6.1.
Real Estate License
A. A License is
nontransferable.
B. Neither a
Broker nor Brokerage Firm may lend their name or License for the benefit of
another person, partnership, limited liability company, or
corporation.
C. Associate Brokers
must not present or hold themselves out to the public as an Employing Broker or
Independent Broker.
D. An Employing
Broker must not knowingly permit Associate Brokers to present or hold
themselves out to the public as an Employing Broker or Independent
Broker.
E. A Broker must not
procure or attempt to procure a License by fraud, misrepresentation, deceit, or
by making a material misstatement of fact in an application for such License
pursuant to section
12-10-217(1)(s),
C.R.S.
6.2. Competency
A. In order to conduct Real Estate Brokerage
Services, a Broker must possess the necessary experience, training, and
knowledge to provide Real Estate Brokerage Services and maintain compliance
with the applicable federal, state and local laws, rules, regulations and
ordinances.
B. If a Broker does not
have the necessary experience, training, and knowledge, the Broker must:
1. Decline to provide Real Estate Brokerage
Services;
2. Obtain the necessary
experience, training, and knowledge;
3. Obtain the assistance of their Employing
Broker, Supervisory Broker, a Broker who meets the requirements as set forth in
subsection A. of this Rule, or legal counsel that is competent in the matter;
or
4. Co-list with another Broker
who meets the requirements as set forth in subsection A. of this
Rule.
6.3.
Employing Broker's Responsibilities and Supervision
A. Employing Broker Exercises Authority,
Direction, and Supervision
1. Employing
Brokers must exercise authority, direction, and supervision over any Associate
Brokers shown in the records of the Commission as supervised by the Employing
Broker to ensure conformance to the Commission statutes and these Rules in the
performance of the Associate Broker's activities pursuant to sections
12-10-203(5)(c)(I),
12-10-217(1)(r),
and 12-10-222, C.R.S., and these
Rules. Whenever a complaint is filed with the Commission against an Associate
Broker, the Commission may investigate whether there have been violations of
section 12-10-217(1)(r),
C.R.S. by the Employing Broker.
2.
Employing Brokers must also supervise, pursuant to section
12-10-222, C.R.S., all unlicensed
employees, including, but not limited to, Unlicensed On-Site Managers,
secretaries, bookkeepers, and personal assistants of Associate
Brokers.
B. Employing
Broker's Responsibilities Employing Brokers must:
1. Maintain all Trust and Escrow Accounts and
records as set forth in Chapter 5 of these Rules;
2. Maintain all transaction records as set
forth in Rule 6.20.;
3. Develop the
Brokerage Firm's written policies as set forth in Rule 6.4.;
4. Provide for a "Reasonable-Level of
Supervision" for all Associate Brokers as set forth in subsection C. of this
Rule;
5. Provide for a "High-Level
of Supervision" for New Associate Brokers as set forth in subsection D. of this
Rule;
6. Take reasonable steps to
ensure that violations of statutes, rules, and office policies do not occur or
reoccur; and
7. Provide for
adequate supervision of all branches or offices operated by the Employing
Broker.
C.
"Reasonable-Level of Supervision" by Employing Brokers
Pursuant to section
12-10-217(1)(r),
C.R.S., Employing Brokers are required to provide all Associate Brokers with a
"Reasonable-Level of Supervision," which includes:
1. Maintaining a written Office Policy Manual
as set forth in Rule 6.4.B., which must:
a.
Be given to and signed by each Associate Broker; and
b. Be available for inspection, upon request,
by any authorized representative of the Commission.
2. Ensuring all executed contracts are
reviewed to maintain assurance of competent preparation. If the Employing
Broker has concerns about the preparation of a contract, Employing Broker
should contact the Associate Broker.
3. Ensuring all transaction files are
reviewed for the required documents. If required documents are not present, the
Employing Broker should contact the Associate Broker.
D. "High-Level of Supervision" by Employing
Brokers
In addition to the requirements of subsection C. of this Rule
and pursuant to section
12-10-203(5)(c)(I),
C.R.S., an Employing Broker must provide a "High-Level of Supervision" for New
Associate Brokers. "High-Level of Supervision" includes:
1. Providing specific training in office
policies and procedures;
2. Being
reasonably available for consultation;
3. Providing assistance in preparing
contracts;
4. Monitoring
transactions from contracting to closing;
5. Reviewing documents in preparation for
closing; and
6. Ensuring that the
Employing Broker or an experienced Associate Broker with more than two (2)
years' Active licensure attends closings with a New Associate Broker or is
available for assistance.
E. Supervision of Unlicensed On-Site Manager
Employing Brokers must:
1. Actively and
diligently supervise all activities of any Unlicensed On-Site Manager or
delegate supervisory authority as set forth in subsection F. of this
Rule;
2. Require the Unlicensed
On-Site Manager to report directly to either the Employing Broker or a
Supervisory Broker;
3. Require the
Unlicensed On-Site Manager to account for and remit all monies, including rents
and security deposits, collected on behalf of the Employing Broker or owner to
the Employing Broker or Supervisory Broker;
4. Ensure that property maintenance scheduled
by the Unlicensed On-Site Manager is performed in accordance with the Property
Management Agreement; and
5.
Instruct the Unlicensed On-Site Manager not to negotiate any of the material
terms of a lease or rental agreement with a Consumer.
F. Delegation of Supervision
Employing Brokers may delegate supervisory authority to other
experienced Associate Brokers for both "Reasonable-Level of Supervision" and
"High-Level of Supervision" as follows:
1. Supervisory Brokers must bear
responsibility along with the Employing Broker for ensuring compliance with the
Commission statutes and these Rules for those persons the delegated Associate
Broker is supervising.
2. Any
delegation of authority must be in writing and signed by the Supervisory
Broker. A copy of such delegation must be maintained by the Employing Broker
for inspection, upon request, by any authorized Commission
representative.
3. The Supervisory
Broker must have competency as set forth in Rule 6.2 . in the area of practice
in which the Supervisory Broker is supervising.
4. An Employing Broker must not contract with
any Associate Broker so as to circumvent the requirement that the Employing
Broker supervise Associate Brokers. While an Employing Broker may delegate
supervision duties, the Employing Broker is still ultimately responsible for
the supervision provided.
G. Confidential Information Revealed to
Employing Broker or Supervisory Broker
Associate Brokers may reveal to an Employing Broker or a
Supervisory Broker confidential information about the Associate Broker's
client. Associate Brokers' disclosure of such confidential information does not
change or extend the Brokerage Relationship beyond the Associate Broker.
Confidential information includes the information pursuant to sections
12-10-404(2),
12-10-405(2) and
12-10-407(3),
C.R.S.
6.4.
Brokerage Firm's Policies
A. Brokerage Firm's
Brokerage Relationship Policy
1. An Employing
Broker or Independent Broker must adopt a written office policy which
identifies and describes the relationships in which such Employing Broker,
Independent Broker, and any Associate Brokers may engage with any Consumers
prior to providing any Real Estate Brokerage Services pursuant to sections
12-10-403 and
12-10-408, C.R.S.
2. An Employing Broker or Associate Broker
must be designated in writing by the Employing Broker to serve as a Single
Agent or Transaction-Broker for a Consumer pursuant to section
12-10-402(3),
C.R.S. and as set forth in Rule 6.6.
B. Office Policy Manual
Employing Brokers must also adopt any written policies
suitable to the Brokerage Firm's business, subject to the following as
applicable:
1. Applies to all
Associate Brokers in the Brokerage Firm.
2. Be given to and signed by each Associate
Broker.
3. Identifies the
procedures for the designation of Brokers who are to work with Consumers
pursuant to section
12-10-403(6),
C.R.S. and as set forth in subsection A. of this Rule.
4. Identifies and provides adequate means and
procedures for the maintenance and protection of confidential information that:
a. The seller or landlord is willing to
accept less;
b. The buyer or tenant
is willing to pay more;
c.
Information regarding motivating factors for the parties;
d. Information that a party will agree to
other financing terms;
e. Material
information about a party not required by law to be disclosed;
f. Facts or suspicions which may
psychologically impact or stigmatize a property; and
g. All information required to be kept
confidential pursuant to sections
12-10-404(2),
12-10-405(2) and
12-10-407(3),
C.R.S.
5. Permits an
Employing Broker to supervise a transaction and to participate in the same
transaction as a Designated Broker.
6.5. Brokerage Relationships Disclosures in
Writing
A. Written disclosures pursuant to
section 12-10-408, C.R.S. must be made to
a Consumer prior to eliciting or discussing confidential information from a
Consumer for Real Estate Brokerage Services.
B. Such activities do not include preliminary
conversations or "small talk" concerning price range, location and property
styles, or responding to general factual questions from a potential Consumer
concerning properties which have been Advertised for sale or
lease.
6.6. Brokerage
Relationships
A. Listing Contract by
Individual Associate Broker: An Associate Broker may enter into a Listing
Contract as the Designated Broker for a particular Consumer in a particular
transaction as either a Single Agent or Transaction-Broker.
B. Listing Contract by Members of a Team: The
individual team member(s) must all be the Designated Broker for a particular
Consumer in a particular transaction as either Single Agents or
Transaction-Brokers. The names of all the members of the Team must be disclosed
in the Listing Contract.
C.
Transaction-Broker: A written disclosure that a Broker working with a Consumer
as a Transaction-Broker is the Designated Broker for that Consumer.
D. Substitute or Additional Designated
Brokers: The Employing Broker may substitute or add other Designated Brokers,
as appropriate, which must be disclosed to the Consumer.
6.7. Brokers or Teams working with Consumers
on Both Sides of the Same Transaction
Neither Brokers nor Teams may enter into a Brokerage
Relationship with one Consumer as a Single Agent and the other Consumer as a
Single Agent or Transaction-Broker in the same transaction. If properly
disclosed, in writing (e.g. Listing Contracts), the Broker or Team that works
with both Consumers in the same real estate transaction may do so as:
A. A Transaction-Broker for both Consumers to
the transaction;
B. A
Transaction-Broker for one Consumer in the transaction and treating the other
Consumer as a Customer; or
C. A
Single Agent for one Consumer and treating the other Consumer as a
Customer.
6.8.
Ministerial Tasks
When a Broker is engaged as a Single Agent or a
Transaction-Broker for one party and treating the other party as a Customer,
the Broker may assist the Customer by performing ministerial tasks following
proper disclosure. Ministerial tasks include: showing a property, preparing as
a scrivener, and conveying written offers and counteroffers, making known the
different types of financing alternatives, and providing information related to
professional, governmental, and community services which will contribute to
completion of the transaction. Performing ministerial tasks will not of
themselves violate the terms of any relationship between the Broker and the
Consumer with which the Broker has a Brokerage Relationship and will not create
an agency or Transaction-Broker relationship with the Customer being
assisted.
6.9. Change of
Status Disclosure in Writing
A Broker or Team who changes their Brokerage Relationship
from a Single Agent for one Consumer to assisting both Consumers in the same
real estate transaction as a Transaction-Broker must provide the written
Commission-Approved "Change of Status" Form to the Consumer that has the
changed relationship with the Broker, at the time the Broker begins to assist
both Consumers as a Transaction-Broker, but not later than at the time the
Consumer signs the contract.
6.10. Advertising
A. Names
1.
Pursuant to section
12-10-203(9),
C.R.S., no Broker will be licensed to conduct Real Estate Brokerage Services
under more than one (1) Brokerage Firm.
2. Pursuant to section
12-10-203(9),
C.R.S., no Broker or Brokerage Firm will conduct or promote Real Estate
Brokerage Services except in the name under which that Broker or Brokerage Firm
appears in the records of the Commission. A Brokerage Firm may also include the
locations of its offices, to include branch offices in the
Advertising.
3. Brokers will not
Advertise so as to mislead the public concerning the identity of the Broker or
the Broker's Brokerage Firm.
4. All
Advertising must be done clearly and conspicuously in the name of the Broker's
Brokerage Firm. However, a Broker who Advertises real property owned by the
Broker which is not listed for sale or lease with the Broker's Brokerage Firm
is exempt from Advertising the Broker's own property in the Broker's Brokerage
Firm's name.
5. A Brokerage Firm
may use a Trade Name in addition to or instead of the Brokerage Firm's legal
name. The Trade Name must be filed with the Commission.
6. A Brokerage Firm may use a Trademark in
conjunction with the Brokerage Firm's legal name or Trade Name with permission
of the owner of such Trademark.
a. A
Brokerage Firm that uses a Trade Name or Trademark owned by a third party is
required to use one (1) of the following statements, which must appear in a
clear and conspicuous manner so as to attract the attention of the public:
i. "Each (insert general Trade Name)
brokerage business is independently owned and operated." or
ii. "Each office independently owned and
operated."
b. Upon
written request, the above statements may be modified with consent of the
Commission.
7. No
Brokerage Firm will use more than one (1) Trade Name; however, upon written
request and with the consent of a representative of the Commission, a Brokerage
Firm may use more than one (1) Trademark. Use of the Trademark(s) is only
acceptable if the Brokerage Firm has obtained permission of the registrant of
such Trademark.
8. No Broker may
use a professional designation in Advertising unless the Broker is in good
standing and the designation is easily verifiable by the public and the
Commission. A Broker that Advertises an award, membership, or achievement must
be able to provide verification of the validity of such claims upon request
from any member of the public or Commission.
B. Teams
1.
Brokers who form a Team must not Advertise in a manner that misleads the public
as to the identity of the Team's Brokerage Firm. Teams are prohibited from
using the following terms in the Team's name:
a. Realty,
b. Real estate,
c. Realtors,
d. Company,
e. Corporation,
f. Corp.,
g. Inc.,
h. LLC,
i. LP or LLP, or
j. Any other term that would imply a separate
entity from the Brokerage Firm with which the Team Brokers are
licensed.
2. All Team
Advertising must clearly and conspicuously include and be in conjunction with
the legal name or Trade Name of the Brokerage Firm.
3. If requested by a Consumer, the
Commission, another Brokerage Firm or Broker, the Brokerage Firm will provide
the names of the Brokers that belong to any Team licensed with the Brokerage
Firm.
4. Brokers may not allow the
use of the Team's name by other Brokers outside the Team's Brokerage
Firm.
C. Brokerage Firms
and Brokers are responsible for ensuring that all Advertising is accurate and
complies with copyright laws and other applicable laws and
regulations.
D. Electronic Media
1. When a Broker owns or controls Electronic
Media, each Viewable Page must include the Broker's Brokerage Firm's name. Any
expired listings must be removed from the Broker's Electronic Media within
three (3) days of a Listing Contract expiring.
2. If a Broker authorizes a third party for
the Broker's Electronic Media Advertising, the Broker is responsible for
ensuring that the information provided to such third party is accurate. The
Broker must submit a written request to any third party syndicators to have all
expired listings removed from Electronic Media within three (3) days of a
Listing Contract expiring.
3. A
Broker who communicates through email, chat, instant messages, newsgroups,
discussion lists, bulletin boards, blogs, or other similar means for purposes
of Advertising the Broker's Real Estate Brokerage Services must use the
Broker's Brokerage Firm's name. However, once a Broker has disclosed the
Broker's Brokerage Firm to a specific Consumer, the Broker is not required to
continue to make the same disclosure to the specific Consumer.
4. When it is not reasonable for a Broker to
disclose the Broker's Brokerage Firm's name in an Electronic Media because
space is limited, the Broker will disclose the Broker's Brokerage Firm's name
clearly and conspicuously within the first click of the mouse.
E. Past Sales Data Advertising
General sales data Advertising, regardless of the medium,
which recaps sales activity over a period of time in a given subdivision or
geographical area must include all of the following:
1. Cite the source of the data; and
2. Include a disclaimer, if accurate, that
all reported sales:
a. Were not necessarily
listed or sold by the Broker; and
b. Are intended only to show trends in the
area or will separately identify the Broker's own sales activity.
F. Authority to
Advertise Available and Under Contract Properties
Brokers may not Advertise the availability or price of a
property whether for sale or lease without authority from the owner or the
owner's Broker.. If such authority is requested, an owner's Broker may not
withhold the authority to advertise said property unless such authority is
contradictory to instructions from the owner as memorialized in the Listing
Contract or other writing. A Broker who has received written permission to
disseminate another Broker's Advertising or an owner's Advertising who is not
represented by a Brokerage Firm (For Sale by Owner) may do so as set forth in
subsections F.1. and F.2. of this Rule.
1. A Broker may disseminate another Broker's
Advertising in the following manner:
a. A
Broker must have the owner's Broker's written permission to disseminate the
Advertising;
b. The Broker
discloses, in a conspicuous manner, the owner's Brokerage Firm;
c. The Advertising is accurate and not
misleading to Consumers; and
d. The
Advertising complies with subsection C. of this Rule.
2. A Broker may disseminate an owner's
Advertising who is not represented by a Brokerage Firm in the following manner:
a. The Broker must have the owner's written
permission to disseminate the Advertising;
b. The Broker discloses, in a conspicuous
manner, that the owner is not represented by a Broker;
c. The Advertising is accurate and not
misleading to Consumers; and
d. The
dissemination of an owner's Advertising does not include submitting the
information into a property exchange or multiple listing service.
G. Price Set by Owner
The price quoted in any Advertising will not be anything
other than the price agreed upon between the Broker and the owner.
6.11. Square Footage
Disclosure
When a Broker Advertises the square footage of a residential
property, including for submission to a multiple listing service, the Broker
must disclose the source of the square footage of the floor space of the living
area of the residence to Consumers on the Commission-Approved Form.
A. Broker Measurement
A Broker is not required to measure the square footage of a
property. If the Broker takes an actual measurement, it does not have to be
exact; however, the Broker's objective must be to measure accurately and
calculate competently in a manner that is not misleading and must:
1. Disclose to the Consumer the standard,
methodology, or manner in which the measurement was taken;
2. Advise that the measurement is for
purposes of marketing and is not a measurement for loan, valuation, or any
other purpose; and
3. Advise that
if exact square footage is a concern, then the property should be independently
measured.
B. Other
Sources of Square Footage
If a Consumer is provided information from a source other
than the Broker's own measurement for square footage, that source (whether an
actual measurement, building plans, prior appraisals, assessor's office, etc.)
must include the date of issuance, if any, and must be disclosed to the
Consumers in writing by the Broker in a timely manner. Such disclosure must be
on the Commission-Approved Form. A Broker may not provide information to a
person from a source known to be unreliable and is responsible for indicating
obvious mismeasurement by others.
6.12. Notice Required on Competitive Market
Analysis (CMA) or Broker's Price Opinion (BPO) for Purposes Other Than
Marketing
When a Broker prepares a CMA or BPO for any reason other than
the anticipated sale or purchase of the property, the Broker 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 section
12-10-602(9)(b)(II),
C.R.S, Brokers are prohibited from completing CMAs or BPOs that are used for
the purpose of obtaining financing. Preparation of CMAs or BPOs for reasons
other than anticipated sale, purchase, or lease is not considered Real Estate
Brokerage Services. As such, any compensation received for such preparation is
not required to be paid to the Broker's Brokerage Firm unless stated otherwise
in Brokerage Firm's Office Policy Manual.
6.13. Offers must be Presented to Other
Broker
A Broker must present all offers to the other Consumer's
Broker if such other Consumer has an unexpired Listing Contract. If the Broker
has made reasonable, but unsuccessful, attempts to present an offer to the
other Consumer's Broker, the Broker must present the offer to the other
Consumer's Broker's Employing Broker. If no Employing Broker exists, or if
reasonable attempts to present the offer to the Employing Broker have failed,
the Broker may present the offer directly to the other Consumer.
6.14. Contracts
A. Document Preparation and Duplicates
1. Contracting instruments prepared by a
Broker performing Real Estate Brokerage Services for all real estate or
business opportunity transactions must accurately reflect the financial terms
of the transaction by itemizing Things of Value paid or received and
identifying the party or parties conveying, receiving and/or ultimately
benefitting from such Things of Value. All such terms made subsequent to the
original contract must be disclosed in an amendment to the contract.
2. A Broker must deliver Duplicates of all
documents prepared by the Broker to all Consumers or their representatives at
the time such document was prepared by the Broker as set forth in Rule 6.19.
B. No Fees to Brokers
for Legal Document Preparation
Brokers are not obligated to prepare any legal documents as
part of a real estate transaction. If the Broker or the Broker's designee
prepares any legal document, the Broker or the Broker's designee may not charge
a separate fee for preparation of such legal documents. The Broker is not
responsible for fees charged for the preparation of legal documents where they
are prepared by an attorney representing the Consumer. Costs of closing not
related to preparation of legal documents may be paid by the Broker 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.
C. Listing must be in Writing
Regardless of the Brokerage Relationship, all seller Listing
Contracts and landlord Listing Contracts must be in writing prior to performing
any Real Estate Brokerage Services.
D. Listings must have Termination Date
All Listing Contracts or other written agreements between a
Consumer and a Brokerage Firm or Broker to perform Real Estate Brokerage
Services must have a definite date for termination pursuant to section
12-10-409(1)(b),
C.R.S.
E. Holdover Agreement
When a Listing Contract or other written agreement contains a
provision entitling a Brokerage Firm to a commission made after the expiration
of the agreement, such provision must refer only to those persons or properties
with whom or on which the Broker negotiated during the term of the agreement,
and whose names or addresses were submitted in writing to the Consumer during
the term of the agreement, including any extension thereof.
F. Brokers must recommend title exam and
legal counsel
Brokers are not permitted to give advice on exceptions to
title as such conduct would constitute the unauthorized practice of law.
Brokers must recommend, before the applicable deadlines, that Consumers should
examine all title exceptions and encourage Consumers to seek guidance from a
licensed attorney.
G. Review
of Deeds
Brokers should not give advice based on their review of deeds
for conveyance of real property unless such deeds are drafted by the
Broker.
6.15. Sign
Crossing
A. Brokers will not negotiate a
Listing Contract directly with a Consumer for compensation from said Consumer
if such Broker knows the Consumer has an unexpired Listing Contract with
another Brokerage Firm granting said Brokerage Firm an exclusive
contract.
B. However, if a Broker
is contacted by a Consumer who is currently subject to an exclusive Listing
Contract, and the Broker has not initiated the discussion, the Broker may
negotiate the terms upon which to take a future Listing Contract or,
alternatively, may take a Listing Contract to become effective upon expiration
or termination of any existing Exclusive Listing.
C. The burden of inquiry is on the Broker to
determine the existence of the Listing Contract and to advise the Consumer to
seek guidance from a licensed attorney.
6.16. Access Information for a Property
A Broker who is not the owner's Broker is prohibited from
sharing access information to a property with any third party, such as an
assistant, home inspector, contractor, or a Consumer without prior
authorization from the owner's Broker.
6.17. Duty to Disclose Conflict of Interest
and License Status
A. Brokerage Firms and
Brokers have a continuing duty to disclose, in writing, any known conflict of
interest that may arise in the course of any real estate transaction.
B. If a Broker sells, buys, or leases real
property on the Broker's own account, such Broker must disclose in the
contracting instrument, or in a separate concurrent writing, that they are a
licensed Broker.
C. A Brokerage
Firm or Broker engaged in Property Management Services has a duty to disclose,
in writing, any known conflict of interest that may arise in the selection or
use of a business or vendor that provides services applicable to lease
transactions, including property maintenance. The Brokerage Firm or Broker is
required to disclose any ownership, financial, or familial interest associated
with the selection or use of a particular business or vendor.
6.18. Affiliated Business
Arrangement Disclosures
Pursuant to section
12-10-218(2)(b),
C.R.S., an Employing Broker and/or a Broker must make the following disclosures
in writing:
A. The existence of an
Affiliated Business Arrangement to the Consumer they are referring at or prior
to the time the referral is made. The disclosure must comply with
RESPA.
B. Prior to or at the time
the Contract to Buy and Sell is executed by the Consumers, the existence of an
Affiliated Business Arrangement with the Brokerage Firm or Broker must be
disclosed in writing to all parties to the transaction.
C. A Broker is required to make the following
disclosures to the Commission.
1. At the time
a Broker enters into or changes an Affiliated Business Arrangement, the Broker
must disclose the names of all Affiliated Business Arrangements to which the
Broker is a party. The written disclosure must include the physical location of
the affiliated businesses.
2. On an
annual basis, each Employing Broker must disclose the names of all Affiliated
Business Arrangements to which the Employing Broker or Brokerage Firm is a
party. The written disclosure must include the physical location of the
affiliated businesses.
D.
Written disclosures to the Commission must be made through the Colorado
Affiliated Business Online Services database, which is accessible through the
Division's website.
6.19.
Closing Responsibility
A. Pursuant to section
12-10-217(1)(j),
C.R.S, at the time of closing, the Broker who has established a Brokerage
Relationship with one or multiple Consumers in a transaction will be
responsible for the proper closing of the transaction. The Broker must ensure
such Consumer receives an accurate, complete and detailed closing statement
that is signed by the Broker. If Broker is licensed with a Brokerage Firm,
Broker must deliver closing statements to the Brokerage Firm along with any
other closing documents, immediately following closing. Nothing in this Rule
relieves an Employing Broker of the responsibility for fulfilling supervisory
responsibilities pursuant to sections
12-10-203(5)(c)(I),
12-10-217(1)(r),
and 12-10-222, C.R.S and as set forth
in subsections C. and D. of this Rule.
B. If closing documents and closing
statements are prepared and closed by a Broker, the Broker is responsible for
the accuracy and completeness of the closing statements and closing
documents.
C. If a Broker has a
Brokerage Relationship with a Consumer in a transaction, the Broker must review
closing documents and attend closing or be reasonably available. If a Broker
will not be available to attend closing and review closing documents, another
Broker designated by the Brokerage Firm may review and attend closing on the
Broker's behalf and will assume joint responsibility with the absent Broker for
its accuracy, completeness, and delivery of the signed closing statement as set
forth in subsection A. of this Rule.
D. Any Broker receiving earnest money must
deliver earnest money as set forth in Rule 5.12.A.
E. Pursuant to section
38-35-125, C.R.S, a Broker or a
Brokerage Firm must not disburse or authorize disbursement of funds until those
funds have been received and are either:
1.
Available for immediate withdrawal as a matter of right from the financial
institution in which the funds have been deposited; or
2. Available for immediate withdrawal as a
consequence of an agreement with a financial institution in which the funds are
to be deposited or a financial institution upon which the funds are to be
drawn. The agreement with a financial institution must be for the benefit of
the Broker and Brokerage Firm providing the closing service. If the agreement
contains contingencies or reservations, no disbursements can be made until
these are satisfied.
6.20. Transaction File Requirements
Both a Broker and a Brokerage Firm must retain transactions
files for all transactions for a period of four (4) years beginning from the
consummation date of the transaction or the expiration date of any Listing
Contracts that do not consummate. Required documents in a transaction file are
designated in the Commission's Transaction File Checklist and may be found on
the Division's website. A Broker is not required to obtain and retain copies of
existing public records, title commitments, loan applications, lender required
disclosures, or related affirmations from independent third party closing
entities after the closing date.
6.21. Referral Fees and RESPA
A. Brokers and Brokerage Firms will not pay
or receive a referral fee except in accordance with RESPA and unless a
reasonable cause for payment of the referral fee exists pursuant to section
12-10-304(1),
C.R.S.
B. RESPA prohibits
settlement service providers from giving or receiving any Thing of Value to
another settlement service provider for the referral of business when the
transaction involves a federally related residential mortgage.
1. Transactions Involving a Federally related
Residential Mortgage
A Broker or Brokerage Firm, whether engaged in an Affiliated
Business Arrangement pursuant to section
12-10-218, C.R.S. or not, will not
accept or give any incentive, disincentive, remuneration, commission, fee, or
other Thing of Value to or from a settlement service provider for the referral
of business in a real estate transaction involving a federally related
residential mortgage transaction. Nothing in subsection B. of this Rule
prohibits a person or entity from receiving a bona fide salary, commission, or
other compensation for services rendered or as a return on their ownership
interest in an Affiliated Business Arrangement.
2. Transaction Not Involving a Federally
related Residential Mortgage
A Broker or Brokerage Firm will not accept, directly or
indirectly, a placement fee, commission or other Thing of Value for referring a
settlement service provider in any real estate transaction unless the Broker or
Brokerage Firm first discloses in writing such compensation to whomever the
Broker or Brokerage Firm is referring at the time of making such
referral.
C. Only
Brokerage Firms licensed in Colorado are permitted to receive a commission on
transactions for real estate located in Colorado. Pursuant to section
12-10-217(1)(l),
C.R.S., a Colorado Brokerage Firm may pay a brokerage firm or broker licensed
in another Jurisdiction or country a referral fee under the following
circumstances:
1. The brokerage firm or broker
licensed in another Jurisdiction or country actually referred a client to the
Broker or Brokerage Firm.
2. The
brokerage firm or broker licensed in the other Jurisdiction or country must
reside and maintain an office in the other Jurisdiction or country. Subsection
C. of this Rule applies to payment made to citizens or residents of a country
which does not license real estate brokers if the payee represents that they
are in the business of selling real estate in that country.
3. All Advertising, negotiations,
contracting, and conveyancing regarding the Colorado property must be performed
by a Broker licensed in Colorado.
4. All money collected from the parties to
the transaction prior to closing must be deposited in the name of the Brokerage
Firm licensed in Colorado as set forth in Chapter 5 of these Rules.
6.22. Prohibited
Remedies for Compensation
A. If for any reason
the seller fails, refuses, neglects, or is unable to consummate the transaction
as provided for in the contract, and through no fault or neglect of the buyer
the real estate transaction cannot be completed, the Brokerage Firm has no
right to any portion of the earnest money deposit which was deposited by the
buyer.
B. In a residential
transaction, unless Broker has adjudicated a claim and a judgment is entered,
no Broker will file or threaten to file a lien, a lis pendens, record a Listing
Contract to secure the payment of a commission or other fee associated with
Real Estate Brokerage Services, cause the title to a property to become clouded
or interfere with the transfer of title when the Broker is not a principal in
the transaction.
C. A Brokerage
Firm and Broker who has Commercial Real Estate listed for lease and has
provided Real Estate Brokerage Services that resulted in procuring a tenant who
has leased any interest in the Commercial Real Estate in accordance with the
written agreement between the Brokerage Firm and the owner may file a lien
pursuant to section
38-22.5-103, C.R.S. against the
Commercial Real Estate in the amount of the compensation set forth in the
written agreement. If the Commercial Real Estate has been conveyed to a bona
fide buyer prior to the recording of the notice to lien pursuant to section
38-22.5-104, C.R.S., a Brokerage
Firm or Broker may not file a lien for a commission that is due as the result
of a lease renewal.
6.23.
Immediate Notification of Conviction, Plea or Violation Required
A Broker must provide written notification to the Commission
within thirty (30) calendar days for any of the following:
A. A plea of guilty, a plea of nolo
contendere, or a conviction of any crime as pursuant to section
12-10-217(1)(n),
C.R.S.;
B. A violation or aiding
and abetting in the violation of the Colorado or federal fair housing
laws;
C. Any disciplinary action
taken against a Broker in any other Jurisdiction, if the Broker's action(s)
would constitute a violation of Commission statutes and these Rules;
and
D. A suspension or revocation
of a license, registration, or certification by Colorado or another
Jurisdiction, within the last five (5) years, for fraud, deceit, material
misrepresentation, theft, or the breach of a fiduciary duty that denied the
Broker the authorization to practice as a mortgage loan originator, a real
estate broker or salesperson, a real estate appraiser, an insurance producer,
an attorney, a securities broker-dealer, a securities sales representative, an
investment advisor, or an investment advisor representative.
6.24. Electronic Records and
Production of Records
All records required to be maintained by Brokers or Brokerage
Firms may be maintained as Electronic Records. Electronic Records or printed
records must be produced upon request by the Commission or any principal party
to a transaction and must be in a format that has the continued capability to
be retrieved and legibly printed.
6.25. Investigations or Audits by Commission
A. Notification of a Complaint that has been
Assigned for Investigations or an Audit
1. A
Broker or Brokerage Firm will receive written notification from the Commission
regarding the following:
a. A complaint has
been filed and an investigation has been initiated. A copy of the complaint
that has been filed against the Broker or Brokerage Firm will be
provided;
b. A complaint has been
initiated on the Commission's own motion. A summary of the complaint against
the Broker or Brokerage Firm will be provided; or
c. The Broker or Brokerage Firm has been
selected for an audit.
2.
Upon receipt of the Commission's notification, a Broker or Brokerage Firm must
submit a written response to the Commission. Failure to submit a written
response within the time set by the Commission in its notification will be
grounds for disciplinary action regardless of the question of whether the
underlying complaint or audit warrants further investigation or subsequent
action by the Commission. The written response must contain the following:
a. A complete and specific answer to the
factual recitations, allegations, or averments made in the complaint filed
against the Broker or Brokerage Firm, 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. A complete transaction file and any
documents or records requested in the notification letter.
d. Any further information relative to the
complaint or audit that the Broker or Brokerage Firm believes to be relevant or
material to the matters addressed in the notification letter.
B. Extension to Respond
Upon request, the Commission will grant extensions of time
for Brokers or Brokerage Firms to respond to any complaint or audit provided
such request is reasonable.
C. Produce Records for Investigation or Audit
Brokers and Brokerage Firms must retain and produce for
inspection by the Commission any document or record as may be reasonably
necessary for investigation or audit in the enforcement of Commission statutes
and these Rules. Failure to submit such documents or records within the time
set by the Commission in its notification will be grounds for disciplinary
action unless the Commission has granted an extension of time for such
production.
6.26.
Actions when License is Suspended, Revoked, Expired or Inactive
Upon suspension, revocation, expiration, or transfer to
Inactive Status of a License, the Broker or Brokerage Firm is responsible for
immediate compliance with the following:
A. If an Associate Broker:
1. Cease any activities requiring a
License.
2. Inform the Employing
Broker of the change in license status.
3. Cease all Advertising, including, but not
limited to, use of office signs, yard signs, billboards, newspapers, magazines,
the internet, direct mailings, and multiple listing services.
4. Inform all impacted Consumers within seven
(7) days of the action taken and the impact that the change in license status
will have on any pending transaction. It is the responsibility of the Employing
Broker to ensure that another Associate Broker is designated to perform the
duties requiring a License in all pending transactions, or to release the
affected parties from any Listing Contract(s) with the Brokerage
Firm.
B. If an
Independent Broker:
1. Cease any activities
requiring a License.
2. Cease all
Advertising, including, but not limited to, use of office signs, yard signs,
billboards, newspapers, magazines, the internet, direct mailings, and multiple
listing services.
3. Notify all
impacted Consumers within seven (7) days of the action taken and the impact
that the change in license status will have on any pending
transaction.
4. Release the
affected parties from any active Listing Contract(s) with the Independent
Broker.
5. Instruct the affected
parties to seek guidance from a licensed attorney or retain a new Brokerage
Firm regarding any pending transactions.
6. The Independent Broker is responsible for
accounting for all funds, returning all Trust and Escrow Account records and
making all final disbursements to the rightful beneficiaries within thirty (30)
days of the change in license status. The Independent Broker is also
responsible for providing the Commission with a full list of all impacted
Consumers' contact information within seven (7) days and for maintaining all
records for four (4) years.
C. If an Employing Broker:
1. Cease any activities requiring a
License.
2. Cease all Advertising,
including, but not limited to, use of office signs, yard signs, billboards,
newspapers, magazines, the internet, direct mailings, and multiple listing
services.
3. The Employing Broker
is personally responsible for the handling of any and all earnest money
deposits, Trust or Escrow Account funds received or disbursed by the Brokerage
Firm. The Employing Broker is responsible for returning all Trust and Escrow
Account records to the Brokerage Firm.
4. The Brokerage Firm must designate a new
Employing Broker to be responsible for the management and supervision of the
licensed actions of the Brokerage Firm and all Associate Brokers shown in the
Commission's records as being in the employ of the Brokerage Firm. Pursuant to
section 12-10-203(6)(c),
C.R.S., the Brokerage Firm may also seek a Temporary License to prevent
hardship if none of the Brokerage Firm's Associate Brokers hold an Employing
Broker level license.
5. If the
Brokerage Firm is unable to designate a new Employing Broker or is not granted
a Temporary License, the Licenses of the Brokerage Firm and any Associate
Brokers will be placed on Inactive status. The Employing Broker must also
perform all duties as set forth in subsection C.6. of this Rule.
6. If a Brokerage Firm's License becomes
Inactive, Expired or revoked, the Employing Broker will have seven (7) days to
notify all Consumers impacted as to the effect of such license status change
will have on the Associate Brokers and all pending transactions. The Employing
Broker is responsible for accounting for all funds, returning all Trust and
Escrow Account records and making all final disbursements to the rightful
beneficiaries within thirty (30) days of the change in license status. The
Employing Broker is also responsible for providing the Commission with a full
list of all impacted Consumers' contact information within seven (7) days and
for maintaining all records for four (4) years.
D. Commissions or fees may be received by a
Broker or Brokerage Firm only for transactions where the commission or fee was
earned prior to that Broker's or Brokerage Firm's suspension, revocation,
expiration, or transfer to Inactive status.
