CO Forms and Contracts
Colorado Real Estate Commission broker license law was passed to
Protect the people of Colorado.
The holdover clause may also be called a
Protection Extension
Rule F
Purpose of rule F is to assist brokers in complying with Conway Bogue decision Deals with forms If a form is approved, brokers must use it Certain clauses specified by rule may be omitted in the printing of the form, such as primary financing methods that do not apply
Licensee buyout addendum ( Commission position statement CP - 23 )
States the following :The broker/buyer is a licensee and can fund the purchase The broker/buyer may make a profit on the resale The broker/buyer will be obligated to pay losses or expenses Does not require the seller to pay any costs or commission fees to the buyer/broker if the buyout closes
Mill Levy
Taxable Value of a Property $300,000 House Tax Rate = 30 Mills 300,000 x 30 = 9,000,000 / 1,000 = 9,000
According to the Residential contract to Buy and Sell Real Estate, what can a buyer who is dissatisfied by the inspection results do?
Terminate the contract with written notice immediately
Counterproposal
Terminate the offer and creates a new one Counter proposal must be attached to the original offer offeror ( usually the seller) does not sign the offer, only the counteroffer The seller would be obligated to withdraw a counter offer in order to accept another offer from a different party
What happens if the seller refuses to fill out the "Seller's Property Disclosure"?
The Buyer may insist. Seller still must disclose any known Property defects.
A post-closing Occupancy Agreement Addendum is valid for how many days?
Up to 60. After 60 days a property drafted lease is recommended
Agreement to Amend / Extend Contract
Used to modify the contract to buy and sell only Is to extend our change provisions ,such as closing date Must be signed by all parties before the deadline
Change of status form
Used when an agent will become a transaction broker for both parties
If a completed Lead-Based Paint Disclosure form is not attached to a sales contract in which a building permit for a residential dwelling was issued prior to January 1, 1978, the contract is?
VOID
Buy Out Addendum
When a licensee uses a commission approved Addendum to buy on their LISTED properties
A buyer's earnest money is held by?
Whoever is named in the contract to hold it
Your buyer signs an objection notice and you (the licensee) deliver it to the listing brokers office via fax, has the seller received the objection?
YES! As soon as the listing broker receives the objection, it is deemed delivered to the seller
in the contract, do you have to disclose the source of water & supply?
Yes
In sales contracts, if a broker initiates the use of a pre-printed or prepared addendum, the addendum must be prepared by
only the broker's attorney and can be used more than once.
A buyer who has signed a buyer broker contract may
pay the broker's commission, refuse to pay the broker's commission, or may have the lisiting agent pay the broker's commission.
The recovery fund could be used for
payment of out-of-pocket losses and reasonable attorney fees to the public in CIVIL suits against licensees.
With a Seller's Property Disclosure...
The seller certifies to truth of disclosure based on current actual knowledge
The Real Estate Commission's E&O Insurance has a minimum coverage of
$100,000 per claim and $300,000 annual aggregate.
The MAXIMUM time allotted for a foreclosure sale through the Public Trustee's office after notice of election to foreclose has been publicized is:
125
There are ____ Colorado real estate commissioners who are appointed by the ________.
5, Governor.
Of the following, which may NOT be used as earnest money: Cash? Check? Note? Deed of Trust?
A Deed of Trust
Single party listing ( CP-13)
A broker who takes a single party listing should did the following Make the listing specific to the buyer Remove the holdover clause
Designated brokerage does NOT include:
A real estate brokerage firm that consists of only 1 licensed natural person
A licensee providing services without a written agreement is __________________.
A transaction broker
Notice, delivery, and choice of law
Allows for E- signatures; however, it States original signatures shall be provided upon request of any party
What would a buyer order to see if there is an encroachment on the property?
An Improvement Location Certificate or a Survey
Short Sale Addenda
Any sale of real estate that equals less than what is owed. the alternative to foreclosure
Why does the Buyer's Broker sign the contract to Buy and Sell?
As a receipt for earnest money
The Commission Approved Deed of Trust form has options for all the following
Assumable Deed of Trust Strict Due On Sale Deed of Trust Assumable if Creditworthy Deed of Trust
Rule F-3 violation
Brokers in firms are in violation of rule F - 3 if they attach a non negotiated addenda to a contract to buy and sell real estate
The following statement about computer generated versions of the approved forms is FALSE
Computer generated versions of the approved forms must not be altered in any way
Most residential leases in Colorado ___________.
Contain an implied warranty of habitability
Rule F does not apply to the following
Contracts for new homes with warranties Contracts prepared by subdivision developers
When acting as a buyer's agent you must inform the buyer
of the exclusivity of the buyer agency contract.
Transaction brokers owe DCAR
Disclosure Confidentiality Accounting Reasonable Care Acts as a facilitator or referee, must still keep confidential PTM (Price, terms, and motivation )
Common interests community (CIC)
Documents are used for communities with and the authority to Levy mandatory assessments for the maintenance of common elements Create statutory liens for OA (owner Association) dues and assessments
Inclusions and exclusions
Fixtures must be excluded Personal property must be included Inclusions would be listed in a different font in the contract
What is the purpose of listing licensee providing information on square footage?
For Marketing Purposes only!
Commission approved contracts allow for specific performance
For all types of property
Colorado Foreclosure Protection Act
Gives the seller the right to cancel their contract. It was made so the sale and foreclosure of a home is done in a fair manner.
If a seller makes a counteroffer to a buyer, what happens to the buyer's original offer?
If a seller counters the buyers offer, the original offer is considered rejected and the buyer is not held liable to that original contract
When can a buyer withdraw an offer to a seller?
Prior to the listing broker delivering it to the sellers
Any additional cost in obtaining an ILC or survey is the responsibility of the:
Must be negotiated
what does a seller need to provide and disclose if their residential building permit was issued before 1978?
Must disclose any known lead based paint hazard Must provide a lead based paint warning Broker must make sure lead based paint accompanies any offer
A non-resident broker with a transaction in Colorado ___________.
Must hold trust funds in a Colorado depository
A designated broker buying her own listing Must do:
Must use a Licensee Buy Out Addendum Must put the property back on the market immediately Must disclose she is a broker
Is earnest money required with a contract in Colorado?
No
Are Addendums to the contract required in real estate contracts?
No. Unless certain situations arise
The success fee in an Exclusive-Right-to-Buy Contract
Often comes from the listing broker
Brokerage relationship
Only the designated broker, not be employing broker, has the brokerage relationship with the consumer
What does the earnest money holder do if there is a controversy over the earnest money?
Options: 1. Wait for any proceedings between buyer and seller 2. Inter plead all parties and deposit earnest money into a court of competent jurisdiction 3. provide notice to the buyer and seller that unless the earnest money holder receives a copy of the summons and complaint or claim within 120 days, the earnest money will be returned to the buyer
A broker may ______________.
Rebate a portion of his commission to the seller to secure the listing
Contract forms generated by computer (Rule F)
Reproduce language exactly as approved Have software security to prevent language from being inadvertently changed or deleted Any language added in the blanks, such as those listing inclusions, it must be different from the approved language. It can be italicized, bold, different type size, or font, as long as a reader can tell it is different from the approved language
Expressed written contract
Required for all real estate transactions done by brokerage
Square footage disclosure
Required to be supplied by the listing broker in a timely manner, if square footage of a residential property is given If the listing broker measures the property, indicate which method was used If another source of square footage is used, name the source The listing broker may not use an unreliable source Square footage is for marketing not for valuation or financing
A transaction-broker may NOT do which of the following without breaching an obligation _____________.
Sell a buyer his own personal residence
Default remedies
Specific performance- Seller may keep the earnest money, Sue for damages, or Sue to force the buyer to buy Liquidated damages - The default, seller's remedy is limited to keeping the earnest money
When filling out a counterproposal form
The broker must fill in only the dates that have changed
Earnest money upon termination
The broker must return the earnest money immediately unless there is an earnest money dispute
If a buyer notifies the seller in writing of a termination of the contract under the loan objection deadline provision, what happens to the earnest money?
The broker will return the money to the buyer
Inspection objection and resolution deadline
The buyer has until the objection deadline to inspect and send any request to the seller The parties must resolve inspection issues before the resolution deadline If not the contact will terminate on the resolution deadline
The listing broker has presented an offer to the sellers who accept the offer verbally but does not sign it. At that moment the broker receives a call stating that the offer is withdrawn
The buyers may withdraw the offer at any time, until they learn of acceptance
Appraisal provision
The cost of the appraisal is negotiated
Based on the Exclusive Right To Sell Listing Contract, if the buyer is in default and forfeits the earnest money...
The earnest money return is negotiated by checking the box on the contract in Forfeiture of Payments
A seller listed his house with a broker for 3 months. After one month the seller decided to take the property off the market.
The listing is irrevocable and may not be unilaterally cancelled without cause
Mediation in all approved Contract forms
The parties agreed to submit any dispute about the contract to mediation for up to 30 days Mediation is not binding. A resolution signed by the parties will be binding The parties jointly agree to a mediator The parties will split the cost of mediation, this is not negotiable If the dispute is not resolved, either party may seek litigation or arbitration
Parties of a contract to buy and sell real estate
The parties are the buyer and the seller The brokerage firm is not a party to this contract The brokerage firm's attorney may not draft a general or specific contract form for a buyer or seller Brokers may help the buyer and/or seller draft addendum to reflect negotiated items Brokers or brokerage firms may not draft and attach any addendum that was not negotiated between the buyer and the seller unless the addendum is created by :The principal to the transaction An attorney representing the principal or the brokerage firm
All contracts belong to the brokerage firm
The parties are the customer ( Seller, buyer, or tenant) and the brokerage firm Brokerage firms or customers attorneys may draft transaction specific listing agreement Brokerage firm's attorneys may draft an addendum to be used by all brokers in the firm for all listings
Seller's property disclosure
The seller fills out and signs the form (the broker does not) The seller certifies to truth of statement based on the seller's current actual knowledge The seller must disclose material facts known by them, even if selling "as is" . Disclosure of material facts is not optional If the seller declines to complete the disclosure form, the broker should inform the seller that the buyer will most likely request the disclosure as part of the contracted by buy and sell
Contract process for common interests community documents
The seller must provide the documents. Once the buyer receives them, the sellers have met their obligation , no matter how the buyer obtained the documents If the buyer finds the conditions unacceptable, the buyer may terminate the contract by written notice prior to the CIC documents objection deadline The seller has no ability or obligation to cure CIC document items that the buyer is not satisfied with by any deadline
The following statement regarding the Lead Base Paint Disclosure is true.
The seller must supply the lead base paint disclosure, if required (built/permitted prior to Jan 1 1978) prior to accepting an offer. If not supplied, the buyer may terminate the contract.
Inspection notice
This form carries out the steps in the inspection section Does not change the objection or resolution deadline ; The broker would need to use and a man that/extend contract form
Agreement to amend/extend contract with broker
This form is used to modify/change/an existing listing contract The broker must amend or extend a listing or buyer representation agreement before the termination date
Title advisory
This warns that 3rd parties may own rights in minerals or other interests, giving them the right to enter and use the property
If a residential dwelling unit built before 1978 has lead-based paint damage, who is most at risk?
Young Children
An individual who charges a fee to sell options on real estate must have
a real estate broker's license.
A transaction broker may not pay
a referral fee to a lender.
The buyer's broker signs the Contract to Buy and Sell
as a receipt for earnest money and to disclose their brokerage relationship.
The Amend/Extend Contract with Broker
can be used extend the terms of the listing agreement. The Amend/Extend contract only changes the terms of the Contract to Buy and Sell.
The Real Estate Commission requires an office policy manual to cover all the following except
commission splits.
In the Contract to Buy and Sell, who pays the appraisal fee?
cost of the appraisal fee is negotiated between buyer and seller
Brokers, as a rule, use ___________ contracts.
expressed & written
To get a real estate license you must:
have a certification of completion form REC-33. complete a background check pass the Real Estate Commission exam.
The wording in the inspection provision of the buy/sell contract allows the buyer to terminate the contract
if the physical condition of the property or inclusions is unsatisfactory in the buyer's subjective discretion
The broker/buyer in the Licensee Buy Out Addendum
is agreeing that the broker/buyer has the ability to purchase the property and that the broker/buyer will keep the home on the market.
The employing broker
may designate an employed broker to be a buyer broker for an in-company sale.
Software used to generate approved standard forms
must have controls to prevent the language of the form from being altered
Specific Performance
suing if the buyer or seller does not end up performing under specific terms of the contract
In the Exclusive Right-to-Sell Listing Contract, if a buyer calls the seller, the seller should
tell the buyer to call his agent.
What does the contract to buy and sell specify about the Seller's Disclosure Form?
that the Seller will PROVIDE it
What happens if the sellers remain in the home past the agreed upon possession date and time?
the buyers may evict the sellers and receive a daily charge as specified in the contract until they vacate
What happens if inspection deadlines are missed?
the contract terminates
In order to extend the deadline date for loan objection a broker must get permission from?
the seller
If possession is on the "day of delivery of deed",
the sellers must remove all their possessions prior to the possession time.
What is the main purpose of the final walk through inspection before closing?
to verify the condition of the property meets the requirements of the contract
Fiduciary duties of transaction broker are the following:
transaction brokers do not have fiduciary duties.
If a broker receives interest in their trust accounts they could do all of the following except
use the money for covering expenses.