Final Focus Questions Exam

Final as of the closing date Explanation All proations are final at the closing table. There is no recourse for adjustments after. There is no date of remission for real estate transactions in the Contract to Buy and Sell Real Estate.

According to the Contract to Buy and Sell Real Estate - all prorations are: Final as of the closing date Taxes are readjusted when the bill comes in at the end of the year Final as of the date of possession Final as the date of remission - 3 days after closing

Buyer and Seller Explanation As per the contract to buy and sell real estate: Earnest Money. The Earnest Money set forth in this section, in the form of _________________________________, 83 is part payment 84 of the Purchase Price and shall be payable to and held by _________________________________________________ (Earnest Money Holder), in 85 its trust account, on behalf of both Seller and Buyer.

According to the Contract to Buy and Sell Real Estate earnest money is held on behalf of: Seller Buyer Buyer and Seller Seller and Broker

They are included if attached on the date of the listing unless specifically excluded by the seller Explanation Unless excluded by the seller, all fixtures will be included

According to the Exclusive-Right-to-Sell Listing Contract which of the following is true with regard to fixtures listed within the contract? They are included unless they are crossed out on the form They are included if attached on the date of the listing unless specifically excluded by the seller They are included in every case They are included if they are on the property at the time of the listing

The mortgagor Explanation The Mortgagor is the owner of the property. The owner placed the voluntary lein on the property which the mortgage represents to secure a loan for the property. Excess funds means the encumbrabces have been satisfied and represents equity belonging to the owner.

Any excess funds above those required to pay off encumbrances realized at a foreclosure sale belong to: The State General Fund The mortgagee The mortgagor The Lender

Yes, as it was part of the negotiated commission in the listing contract Explanation The Real Estate Commission has no problem with a licensee giving money to his/her client. The client does not need to be licensed as the rebate is considered a product of the commission negotiated by the licensee and his/her client in the Listing Agreement.

The Sellers Agent at his option rebated part of his commission back to the Seller. Was this legal? No, it is illegal to pay a commission to anyone who is unlicensed Yes, as it was part of the negotiated commission in the listing contract

None of the above. Explanation Never, BPO's are an estimate of value for the purposes of marketing and not an appraisal. Only licensed appraisers can prepare an appraisal. Only appaisals can be used for financing purposes. E-42. Notice Required on CMA's or BPOs for Other Than Marketing. When a real estate broker prepares a competitive market analysis (CMA) or a broker's price opinion (BPO) for any reason other than the anticipated sale or purchase of the property, the licensee must include a notice stating: "This evaluation was prepared by a licensed real estate broker and is not an appraisal. This evaluation cannot be used for the purposes of obtaining financing." Pursuant to 12-61-702(5)(b)(II), C.R.S, brokers are prohibited from completing CMA's or BPOs that are used for the purpose of obtaining financing.

A BPO (Broker Price Opinion) is an estimate of value most often requested by a lending institution of a real estate broker to determine the value of a foreclosed property. Can a BPO be used for financing? When there is a shortage of available appraisers. When you'd like to save your client money on appraisal fees. When your employing broker signs off on it. None of the above.

This evaluation was prepared by a licensed real estate broker and is not an appraisal. This evaluation cannot be used for the purposes of obtaining financing. Explanation What in the heck are BPO's? BPO's are "Broker Price Opinions". They and CMA's are "estimates of value" prepared by real estate licensees for marketing purposes. BOP's are most commonly requested by lending institutions to ascertain the market value of a REO ("Real Estate Owned" i.e. foreclosed) property. In simpleze: when banks need to get a market value of a property they are getting ready to sell, they would much rather pay a pittance to a real estate licensee hungry for the listing, than real money to a licensed appraiser. They also can be used as testimony in a court case, or for tax purposes, or to set a listing price on a home. There are four facts you need to know about BPO's for the State test: 1) BPO stands for "Broker Price Opinion" 2) They are "estimates of value" NOT an appraisal. Only licensed appraisers can prepare appraisals. 3) They can be used only for marketing purposes (valuing a property for sale), NOT for financing (valuing a property for a loan) 4) Whenever you create a BPO (for a bank) or a CMA ("Competitive Market Analysis" for a client), you need to include these words in the report "This evaluation was prepared by a licensed real estate broker and is not an appraisal. This evaluation cannot be used for the purposes of obtaining financing."

A Broker Price Opinion (BOP) and Competitive Market Analysis (CMA) are estimates of value created by real estate licensees for marketing purposes. Since they were not prepared by a licensed appraiser, the follow words must appear at their bottom: This evaluation was prepared by a licensed real estate broker and is not an appraisal. This evaluation cannot be used for the purposes of obtaining financing. This appraisal was prepared by a licensed real estate broker. This evaluation was prepared by a licensed appraiser. This evaluation was prepared by a licensed real estate broker. It may be used to obtain financing only with full disclosure and the signatures of all parties to the associated Contract to Buy/Sell Real Estate.

Leased security systems Explanation The Inclusions and Exclusions section of the Contract does not specify inclusion of items likely to be leased, such as security systems, water softeners, smoke/fire detectors and satellite systems. These are included only if the appropriate box is checked

A Contract to Buy and Sell (Residential) does NOT require inclusion of which of the following? Fireplace screens and grates Leased security systems Parking and storage facilities as described in a condominium community Window coverings on the property on the date of the sales contract

True Explanation Rule D-14 Errors and omissions (E&O) insurance Every active real estate licensee, including licensed real estate companies, shall have in effect a policy of errors and omissions insurance to cover all acts requiring a license.

A Corporation, LLC, Partnership must have E&O insurance for entity and employing broker. True False, only the employing broker requires E&O insurance False, only the legal entity requires E & O insurance False, only the individual licensee''s require E&O insurance

Not acceptable as broker may not receive any fees for lead generation from any settlement service provider

A broker has put together a team consisting of a title representative, a lender and an inspector to assist the broker in building her business. Each settlement service provider reimburses the broker monthly for the cost of lead generation. The reimbursement covers all the broker's cost for generating the leads. In this instance this practice is: Not acceptable as a broker may not receive any money from a title company but acceptable for the other team members. Acceptable since the team members may also get a lead and the broker is not using just one settlement provider but three. Not acceptable as broker may not receive any fees for lead generation from any settlement service provider Acceptable as long as it is documented and the broker will accept other settlement providers on her team.

Abstract of title or Tile Commitment Explanation Providing a title or Title Commitment is normally done by a title company and is the responsibility of the seller

A broker is not required to provide: Copy of listing agreement Accurate closing statement Copy of signed purchase agreement Abstract of title or Tile Commitment

Disclose and get approval from the seller Explanation In Colorado Commission Position Statement CP-12, the commission says that "rebating" a part of a commission to a buyer or seller is legal. However, since the broker represents the seller, the broker must disclose this to the seller and get the seller's approval.

A broker representing a seller advertises that she will "rebate" a part of her commission to the buyer at closing. To be legal the broker must: This is not legal as the buyer is not licensed Disclose and get approval from the seller Give the seller the same rebate Disclose and get approval from the buyer''s broker

3 Explanation Three - One for Earnest money, one for security deposts and one for rent receipts. More info: f a Broker is going to deposit rent or security deposits into the employing broker's trust account(s), the Broker is required to keep records relative to these monies. Rule E-1 requires that all money belonging to others that is accepted by Broker be deposited in one or more accounts separate from money belonging to the Broker, employing broker or brokerage entity. Separate trust accounts must be maintained in the name of the employing broker, or the employing broker and the licensed business entity, and the maintenance of the separate accounts is the responsibility of the employing broker (Rule E-1(a) and (c)). This includes rent checks. A Broker who manages fewer than seven residences may deposit rental receipts and security deposits, and disburse money for such purposes, in the "sales escrow" account (Rule E-1(i)), although this is not recommended. A better practice is to maintain separate accounts for property management. At a minimum, a Broker is recommended to have two trust accounts for property management; one for security deposits and one for operating trust monies. As an alternative to trust accounts, a Broker may deposit rent monies or security deposits directly into an account owned and controlled by the landlord. Reference Colorado Real Estate Manual Chap 2 - Rule E-1 (h)

A brokerage firm holding 4 earnest money deposits, and 15 security deposits for managed single-family residences must have a minimum of how many trust accounts? 19 1 2 3

Fraudulent dual contracting Explanation The buyer and seller are committing fraud and if a broker knew of the arrangement, he or she is also committing fraud and risks disciplinary action as well.

A buyer and seller have written two contracts for one property: a higher contract to submit for a larger loan request and another with a lower actual purchase price because they know the seller is anxious to sell quickly. Which correctly describes this arrangement? Risky but acceptable because the lender will have the right to appraise and inspect the property Good business since the parties agree and the loan can only be made if the property appraises at the higher value Fraudulent dual contracting Acceptable for conventional loans, but not for VA or FHA loans

The buyer may terminate the contract by written notice if the difference causes the buyer's cash at closing to increase by a stated amount. Explanation The buyer has the option of terminating the contract if the terms are unacceptable.

A buyer is assuming a loan and the loan balance has turned out to be less than the assumption balance provided by the seller. How would this be handled according to the Residential Contract to Buy and Sell ? The seller must reduce the price of the property to compensate for the difference. The buyer may terminate the contract by written notice if the difference causes the buyer's cash at closing to increase by a stated amount. The contract is automatically terminated by the seller's misrepresentation. Depending on how the form is completed, either the buyer may terminate the contract or the seller could reduce the price to make up for the difference.

An obligation to fully disclose all material items the buyer found which the seller now has knowledge of

A contract was terminated when the buyer and seller were unable to resolve inspection issues. The buyer had included the buyer's inspection report as part of the inspection notice, which included information about a number of small material items. The seller of the property has what if any obligation for disclosing the issues noted in the report? No obligation to disclose because the contract was terminated An obligation to disclose only those items which are not latent defects No obligation to disclose if the total amount of items is less than $5,000 An obligation to fully disclose all material items the buyer found which the seller now has knowledge of

Amends the terms and conditions of a proposed contract to buy/sell Explanation The key here is "supersede and replace." This is not merely a rejection of an offer, it is amending the original offer, not rejecting it entirely.

A counterproposal: Is a rejection of a proposed contract to buy/sell Amends the terms and conditions of a proposed contract to buy/sell Use is mandatory to modify the terms and conditions of a contract to buy/sell Is used to counter the purchase price only of a proposed contract to buy/sell

Bringing court action Explanation A landlord must institute court action in order to evict a tenant which is called an unlawful detainer action.

A landlord can evict a delinquent tenant by: Giving him three days notice Giving him thirty days notice Calling the sheriff Bringing court action

A person addicted to or using illegal drugs Explanation The Fair Housing Act considers alcoholism and drug addiction to be a disability. This means that a landlord can't reject a rental application or otherwise discriminate simply because someone is an alcoholic or a drug addict. HOWEVER, a landlord may reject if (s)he learns that someone is currently using illegal drugs. Use of illegal drugs is an illegal activity. Many landlords ask about this on their rental application, and it's perfectly legal to do so. The other answer options all represent protected classes and may not be discriminated against. Reference Fair Housing Act

A property manager may refuse to lease to: A Muslim tenant renting near a Catholic church A gay individual A disabled veteran A person addicted to or using illegal drugs

Preparing legal documents as a courtesy for the seller of a for a sale by owner transaction Explanation According to the Conway-Bogue court decision - a Broker is only allowed to perform a licensed activity, such as prepare contracts, on a transaction in which they have been engaged as a Broker by at least one of the parties.

A real estate broker shall NOT engage in any of the following acts: Dealing in options on real estate Preparing legal documents as a courtesy for the seller of a for a sale by owner transaction Selling or offering to sell or exchange a time-share Auctioning real estate

If the employing broker signs at the bottom of the addendum Explanation If the managing or employing broker signs the Licensee Buyout Addendum, then the brokerage company is responsible. According to the form, this is the only specification for responsibility. A is correct. A is the only verbiage listed NOT in the Licensee Buyout Addendum. More info: What Is a Licensee Buyout Addendum? by Maxwell Wallace, Demand Media A licensee buyout addendum is a form used in certain real estate and property transactions in the state of Colorado. The LBA is used only in the purchase and sale of properties between licensed real estate professionals and their own clients. History and Purpose The Licensee Buy-Out Addendum to Contract to Buy and Sell Real Estate is intended to prevent improprieties and conflicts of interest in licensee/client transactions, as well as to make sellers contractually aware of the potential differences in selling to a licensed real estate professional as opposed to conventional buyers. Situations Dictating Use Licensed real estate agents are required to use an LBA when they enter into contracts to purchase properties concurrently with the initial listing of that property, when it immediately hits the market. Licensees also are required to use the LBA form when they are purchasing a property to facilitate its owner's purchase of another property, as well as when they continue to market that property to other potential buyers. Deleted Provisions Under the provisions of the licensee buyout addendum, several conventional provisions of standard real estate listing contracts reached under Colorado state law are deleted. Deleted provisions include a property's appraisal condition, liquidated damages or pre-assessed damages to the property, provisions related to the seller's financial default status and the broker's acknowledgments and compensation disclosure forms. Profit and Loss Stipulations Colorado's LBA also stands as contractual acknowledgment by a property seller that the buyer is a licensed real estate professional and any future profit or loss on a resale of the property is solely that of the buyer. Similarly, the LBA protects the property seller by acknowledging that any fees related to closing, holding and reselling the property are all absorbed by the buyer and not the property seller as the original or prior landowner.

According to the Licensee Buyout Addendum to the Contract to Buy and Sell, when does responsibility extend beyond the licensee to the brokerage firm? When the buyout date arrives When the buyout is for the personal use of the principal broker Only if the listing associate is unable to perform the buyout If the employing broker signs at the bottom of the addendum

The contract is void unless disclosure is signed by the seller and brokers prior to the parties signing the sales contract Explanation The provision about lead-based paint disclosure included in the Residential Contract to Buy and Sell is a federal disclosure requirement. Colorado rules provide that the contract is void unless proper disclosure is made prior to the parties signing the sale contract. WARNING! LEAD FROM PAINT, DUST, AND SOIL CAN BE DANGEROUS IF NOT MANAGED PROPERLY Penalties for failure to comply with Federal Lead-Based Paint Disclosure Laws include treble (3 times) damages, attorney fees, costs, and a base penalty up to $11,000 (plus adjustment for inflation). The current penalty is up to $16,000 for each violation. Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards Lead Warning Statement Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The Seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the Seller's possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase.

According to the lead-based paint disclosure provision contained in the Residential Contract to Buy and Sell which of the following is correct if the building permit for a residential improvement was issued prior to January 1, 1978? The contract is void unless disclosure is signed by the seller and brokers prior to the parties signing the sales contract The seller and brokers must make disclosure prior to closing The broker is responsible to disclose the age of the property Disclosure is required only if the sellers are aware of lead-based paint on the property

Itemize the damage in writing and return any excess deposit within one month Explanation The maximum amount of time a landlord can specify in a lease that they will hold a security deposit after lease termination is 60 days. If no time was specified in the lease, the default maximum is one month.

After a tenant gave notice and vacated an apartment, the landlord discovered substantial damage to the unit. No time was set in the lease specifying the length of time the landlord had to account or refund the security deposit after deductions. Which of the following is an appropriate action by the landlord? Return the deposit immediately and bill the tenant for the repairs when completed If the damage is obviously more than the deposit, the landlord may keep the damage deposit without notice Notify the tenant that his or her damage deposit is forfeited within 60 days Itemize the damage in writing and return any excess deposit within one month

Money owed by the Seller Explanation When the Sellers credit column is less than the debit column you need to add a credit to make them both equal. This means the credit column (containing the sale price) is less than the debits (containing amoung items - money owed on the property). This Seller is "upside-down." This credit ends up representing money the Seller must bring to the Closing and give to the Broker to pay off debts. (A Broker Debit is a deposit into the escrow account and a check that has to be written). More info: That is a common spot of confusion, so do not let it break your head. The situation occurs at the bottom of the 6 column worksheet when you are reconciling the columns. Let's assume for a moment you are looking at a Buyer's columns. You have applied all the debits and credits and all you have to do is reconcile the columns which have $100,000 in the Credit column (money the buyer has proven they have) and $125,000 in the Debit column (what the Buyer owes). Looks like this Buyer is a little short, but by how much? To determine this amount, you have to make both columns equal. This enables the Closing Agent to determine how much the Buyer is short; which is also how much of a check the Buyer needs to bring and be deposited into the escrow account. So you add $25,000 to the Buyer's Credit column to make both columns equal. Therefore this $25,000 CREDIT represents how much the Buyer is short, meaning this CREDIT does not represent how much they have, it represents how much they still OWE. This is how a CREDIT becomes something you OWE. We are not done reconciling yet. We have a $25,000 Credit, to balance it out we need a $25,000 Debit. That debit goes to the Broker account which represents the Escrow Account. Back to practical language - the Buyers needs to bring a $25,000 check to the closing so that they can make their Credit column (what they got) equal to the Debit column (what they owe) and the Broker (Closing Agent) needs to deposit it into the Escrow Account ($25,000 Debit). For extra points - the reverse is most common with the Seller. When a Sellers Debit column (what they owe) is lower than their Credit column (what they sold their property for), the amount added to the DEBIT column to make both columns equal represents money the Seller is receiving. The balancing CREDIT in the Broker column, reminds the Closing Agent to cut a check to the Seller out of the escrow account. Reference Closings

After the Sellers columns on a Settlement sheet have been subtotaled, to balance the two debit and credit columns, a credit to the Seller and a debit to the broker would represent: Money due to the Buyer Money due to the Seller Money owed by the Seller Money owed by the Buyer

A definite termination date Explanation Money, lockboxes and use of MLS are optional. The use of a definite termination date for the agreement is not. Real Estate Commission rule E-11 does not allow open-ended contracts with Brokerage firms Reference Commission Rule E-11

An Open Listing, an Exclusive Brokerage listing and an Exclusive Right-To-Sell listing all require: A lockbox to be used A definite termination date The property to be entered into an MLS The broker to offer compensation

County Treasurer Explanation The fault lies with the County Treasurer

An inaccurate county tax certificate failed to indicate the correct taxes due. Additional tax money due would be the responsibility of the: Title Company Buyer''s Agent Seller County Treasurer

The licensee bears the cost for the preparation of legal documents except those prepared by the Seller''s or Buyer''s attorney Explanation E-37. No fees to licensee/agent for legal document preparation There is no obligation for a licensee to prepare any legal documents as part of a real estate transaction. However, if a licensee or the licensee's agent (editors note: the Closing Agent is engaged by a licensee and is thus a licensee's agent) prepares any legal document, the licensee or the licensee's agent may not charge a separate fee for preparation of such documents. A licensee shall not be responsible for fees charged for the preparation of legal documents where they are prepared by an attorney representing the purchaser or seller. Costs of closing not related to preparation of legal documents may be paid by the licensee or by any other person. A broker who closes transactions and charges separately for costs of closing not related to the preparation of legal documents must specify the costs and obtain the written consent of the parties to be charged Reference Commission Rule E-37

As to the preparation of legal documents at closing: The licensee bears the cost for the preparation of all legal documents including those prepared by the Sellers or Buyers attorney The licensee may charge the Seller or Buyer for the cost of preparation The licensee bears the cost for the preparation of legal documents except those prepared by the Seller''s or Buyer''s attorney The licensee does not pay for the preparation of legal documents

Make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion. Explanation Brokers are required to make agency disclosure. Buyers are not required to sign the disclosure. It is acceptable to note the date and time the disclosure was made, and indicate that the buyers declined to sign the form.

Broker Betty at an open house meets a young couple looking to purchase their first home. The couple asked if the Broker thought they had enough income to qualify for a loan to purchase the property. Realizing this information is of a confidential nature Broker Betty makes the agency disclosure that her office policy and State statute require. The buyers are very skeptical about making a commitment and have been coached by family members not to sign anything. They refuse to sign the signature block on the Brokerage Disclosure to Buyer form. Betty should: Refuse to answer unless they sign Answer the question, then ask them to sign once again Call their attorney and make the disclosure to him Make a note of the date and time the disclosure was made and reference the fact that the buyers declined to sign the form - then have the discussion.

To obtain financing Explanation 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.

Broker Price Opinions (BPO) are created by real estate licensees not appraisers. These "estimates of value" cannot be used: For tax purposes For court testimony To set a listing price To obtain financing

Notify Real Estate Commission of true selling price of home Explanation The real estate commission does not track sale prices of homes. CP-30 State of Colorado Real Estate Commission and Board of Real Estate Appraisers Joint Position Statement The Colorado Real Estate Commission and the Colorado Board of Real Estate Appraisers have issued this Joint Position Statement to address mutual concerns pertaining to practices of real estate brokers and real estate appraisers with regard to residential sales transactions involving seller assisted down payments, seller concessions, personal property transferred with real property and other items of value included in the sale of residential real property. A residential real estate transaction has a life well beyond closing and possession of the property. Accurate sales data is crucial for appraisals and comparative market analysis (CMA) work products. Both appraisers and real estate brokers can effectively work together to maintain the safeguards that accurate sold data affords. A real estate broker can facilitate these safeguards by adherence to the following: • Note the amount of any seller paid costs (including a seller assisted down payment or fee paid to a charitable organization on behalf of the buyer) or other seller concession in the proper transaction documents, including the Buy/Sell Contract, Closing Statements, and Real Property Transfer Declaration. • Utilize all available fields in the multiple listing service to report sold information including all transaction terms and seller concessions. Sold information should be entered promptly following closing and be specific and detailed particularly when the sold price includes a seller assisted down payment or concessions. • Advise buyers and sellers to consult legal and tax counsel for advice on tax consequences of seller contributions and inducements to purchase. • Cooperate with appraisers as they perform their due diligence in asking questions about sales.

Broker is allowed to facilitate safeguards for seller assisted financing by adherence to the following EXCEPT: Advise buyers and sellers to consult legal and tax counsel for advice Cooperate with appraisers as they perform their due diligence in asking questions about sales Advise seller as to the impact of any seller paid costs Notify Real Estate Commission of true selling price of home

Residential transactions Explanation As per Commission Position Statement 30 (CP-30) "The Colorado Real Estate Commission and the Colorado Board of Real Estate Appraisers have issued this Joint Position Statement to address mutual concerns pertaining to practices of real estate brokers and real estate appraisers with regard to residential sales transactions involving seller assisted down payments, seller concessions, personal property transferred with real property and other items of value included in the sale of residential real property. A residential real estate transaction has a life well beyond closing and possession of the property. Accurate sales data is crucial for appraisals and comparative market analysis (CMA) work products. Both appraisers and real estate brokers can effectively work together to maintain the safeguards that accurate sold data affords."

Brokers should provide safeguards on seller-assisted down payments on: Commercial transactions Land transactions Time share transactions Residential transactions

3 Explanation The private lender will collect its loan in monthly installments, along with one month's taxes to be held in reserve so that sufficient funds are on hand to pay the yearly taxes when due. This reserve is based lender's own loan requirement and state law, C.R.S. 39-1-119. This law provides that any amount held on May 20 in excess of 3/12 of the taxes paid that year must be refunded to the borrower on or before May 30. Payments to a reserve escrow account must be adjusted annually upon reasonable belief of substantial improvements to the property or upon official notification of an increase in the actual amount of taxes levied. Failure to make a refund is subject to interest and penalty.

Closing March 15, next payment due April 1. How many months of escrow can lender take for taxes? 1 2 3 4

Attending first meeting with client Explanation E-31. Reasonable supervision. Pursuant to section 12-61-113(1)(o), C.R.S., and in addition to the requirements of Commission Rule E-30 "reasonable supervision" of licensees with two or more years of experience shall include, but not be limited to, compliance with the following: (a) Maintaining a written office policy describing the duties and responsibilities of licensees employed by the broker. A copy of the written policy shall: (1) be given to, read and signed by each licensee; (2) be available for inspection, upon request, by any authorized representative of the Commission. (b) Reviewing all executed contracts in order to maintain assurance of competent preparation. (c) Reviewing transaction files to ensure that required documents exist. (d) Nothing in this rule shall prohibit an employing broker from delegating supervisory authority to other experienced licensees. (1) Employed licensees who accept supervisory authority from an employing broker shall bear responsibility with the employing broker for ensuring compliance with the Commission statutes and rules by all supervised licensees. (2) Any such delegation of authority shall be in writing and signed by the employed licensee to whom such authority is delegated. A copy of such delegation shall be maintained by the employing broker for inspection, upon request, by any authorized Commission representative. (3) An employing broker shall not contract with any employed licensee so as to circumvent the requirement that the broker supervise employed licensees. More info on "High Level of Supervision: E-32. High-level of supervision. In addition to the requirements of Rule E-31 and pursuant to section 12-61-103 (6)(c)(I) C.R.S., an employing broker shall provide a "high level of supervision" for licensed persons with less than two years experience as follows: (a) Provide specific training in office policies and procedures; (b) Be reasonably available for consultation; (c) Provide assistance in preparing contracts; (d) Monitor transactions from contracting to closing; (e) Review documents in preparation for closing; (f) Ensure that the employing broker or an experienced licensee attends closings or is available for assistance. (g) Nothing in this rule shall prohibit an employing broker from delegating supervisory authority to other experienced licensees. (1) Employed licensees who accept supervisory authority from an employing broker shall bear responsibility with the employing broker for ensuring compliance with the Commission statutes and rules by all supervised licensees. (2) Any such delegation of authority shall be in writing and signed by the employed licensee to whom such authority is delegated. A copy of such delegation shall be maintained by the employing broker for inspection, upon request, by any authorized Commission representative.

Employing Broker "reasonable supervision" includes all of the following EXCEPT: Reviewing all contracts Review transaction files Maintaining an office policy manual Attending first meeting with client

Debit Seller Explanation The VA assigns this expense to the Seller. The Buyer can not pay it. Fees Not Allowed to be Charged to the Veteran Some fees are not allowed to be charged, per VA loan guidelines. Attorney Fee If for anything besides title work. Escrow Fee/Settlement Fee/Closing Fee The VA does not allow the veteran to pay an escrow fee. The escrow fee varies greatly and can be quite expensive, so this is a great benefit to the VA loan. Although the veteran does not pay for the escrow fee, it's good to know what the escrow company does. The escrow company is responsible for collecting and distributing all monies involved in the transaction. Escrow will receive the earnest money, any wired amounts from banks, down payments from the buyer, closing cost assistance from the seller, etc. The escrow company then divvies out the money to the appropriate parties — real estate agent commission checks, a wire paying off the existing loan on the house, a wire to the seller for any proceeds from the sale, etc. In addition, the escrow company makes sure all parties sign all the final loan documents and sale documents. When it's all said and done, escrow records the sale with the appropriate jurisdiction, such as the county government. Closing Protection Letter (CPL) The CPL fee is often included in the escrow fee but sometimes charged separately. It is a letter that makes the title company responsible if escrow does not appropriate loan proceeds correctly. Document Preparation Fee Fee charged by escrow for preparing final loan documents. Underwriting Fee/Processing Fee Fees charged by the lender for processing and underwriting the loan.

For a VA loan - how will the Buyer's Loan Processing Fee be shown on a settlement sheet Debit Buyer Debit Seller Debit Broker Not indicated on settlement sheet

Employing Broker Explanation § 12-61-117, C.R.S. Broker remuneration. It is unlawful for a real estate broker registered in the commission office as in the employ of another broker to accept a commission or valuable consideration for the performance of any of the acts specified in this part 1 from any person except the broker's employer, who shall be a licensed real estate broker. Reference § 12-61-117, C.R.S. Broker remuneration

From whom does the licensee receive a commission? Employing Broker Seller Buyer Either 2 or 3 may pay a commission to the licensee

They are awarded to the winning party. Explanation The contract specifies that both parties will go to mediation before court. At mediation the expenses are split evenly, at court the contract specifies that court costs and legal fees shall be awarded to the prevailing party. Only in a special case of a dispute over earnest money would fees be awarded to the broker.

How are court costs and legal fees handled if a dispute over the Residential Contract to Buy and Sell goes to court? They are split evenly between the parties. They are awarded to the winning party. They are awarded to the broker. They are awarded to the losing party.

From any debt Explanation The Colorado Homestead Protection Exception provides a $75,000 (This number changes with time) exemption from any debt, contract or civil obligation entered into after July 1, 1975. This exemption is for the head of family householder. Elderly or disabled individuals receive a $105,000 exemption. Generally, the exemption is waived as a requirement for getting a loan.

If the homestead exemption is not waived, the owner is protected: Unsecured debt Secured debt only Only ownership was acquire through a homestead From any debt

24 Explanation The licensee must complete 24 hours of approved continuing education during the three year license period. Twelve of those hours must consist of taking 4 hour Annual Commission Update Course each year. CE requirements are listed in Commission Rule B-2 below: B-2. Methods of completing continuing education. Licensed brokers must satisfy the continuing education requirement before they apply to renew an active license, activate an inactive license or to reinstate an expired license to active status. Licensed brokers may satisfy the entire continuing education requirement through one of the following options: a) Complete the twelve hours required bysection 12-61-110.5 (1) (c), C.R.S., and required by this rule in annual 4-hour increments developed by the Commission, otherwise referred to as the "Annual Commission Update Course." Licensees who choose this option must complete an additional 12 hours of elective credit hours to meet the 24-hour total continuing education requirement during the license period in subject areas listed in section 12-61-110.5(3), C.R.S. Please note that a licensee may not take the same version of the Annual Commission Update Course more than once. If a licensed broker takes more than 12 hours of the Annual Commission Update Course during a license period, the licensee will receive elective credit hours for any additional hours. b) Completing the Commission-approved 24-hour "Broker Reactivation Course." This option is available to licensees under one of the following conditions: (1) Licensee is currently active and did not use the Broker Reactivation Course to satisfy the Rule B-2(a) requirements in the previous license year (2) Licensee is inactive or expired for up to thirty-six months prior to active status and unable to comply with the education requirements listed in Rule B-2(a). c) Pass the Colorado state portion of the licensing exam. d) Completing 72 total hours of pre-licensure education concerning the understanding and preparation of Colorado real estate contracts (48 hours) and real estate closings (24 hours). The courses and course providers are required to comply with the requirements as described at section 12-61-103(4)(a), C.R.S. Any inactive or expired licensees who cannot meet the education requirements listed in Section 4(a), (b), or (c) must comply with the education requirements found in Section 4(d) before activation or reinstatement of the license. Reference Statute 12-61-110.5 Colorado Real Estate Manual

How many credit hours of Continuing Education classes does an Associate Broker need to renew his/her license? 8 16 24 32

I would be happy to do some research or analysis and speak to a construction expert on costs to determine if it's worth it Explanation Agents are experts on real estate values and transactions but not on construction costs. The best approach is to get a construction experts opinion on the cost of adding a bathroom and then perform additional research to determine if the value increase would justify the expenditure. This takes the agent out of being the expert on construction costs and places the agent in the correct role of recommending soliciting expert advise when the topic is outside the agent's expertise.

If a client asks whether it would be beneficial to add a second bathroom to increase profit on the sale of the home, what would be the appropriate response? Yes, an additional bathroom will always add more value than it costs to add it in No, the additional bathroom will never add more value than it costs to put in I cannot answer this, I am a real estate broker not a construction expert and I do not have the expertise to answer this question I would be happy to do some research or analysis and speak to a construction expert on costs to determine if it's worth it

Is liable for treble the amount wrongfully withheld Reference CRS 38-12-103 (3) (a)

If a landlord fails to refund the security deposit within one month (up to 60 days if specified in the lease) of the tenant surrendering the property, the landlord: Is liable for the entire deposit Is liable for treble the amount wrongfully withheld May be liable for double damages May extend the deposit return period for an additional 10 days if good cause exists

Yes, as long as it is disclosed to all parties Explanation There are no laws that prohibit an appraiser or a mortgage broker from working as such on a transaction upon which they are involved as a real estate broker, or acting as a real estate broker in the future on a property on which they have operated as a mortgage broker or an appraiser. However, this can be construed as a conflict of interest and all present or potential conflicts of interest must be disclosed to the parties involved.

If a licensee is also a licensed appraiser, can the licensee offer to appraise a home if they intend to be the listing agent for that same property in the future? No, that would be a conflict of interest Yes, as long as it is disclosed to all parties Yes, as the listing is in the future no disclosure requirements apply No, according to Federal law licensed real estate brokers cannot hold an appraisers license

Direct them towards the public records which would specify whether the land is in a flood zone Explanation Recognizing when you are out of your area of expertise and knowing how to deal with it, is an important skill and required by the Real Estate Commission. Recommending a review of public records to determine if the property is in a flood zone demonstrates that skill. The other three have the agent stepping out of their area of expertise.

If a property owner tells you the land only flooded during the "great flood" over 100 years ago, a licensees obligation to a potential buyer is.... Provide them with necessary documentation and assure them that there''s nothing to worry about Direct them towards the public records which would specify whether the land is in a flood zone Assure them there is nothing to worry about because the flooding only occurs every 100 years Recommend the install necessary infrastructure to avoid future flooding.

April 30 Explanation Real property taxes may be paid as follows: if the owners wants to make payments, one-half is due on or before the last day of February and the remaining one-half on or before June 15. If the owner wants to make one full payment, the entire tax may be paid on or before the last day of April

If an owner wants to make a single full payment for property taxes, what is the latest date by which this payment can be made? March 1 April 30 May 1 June 16

Do nothing, if the listing item is not on the property as of the date of the contract, it is not included nor necessary to cross it out Explanation 3.1. Inclusions. The Purchase Price includes the following items (Inclusions): 3.1.1. Fixtures. If attached to the Property on the date of this Contract, lighting, heating, plumbing, ventilating, and air conditioning fixtures, TV antennas, inside telephone, network and coaxial (cable) wiring and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems, built-in kitchen appliances, sprinkler systems and controls, built-in vacuum systems (including accessories), garage door openers including remote controls; and 3.1.2. Personal Property. The following are included if on the Property whether attached or not on the date of this Contract: storm windows, storm doors, window and porch shades, awnings, blinds, screens, window coverings, curtain rods, drapery rods, fireplace inserts, fireplace screens, fireplace grates, heating stoves, storage sheds, and all keys. If checked, the following are included: Water Softeners Smoke/Fire Detectors Security Systems Satellite Systems (including satellite dishes).

If items listed in the Inclusions and Exclusions Section of of the Contract to Buy and Sell Real Estate are not a part of the property, the broker should: Do nothing, if the listing item is not on the property as of the date of the contract, it is not included nor necessary to cross it out Cross out the items to show they are not included If not crossed out the seller could be obligated to install the item Check the appropriate box

Remove the section in its entirety as it is not applicable Explanation Whenever a section which is allowed to be omitted from any approved contract is omitted (such as the Seller Financing section of the Contract to Buy and Sell contact when the buyer is getting a new loan from a bank), you cannot remove it completely. You need to either: 1) cross it out cleanly such that someone can see what you are crossing out, 2) put n/a for "not applicable" in all the blank fields of the paragraph, or 3) if you are using a contract software package the software will remove the paragraph, but leave the title of the paragraph with the words "omitted as not applicable next to it.

If your Contract to Buy and Sell does not need the Seller or Private Financing Section, you as broker may do all of the following except: Crossing out the section cleanly Putting n/a in all blank fields in the section Remove the section in its entirety as it is not applicable Remove the paragraph text leaving the title and the words "omitted as not applicable"

Buywell Realty Explanation The minimum is the employing broker's name (the firm, not the person) Chapter 2 - CREC Manual Rule E-8. Advertising "A real estate licensee who performs any act requiring a license, including advertising services or advertising property belonging to another, shall do so in the name of the employing broker;...."

John Bargas of Buywell Realty wants to place a listing in the phone book. At a minimum he must list: John Bargas, Buywell Realty John Bargas Buywell Realty John Bargas, Buywell Realty, Each Branch Independently Owned and Operated

In writing, before providing specific real estate services Explanation The real estate commission allows conversation and discussion recognizing it is necessary to build rapport, but the law requires disclosure in writing at the earliest practical moment. June must disclose an agency relationship before she receives any confidential information from the prospective buyer.

June is a listing broker in Colorado. When and how must she disclose to a potential buyer that she has a working relationship with the seller? In writing, before any conversation or discussion In writing, at the time the contract to buy and sell is signed In writing, before providing specific real estate services Orally, before writing the contract and in writing before closing

Inform employing broker to create Property Management Contract and set up proper escrow account Explanation Section 12-61-103 (10) requires all business to be conducted only in the licensed name of the employing broker. Within a brokerage, only the employing broker or an attorney for the brokerage can create contracts from scratch.

Licensee gets asked by out-of-state party to manage 15 rental units. Broker should: Put money in sales escrow account Set up escrow account in own name Inform employing broker to create Property Management Contract and set up proper escrow account Inform employing broker and set up own escrow account

Seller or buyer Explanation This is a negotiable item in the contract to Buy and Sell Real Estate

Loan discount fees are paid by: Broker Buyer Seller Seller or buyer

3 business days after notice of acceptance Explanation A check for the earnest money should either accompany the offer until accepted or be delivered prior to expiration of the Alternative Earnest Money Deadline. Most often, a buyer's agent holding the deposit forwards a copy of the earnest money check with the offer and then specifies a date in the Alternative Earnest Money Deadline when the actual check will be delivered after contract acceptance. If the deposit was tendered with the contract; it must be deposited no later than 3 business days after notice of acceptance of the contract. From the real estate manual: "Unless otherwise agreed, earnest money deposits held by the specified broker must be deposited not later than the third business day after notice of acceptance of the contract. The broker should keep a copy of the validated escrow deposit slip and earnest money check in the office transaction file for later inspection."

Once a contract to purchase has been accepted by the seller, when does the earnest money tendered with the contract need to be deposited into the appropriate escrow account? 1 business day after notice of acceptance 2 business days after notice of acceptance 3 business days after notice of acceptance 4 business days after notice of acceptance

$5500 Explanation This question relates to the rules on Colorado withholding taxes. The rule is if the seller has an out-of-state address, the State directs at close a withholding of 2% of the purchase price or the entire net proceeds, whichever is less. This is to cover any potential State income tax liability for sellers. Since they live out-of-state, they likely do not file Colorado tax returns. Taking the money gives them a good incentive to file. Keep in mind this is not an actual tax, just a withholding. If the seller files and does not owe taxes, they get the withheld money back. Two percent of the selling price of $489,000 is $9780. Since $9780 is higher than the proceeds of $5,500, the lessor amount of $5,500 will be withheld as the potential tax liability. Also note that this withholding does NOT apply to Colorado residents.

Out of state seller sold a property for $489,000. The property was highly leveraged resulting in cash proceeds to the seller of $5,500. How much should be withheld subject to the Colorado Department of Revenue Income Tax? $9780 $5500 $110 $978

The first half payment by the last day of February, the second half payment no later than June 15 Explanation If you are going to pay property taxes in one payment, that payment is due no later than April 30. If you choose to make two half payments; the first payment is due no later than the last day of February and the second payment not later than June 15.

Property taxes become a lein on January 1 for the previous year. When may taxes be paid without receiving a penalty: The first half payment by the last day of February, the second half payment no later than June 15 All payments no later than Dec 31 All payments by October 15 Half payment by April 1, second half payment by July 1

Establishes the right of an HOA to place a lien on a property for unpaid HOA dues and assessments Explanation When someone buys a house, condo, or townhome that is part of a community with an HOA, s/he will most likely pay monthly fees and assessments to the homeowners' association. Becoming delinquent in paying those fees and assessments, the homeowners' association will be able to get a lien on the home that could lead to a foreclosure. This right to lien is established in the Colorado Common Interest Ownership Act. The Colorado Common Interest Ownership Act ("CCIOA") is modeled on the Uniform Common Interest Ownership Act some form of which has been enacted by more than 20 states. The super-lien provision, Colorado Revised Statutes §38-33.3-316 authorizes the existence of a lien on a unit for: "any assessment levied against that unit or fines imposed against its owner. Unless the declaration otherwise provides, fees, charges, late charges, attorney fees, fines and interest charged pursuant to section 38-33.3-302(1)(j), (1)(k) and (1)(.), 313(6) and 315(2), are enforceable as assessments under this article".

Provisions of the Colorado Common Interest Ownership Act: Provides a statutory right for an HOA homeowner's access to common community elements Establishes a social media forum for HOA homeowner discussions Establishes the right of an HOA to place a lien on a property for unpaid HOA dues and assessments

Public Trustee Explanation Sale date published for 5 consecutive weeks prior to sale More info: A residential foreclosure sale must be within 110 to 125 days of the recording of the Notice of Election and Demand. For agricultural properties the window is 215-230 days.

Publishing a foreclosure notice of sale in a newspaper is the duty of the: County Treasurer Public Trustee Lender County Assessor

Debit buyer Explanation Although everything is negotiable, the buyer is the primary beneficiary of recording the warranty deed since it will make the transfer into the buyer's name a matter of public record.

Recording Fee of Warranty Deed most typically would appear on the settlement statement as: Debit buyer Debit seller Debit broker Debit 1/2 seller and 1/2 buyer

The trustor waives the right to the homestead exemption Explanation The trustor (buyer) waives all rights to the homestead exemption in all Colorado approved deed of trust forms. The buyer is the "Trustor" because the buyer originates the Deed of Trust to provide security for a loan, the Public Trustee is the "Trustee" as he/she receives and holds the Deed of Trust, the lender is the "Beneficiary" because it is their loan that is being protected i.e the benefit. The Colorado Homestead Protection Exception provides a $75,000 (This number changes with time) exemption from any debt, contract or civil obigation entered into after July 1, 1975. This exemption is for the head of family householder. Elderly or disabled individuals recieve a $105,000 exemption. Generally, the exemption is waived as a requirement for getting a loan.

Regarding the Colorado Homestead Exemption, as indicated in the approved deed of trust forms, the buyer agrees that: The homestead exemption is not addressed in the deed of trust forms That the homestead exemption is not waived The trustor waives the right to the homestead exemption The trustee waives the right to the homestead exemption

Make written disclosure of his/her brokerage relationship before eliciting or receiving confidential information Explanation Rule E-35 states that when a real estate broker elicits or accepts confidential information from a buyer or tenant concerning the buyer's or tenant's real estate needs, motivation, or financial qualifications, the real estate broker must provide a written brokerage relationship disclosure identifying his or her brokerage relationship with the buyer or seller.

Rule E-35 of the Colorado Real Estate Commission requires brokers: Make oral disclosure of brokerage relationship first, then followup with correct Commission form prior to closing Make written disclosure of his/her brokerage relationship before eliciting or receiving confidential information Make written disclosure of brokerage relationship using forms prepared by the managing broker Make written disclosure of brokerage relationship prior to closing

No holdover provision Explanation As per commission Position 13 on Single Party Listings, the termination date shall not be extended by the "Holdover Period" of this listing contract. More info: CP-13 Commission Policy on Single-Party Listings Brokers often secure single-party listings because they have what they believe to be a good prospect for purchase. These listings are usually only for a few days, but occasionally the broker wishes to be protected for a longer period while the broker is negotiating with a particular prospective purchaser. A single-party listing, when placed on a Commission approved form for an Exclusive Right to Sell or Exclusive Agency, results in greater protection to the broker than the broker needs to have and the owner is placed in a position which is unfair. The owner may not realize that if the owner signs a listing contract with another broker, the owner may become liable for the payment of two commissions even though the owner has excepted a sale to the person mentioned in a single-party listing contract. In any and all contracting, the intent of the parties is paramount in its importance, in a listing contract, a broker is dealing with those less informed than the broker, and the broker has a duty to disclose the true meaning of the listing contract. The Commission does not wish to limit any owner of the freedom to contract. However, the broker should fully disclose to the owner the effect of the exclusive right to sell listing contract or the exclusive agency contract. Usually, when an owner signs an exclusive right to sell or exclusive agency agreement concerning a single party, the owner wishes to limit the rights of the broker under the listing contract. Therefore, in the space provided for additional provisions, one, two, or all of the following limitations should be inserted in this space: provided for additional provisions, one, two, or all of the following limitations should be inserted in this space: 1. The provisions of this listing contract shall apply only in the event a sale is made to ___________________________________. 2. The termination date shall not be extended by the "Holdover Period" of this listing contract. 3. In the event a sale is made by the owner or their broker to any other party than the above names, this listing contract is void. If an owner is misled to their disadvantage, the broker may be found guilty of endangering the public.

Single party listings: No holdover provision No disclosure is necessary No contract to perform is necessary Not applicable to the Statute of Frauds

He must comply with state and federal securities laws in arranging this investment group. Explanation The arrangement must comply with securities regulations regardless of how it is organized. Stan is a partner and must disclose his interest and any gains to the other owners.

Stan is a real estate broker in Colorado. He has identified a property for a fast food outlet and has asked four friends to contribute money to the purchase and gain partial ownership. Stan will manage the property and negotiate the lease for the fast food franchise. Which of the following is correct with regard to Stan's role as a broker in this arrangement? He must comply with state and federal securities laws in arranging this investment group. He will have no liability in the deal since he will not contribute money. He is not entitled to any commission on the purchase because he will be an owner. He can keep both the sales commission and the lease commission without specifically telling the others about the amounts involved.

Transaction specific items resulting from negotiations or instructions of the parties to the contract Explanation The additional provisions sections is a blank area in which Brokers have broad discretion to enter any necessary language. However, the clauses inserted must be a product of the buyers and sellers negotiation and not language, for example, benefiting the Broker. Reference Commission Rule F

The "Additional Provisions" section of the Contract to Buy and Sell Real Estate may include: Personal provisions of the listing broker on the client''s behalf Confirmation of the commission split to the cooperating brokerage firm Exculpatory language protecting the brokerage firm Transaction specific items resulting from negotiations or instructions of the parties to the contract

Marital status Explanation Marital status, sexual orientation., ancestry and creed are additional protections beyond the Federal Fair Housing protections. Age, military status are sometimes protected under local laws. Occupation is not protected.

The Colorado Fair Housing Law prohibits discrimination based on: Age Occupation Military status Marital status

All of the above Explanation The CREC has the power to investigate the real estate activities of any licensee upon its own motion. If a written complaint is filed the office is compelled to investigate.

The Colorado Real Estate Commission on its own motion can investigate: Violations of the Colorado Fair Housing Law Failure to account for money belonging to others A licensee's real estate activities All of the above

If the transaction fails and there is no dispute over who is to receive the earnest money the broker should release the funds immediately Explanation Commission Position 6: " If there is no dispute, the broker should disburse to the appropriate party immediately."

The Commission Position on earnest money deposits indicates: The broker cannot release earnest money funds from the trust account without written releases from all parties In the event of a dispute, the broker must decide to the "best of their ability" who is deserving of the earnest money and release it to that party If the transaction fails and there is no dispute over who is to receive the earnest money the broker should release the funds immediately

Seller is responsible for marketing and closing expenses Explanation A is the only verbiage listed NOT in the Licensee Buyout Addendum. More info: What Is a Licensee Buyout Addendum? by Maxwell Wallace, Demand Media A licensee buyout addendum is a form used in certain real estate and property transactions in the state of Colorado. The LBA is used only in the purchase and sale of properties between licensed real estate professionals and their own clients. History and Purpose Formally known as Form LB36-10-06, or the Licensee Buy-Out Addendum to Contract to Buy and Sell Real Estate, the form was adopted by the Colorado Real Estate Commission in January 2007. It is intended to prevent improprieties and conflicts of interest in licensee/client transactions, as well as to make sellers contractually aware of the potential differences in selling to a licensed real estate professional as opposed to conventional buyers. Situations Dictating Use Licensed real estate agents are required to use an LBA when they enter into contracts to purchase properties concurrently with the initial listing of that property, when it immediately hits the market. Licensees also are required to use the LBA form when they are purchasing a property to facilitate its owner's purchase of another property, as well as when they continue to market that property to other potential buyers. Deleted Provisions Under the provisions of the licensee buyout addendum, several conventional provisions of standard real estate listing contracts reached under Colorado state law are deleted. Deleted provisions include a property's appraisal condition, liquidated damages or pre-assessed damages to the property, provisions related to the seller's financial default status and the broker's acknowledgments and compensation disclosure forms. Profit and Loss Stipulations Colorado's LBA also stands as contractual acknowledgment by a property seller that the buyer is a licensed real estate professional and any future profit or loss on a resale of the property is solely that of the buyer. Similarly, the LBA protects the property seller by acknowledging that any fees related to closing, holding and reselling the property are all absorbed by the buyer and not the property seller as the original or prior landowner.

The Licensee Buyout Addendum informs the Seller of all EXCEPT: Seller is responsible for marketing and closing expenses Seller acknowledges that in entering into the Contract, Buyer is exposed to possible losses and expenses. The Contract may be terminated at any time by Seller upon written notice to Buyer. Any termination of the Contract shall not affect the listing contract for the Property (Listing Contract).

Creates a limited agency agreement Explanation The Colorado Real Estate Commission approved Power of Attorney form is designed to establish a limited agency agreement sufficient to designate someone to sign on behalf of another for a real estate transaction. It is not designed to establish broader legal authority to act outside this limited legal scope.

The Real Estate Commission approved Colorado Power of Attorney form Creates a limited agency agreement Is required in foreclosure sales Creates a universal agency agreement May be used in place of a buyer agency agreement

Sole proprietor Explanation Every company must have an employing broker at all times. If something should happen to an employing broker, such as leaving the company, the real estate commission can issue a "hardship" license to someone else to act as the interim employing broker while the company settles on a permanent employing broker. The only rule for the "hardship" employing broker is that he/she must have an active Colorado license. The problem with someone who is a sole proprietor i.e. they are an independant agent working for themselves, is that there is no one else in the company to become the employing broker. Statute below: Rule 12-61.103 (7) (3) - "If the person so designated is refused a license by the real estate commission or ceases to be the designated broker of such partnership, limited liability company or corporation, such entity may designate another person to make application for a license. If such person ceases to be the designated broker of such partnership,, limited liability company or corporation, the director may issue a temporary license to prevent hardship for a periord not to exceed 90 days to the licensed person so designated." Reference Rule 12-61.103 (7) (c)

The Real Estate Commission may NOT issue a temporary license to prevent hardship to a: Limited Liability Company Corporation Partnership Sole proprietor

Debit Seller & Credit Buyer $6,000 Explanation Security deposits are a surity against damage to a property. It belongs to the tenants and not the owner. When the property is sold - they must be transferred in whole to the new owner. Debit Seller Credit Buyer.

The Seller holds security deposits in the amount of $1,000 from each of six tenants. On the settlement sheet: Credit Seller & Debit Broker $6,000 Debit Seller & Credit Buyer $6,000 Credit Seller & Debit Buyer $6,000. Prorate the deposits between the Buyer and Seller based on the closing date

The broker must immediately return the money to the buyer Explanation A buyer has until the Loan Objection Deadline to provide written notice s/he cannot receive a satisfactory loan and wants to terminate the contract. If s/he does provide such notice, the earnest money must be refunded to the buyer. If the buyer does not provide such notice, the contract continues, but the buyer's earnest money becomes nonrefundable should s/he not receive a loan. From the Contract to Buy/Sell Real Estate: Loan Objection. If Buyer is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer's sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan. This condition is for the sole benefit of Buyer. Buyer has the Right to Terminate on or before Loan Objection Deadline, if the New Loan is not satisfactory to Buyer, in Buyer's sole subjective discretion. IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER'S WRITTEN NOTICE TO TERMINATE, BUYER'S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey).

The buyer notifies the seller in writing of a termination of the contract under the Loan Objection Deadline. What happens to the earnest money? The broker splits the money with the seller The broker must immediately return the money to the buyer The broker holds the money until there is mutual agreement to return the money to the buyer The buyer and the seller will mediate any disagreement about the earnest money

The seller Explanation The seller(s) signs the warranty deed, not the buyer. The charge is debit seller. On the settlement sheet do not confuse "recording" the deed with "notarizing" the deed. Recording the deed is "debit buyer" as it is considered in the buyers best interest to have the deed recorded into public record. For info: THE WARRANTY DEED - Although title may be transferred by a number of types of deed such as a quit claim deed, the most common type of deed used in a closing to transfer title is the warranty deed. The seller signs the warranty deed, not the buyer. In addition, a notary public must notarize the deed and an unofficial witness who is not a party to the transaction must sign as well so the deed can be recorded. The notary and the witness are usually employees of the closing attorney, although sometimes the attorney may ask the licensee to be a witness. Once the seller, the notary, and the unofficial witness have signed the deed, and the seller or attorney hands (delivers) it to the buyer and the seller has officially transferred title. It is standard practice for the attorney to keep the original warranty deed at closing for recording at the courthouse. The original deed is then mailed to the buyer after the recording.

The fee to notarize a Warranty Deed is charged on the settlement statement to: The buyer The listing broker The seller The buyer and seller

125 days Explanation For residential properties, the public trustee schedules the sale 110-125 days ( 215-230 days for agricultural) after the initial foreclosure action was recorded. The notice of sale is published in a local newspaper for 5 weeks. The public trustee also mails a copy of the notice to the borrower. The public trustee typically conducts the sale at the courthouse. At the sale, the public trustee reads the written bid submitted by the lender, and any party may bid. If anyone other than the lender is the winning bidder, that person must deliver the bid amount in cash or cashier's check to the public trustee. The winning bidder is given a certificate of purchase.

The maximum time allowed for the sale of a residential property, through the Public Trustee's office after filing of the notice of election and demand (NED) to foreclose is: 45 days 90 days 125 days 230 days

To act as scrivener for the transaction Explanation Preparation of Legal Documents Although buyers and sellers may be charged a fee for closing, no fee may be charged for preparation of legal documents, except by an attorney representing the buyer or seller. The Conway-Bogue decision granted real estate brokers the right to prepare certain legal documents, but prohibits licensees from charging a separate fee for such service. The companion Title Guaranty case specifically prohibits title companies from preparing legal documents. Today, title companies only fill in blanks on legal documents under explicit instructions from the broker responsible for the closing. The listing broker who is responsible for completing the deed, bill of sale, and any notes and deeds of trust called for in the contract uses the second section of the Closing Instructions form to hire the title company as scrivener to complete the legal forms. The listing broker will be responsible for paying for legal documents and for their accuracy. However, the listing broker is not responsible for the cost of legal documents prepared by the buyer or seller, or by attorneys hired by the buyer or seller.

The title company may be hired by the listing broker: To prepare legal documents And may charge the buyer and/or seller for the preparation of legal documents To act as scrivener for the transaction And has ultimate responsibility for the accuracy of legal documents

True Explanation 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.

True/False - According to Commission Position 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

Name of the person who wrote the check out of the account Explanation Rule E-1 (p) Recordkeeping requirements A broker shall supervise and maintain, at the broker's licensed place of business, a record keeping system, subject to subsection (7) of this rule, consisting of at least the following elements for each required escrow or trust account: (1) A record called an "escrow or trust account journal" or an equivalent accounting system which records in chronological sequence all money belonging to others which is received or disbursed by the broker. For funds received, the records maintained in the system must include the date of receipt and deposit, the name of the person who is giving the money, the name of the person and property for which the money was received, the purpose of the receipt, the amount, and. a resulting cash balance for the account. For funds disbursed, the records maintained in the system must include the date of payment, the check number, the name of the payee, a reference to vendor documentation or other physical records verifying purpose for payment, the amount paid, and a resulting cash balance for the account. Reference Rule E-1 (p)

Trust Account journal and ledger documentation of disbursements from trust accounts need NOT include: Records verifying purpose of payment Amount paid and the resulting balance Date of payment and check number Name of the person who wrote the check out of the account

General in scope Explanation Power of Attorney, unless modified, are general in scope. Usually they are modified by stating exactly what is allowed for a licensee to sign in the name of the client. Reference Uniform Statutory Power of Attorney Act, C.R.S. 15-1-1301

Unless modified, the powers granted in a Colorado statutory power of attorney for property are: Not applicable to property management A conflict of interest for a designated broker General in scope Limited to signing papers at closing

One month Explanation Colorado law mandates that a security deposit must be returned within one month with an accounting for all deductions unless the lease indicates a different time period. Under no circumstances can the period of time in the lease be greater than 60 days.

Unless the lease states otherwise, how long does a property manager have to return a security deposit after a lease has expired? One month 60 days 45 days 6 months

Debit seller, credit buyer Explanation The seller still owes the amount that is assumed (debit seller). On an assumption, that the buyer will be making payments against the loan does not relieve the seller of the obligation that it be paid in full. The buyer will not be required to bring this amount to the closing (credit buyer)

What is the debit/credit entry when a buyer assumes a loan from the seller? Debit broker, credit buyer Debit seller, credit buyer Debit buyer, credit seller Debit seller, credit broker

A special assessment tax or levy has or will be applied Explanation Generally, an Assessment Role is a list of all properties in a specific area and their assessed valuation for tax purposes. It makes it possible for property owners to compared the value of their properties against others to see if they have been over assessed. In a Special Improvement District, when a property is added to the Assessment Role it means that the property has been deemed to benefit from an improvement and thus is going to be hit by a special tax or levy to pay for it. This must be disclosed to all potential buyers. Since the tax or levy is only going to be applied to specific properties it is not a general tax levy which is applied to an entire community.

When a home is added to the Assessment Role in an Special Improvement District, what must brokers disclose to all potential buyers? General taxes are going up substantially A special assessment tax or levy has or will be applied No disclosure is necessary Disclosure is not necessary until the tax has been levied.

If the buyer cannot get a satisfactory written loan commitment by that date, the buyer may terminate the contract upon written notice to the seller. Explanation A buyer has until the Loan Objection Deadline to provide written notice s/he cannot get a commitment for a satisfactory loan and wants to terminate the contract. If s/he does provide such notice, the earnest money is refunded to the buyer. If the buyer does not provide such notice, the contract continues, but the buyer's earnest money becomes nonrefundable should s/he not receive a loan. From the Contract to Buy/Sell Real Estate: Loan Objection. If Buyer is to pay all or part of the Purchase Price with a New Loan, this Contract is conditional upon Buyer determining, in Buyer's sole subjective discretion, whether the New Loan is satisfactory to Buyer, including its availability, payments, interest rate, terms, conditions, and cost of such New Loan. This condition is for the sole benefit of Buyer. Buyer has the Right to Terminate on or before Loan Objection Deadline, if the New Loan is not satisfactory to Buyer, in Buyer's sole subjective discretion. IF SELLER IS NOT IN DEFAULT AND DOES NOT TIMELY RECEIVE BUYER'S WRITTEN NOTICE TO TERMINATE, BUYER'S EARNEST MONEY WILL BE NONREFUNDABLE, except as otherwise provided in this Contract (e.g., Appraisal, Title, Survey).

What is the effect of a Loan Objection Deadline when specified in an approved Residential Contract to Buy and Sell? If the buyer cannot get a satisfactory written loan commitment by that date, the buyer may terminate the contract upon written notice to the seller. The contract is contingent on actual funding of the new loan at closing. If the buyer cannot get a satisfactory written loan commitment, the contract terminates on that date. The buyer must provide the written commitment to the seller by that date or he will be in default.

Buyers must obtain information on known sex offenders from local law enforcement officials. Explanation If the possible presence of registered sex offenders is a concern, the buyer is responsible for contacting local law enforcement officials. This is clearly stated in Exclusive-Right-to-Buy Contracts.

What is the responsibility for disclosure involving registered sex offenders (Megan's Law) according to the Exclusive-Right-to-Buy Contract? Sex offenders' privacy rights are protected by state and federal law. Sellers will be required to disclose any sex offenders in the neighborhood. Buyers must obtain information on known sex offenders from local law enforcement officials. Brokers must disclose the presence of any known registered sex offenders.

Mediation fee Explanation The purchase contract indicates that should there be a legal dispute between buyer and seller, the first legal recourse is mediation and both both parties will split the fee equally regardless of who prevails. From the Contract to Buy and Sell: MEDIATION. If a dispute arises relating to this Contract, prior to or after Closing, and is not resolved, the parties shall first proceed in good faith to submit the matter to mediation. Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially. Mediators cannot impose binding decisions. The parties to the dispute must agree, in writing, before any settlement is binding. The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation. The mediation, unless otherwise agreed, shall terminate in the event the entire dispute is not resolved within thirty days of the date written notice requesting mediation is delivered by one party to the other at the party's last known address. This section shall not alter any date in this Contract, unless otherwise agreed

What is typically not negotiable in the Contract to Buy and Sell Real Estate Closing service fee Mediation fee Appraisal fee Title fee

Company name and employing broker's name Explanation How to Open Escrow Bank Accounts 1. Select a Colorado depository that offers FDIC insurance coverage or as authorized for the specific engagement. 2. Include the following "fiduciary elements" in the account title. These must identify the true owner of the account, specify the type or purpose of account being established (sales, management, homeowner association, etc.), include one of the fiduciary words "escrow" or "trust," state the employing broker's personal name, and show his or her fiduciary capacity as "broker." The employing broker must be able to independently control and operate all escrow bank accounts, but others may be designated as signatories as well. These elements may be abbreviated to facilitate printing the broker's monthly bank statement heading, checks, and deposit stock. The general account title format follows: Licensed brokerage name and/or d.b.a. (brokerage TIN/SSN) Type of escrow, broker's name, broker Statement mailing address

What must appear in the title of a trust account? Company name Employing broker's name Company name and employing broker's name Responsible broker's name

They may terminate the contract by written notice to the seller. Explanation Termination requires written notice of intent to terminate and the buyers must provide written notice to the seller no later than the Off-Record Matters date

What recourse do the buyers have if they determine that property they have contracted to purchase is within a special taxing district? They may demand that the seller pay the indebtedness of such a district. They may petition to be excluded from the district. They may terminate the contract automatically on the Off-Record Matters date. They may terminate the contract by written notice to the seller.

Checks the Countered box, initials the original Contract and signs the Counterproposal Explanation To counter: the Seller would check the Countered box, initialing directly underneath in the space provided indicating the Seller is the one countering, The next step is to complete and sign the Counterproposal. The last step is to return the original offer and the counterproposal to the Buyer. The Seller does not sign the original offer as that would indicate acceptance.

When a Seller decides to submit a Counterproposal in response to a Contract to Buy and Sell, the Seller: Checks the Countered box, signs both the original Contract and the Counterproposal Checks the Rejected box, initials the original Contract and signs the Counterproposal Checks the Countered box, initials the original Contract and signs the Counterproposal Carefully signs and submits only the Counterproposal

Check the appropriate box and initial on the indicated line Explanation The should not sign the contract. Instead there is a check box to indicate if the offer is being rejected or countered. The seller intials in the appropriate area.

When a contract is rejected by the Seller, the seller should: Not return the contract Write "rejected" across the front of the contract Check the appropriate box and initial on the indicated line Indicate a rejection on the appropriate box and complete a counteroffer

Submit a written response to the Commission if requested Explanation Rule E-21. Licensee must respond to complaint or audit notice in writing When a licensee has received written notification from the Commission that a complaint has been filed against the licensee, the licensee has been selected for an audit, or that an audit has identified record keeping or trust account deficiencies, such licensee shall submit a written answer to the Commission. Failure to submit a written answer within the time set by the Commission in its notification shall be grounds for disciplinary action unless the Commission has granted an extension of time for the answer in writing and regardless of the question of whether the underlying complaint warrants further investigation or subsequent action by the Commission. The licensee's written answer shall contain the following: (a) A complete and specific answer to the factual recitations, allegations or averments made in the complaint filed against the licensee, whether made by a member of the public, on the Commission's own motion or by an authorized representative of the Commission. (b) A complete and specific response to any additional questions, allegations or averments presented in the notification letter. (c) Any documents or records requested in the notification letter. (d) Any further information relative to the complaint that the licensee believes to be relevant or material to the matters addressed in the notification letter. Reference Rule E-21

When a license law complaint is made to the Commission against a licensee, the licensee must: Pay a fine and give up license Appear before the Commission within 30 days Submit a written response to the Commission if requested Temporarily give up license

Due on Transfer-1% Interest Escalation Explanation The approved Deeds of Trust forms are: Deed of Trust (Due on Transfer-Credit Worthy Restriction, Deed of Trust (Due on Transfer-Strict), Deed of Trust (Assumable-Not Due on Sale)

When doing a seller carryback, which would NOT be an approved deed of trust form? Due on Transfer-Creditworthy Restriction Due on Transfer-Strict Assumable-Not Due on Sale Due on Transfer-1% Interest Escalation

A $30,000 check the Seller will receive from this closing Explanation This DEBIT represents the Seller's proceeds from the sale (what they are getting). More info: This is a common spot of confusion, so do not let it break your head. The situation occurs at the bottom of the 6 column worksheet when you are reconciling the columns. Let's assume for a moment you are looking at a Buyer's columns. You have applied all the debits and credits and all you have to do is reconcile the columns which have $100,000 in the Credit column (money the buyer has proven they have) and $125,000 in the Debit column (what the Buyer owes). Looks like this Buyer is a little short, but by how much? To determine this amount, you have to make both columns equal. This enables the Closing Agent to determine how much the Buyer is short; which is also how much of a check the Buyer needs to bring and be deposited into the escrow account. So you add $25,000 to the Buyer's Credit column to make both columns equal. Therefore this $25,000 CREDIT represents how much the Buyer is short, meaning this CREDIT does not represent how much they have, it represents how much they still OWE. This is how a CREDIT becomes something you OWE. We are not done reconciling yet. We have a $25,000 Credit, to balance it out we need a $25,000 Debit. That debit goes to the Broker account which represents the Escrow Account. Back to practical language - the Buyers needs to bring a $25,000 check to the closing so that they can make their Credit column (what they got) equal to the Debit column (what they owe) and the Broker (Closing Agent) needs to deposit it into the Escrow Account ($25,000 Debit). For extra points - the reverse is most common with the Seller. When a Sellers Debit column (what they owe) is lower than their Credit column (what they sold their property for), the amount added to the DEBIT column to make both columns equal represents money the Seller is receiving. The balancing CREDIT in the Broker column, reminds the Closing Agent to cut a check to the Seller out of the escrow account.

When reconciling a 6 column worksheet for a closing - after totaling up the debits and credits, the closing agent needed to add a $30,000 Debit to the Seller Debit column to make it equal to the Seller Credit column. What does this Seller Debit represent? A $30,000 check the Seller must bring to the closing A $30,000 check the Seller will receive from this closing

Marital Status Explanation Marital Status is not a protected class under Federal Fair Housing

Which class is protected under under Colorado Fair Housing and not the Federal Fair Housing? Marital Status Race Familial Status National Origin

All of the above are required disclosures Explanation From the Licensee Buyout Addendum: RESALE, PROFIT/LOSS, EXPENSES. Seller acknowledges that in entering into the Contract, Buyer is exposed to possible losses and expenses. Seller acknowledges that following Closing, the Property may be held by Buyer for a period of time or may be resold immediately, and any profit or loss shall be solely that of Buyer. Seller further acknowledges that there is a chance for profit to Buyer and that certain expenses may accrue to Buyer. Such expenses include costs and expenses of Closing, holding, and reselling the Property. Buyer may incur additional expenses, or some anticipated expenses may vary, or may not be incurred. In any event, after Closing, Buyer will absorb the loss or receive the profit from any sale and ownership of the Property.

Which does the buyer have to disclose to the seller when using the Licensee Buyout Addendum? That the Buyer stands to make a profit That the Buyer is exposed to possible losses and expenses That the property may be immediately sold by the Buyer All of the above are required disclosures

The owner must obtain a well permit from the state engineer Explanation Small wells on domestic property must have a permit from the state engineer even though they are exempt from a requirement to purchase water rights.

Which of the following is required before an owner of a 35-parcel of undeveloped land may drill a well for water only? Nothing is required; a 35-acre site is entitled to an exempt well The owner must purchase water rights The owner must obtain a well permit from the state engineer If there is a stream on the property it must be diverted

Brokerage Relationships Offered to Public Explanation There are only three sections which are mandatory, whereas there are a number that are suggested. The mandatory ones are: written brokerage relationship policy, a policy to protect confidential information and designation brokerage relationships. The suggested ones are the long list below. More info: From the real estate manual: Office Policy Manuals Commission Rules E-29 through E-32 require brokers to demonstrate reasonable supervision over all licensees and non-licensed employees, including but not limited to secretaries, bookkeepers, and personal assistants of licensed employees. To comply with these supervision Rules, brokers who employ others are required to establish an office policy manual. This is in addition to the requirements for a written brokerage relationship policy (Rule E-39), a policy to protect confidential information (Rule E-39), and designation brokerage relationships (Rule E-38), whether performing sales or management activities. The following topical guidelines (as applicable) are suggested for office policy manuals. Sales Transactions • Parties responsible for delegated duties/agreements; • Preparation and review of contracts prior to closing; • Handling earnest money deposits, disputes, and releases; • Backup contracts; • Closing documents and closing instructions for the broker's agent; • Maintenance/custody of contract files; • Escrow records and written procedures for handling business operations; • Fair housing/affirmative action marketing; • Staff training - dissemination of information, staff meetings; • Use of personal assistants; • Guaranteed buyouts; • Investor purchases; • Non-qualifying assumptions and owner financing; • Licensee's purchase and sale of property; • Listing procedures and release of listings; • Rental occupancy before closing; • Computer system - data control, backup, and physical security; and • Internal audit and supervisory reviews of business operations. Management Activity • Operating policies and required disclosures; • Use of unlicensed on-site managers; • Administration of rentals and leasing activity; • Items under "Sales" above, where applicable; • Supervision of accounting services, records, and reporting to others; • Cash handling, collection of delinquent rents and deposits; • Ownership/management of rental properties by agents; • Administration and policies for in-house services; • Maintenance of records and business reports by any outside service; • Advances of funds on behalf of clients/customers; • Cancellation of agreements and termination of services; • Related services performed by affiliated entities; • Backup and disaster recovery plan for loss of business records; • Eviction and legal action; and • Return of security and advance deposits.

Which of the following is the ONLY section which must be a office policy manual? Human Resource Benefits Commission Plan Backup Contracts Brokerage Relationships Offered to Public

This is the practice of law but it is specifically permitted by Colorado law. Explanation The Colorado Supreme Court issued a decision that the practice of filling in blanks by real estate licensees is authorized, but that it still constitutes the practice of law.

Which of the following is true about licensees filling in blanks on a standard commission-approved form? This is the practice of law and must be done by attorneys. This is not the practice of law. This is the practice of law but it is specifically permitted by Colorado law. This must be done entirely with preapproved standard clauses.

They are legal in Colorado as long as the seller agrees, and the broker has the necessary form prepared by an attorney representing one of the parties to the transaction. Explanation A traditional Net Listing is one in which the broker receives as commission all proceeds above a set net price. Net listings are legal in Colorado. Because of the potential for conflict of interest between the seller and broker, they can be problematic.

Which of the following is true concerning listings based on a "net price?" They are illegal in Colorado They are more profitable because no minimum is set on the amount of commission They are legal in Colorado as long as the seller agrees, and the broker has the necessary form prepared by an attorney representing one of the parties to the transaction. They are permissible with approval of the real estate commission

The broker acknowledges receipt of the earnest money deposit. Explanation The brokers' signatures acknowledge receipt of the earnest money deposit and confirm their brokerage relationship to the party with whom they are working

Which of the following is true when a broker signs the Broker Acknowledgments at the end of the Residential Contract to Buy and Sell? The broker acknowledges receipt of the earnest money deposit. The broker becomes a party to the contract and agrees to its terms. The broker assures the right to a commission. The broker confirms the commission split with cooperating brokers.

A broker is offering a guarantee as an inducement to list with his company Explanation This form is to be used when a broker enters into a contract to purchase a property either: (a)concurrent with the listing of such property; or (b) as an inducement or to facilitate the property owner's purchase of another property; or (c) continues to market that property on behalf of the owner under an existing listing contract. More info: What Is a Licensee Buyout Addendum? by Maxwell Wallace, Demand Media A licensee buyout addendum is a form used in certain real estate and property transactions in the state of Colorado. The LBA is used only in the purchase and sale of properties between licensed real estate professionals and their own clients. History and Purpose The Licensee Buy-Out Addendum to Contract to Buy and Sell Real Estate is intended to prevent improprieties and conflicts of interest in licensee/client transactions, as well as to make sellers contractually aware of the potential differences in selling to a licensed real estate professional as opposed to conventional buyers. Situations Dictating Use Licensed real estate agents are required to use an LBA when they enter into contracts to purchase properties concurrently with the initial listing of that property, when it immediately hits the market. Licensees also are required to use the LBA form when they are purchasing a property to facilitate its owner's purchase of another property, as well as when they continue to market that property to other potential buyers. Deleted Provisions Under the provisions of the licensee buyout addendum, several conventional provisions of standard real estate listing contracts reached under Colorado state law are deleted. Deleted provisions include a property's appraisal condition, liquidated damages or pre-assessed damages to the property, provisions related to the seller's financial default status and the broker's acknowledgments and compensation disclosure forms. Profit and Loss Stipulations Colorado's LBA also stands as contractual acknowledgment by a property seller that the buyer is a licensed real estate professional and any future profit or loss on a resale of the property is solely that of the buyer. Similarly, the LBA protects the property seller by acknowledging that any fees related to closing, holding and reselling the property are all absorbed by the buyer and not the property seller as the original or prior landowner.

Which of the following requires the use of the Licensee Buyout Addendum to the contract to Buy & Sell? A listing associates offer to purchase a listing immediately after it expires A broker is offering a guarantee as an inducement to list with his company An associate in the brokerage wishes to purchase another associates listing A broker wishes to acquire a property he has listed to use as an investment

State engineer Explanation The Colorado Sate Engineer administers tributary water. Nontributary water in six defined water basins is administered by the Colorado Ground Water Commission. This is in the Colorado Real Estate Manual in the chapter on water tights

Who administers Colorado tributary water rights and well permits? Colorado legislature Colorado Supreme Court Colorado Ground Water Commission state engineer

Buyer''s broker Explanation Associate Brokers may only use forms prepared by the Real Estate Commission.

Who can not prepare an addendum to the Contract to Buy and Sell Real Estate? Buyer or seller Employing broker's attorney Attorney for buyer Buyer''s broker