and rules of the Commission. Consequently, all money received concerning the integrated transaction, including the modular home, should be processed through the broker or the employing broker pursuant to 12-61-117, C.R.S. and 12-61-113(l)(f), C.R.S. and Commission Rules E-l and E-5.It is also the position of the Commission that if a licensee sells to an owner of land, a modular home to be affixed to the land, and there has been no brokerage relationship between the owners of the land and the licensee, such licensee in such a sale will not be required to comply with the requirements of 12-61-117, C.R.S. or 12-61-113(l)(f), C.R.S. or Commission Rules E-l and E-5. |
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True/False - According to CP-40 on Teams, Real estate brokers that function as teams should not advertise teams using the terms “realty”, “real estate”, “company”, “corporation”, “corp.”, “inc.”, “LLC” or other similar language that would indicate a company other than the employing brokerage firm. True False |
A: True CP-40 Commission Position on Teams (4-5-2011)The Commission recognizes that there are benefits to both real estate brokers and consumers in the usage of real estate broker teams. Teams may be formed within a licensed brokerage firm with the approval of the employing broker. Real estate brokers operating as teams need to ensure that they are compliant with Commission rules regarding advertising, name usage and supervision.Advertising and name usage:While there is no prohibition of teams, real estate brokers need to ensure that they do not advertise in a manner that misleads the public as to the identity of the brokers’ licensed brokerage. Real estate brokers that function as teams should not advertise teams using the terms “realty”, “real estate”, “company”, “corporation”, “corp.”, “inc.”, “LLC” or other similar language that would indicate a company other than the employing brokerage firm. Advertising includes, but is not limited to, websites, signage, property flyers, mailings, business cards, letterhead and contracts. The advertising of team names should never give the impression that the team is an entity separate from the licensed real estate brokerage. If the identity of the employing broker or the brokerage firm is difficult for the public or the Commission to ascertain, the team may be in violation of Rule E-8 Advertising.Supervision:In addition to the supervision requirements set forth in Rules E-31 and E-32, Rule E-30 Employing broker responsibilities requires that the broker designated to act as the broker for any partnership, limited liability company or corporation, i.e. the employing broker, fulfill the following duties:1) Maintain all trust accounts and trust account records;2) Maintain all transaction records;3) Develop an office policy manual and periodically review office policies with all employees;4) Provide for a high level of supervision for newly licensed persons pursuant to Rule-32;5) Provide for a reasonable level of supervision for experienced licensees pursuant to Rule E-31;6) Take reasonable steps to ensure that violations of statutes, rules and office policies do not occur or reoccur;7) Provide for adequate supervision of all offices operated by the broker, whether managed by licensed or unlicensed persons.Pursuant to §12-61-118, C.R.S. and Rule E-29, employing brokers are also responsible for providing supervision over such activities with reference to the licensing statutes and Commission rules for all brokerage employees, including but not limited to administrative assistants, bookkeepers and personal assistants of licensed employees. Thus, employing brokers are responsible for the actions of unlicensed persons who perform functions within the real estate broker team. Employing brokers need to ensure that any unlicensed person acting within the team is not engaged in practices that require a real estate broker’s license. Employing brokers also need to establish that the compensation paid to an unlicensed person for services provided is not in the form of a commission. Compensation paid to an unlicensed person is not required to to be paid solely by the employing broker. However, §12-61-117, C.R.S. requires that all licensee compensation or valuable consideration for the performance of any acts requiring a broker’s license is paid solely by the employing broker. |
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True/False - The name of the Brokerage Firm with whom the team is associated does NOT have to appear on all team advertising as long as all licensed brokers on the team have their licenses registered under the Brokerage Firms name. True False |
A: False CP-40 Commission Position on Teams (4-5-2011)The Commission recognizes that there are benefits to both real estate brokers and consumers in the usage of real estate broker teams. Teams may be formed within a licensed brokerage firm with the approval of the employing broker. Real estate brokers operating as teams need to ensure that they are compliant with Commission rules regarding advertising, name usage and supervision.Advertising and name usage:While there is no prohibition of teams, real estate brokers need to ensure that they do not advertise in a manner that misleads the public as to the identity of the brokers’ licensed brokerage. Real estate brokers that function as teams should not advertise teams using the terms “realty”, “real estate”, “company”, “corporation”, “corp.”, “inc.”, “LLC” or other similar language that would indicate a company other than the employing brokerage firm. Advertising includes, but is not limited to, websites, signage, property flyers, mailings, business cards, letterhead and contracts. The advertising of team names should never give the impression that the team is an entity separate from the licensed real estate brokerage. If the identity of the employing broker or the brokerage firm is difficult for the public or the Commission to ascertain, the team may be in violation of Rule E-8 Advertising.Supervision:In addition to the supervision requirements set forth in Rules E-31 and E-32, Rule E-30 Employing broker responsibilities requires that the broker designated to act as the broker for any partnership, limited liability company or corporation, i.e. the employing broker, fulfill the following duties:1) Maintain all trust accounts and trust account records;2) Maintain all transaction records;3) Develop an office policy manual and periodically review office policies with all employees;4) Provide for a high level of supervision for newly licensed persons pursuant to Rule-32;5) Provide for a reasonable level of supervision for experienced licensees pursuant to Rule E-31;6) Take reasonable steps to ensure that violations of statutes, rules and office policies do not occur or reoccur;7) Provide for adequate supervision of all offices operated by the broker, whether managed by licensed or unlicensed persons.Pursuant to §12-61-118, C.R.S. and Rule E-29, employing brokers are also responsible for providing supervision over such activities with reference to the licensing statutes and Commission rules for all brokerage employees, including but not limited to administrative assistants, bookkeepers and personal assistants of licensed employees. Thus, employing brokers are responsible for the actions of unlicensed persons who perform functions within the real estate broker team. Employing brokers need to ensure that any unlicensed person acting within the team is not engaged in practices that require a real estate broker’s license. Employing brokers also need to establish that the compensation paid to an unlicensed person for services provided is not in the form of a commission. Compensation paid to an unlicensed person is not required to to be paid solely by the employing broker. However, §12-61-117, C.R.S. requires that all licensee compensation or valuable consideration for the performance of any acts requiring a broker’s license is paid solely by the employing broker. |
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According to Commission Position 25 on Recording Contracts should a listing broker get into a dispute with a seller over a commission, the broker may pursue a civil action and file a lis pendens. True False |
A: False CP-24 ... File a lis pendens (notice of pending lawsuit)? ANS: No. A lis pendens relates to a title or ownership dispute involving the land itself. The broker has no legal interest in the real estate. |
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According to CP-39 on Lease Options, Lease Purchase Agreements and Installment Land Contracts a licensee may create the before mentioned agreements by: using the appropriate commission approved form having a lawyer draw them up creating an addendum to the lease or purchase contract and having it signed by the parties involved Adding the neccessary language to the Additional Provisions section of an Exclusive Right to Buy/Sale |
A: having a lawyer draw them up Installment Land Contracts AKA "Land Contracts" is a purchase agreement in which the owner retains legal title to a property while the buyer, usually a tenant, makes payments. ONCE THE BUYERS COMPLETES THESE PAYMENTS, THE SELLER DEEDS THE PROPERTY TO THE BUYER. Two big points here: 1) Since the buyer does not take legal ownership until they complete payments, this means the buyer, who usually has possession of the property, has no legal rights to the property beyond that of a renter. THEY DO NOT OWN IT - THE SELLER DOES. 2) Because of the number of creeps who have used installment land contracts to defraud unknowing buyers, the real estate commission does not have an approved form for us as agents to use. These contracts are not illegal, if you have clients who want to enter into such an agreement, they (notice the "they" here - I for one would not touch a land contract transaction for all the tea in China) need to bring in an attorney to draw up the necessary paperwork.The real estate commission feels so strongly about this, they issued a position statement on it. Here it is: CP-39 Commission Position on Lease Options, Lease Purchase Agreements and Installment Land Contracts (4-5-2011)The Commission recognizes that in order to maintain the resilience of the real estate market during times when conventional lending requirements are rigorous, alternative funding practices are utilized to sustain the market conditions of supply and demand. The Commission has received and investigated numerous complaints pertaining to lease options, lease purchase agreements and installment land contracts. Although the Commission does not have the authority to prohibit the types of real estate transactions that real estate brokers participate in, the Commission strongly cautions real estate brokers to utilize the services of an attorney licensed to practice law within the State of Colorado. It has been the Commission’s observation, based on complaints received, that lease option and lease purchase transactions are complex and generally contain provisions with significant financial risk posed to the prospective buyer and seller. Installment land contracts and the other transactions mentioned in this position statement afford buyers the opportunity to take possession of the real property and make installment payments to the seller. There is a significant potential for harm to the seller, buyer or assignee if the installment land contract is not properly drafted. In all of the above transactions, the seller retains legal title to the property while the buyer may acquire equitable title. The Commission does not have an approved contract form necessary to memorialize the terms and nuances related to these complex transactions, or any jurisdictional regulations that may be germane. Pursuant to Rule F, the appropriate provisions of the license law and the brokerage relationship act (§§12-61-113, 12-61-804, 805 and 807, C.R.S.), real estate brokers are prohibited from drafting a contract document that would reflect the terms of such a transaction as it would exceed their level of competency and is a matter requiring the expertise and advice of an attorney. Additionally, such behavior may be construed as the unauthorized practice of law by the real estate broker and subject to civil penalties. The contracts for these transactions should not be prepared by a real estate broker; rather, the documents should be drafted by a licensed Colorado attorney-at-law engaged for each particular transaction. |
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According to CP-6 on the Release of Earnest Money Deposits, should a broker refuse to release earnest money to the appropriate party when there is no dispute until such time as both parties have signed a written release? Earnest money deposits should never be issued without a signed release by all parties If there is no dispute, the broker should release earnest money to the appropriate party immediately Regardless if there is a dispute or not; the broker decides who should receive the earnest money in accordance with commission rules If there is no dispute, agency rules require the listing broker to release earnest money in accordance with the express direction of the seller |
A: If there is no dispute, the broker should release earnest money to the appropriate party immediately Releases are not required when there is no dispute - the money should be released immediately. When there is a dispute, there are no commission rules as to who should receive the earnest money, nor is the broker allowed to make a decision. Disputed earnest money must be resolved by the parties to the contract, by an agreed upon arbitrator or in a court of law. CP-6 Commission Position on Release of Earnest Money Deposits Rule E-15 states in part that: “When for any reason the owner fails, refuses, neglects or is unable to consummate the transaction as provided for in the contract, and through no fault or neglect of the purchaser the real estate transaction cannot be completed, . . . the deposit should be returned to the purchaser at once . . .”The Commission will not pursue disciplinary action against a broker for refusal to disburse disputed funds when the broker is acting in accordance with the language of the appropriate Commission-approved contract to buy and sell. It is clear in the contract to buy and sell real estate that the broker holds the earnest money on behalf of both buyer and seller. If there is no dispute, the broker should disburse to the appropriate party immediately.Some brokers unnecessarily require a signed release by both parties even when there is no disagreement. Audits have disclosed many instances where brokers have held deposits for extended periods just because one or both parties will not sign a release. While good judgment is always urged, releases are not a requirement of the Real Estate Commission. In addition, where one party has given written authorization for the release of a deposit to another, a written release by the other party is not required. |
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A broker does not have to supervise independent contractors when: they have at least three years experience they have an independent brokers license, even though a designated broker employs them the broker is out of town none of the above |
A: none of the above A broker must always supervise all independent contractors. |
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True/False - According to Commission Position 24 on the Preparation of Market Analysis and Evaluation for Loans the following text must appear on every licensee's estimates of value. “NOTICE: The preparer of this appraisal is not registered, licensed or certified as a real estate appraiser by the State of Colorado”. True False |
A: True CP-24...The broker preparing an estimate or evaluation must at all times comply with the statutory requirement in Sections 12-61-702 and 12-61-718, Colorado Revised Statutes, for a written notice that they are not an appraiser. The wording and use of the written notice are specified in Chapter 15 of the Rules of the Board of Real Estate Appraisers. The required wording is:“NOTICE: The preparer of this appraisal is not registered, licensed or certifiedas a real estate appraiser by the State of Colorado”. |
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True/False - According to CP-38 Disclosure of Affiliated Business Arrangements, a licensee is required to disclose any affiliated business arrangement in which the licensee has a 1% or more interest when an offer to purchase real property is fully executed. True False |
A: True CP-38 Commission Position on Disclosure of Affiliated Business Arrangements and Conflicts of Interest (4-5-2011)This statement supplements Rule E-46 Affiliated Business Arrangements. §12-61-113.2, C.R.S. Affiliated Business Arrangements was enacted in Colorado to provide transparency, accountability, and consumer protection through disclosure and consistency concerning affiliated business arrangements. Affiliated business arrangements have also been regulated for many years by the Real Estate Settlement Procedures Act (RESPA). RESPA was precipitated by significant reforms identified by Congress as necessary to ensure that consumers did not pay disproportionately high settlement costs as the result of certain deleterious business practices by settlement service providers. RESPA is applicable to any residential mortgage transaction involving a federally related mortgage loan. However, Colorado law requires disclosure of affiliated business arrangements to consumers even if the transaction does not involve a federally related residential mortgage loan.Colorado law C.R.S. 12-61-113.2(1)(a) defines an “affiliated business arrangement” as an arrangement in which:“A provider of settlement services or an associate of a provider of settlement services has either an affiliate relationship with or a direct beneficial ownership interest of more than one percent in another provider of settlement services;”and the provider directly or indirectly refers business to the other provider or affirmatively influences the selection of another provider of settlement services.It is the Commission’s position that real estate brokers must disclose affiliated business arrangements to consumers in all transactions intended to result in the transfer of title from one party to another. RESPA requires that affiliated business arrangements be disclosed before or at the time a referral is made to a provider of settlement services. Colorado law requires a licensee to disclose any affiliated business arrangement when an offer to purchase real property is fully executed. In Colorado, the disclosure is required to be in writing, must be given to both agents and transaction brokers, must comply with RESPA and Colorado law, and must be made using the Federal RESPA disclosure form. Colorado law requires real estate brokers to disclose their affiliated business arrangements to all parties to the real estate transaction and all parties are expected to sign the disclosure form. The Commission recommends that real estate brokers disclose their affiliated business arrangements to the party with whom they are working early in their relationship, i.e. at the time brokerage relationships are disclosed or when the listing contract or buyer broker agreement is negotiated. In those transactions where the broker does not deal with another party until the time of contracting written disclosure should be made to all parties at the time the purchase contract is fully executed.Additionally, real estate brokers are required to make certain disclosures to the Division of Real Estate regarding their affiliated business arrangements. Colorado law requires every licensee to disclose to the Commission when they enter into or change an affiliated business arrangement. All affiliated business arrangements to which the licensee is a party must be disclosed. Disclosure is required at the time of a new application for licensure or at the time of activation of an inactive license. The disclosure must include the physical location of the affiliated business. Employing brokers are required to disclose the names of all affiliated business arrangements to which the employing broker is a party on an annual basis, at the least. The disclosure must include the physical location of the affiliated businesses. The Commission has determined that these disclosures shall be made electronically through the Division of Real Estate’s website at www.dora.state.co.us/pls/real/AFB_Web.Logon?p_div=REC.It is the Commission’s position that Rule E-25 Continuing duty to disclose conflict of interest and license status, applies to all licensees including real estate brokers who perform licensed property management services and are affiliated with businesses or vendors that provide services applicable to lease transactions. For example, a real estate broker acting on behalf of a landlord is required to disclose to the landlord that the real estate broker has partial ownership of the maintenance company that the real estate broker utilizes for the landlord’s property repairs. The Commission strongly recommends that this type of information be disclosed to the principal early in the business relationship, i.e. at the time brokerage relationships are disclosed or when the listing contract is negotiated. Additionally, this disclosure should be made in writing. |
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According to Commision Position 31 on Acting as a Transaction Broker, you cannot be a Transaction Broker for: Your brother Your close friend Your best client All of the above |
A: All of the above CP-31 Commission Position on Acting as a Transaction Broker or Agent in Particular Types of Transactions(Adopted 9-8-04)The public may enter into either a Transaction-Broker relationship or an Agency relationship with a Broker. Fundamental among the differences between Agency and Transaction-Brokerage is that an Agent is an advocate with fiduciary duties, while a Transaction-Broker should remain neutral, not advocate. However, in some situations the relationship of the Broker with a particular party or property may make a particular relationship inappropriate or problematic.Before acting as a Transaction-Broker in transactions where neutrality is difficult, the Broker should consider whether the Transaction-Brokerage arrangement is suitable, consult with the Broker’s supervising Broker and then make the necessary disclosures. Some examples of these situations include: 1. Selling or purchasing for one’s own account (whether the property is solely or partially owned or to be acquired by the Broker), (See Rule E-25 regarding proper disclosures); 2. Selling or purchasing for the account of a spouse or family member of the Broker; 3. Selling or purchasing for the account of a close personal friend, business associate, or other person where it would be difficult for the Broker to remain neutral; or 4. Selling or purchasing for the account of a repeat or regular client/party where it would be difficult for the Broker to remain neutral (i.e., undertaking as a Transaction-Broker the listing of multiple units, lots or properties such as listing a real estate development or condominium complex for a single developer, listing multiple residential or commercial properties for the same seller that will be sold to different buyers, or listing for lease a multiple unit residential or commercial property that will be leased to different tenants).An agency relationship between a Broker and a seller or landlord, buyer or tenant, requires a written agency agreement. The duties of an agent go beyond facilitation of the transaction as a neutral party and require representing the interests of the Broker’s principal over the interests of the other party. In certain circumstances, fulfilling the duties of an Agent including acting as an advocate may be difficult. A Broker who enters into an agency relationship must fulfill the duties of advocacy, fidelity, loyalty and other fiduciary duties associated with a single agency relationship. In circumstances where the Broker may not be able to fulfill the duties imposed on an agent the Broker should consider whether the agency arrangement is appropriate, consult with the Broker’s supervising Broker and act accordingly. |
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True/False - According to Commission Position 42 on Apartment Building or Complex Management, an on-site manager performing customary duties is required to have a real estate license. True False |
A: False * CP-42 Commission Position on Apartment Building or Complex ManagementThe Commission recognizes that owners of apartment buildings or complexes will engage the services of real estate brokerages or unlicensed, on-site managers, or both. An “owner” includes either a person or an entity recognized under Colorado law. The owner must have a controlling interest in the entity formed by the owner to manage the apartment building or complex. In the instance of an entity, the “owner” may form a separate entity to manage the apartment building or complex. The ownership entity and the entity formed by the owner to manage the apartment building or complex must be under the control of the same person or persons.Pursuant to §12-61-101(2)(b)(XII), C.R.S., a regularly salaried employee of the owner of an apartment building or complex is permitted to perform customary duties for his or her employer without a real estate broker’s license. The unlicensed, on-site manager must either report directly to the owner or to the real estate broker, if a real estate broker is engaged to manage the property. The Commission views the following to be customary duties of an unlicensed, on-site manager: 1. Performance of clerical duties, including gathering information about competing projects. 2. Obtain information necessary to qualify perspective tenants for a lease. This includes obtaining and verifying information regarding employment history, credit information, references and personal information as necessary. 3. Provide access to a property available for lease and distribute preprinted, objective information prepared by a broker as long as no negotiating, offering or contracting is involved. 4. Distribute preprinted, objective information at an on-site leasing office that is prepared by an owner or broker, as long as no negotiating, offering or contracting is involved. 5. Quote the rental price established by the owner or the owner’s licensed broker. 6. Act as a scrivener to the owner or the broker for purposes of completing predetermined lease terms on preprinted forms as negotiated by the owner or broker. 7. Deliver paperwork to other brokers. 8. Deliver paperwork to landlords and tenants, if such paperwork has already been reviewed by the owner, or a broker or has been prepared in accordance with the supervising broker’s instructions. 9. Collect and deposit rents and security deposits in accordance with the owner’s lease agreement or the brokerage firm’s written office policy. 10. Schedule property maintenance in accordance with the brokerage firm’s management agreement or the owner’s lease agreement.If the owner has executed a Power of Attorney form or a written delegation of authority that authorizes the unlicensed, on-site manager to sign and execute leases on behalf of the owner, the unlicensed, on-site manager may execute those without possessing a real estate broker’s license. Brokers supervising unlicensed, on-site managers with this authority are expected to review the executed documents to ensure compliance with lease terms, management agreements, local, state and federal laws, including the real estate brokerage practice act and Commission rules.Employing brokers need to be especially aware of their supervisory duties under the license law. Supervisory duties apply whether the on-site manager is an employee or independent contractor of the broker or brokerage firm, or if the on-site manager is a regularly salaried employee of the apartment building or complex owner. The employing broker should have a written office policy explaining the duties, responsibilities and limitation on the use of on-site managers. This policy should be periodically reviewed with all employees. |
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True/False - According to Commission Position 22 on Handling of Confidential Information, a designated broker is permitted to share confidential information with a supervising broker without changing or extending the brokerage relationship beyond the designated broker. True False |
A: True CP-22...A designated broker is permitted to share confidential information with a supervising broker without changing or extending the brokerage relationship beyond the designated broker. Brokers may want to consult legal counsel regarding the necessity of securing the authorization of the party to whom the information is confidential before the designated broker shares that confidential information with the supervising broker. Such advice could include modifications to the listing agreement or buyer agreement that create such authorization. |
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True/False - According to CP-24 on the Preparation of Market Analysis and Evaluations for Loans, real estate brokers may perform valuations only for the purpose of determining the market value of a property for marketing purposes. True False |
A: True This is one of those gray areas where the reading assignment says one thing, but the way the State exam is written reflects another. Real estate brokers may never do appraisals. Only a licensed appraiser may do an appraisal. Real estate brokers may do "estimates of value" for their clients, but not for the purpose of securing financing. Despite the fact that CP-24 says a bank may use it for lending, that is not what the question on the state exam (or this one) wants to know. The real estate commission draws a very hard line for agents, and that is that agents are never allowed to do an appraisal, so all agents can do is a BPO for the purpose of marketing their client's home. So when you see the question on the state exam the answer is always reflective of the marketing only response.CP-24 Commission Position on Preparation of Market Analyses and Real Estate Evaluations Used for Loan Purposes:The Colorado Real Estate Appraiser Licensing Act contains special provisions which allow licensed real estate brokers to perform certain real estate valuation related activities without being registered, licensed or certified as real estate appraisers. These provisions are found in Sections 12-61-702 and 12-61-718, C.R.S.The first of these allows a broker to prepare an “estimate of value” which is not represented as an appraisal and is not used to obtain financing. The position of the Commission is that this provision allows a broker to prepare a market analysis for use in the real estate brokerage process and to offer their estimate as to the value or market price of real estate for court testimony or tax purposes. |
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According to Commission Position 4 on Interest Bearing Trust Accounts who cannot receive interest earned by a trust account Buyers Sellers Tenants Brokers |
A: Brokers CP-4 Commission Position on Interest Bearing Trust AccountsThe Commission has taken the position that in the absence of a contract signed by the proper parties to the contrary, any interest accumulating on a trust account does not belong to the broker who is acting as escrow agent. (This position is based upon 12-61-113(l)(q) and upon the well-established tenet of agency that the agent may not profit personally from the agency relationship except for agreed upon compensation.) |
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Which of the following is a less-than-freehold estate? Fee simple defeasible Fee simple absolute Leasehold estate Life estate |
A: Leasehold estate Under a less-than-freehold estate the holder does not have a title to the property. A less-than-freehold estate is a leasehold estate. A leasehold merely gives possession and use of the property, not title. |
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True/False - According to CP-11 Assignment of Brokers Rights to a Commission, the Employing Broker has full authority to assign legal rights to a commission True False |
A: True CP-11 - If a broker is entitled to a commission pursuant to 12-61, Part 2, C.R.S., or, a broker is entitled to a commission in a transaction and title has passed from a seller to a buyer, the broker may assign any or all legal rights to such commission to any person including employed licensees and no disciplinary action will be invoked against such broker for having made such an assignment. |
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According to Commission Position 2 on Earned Fees can a commission be paid to a broker whose license is in an inactive status? Yes No |
A: No A broker with an inactive license is not licensed CP-2 Commission Position on Earned Fees Section 12-61-113(1)(j), C.R.S. of the license law forbids a broker from paying a commission or valuable consideration, for performing brokerage functions, to any person who is not licensed as a real estate broker. Brokerage functions include negotiating the purchase, sale or exchange of real estate. |
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According to Commission Position 42 on Apartment Building or Complex Management, a duty an unlicensed on-site manager may NOT perform without a license is: Draw up a lease Sign and execute a lease with a Power of Attorney from the owner Collect and deposit rents and security deposits Obtain information necessary to qualify perspective tenants for a lease. |
A: Draw up a lease CP-42 on on Apartment Building or Complex ManagementPursuant to §12-61-101(2)(b)(XII), C.R.S., a regularly salaried employee of the owner of an apartment building or complex is permitted to perform customary duties for his or her employer without a real estate broker’s license. The unlicensed, on-site manager must either report directly to the owner or to the real estate broker, if a real estate broker is engaged to manage the property. The Commission views the following to be customary duties of an unlicensed, on-site manager: 1. Performance of clerical duties, including gathering information about competing projects. 2. Obtain information necessary to qualify perspective tenants for a lease. This includes obtaining and verifying information regarding employment history, credit information, references and personal information as necessary. 3. Provide access to a property available for lease and distribute preprinted, objective information prepared by a broker as long as no negotiating, offering or contracting is involved. 4. Distribute preprinted, objective information at an on-site leasing office that is prepared by an owner or broker, as long as no negotiating, offering or contracting is involved. 5. Quote the rental price established by the owner or the owner’s licensed broker. 6. Act as a scrivener to the owner or the broker for purposes of completing predetermined lease terms on preprinted forms as negotiated by the owner or broker. 7. Deliver paperwork to other brokers. 8. Deliver paperwork to landlords and tenants, if such paperwork has already been reviewed by the owner, or a broker or has been prepared in accordance with the supervising broker’s instructions. 9. Collect and deposit rents and security deposits in accordance with the owner’s lease agreement or the brokerage firm’s written office policy. 10. Schedule property maintenance in accordance with the brokerage firm’s management agreement or the owner’s lease agreement.If the owner has executed a Power of Attorney form or a written delegation of authority that authorizes the unlicensed, on-site manager to sign and execute leases on behalf of the owner, the unlicensed, on-site manager may execute those without possessing a real estate broker’s license. Brokers supervising unlicensed, on-site managers with this authority are expected to review the executed documents to ensure compliance with lease terms, management agreements, local, state and federal laws, including the real estate brokerage practice act and Commission rules. |
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Sellers are required to keep a copy of the lead-based paint disclosure form in their files for a minimum of: 6 months 1 year 3 years 7 years |
A: 3 years Sellers are required to keep lead paint disclosure forms for 3 years. Real estate brokers are required to keep them for 4 years. |
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According to CP-7 on Closing Costs - In reference to a Closing; is the listing broker responsible for paying the costs of legal document preparation? Yes, even if the documents were prepared by the Seller''s Attorney Yes, when the broker is responsible for preparing such documents No, this expense is split between the Buyer and Seller |
A: Yes, when the broker is responsible for preparing such documents 1. Licensees are still responsible for paying the costs of legal document preparation when they are preparing such documents for their clients. If the broker delegates this function to an agent (title company or closing service) the broker is still responsible for bearing the cost. 2. Other costs associated with closings can be paid for by the licensee or any other party. The Commission will no longer require that licensees bear these costs. Licensees are urged to use the Closing Instructions and Earnest Money Receipt form developed by the Commission. 3. It is now permissible for brokers to close their own transactions and make additional charges for providing closing services so long as the charges are not tied to legal document preparation. If a licensee does this it must be with the consent of the parties and all charges must be specified. This consent may be obtained through the Listing Contract, the Contract to Buy and Sell, the Closing Instructions and Earnest Money Receipt form, or otherwise. 4. Licensees are not responsible for bearing the cost of legal document preparation where the documents are prepared by an attorney representing the parties to the transaction. However, the broker should not designate the broker’s own attorney to prepare legal documents for the parties and then charge as if the attorney had prepared the documents on behalf of a client. 5. The broker must still provide accurate closing statements. |
