Colorado Real Estate Exam Prep

In Colorado, when can real estate licenses be renewed?

A. 10 days prior to the license's expiration B. 45 days prior to the license's expiration C. 14 days prior to the license's expiration D. 3 months prior to the license's expiration B

How many hours of continuing education must licensees complete in order to retain their licenses?

A. 12 hours of continuing education during each 3 year license cycle. B. 6 hours of continuing education during each 3 year license cycle. C. 48 hours of continuing education during each 3 year license cycle. D. 24 hours of continuing education during each 3 year license cycle. D

When the employing broker of a corporate brokerage is suddenly unable to continue in that position, to whom may the Commission issue a temporary "hardship" license?

A. A person with sufficient ownership interest in the corporation. B. A Colorado licensee approved by the corporate board of directors. C. A member of the board of directors. D. An officer or director with a broker's license from another state. B

When the license of the sole proprietor is suspended for 2 years, what is the effect on the affiliated associate brokers and associate brokers?

A. Affiliates' licenses will also be suspended for a 2-year period. B. Affiliates' licenses will be revoked, subject to reinstatement after 1 year. C. Suspension of the proprietor has no effect on the affiliates' licenses. D. Affiliates licenses are inactive until they are hired by a new employing broker. D

Which of the following is NOT a closing document?

A. Agent-Seller Agreement B. Sales Contract C. Deed of Trust D. Promissory Note A

In the Contract to Buy and Sell, what does the statement, "time is of the essence hereof" mean?

A. All dates and deadlines will be strictly interpreted. B. All dates and deadlines must be performed within a reasonable margin of the stated time or date. C. Everything in the contract must be complete within 1 year or it will be void. D. Everything not done by closing will be waived. A

Which of the following must be disclosed by the listing broker to any potential buyer?

A. All facts about the transaction actually known by the broker. B. The motivations of the seller, if requested by the buyer. C. Facts about the seller actually known by the broker. D. Material facts about the property actually known by the broker. D

In Colorado, which of the following individuals is exempt from real estate license law?

A. An investor who owns multiple investment properties and sells 1 to an owner-occupant. B. A right-of-way specialist who finds investment acreage for a friend and subsequently accepts a commission referral. C. An attorney who assists in marketing a property and collects a 5% commission. D. An inactive licensee who assists a friend with a purchase offer. B

A licensee is working with a buyer in a transaction on another broker's listing. What must she do with the personal check given to her by the buyers as earnest money?

A. Deposit it in her broker's account until closing. B. Make a copy for her broker and turn it over to the listing broker. C. Protect it in a safe place until she learns if the offer was accepted. D. Wait until the offer is accepted, then turn it over to her broker for deposit. B

While you are on phone duty, an agent describes an associate's agency listing, and the agent agrees to meet the buyer and let them view the listing. What should the agent do when the buyer arrives?

A. Disclose the brokerage relationship in writing; if the potential buyer declines to sign the disclosure, annotate the form and proceed to show the property. B. Disclose the brokerage relationship orally; no written disclosure is required since transaction-broker is the default relationship. C. Show the listing; the relationship will automatically be transaction-broker and disclosure is not required. D. No disclosure is required. A

When and how must a buyer's agent disclose his agency relationship when he approaches a property that is "For Sale By Owner"?

A. Disclosure is not necessary because the sellers have chosen to represent themselves. B. Oral disclosure is adequate unless the buyer wants to submit an offer, then in writing with the offer. C. Orally at the first contact and in writing at the first physical meeting. D. In writing when taking the one-party listing on the property. C

An unlicensed personal assistant would be permitted to do which of the following?

A. Discuss an offer at an open house while the licensed associate is showing another listing. B. Complete contract forms after the licensed associate has captured the important things like price and closing date. C. Show a property to a potential buyer when the licensed associate is busy. D. Complete a comparative market analysis for presentation by the licensed associate, provided the preparer is identified. D

In Colorado, which of the following is presumed to be true of a lease?

A. Every lease contains an implied warranty of quiet enjoyment only. B. Every lease contains an implied warranty of habitability and quiet enjoyment. C. Only residential leases have an implied warranty of quiet enjoyment. D. Every lease contains an implied warranty of habitability only. A

Which of the following is correct according to the Colorado Real Estate Commission Position Statement regarding Rule F?

A. Exculpatory language limiting a broker's liability may not appear in listings or buyer relationship agreements. B. Brokers may not add exculpatory language limiting their liability to the Contract to Buy and Sell. C. Exculpatory language limiting the broker's liability may be added to the Contract to Buy and Sell only in addenda, not in additional provisions. D. Brokers may not add exculpatory language to any commission-approved contract. B

The broker's commission for certain disclosed buyers is protected by the "holdover clause" in the approved Right-to-Sell Listing Contract. Which of the following correctly describes the length of protection afforded by this clause?

A. For a negotiated time unless the seller lists the property with another broker after expiration. B. Only during the term of the listing and any extensions. C. For a negotiated time even if the seller lists the property with another broker after expiration. D. For up to 6 months after the listing expires. A

What is the primary difference between the Commission-approved deed of trust forms?

A. Forms contain different provisions for assumption of the loan upon sale of the property. B. Forms are specific for public trustee or private trustee transactions. C. Forms are specific for residential, agricultural, and investment loans. D. Forms contain different provisions depending on the loan program to be used for funding the loan. A

What are the lawful duties owed to an unrepresented buyer by a seller's agent?

A. No specific duties apply; agency duties are to the principal. B. Fair and honest dealing and disclosure of material facts about the property. C. Honest dealing and full disclosure of anything the broker knows about the transaction. D. Loyalty, fidelity, and disclosure of material facts about the property. B

Mason is the agent for an estate that owns a unit in a condominium complex. The former owner died of AIDS in the unit, and 5 years before that the unit was the site of a highly publicized murder. What are Mason's disclosure responsibilities to prospective purchasers of this condo unit?

A. He does not need to disclose the murder but must disclose the AIDS-related death. B. He is specifically prohibited by law from disclosing either event. C. He is specifically relieved of liability for nondisclosure of either fact. D. He must disclose both the murder and the AIDS-related death. C

Richard privately owns a single 20-acre parcel of land and wishes to sell ten acres. Which of the following statements is TRUE?

A. He is not required to register with the Commission but must meet local and state requirements for dividing his land as such. B. Because he is the private owner, there are no restrictions or registration requirements. C. Only a registered subdivider may divide land, thus Richard as a private owner may not sell part of a single parcel. D. Richard can only sell the land to another Colorado resident. A

Which of the following correctly describes how an independent broker may work according to Colorado law?

A. He may work independently without the supervision of another broker. B. He may only work independently, not in the employ of another broker. C. He may work in the employ of another broker, work independently, or hire and supervise no more than 5 other licensees. D. He may act as a broker for a corporate brokerage as long as there is a qualified employing broker available for supervision and training of associated licensees. A

Which of the following should a broker do after receiving an earnest money deposit from a buyer?

A. Hold the earnest money deposit in a secure place in the broker's real estate office until the offer is accepted. B. Immediately deposit the earnest money in the broker's personal interest-bearing account. C. Deposit the money in an existing, special non-interest-bearing escrow account in which all earnest money received from buyers is held. D. Open a special, separate escrow account that will contain funds for this transaction only, separate from funds received in another transaction. A

The inspection provision of the Residential Contract to Buy and Sell allows the buyer to terminate the contract in which of the following situations?

A. If the property is unsatisfactory in the buyer's subjective discretion. B. If the seller refuses to correct certain defects in which case the buyer may do so immediately. C. Only if a licensed inspector determines that there are significant problems with the property. D. Only after listing unsatisfactory conditions that cause the buyer to terminate. A

When and how must a listing broker disclose to a potential buyer that she has a working relationship with the seller?

A. In writing, before any conversation or discussion. B. In writing, at the time the contract to buy and sell is signed. C. In writing, before providing specific real estate services. D. Orally, before writing the contract and in writing before closing. C

Williams Realty, a brokerage, is part of a franchise or marketing cooperative with a strong public image. How must the broker's advertising indicate this relationship?

A. Include the franchise name in advertising with the broker's phone number so that people are led to the correct office. B. Advertise only Williams Realty since that is how the license is held with the Commission. C. Advertising should show both the franchise name and Williams Realty with the same level of prominence. D. Display the franchise name prominently with Williams Realty identified in fine print. C

Which of the following is a false statement about the Colorado Fair Housing Act?

A. It applies to commercial property. B. "Occupation" is a protected class. C. It includes single family homes. D. It allows for the imposition of fines for all cases. B

Which of the following is TRUE concerning the Colorado Real Estate Recovery Fund?

A. It promotes good real estate business practices. B. It supplements errors and omissions insurance in protecting licensees against losses caused by professional mistakes or illegal actions. C. It provides the public with protection if an individual is financially damaged by the improper actions of a licensee. D. It is available to repay private parties who lose money in real estate investments. C

How may 2 or more owners of a single property in Colorado hold title?

A. Joint tenancy with right of survivorship B. Tenancy by the entirety C. Tenancy in severalty D. Community property A

What step must precede the placement of a "For Sale" sign on a listed property?

A. List the property B. Show the property C. Obtain a formal appraisal of the current market value of the property D. Obtain the written permission of the owner of the property D

Which of the following is NOT included on the settlement statement?

A. Money the buyer/seller will pay at closing B. Money buyer/seller will receive at closing C. Money the broker is owed for services but will not receive at closing D. Money the buyer/seller is owed but will not receive at closing C

An associate broker has developed a website. What must she include on the site?

A. Name of the home office of the company that holds the associate's license and a list of states in which company is licensed. B. Name and location of the brokerage company that holds the associate's license. C. Names of all licensees in the broker's office and the states in which they are licensed. D. License number of the brokerage and a list of current active licensees. B

May a broker accept a referral fee from a title insurance company or representative?

A. No, it is never permissible to accept such a fee. B. Yes, but only with the permission of the broker's principal or if the broker is not receiving a commission from the same transaction. C. Yes, this practice is a good way to enhance licensee income. D. Yes, but only if the broker will not receiving a commission for the same transaction? A

Is it acceptable for a broker to accept a referral fee from a mortgage lender or mortgage broker?

A. No, it is never permissible. B. Yes, but only with the permission of the broker's principal or if the broker is not receiving a commission from the same transaction. C. Yes, but only if the broker will not be receiving a commission for the same transaction. D. Yes, this practice is a good way to enhance the licensee's income. B

How long does a public trustee have to hold a foreclosure sale for a residential property under a Colorado deed of trust arrangement?

A. Not more than 90 days after the first instance of defaulted payment. B. Not more than six months after the lender notifies the borrowed of default. C. Whenever the court schedule permits the case to be heard. D. 110 to 125 days after the lender's notice of default and request for sale. D

A licensee has an exclusive-right-to-sell listing with a seller as a transaction-broker. What must she disclose when a potential buyer calls on this listing?

A. Nothing until the potential buyer has seen the property. B. That she represents the seller exclusively and that the buyer will have no working relationship with her company. C. Nothing since state law makes her the buyer's transaction-broker by default. D. That she works with the seller as a transaction-broker and will owe the same duties to the buyer in a purchase transaction. D

The Residential Contract to Buy and Sell includes various provisions that call for notification to one of the parties about various events or objections. Which of the following is TRUE with regard to the wording of the approved form?

A. Notice may be sent to the broker but is effective only when received by the party. B. Notice is effective when received by either the party or the broker working with that party. C. Notice must be directly to the party and not its broker. D. Notice to the party must be by "normal channels of communication," such as telephone, mail, or fax B

After a tenant gave notice and vacated an apartment, the landlord discovered substantial damage to the unit. Which of the following is an appropriate action by the landlord?

A. Return the deposit immediately and bill the tenant for the repairs when completed. B. If the damage is obviously more than the deposit, the landlord may keep the damage deposit without notice. C. Notify the tenant that his or her damage deposit is forfeited within 60 days. D. Itemize the damage in writing and return any excess deposit within 1 month. D

A broker who has received earnest money from a buyer should take which of the following steps?

A. Secure the earnest money in a safe place at the broker's place of business until the closing. B. Deposit the money into an existing escrow account established to hold earnest money deposits from all clients. C. Establish an escrow account specifically for that transaction only. D. Deposit the earnest money into the broker's personal account immediately (or by the next day) as partial payment of the commission. B

The Exclusive-Right-to-Buy Listing Contract calls for "reasonable efforts to locate property." Which of the following would most likely demonstrate such efforts?

A. Showing the buyer properties that meet the general description of the property as defined in the contract. B. Running a "Property Wanted" ad in local newspapers. C. Providing the buyer with descriptions of several properties recently listed with the brokerage. D. Providing the buyer with addresses of internet sites that list local properties. A

Regulation under state or federal securities laws may apply to which of the following?

A. Speculative purchase of raw land by a doctor as part of a retirement plan. B. Condominium project that includes both residential and retail uses within one structure. C. Resort condominium project in which owners enter their units in a common rental pool to enhance their income. D. Sale of 1,000 mountain lots primarily through online advertising C

An associate broker received a thank you letter and bonus check from the seller several weeks after the closing. The associate broker cashed the check because she felt she earned it. Which of the following is TRUE?

A. The associate broker may accept the bonus check because she is fully licensed. B. The associate broker is allowed to accept the money if 30 days have elapsed since the closing. C. It is a violation of commission regulations to accept the money. D. The associate broker may accept the money if her broker permits her to do so. C

A broker manages 3 properties for the same owner. When 1 property needed repairs, there was not enough money in the management account to cover the cost and the broker used excess funds from the emergency account and later replaced them with a check from the owner. Which of the following is TRUE?

A. The broker is in violation of regulations for improperly handling escrow funds. B. The broker must use personal funds for repairs if there are insufficient funds in the management account. C. The broker acted properly by safeguarding the client's interest. D. The broker's action was proper because the management account balance was insufficient. A

Who gets the ORIGINAL copy of the deed at the time of closing?

A. The buyer B. The broker C. The county clerk D. The seller C

Which of the following is TRUE if a buyer receives a property inspection report indicating several apparently serious problems on the day after the Inspection Objection Deadline?

A. The buyer can compel the seller to correct these serious defects before closing. B. The buyer missed the opportunity to object based on inspection issues, and the contract is still in force. C. The buyer may still object because the report came after the deadline. D. The buyer is in default for missing the deadline, and the seller may terminate the contract. B

Under Colorado law, which of the following statements about Home Service Warranty Contracts is FALSE?

A. The contract must set forth the duration of the contract. B. The contract must list all the items that are excluded from coverage. C. The contract must be transferable. D. The contract must set forth the procedures for making a claim. C

Which of the following MUST occur when an associate broker leaves a company?

A. The employing broker MUST terminate all listing agreements held by that salesperson. B. The employing broker MUST notify the Real Estate Commission immediately. C. The employing broker MUST notify the Association of Realtors within 10 days. D. The employing broker has no specific obligations in these circumstances. B

Which of the following statement concerning continuing education requirements for license renewal is TRUE?

A. The licensee has the option of retaking the Colorado portion of the real estate exam to satisfy the requirement. B. The licensee can satisfy the requirement only by taking CE courses developed by the Real Estate Commission. C. The licensee can satisfy the requirement only by taking CE courses developed by the Colorado Association of REALTORS. D. 30 hours of CE courses must be taken within the last year of the licensing period. A

Which of the following is TRUE if a broker negotiates a "success fee" under the Exclusive-Right-to-Buy Contract?

A. The listing broker must pay the negotiated fee at closing. B. The buyer will pay the fee at closing. C. The broker may be directed to seek payment from any or all of several sources. D. If the broker cannot get the fee from the listing broker or seller, the buyer is under no obligation to pay. C

Which of the following is required in the event of a dispute between the parties relating to the Contract to Buy and Sell?

A. The parties must accept the solution presented by the qualified mediator chosen by the parties. B. The parties must submit the dispute to arbitration if mediation is unsuccessful. C. The parties may immediately decide to mediate or seek arbitration or litigation. D. The parties must mediate in good faith to seek a settlement for up to 30 days. D

What happens if a defaulting buyer forfeits an earnest money deposit, according to the Exclusive-Right-to-Sell Listing Contract form?

A. The seller is entitled to keep the funds. B. The broker and seller split the funds. C. The broker receives the funds. D. The broker and seller submit the funds for mediation. B

A dishwasher in a property under contract is listed affirmatively "In Working Condition" on the Seller's Property Disclosure. What must the seller do if the dishwasher fails before closing?

A. The seller is not responsible since he or she could not have known it would fail. B. The seller must offer the buyer a credit at closing for the price of a new dishwasher. C. The seller must replace the dishwasher with a used appliance of similar age, size, and condition. D. The seller must replace the dishwasher with a new one. C

Which of the following is true with regard to the Seller's Property Disclosure form that is mentioned in an Exclusive-Right-to-Sell listing form?

A. The seller is required by law to provide this form to every buyer. B. The seller may check the "as is" box, making the buyer responsible to find any defects. C. The seller may decline to provide the disclosure but still must disclose latent material defects. D. The seller may refuse to provide the disclosure and avoid disclosure of material defects. C

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 ?

A. The seller must reduce the price of the property to compensate for the difference. B. 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. C. The contract is automatically terminated by the seller's misrepresentation. D. 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. D

Which of the following is TRUE of brokers working for buyers under the Exclusive-Right-to-Buy Contract?

A. They may require listing brokers to adjust their offered split to match the buyer's broker's negotiated fee. B. They may negotiate an hourly fee to be paid in addition to any other compensation agreed upon. C. They may also seek a nonrefundable retainer fee, which must be credited toward any Success Fee earned. D. They may also receive compensation from lenders and other service providers without disclosure to the buyer. B

Which of the following is TRUE for a person maintaining an inactive Colorado real estate license?

A. They must maintain errors and omissions insurance. B. They must pay regular renewal fees, but are not required to take continuing education courses while holding this license status. C. They must complete the usual continuing education and pay the renewal fees when due. D. They may perform no more than 5 brokerage activities in any 1 year. B

What are the circumstances in which an associate broker may hold a concurrent license with more than 1 employing broker?

A. Under no circumstances B. With the written consent of the brokers being represented. C. With the permission of the Real Estate Commission. D. With the permission of his or her sales manager. A

When an out-of-state investor sells a property in Colorado, which of the following is required of the closing entity?

A. Withhold up to 2% of the selling price as a state transfer tax. B. Withhold up to 2% of the selling price as possible income tax liability. C. Withhold up to 2% of the net proceeds of the sale as sales tax. D. Withhold up to 2% of the proceeds of the sale as possible income tax. B

Andrew is selling his property and has no knowledge of any plumbing system problems. In fact the pipes are corroded and will require replacement very soon. How should Andrew respond in the seller's property disclosure when asked if the seller has any knowledge of plumbing system problems?

A. Yes B. No C. I don't know D. The seller would not be the one required to respond to this question. B