Licensing Requirements
Who must carry E&O Insurance
All active licensees, including the Employing Broker. The Commission require that it be on file or they may inactivate a license. Insurance is purchased through private carriers and approved lenders are listed on the DORA web pages.
Licensed LLC or Licensed Corporation
Although afforded certain rights and protections, is viewed as a person or personal entity and need E&O Insurance Examples 1) Gary wishes to be an employing broker. He could operate as sole proprietor, but learns if he is sued one day, since he is the business, his home and personal assets would be at risk. His attorney tells him he should form an LLC to protect himself and conduct business. He creates Gary Real Estate LLC, which is considered its own entity. Gary is protected and has limited his liability to the assets of the company and is less at risk personally. Since the company has its own liability, it must carry E&O Insurance and Gary must carry it for himself as an active RE Licensee as well. In addition, any agent Gary hires must have E&O Insurance. 2) Similarly, some RE Licensees decide to form an LLC to limit their personal liability. Same rule applies; the licensee must carry two policies, one for the LLC and one for the active RE licensee.
Inactive Licensees
Cannot perform any actions that require a license. They do not need an office or Errors and Ommissions Insurance. They can perform unlicensed duties like property management.
Continuing Education
In addition to paying to renew your license, the state requires a licensee to complete 24 hours of continuing education during every 3 year cycle. 12 of the 24 hours must be comprised of mandatory Annual Commission Update courses, with one 4-hour class taken each year. You may only take the update course within the year (cannot take 2015 course in 2015) In addition, you need to take 12 hours of elective credits. Which can be any classes approved for continuing education credit by the Real Estate Commission. Personal marketing and exam prep courses do not count. Brokers must keep their own records proving that they have met the continuing education requirement for 4 years from the date of compliance.
Cost of renewing license
1 - 31 days past late: - Renewal Fee (31 day grace period) 32 days - 1 year - Renewal Fee + Reinstatement Fee (1/2 renewal fee) 1.5 times the renewal fee 1 - 3 years - Renewal Fee + Reinstatement Fee (Full renewal Fee) Twice the renewal fee Over 3 years - Treated as a new applicant
There are 4 exemptions from licensing:
1) A non-licensed salesperson working directly for a new home builder 2) A regular salaried employee of an apartment complex who reports to the owner and does not negotiate leases or sales. 3) An attorney may draft contracts or close property for a client 4) The sale of real estate securities requires a securities license, not a real estate license
Three Levels of Licensing in Colorado
1) Associate Brokers 2) Independent Brokers 3) Employing Brokers
Important facts about the real estate exam that the Commission mandated include:
1) Exam is made up of two parts (National and State) 2) You can re-take a failed portion of the exam without having to re-take entire exam 3) A passing score is valid for one year
Real Estate Brokers License may be granted to
1) Individuals 2) Partnerships 3) Limited Liability Corporations 4) Corporations These entities designate a qualified, active broker to be the employing/managing/principal broker, responsible for management and supervision of the licensed actions of the company and its licensees. If the company's principal broker is unable to continue as broker, The Commission can issue a temporary hardship license to a licensed broker who has at least 2 years of experience. Temporary licenses can be issued to a corporation or LLC. Such a permit will be for 90 days and will be renewable for another 90 days
License Qualifications and Exemptions
1) Must take and pass a 168-hour class or its distance/online equivalent hours. At completion, you will be given a REC-33 Certificate, which is your proof of course completion. 2) Must be 18 years of age to obtain license. 3) Must submit fingerprints to Colorado Bureau of Investigation 4) Must pass background check 5) Must be lawfully present in the United States 6) Must take/pass Colorado Real Estate Broker Exam given by PSI
What if Update Course is not taken or 24 hour requirement is not completed?
1) Retake the Colorado portion of the real estate exam and pass This accounts for all 24 hours of continuing education and may be done as often as the broker chooses. 2) Take and pass a 24-hour Broker Revocation course. Only limitation is is that the course can't be taken to satisfy the 24 hour continuing education requirement a year after it was taken to reactivate the license. 3) Take 72 hours of pre-licensure education on Colorado Contracts (48 hours) and Real Estate Closings (24 hours) ppr Once you earn your license, you have no continuing education requirements for 3 years.
All of the following must hold a license:
1) Those who are selling or leasing property for others for a fee 2) Those who sell a business opportunity that involves real property 3) Those selling real estate options. (An example of an option is a contract that obliges the seller to convey title to their land if the buyer comes up with $22,000 on or before Dec. 31st) A real estate license is needed to sell a store with a five-year lease.
License Renewal
Licenses will need to be renewed every three years And expires at midnight on the anniversary date.
E&O Insurance Renewal.
Must be renewed every calendar year.
Brokers can only work for -
ONE employing broker/brokerage firm at a time as a real estate licensee
Errors and Omissions Insurance (E&O Insurance)
Protects the licensee against financial loss from oversights in filling out forms and conducting business. For example, if the listing says the refrigerator is excluded, it is listed in an offer as an inclusion, however the listing broker does not notice it... He might make an E&O Claim to purchase a replacement refrigerator for the client. E&O Insurance does not protect the broker if fraud is involved or alleged
When does license expire?
Three years from the date of issue. There is a 31-day grace period to renew an expired license. Which, you will not have to pay an additional fee for renewal until license is expired past 32 days
How a license can become inactive
Voluntary - A broker can place their license on inactive status Involuntarily - Real Estate Commission may suspend license for cause Even if license is voluntarily inactivated, the broker must renew that license and pay any appropriate fees. Failure of a broker associate to inform the Commission of a move from one firm or location to another will cause that license to be involuntarily inactive. Failure of employing broker to inform the Commission of a change of location will inactivate their license AND their associate brokers under them. If employing broker's license is suspended or revoked, all of their associate brokers under them are also placed on inactive status.
E&O Claims
When a licensee files a claim, that claim is NOT reported to the Real Estate Commission.
Independent Brokers
a) Can apply for license change after 2 Years of active licensure b) Not affiliated with another brokerage firm c) Cannot hire other licensed brokers
Employing Brokers
a) Can apply for license change after 2 years of active licensure b) Can act as Employing Brokers for another firm or their own. c) Can hire other brokers d) Responsible for supervising brokers at the firm e) Must also pass a 24-hour Broker Administration Course
Associate Brokers
a) Lowest Level b) Must be affiliated with brokerage firm
Those with a Colorado License live in other states (non-resident brokers) may conduct business in Colorado under certain circumstances
a) Must have an office in home state b) Must agree to keep all trust funds (such as earnest money) in a Colorado depository c) Must accept legal action in Colorado
