2010 commission update course slide #1 2010 crec annual commission update course

2010 Commission Update Course2010 Commission Update Course Slide #Slide #11Slide #Slide #11

2010 CREC Annual 2010 CREC Annual Commission Update Commission Update

CourseCourse

2010 Commission Update Course2010 Commission Update Course Slide #Slide #22

Table of ContentsTable of Contents

1)1) Carbon MonoxideCarbon Monoxide

2)2) Property Management Property Management IssuesIssues

3)3) Warranty of Warranty of HabitabilityHabitability

4)4) 2010 New & Revised 2010 New & Revised FormsForms

5)5) Seibel CaseSeibel Case

6)6) RESPA ReformRESPA Reform

7)7) SAFE Act UpdateSAFE Act Update8)8) Foreclosure Foreclosure

Protection ActProtection Act9)9) License Management License Management

& Continuing & Continuing Education Education

10)10) HVCCHVCC11)11) Consumer TipsConsumer Tips12)12) QuizQuiz

Slide #Slide #22


Carbon Monoxide Legal Carbon Monoxide Legal ComplianceCompliance

Properties Covered By The LawProperties Covered By The Law

1.1. Single-Family DwellingsSingle-Family Dwellings

2.2. Multi-Family DwellingsMulti-Family Dwellings

3.3. All Residential Rental PropertiesAll Residential Rental Properties


Triggering Features & Events Triggering Features & Events

1.1. Triggering Appliances and Triggering Appliances and StructuresStructures

2.2. Triggering EventsTriggering Events

3.3. Compliance Scenario AnalysisCompliance Scenario Analysis

4.4. Local Laws and OrdinancesLocal Laws and Ordinances


Alarms & InstallationAlarms & Installation

1.1. Complying Alarms – National Fire Complying Alarms – National Fire Alarm Protection AssociationAlarm Protection Association

1.1. Distinct audible alarmDistinct audible alarm

2.2. Conform to standardsConform to standards

3.3. Power sourcePower source

4.4. Combination detectorsCombination detectors

2.2. Installation MethodsInstallation Methods

3.3. Installation LocationInstallation Location


Maintenance ResponsibilitiesMaintenance Responsibilities

1.1. Landlords and ManagersLandlords and Managers1.1. New tenancy – replaceNew tenancy – replace

2.2. New tenancy – batteryNew tenancy – battery

3.3. Written notice – repair/replaceWritten notice – repair/replace

2.2. TenantsTenants1.1. Keep, test, maintainKeep, test, maintain

2.2. Notify landlord – issuesNotify landlord – issues


Limits on LiabilityLimits on Liability

1.1. GenerallyGenerally1.1. 38-45-106(1) C.R.S.: No claim against38-45-106(1) C.R.S.: No claim against

1.1. Property ownerProperty owner2.2. Agent for ownerAgent for owner3.3. InstallerInstaller

2.2. If installed to manufacturer’s If installed to manufacturer’s instructions and CO statuteinstructions and CO statute

3.3. 38-45-106(2) C.R.S.: Purchaser38-45-106(2) C.R.S.: Purchaser

2.2. Real Estate BrokersReal Estate Brokers


Property Management Without Property Management Without Employing Broker’s (EB’s) Employing Broker’s (EB’s)

KnowledgeKnowledge You could be violating several rules and You could be violating several rules and

statutes by performing property management statutes by performing property management without the EB’s knowledge, especially if without the EB’s knowledge, especially if representing a separate company to the representing a separate company to the consumer.consumer.

There are significant trust accounting and There are significant trust accounting and transaction file problems because the EB has transaction file problems because the EB has no knowledge of their employee doing property no knowledge of their employee doing property management management

Accounts must be in the name of the Accounts must be in the name of the employing broker, license is non-transferable, employing broker, license is non-transferable, and supervision is requiredand supervision is required

Rules E-1 (a) (c) (p), E-29 – E-32Rules E-1 (a) (c) (p), E-29 – E-32


Property Managers May Not Property Managers May Not Markup Services Without Markup Services Without

DisclosureDisclosure Taking any undisclosed amount (due to Taking any undisclosed amount (due to

the principal) of compensation or the principal) of compensation or commission is a violation of C.R.S. 12-61-commission is a violation of C.R.S. 12-61-113 (1) (q)113 (1) (q)

Payment to broker for services are Payment to broker for services are considered “earned”…..after contracted considered “earned”…..after contracted services have been performed. See Rule services have been performed. See Rule E-1 (f)E-1 (f)


HB 08-1356: Warranty of HB 08-1356: Warranty of HabitabilityHabitability

1.1. Applies to all leases after 9-1-08Applies to all leases after 9-1-082.2. Defines Uninhabitable PremisesDefines Uninhabitable Premises3.3. Establishes a Statutory Warranty of Establishes a Statutory Warranty of

HabitabilityHabitability4.4. Defines when the Warranty of Defines when the Warranty of

Habitability is breachedHabitability is breached5.5. Resident remedies for breach of the Resident remedies for breach of the

Warranty of HabitabilityWarranty of Habitability


The Landlord Has Breached the The Landlord Has Breached the Warranty of Habitability if:Warranty of Habitability if:

1.1. The condition which makes the premises The condition which makes the premises unfit for human habitation is materially unfit for human habitation is materially dangerous or hazardous to a tenant’s dangerous or hazardous to a tenant’s life, health or safety andlife, health or safety and

2.2. Landlord has received written notice of Landlord has received written notice of the condition andthe condition and

3.3. Landlord hasLandlord has failed to cure the problem failed to cure the problem within a within a reasonablereasonable time. time.


Required Property ConditionsRequired Property Conditions

1.1. Functioning heating, lighting, running water, Functioning heating, lighting, running water, and and reasonablereasonable amounts of hot water. amounts of hot water.

2.2. Common areas that are clean and free from Common areas that are clean and free from debris and garbage.debris and garbage.

3.3. Unbroken windows and doors with working Unbroken windows and doors with working locks.locks.

4.4. An appropriate extermination response to An appropriate extermination response to rodent/vermin infestation throughout the rodent/vermin infestation throughout the premises.premises.

5.5. Compliance with all applicable building and Compliance with all applicable building and health codes.health codes.


Tenants Now Have a Statutory Tenants Now Have a Statutory Duty to Maintain the PremisesDuty to Maintain the Premises

1.1. Should the tenant fail to maintain the Should the tenant fail to maintain the premises, he/she may be evicted premises, he/she may be evicted under HB 08-1356.under HB 08-1356.

2.2. Tenants are now statutorily liable for Tenants are now statutorily liable for knowingly, intentionally, deliberately, knowingly, intentionally, deliberately, or negligently destroying, defacing, or negligently destroying, defacing, damaging, impairing, or removing any damaging, impairing, or removing any part of the premises.part of the premises.


Tenant RemediesTenant Remedies1.1. Lease Termination.Lease Termination.2.2. Injunctive ReliefInjunctive Relief: The court may : The court may

order landlord or tenant to order landlord or tenant to immediately fix the problem.immediately fix the problem.

3.3. Withholding of RentWithholding of Rent: The tenant : The tenant may claim breach, withhold rent, may claim breach, withhold rent, and then later assert the breach and then later assert the breach as a defense to an eviction action.as a defense to an eviction action.


Tenant Remedies Tenant Remedies (cont’d)(cont’d)

4.4. Payment of RentPayment of Rent: If the tenant withholds : If the tenant withholds rent because s/he alleges a breach of the rent because s/he alleges a breach of the Warranty of Habitability, the law requires Warranty of Habitability, the law requires the court to order the tenant to the court to order the tenant to immediately pay all or part of the rent immediately pay all or part of the rent due into the court registry at the time due into the court registry at the time the tenant asserts a breach of warranty the tenant asserts a breach of warranty of habitability claim.of habitability claim.


Tenant Remedies – Lease Termination Tenant Remedies – Lease Termination if the Warranty of Habitability is if the Warranty of Habitability is

BreachedBreached

1.1. The problem must make the premises The problem must make the premises uninhabitable.uninhabitable.

2.2. The tenant has given written notice of The tenant has given written notice of the problem and landlord failed to cure the problem and landlord failed to cure within a reasonable time.within a reasonable time.

3.3. Tenant must send a 2Tenant must send a 2ndnd written notice of written notice of intent to terminate if the problem is still intent to terminate if the problem is still not remedied within 5 business days.not remedied within 5 business days.


2010 New Foreclosure 2010 New Foreclosure FormsForms CBSF1-7-09 Contract to Buy & Sell CBSF1-7-09 Contract to Buy & Sell

(Foreclosure)(Foreclosure) NCF34-7-09 Notice of CancellationNCF34-7-09 Notice of Cancellation NTCF43-7-09 Inspection NoticeNTCF43-7-09 Inspection Notice CPF40-7-09 CounterproposalCPF40-7-09 Counterproposal AEF41-7-09 Amend/Extend ContractAEF41-7-09 Amend/Extend Contract SWF30-7-09 Seller Warning (NEW)SWF30-7-09 Seller Warning (NEW) The Seller Warning and the Notice of The Seller Warning and the Notice of

Cancellation must accompany the CBSF1.Cancellation must accompany the CBSF1.


Strike Through ExampleStrike Through Example

Strike-Thru Allowed: Second to last Strike-Thru Allowed: Second to last sentence of Sect. 10.5 in the Listing sentence of Sect. 10.5 in the Listing ContractContract

……Therefore, if the Act applies, Seller Therefore, if the Act applies, Seller agrees that Broker is not authorized agrees that Broker is not authorized to prepare such a contract for the to prepare such a contract for the sale of the Propertysale of the Property……


When to use the Foreclosure When to use the Foreclosure Forms?Forms?

The property is ResidentialThe property is Residential There is a mortgage against the propertyThere is a mortgage against the property The seller is a HomeownerThe seller is a Homeowner The Buyer will not live on the property for The Buyer will not live on the property for

at least one yearat least one year

* * There may be situations where the There may be situations where the foreclosure forms may not be necessary foreclosure forms may not be necessary even though it meets the above test. even though it meets the above test. Brokers should seek advice from legal Brokers should seek advice from legal counsel.counsel.


Can NOT draft the Contract Can NOT draft the Contract if…if…

The Seller does not speak English as The Seller does not speak English as their principal languagetheir principal language

The Seller will lease the property The Seller will lease the property after closingafter closing

The Seller has a right to repurchase The Seller has a right to repurchase the property after closingthe property after closing


List of New FormsList of New Forms DSD17-1-09 Dual Status DisclosureDSD17-1-09 Dual Status Disclosure SPD29-5-09 Seller’s Property SPD29-5-09 Seller’s Property

Disclosure (Residential)Disclosure (Residential) BDT20-5-09 Brokerage Disclosure to BDT20-5-09 Brokerage Disclosure to

TenantTenant NTT44-5-09 Notice to TerminateNTT44-5-09 Notice to Terminate


List of Revised FormsList of Revised Forms CBS1 Contract to Buy & SellCBS1 Contract to Buy & Sell CL8 Closing InstructionsCL8 Closing Instructions CP40 Counter ProposalCP40 Counter Proposal AE41 Agreement to Amend/ExtendAE41 Agreement to Amend/Extend LB36 Licensee Buyout AddendumLB36 Licensee Buyout Addendum SSA38 Short Sale AddendumSSA38 Short Sale Addendum SPD19 Seller’s Property Disclosure (All SPD19 Seller’s Property Disclosure (All

Properties)Properties) BD24 Buyer DisclosureBD24 Buyer Disclosure SD16 Seller DisclosureSD16 Seller Disclosure


List of Revised Forms List of Revised Forms (cont’d)(cont’d)

DD25 Working Relationships DefinitionsDD25 Working Relationships Definitions BDD56 Broker Duties Disclosure REOBDD56 Broker Duties Disclosure REO TD72 Deed of Trust (Strict)TD72 Deed of Trust (Strict) TD73 Deed of Trust (Creditworthy)TD73 Deed of Trust (Creditworthy) TD74 Deed of Trust (Assumable)TD74 Deed of Trust (Assumable) SS60 Closing StatementSS60 Closing Statement SS61 Closing Statement WorksheetSS61 Closing Statement Worksheet


List of Revised Forms List of Revised Forms (cont’d)(cont’d)

EBA53 Exclusive Brokerage Listing EBA53 Exclusive Brokerage Listing Addendum to Exclusive Right-to-Sell Addendum to Exclusive Right-to-Sell Listing ContractListing Contract

OLA54 Open Listing Addendum to OLA54 Open Listing Addendum to Exclusive Right-to-Sell Listing Exclusive Right-to-Sell Listing ContractContract


Contract to Buy & SellContract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 CBS 1-5-09 and CBSF 1-7-09

Mandatory 2009Mandatory 2009 §2.5 Computation of Time§2.5 Computation of Time

““Day” clarified to include entire day Day” clarified to include entire day ending at 11:59pm MTending at 11:59pm MT

Computing time periodsComputing time periods When no deadline is specifiedWhen no deadline is specified

11stst day excluded/Last day included day excluded/Last day included Example: “3 days after MEC”Example: “3 days after MEC”

When deadline falls on weekend or holidayWhen deadline falls on weekend or holiday Check box: Deadline extended to next weekday Check box: Deadline extended to next weekday

that is not a weekend or holidaythat is not a weekend or holiday



§3.1.6 Water Rights§3.1.6 Water Rights Change in Well Ownership form filed Change in Well Ownership form filed

with Division of Water Resources within with Division of Water Resources within 60 days after Closing60 days after Closing

Filed by Closing Services Provider or BuyerFiled by Closing Services Provider or Buyer ““Small capacity” water wells and “Domestic Small capacity” water wells and “Domestic

exempt” water wellsexempt” water wells The Division of Water Resources The Division of Water Resources

website: website: http://water.state.co.us/

http://water.state.co.us/


Contract to Buy & SellContract to Buy & SellCBS 1-5-09 and CBSF 1-7-CBS 1-5-09 and CBSF 1-7-

09 09 §3.1.6.3 Water Tap/Sewer Tap§3.1.6.3 Water Tap/Sewer Tap

Note: Buyer is advised to obtain, from Note: Buyer is advised to obtain, from the provider, written confirmation of the the provider, written confirmation of the amount remaining to be paid, if any, amount remaining to be paid, if any, time and other restrictions for transfer time and other restrictions for transfer and use of the tap.and use of the tap.



§2.3 Dates & Deadlines§2.3 Dates & Deadlines Line 10. Appraisal Objection Deadline Line 10. Appraisal Objection Deadline

(§6.2.2)(§6.2.2) §6.2.2 Appraisal §6.2.2 Appraisal

Provisions/ConventionalProvisions/Conventional Objection Deadline language addedObjection Deadline language added

This deadline of course is NOT This deadline of course is NOT applicable to transactions using FHA or applicable to transactions using FHA or VA financing.VA financing.



§4.2 Earnest Money§4.2 Earnest Money If Earnest Money Holder will not be one If Earnest Money Holder will not be one

of the brokers to the transaction, of the brokers to the transaction, Closing Instructions must be completed Closing Instructions must be completed no later than when Earnest Money no later than when Earnest Money Holder receives the Earnest MoneyHolder receives the Earnest Money

Broker signature lines at end of Contract Broker signature lines at end of Contract restate this pointrestate this point



§4.3 Cash at Closing§4.3 Cash at Closing Failure to have necessary funds at Failure to have necessary funds at

Closings = DEFAULTClosings = DEFAULT



§6.1 Property Approval§6.1 Property Approval For repairs required by lender:For repairs required by lender:

Seller’s right to cancel no longer subject to Seller’s right to cancel no longer subject to “5 days before Closing” requirement“5 days before Closing” requirement

Avoids the time trap created by lenders who Avoids the time trap created by lenders who notify parties of required repairs late in the notify parties of required repairs late in the transactiontransaction

Especially FHA & VAEspecially FHA & VA



§7.1 Evidence of Title§7.1 Evidence of Title Sellers must provide Abstracts of Title in Sellers must provide Abstracts of Title in

their possession to Buyerstheir possession to Buyers



§9 Lead-Based Paint§9 Lead-Based Paint Buyer Buyer mustmust sign and return disclosure to sign and return disclosure to

Seller at time of or before executing the Seller at time of or before executing the Contract to Buy & SellContract to Buy & Sell

Disclosure must be signed by seller, buyer, Disclosure must be signed by seller, buyer, and real estate brokersand real estate brokers

Transaction cannot legally continue Transaction cannot legally continue without this step. Contract will be without this step. Contract will be considered VOID.considered VOID.

Don’t forget to provide Lead Based Paint Don’t forget to provide Lead Based Paint information booklet!information booklet!



§10.2 Inspection Objection Deadline§10.2 Inspection Objection Deadline New language adds proximity to New language adds proximity to

existing or proposed roads, highways, existing or proposed roads, highways, and other environmental issues and other environmental issues (noises, odors) to list of items which (noises, odors) to list of items which permit Buyer to cancel contractpermit Buyer to cancel contract

§10.8 Carbon Monoxide Alarms§10.8 Carbon Monoxide Alarms



§15.4 Closing Instructions§15.4 Closing Instructions Text revised to emphasize the importance Text revised to emphasize the importance

of completing the Closing Instructions early of completing the Closing Instructions early (before delivery of Earnest Money)(before delivery of Earnest Money)

Joint Position Statement with Division of Joint Position Statement with Division of InsuranceInsurance

Closing Instructions form removed from the Closing Instructions form removed from the Contract to Buy & Sell but preferred Contract to Buy & Sell but preferred treatment is to complete them at the time treatment is to complete them at the time of executing the Contract to Buy & Sellof executing the Contract to Buy & Sell



§16.1 Tax Proration§16.1 Tax Proration Tax proration will be adjusted if the Tax proration will be adjusted if the

Seller qualifies for the “qualifying Seller qualifies for the “qualifying seniors property tax exemption”seniors property tax exemption”

Please note that SB09-276 suspended Please note that SB09-276 suspended this tax exemption for the period this tax exemption for the period beginning January 1, 2009 and ending beginning January 1, 2009 and ending January 1, 2010.January 1, 2010.



§16.2 Rents§16.2 Rents Adds language telling Seller to notify Adds language telling Seller to notify

tenants in writing that their security tenants in writing that their security deposits will be transferred to Buyerdeposits will be transferred to Buyer



§17 Possession§17 Possession Clarifying language makes clear that Per Clarifying language makes clear that Per

Diem charge accrues for the entire day Diem charge accrues for the entire day if Seller fails to deliver possession as if Seller fails to deliver possession as called for by the Contract, despite §2.5.1 called for by the Contract, despite §2.5.1 which defines a “day” to mean one which defines a “day” to mean one ending at 11:59pmending at 11:59pm



§24 Earnest Money Dispute§24 Earnest Money Dispute New last sentence added to emphasize New last sentence added to emphasize

that this section only applies if Earnest that this section only applies if Earnest Money Holder is one of the real estate Money Holder is one of the real estate brokers to the transactionbrokers to the transaction

Reinforces importance of having Closing Reinforces importance of having Closing Instructions signed by all parties before Instructions signed by all parties before delivery of earnest money to Closing delivery of earnest money to Closing CompanyCompany



§30 Colorado Foreclosure Protection §30 Colorado Foreclosure Protection ActAct Buyer now required to check a box Buyer now required to check a box

indicating whether buyer intends to indicating whether buyer intends to occupy property as personal residence occupy property as personal residence for at least 1 year after Closingfor at least 1 year after Closing

This provides an easy way to determine This provides an easy way to determine whether the Foreclosure Protection Act whether the Foreclosure Protection Act may applymay apply



§31 Notice, Delivery and Choice of §31 Notice, Delivery and Choice of LawLaw §31.1 Adds word “document” providing §31.1 Adds word “document” providing

for any notice “or document” to be for any notice “or document” to be effective upon physical delivery to buyer effective upon physical delivery to buyer or selleror seller

§31.2 Adds “internet” as acceptable §31.2 Adds “internet” as acceptable method of electronic deliverymethod of electronic delivery


Closing InstructionsClosing InstructionsCL8-9-08CL8-9-08

Form separated from Contract to Buy Form separated from Contract to Buy & Sell& Sell

Text updated to reflect changes to Text updated to reflect changes to Contract to Buy & SellContract to Buy & Sell

Important form when Earnest Money Important form when Earnest Money Holder will be a closing company Holder will be a closing company instead of one of the brokersinstead of one of the brokers


Counter Proposal CP 40-5-09Counter Proposal CP 40-5-09Agreement to Amend/ExtendAgreement to Amend/Extend

AE 41-5-09AE 41-5-09Licensee Buyout AddendumLicensee Buyout Addendum

LB 36-9-08LB 36-9-08

Updated to reflect changes to Dates Updated to reflect changes to Dates & Deadlines table and section & Deadlines table and section numbers in Contract to Buy & Sellnumbers in Contract to Buy & Sell


Brokerage Relationship Brokerage Relationship DisclosuresDisclosures

BD24-5-09, BDT20-5-09, BDD56-5-09, SD BD24-5-09, BDT20-5-09, BDD56-5-09, SD 16-5-0916-5-09 Buyer or Seller not vicariously liable Buyer or Seller not vicariously liable

for acts of broker unless approved, for acts of broker unless approved, directed, or ratifieddirected, or ratified

Buyer or Seller’s relationship with Buyer or Seller’s relationship with brokerage firm is at the designated brokerage firm is at the designated broker level, not with the entire firmbroker level, not with the entire firm

Reminder to Buyer or Seller that they Reminder to Buyer or Seller that they may shop for settlement services may shop for settlement services and prices/quality varyand prices/quality vary


Broker Disclosure to TenantBroker Disclosure to Tenant(BDT 20-5-09)(BDT 20-5-09)

As of 1-1-09 there is a new BROKERAGE As of 1-1-09 there is a new BROKERAGE DISCLOSURE TO TENANT form, required DISCLOSURE TO TENANT form, required in all leasing transactions.in all leasing transactions.

Based on broker disclosure to buyer form, Based on broker disclosure to buyer form, a major change is Seller is now Landlord a major change is Seller is now Landlord and Buyer is now Tenant. This new form and Buyer is now Tenant. This new form was mandatory as of 1-1-09.was mandatory as of 1-1-09.


Brokerage Disclosure to BuyerBrokerage Disclosure to BuyerBD 24-5-09BD 24-5-09

Added Megan’s Law disclosureAdded Megan’s Law disclosure Megan’s Law: If the presence of a Megan’s Law: If the presence of a

registered sex offender is a matter of registered sex offender is a matter of concern to the Buyer, Buyer concern to the Buyer, Buyer understands that Buyer must contact understands that Buyer must contact local law enforcement officials local law enforcement officials regarding obtaining such regarding obtaining such information.information.


Seller’s Property DisclosureSeller’s Property Disclosure(all Types of Properties)(all Types of Properties)

SPD 19-9-08SPD 19-9-08 Toll roadsToll roads Transportation projectsTransportation projects Carbon Monoxide alarmCarbon Monoxide alarm ““N/A” column replaces “Not Present” N/A” column replaces “Not Present”

columncolumn


Seller’s Property DisclosureSeller’s Property Disclosure(Residential) SPD 29-5-09(Residential) SPD 29-5-09

Shorter form easier for most Shorter form easier for most residential transactionsresidential transactions

Review Notices to buyer and seller Review Notices to buyer and seller on the last pageon the last page


New formNew form Provides precise, clear language when Provides precise, clear language when

one party to the Contract to Buy & one party to the Contract to Buy & Sell wishes to terminateSell wishes to terminate

Is not an agreement to terminate, just Is not an agreement to terminate, just a notice. Remember to include a notice. Remember to include earnest money release.earnest money release.

Notice to TerminateNotice to TerminateNTT 44-5-09NTT 44-5-09


Formerly called “Statement of Settlement”Formerly called “Statement of Settlement” Updated to reflect typical costs and feesUpdated to reflect typical costs and fees Checkbox to indicate “estimate” or “final”Checkbox to indicate “estimate” or “final” Name change reduces confusing it with Name change reduces confusing it with

HUD-1 Statement of SettlementHUD-1 Statement of Settlement

Closing StatementClosing StatementSS 60-9-08SS 60-9-08


Short Sale AddendumShort Sale AddendumSSA 38-9-08 SSA 38-9-08

Modified to allow either Buyer or Modified to allow either Buyer or Seller to terminateSeller to terminate

Must be done Must be done beforebefore Lender’s Lender’s Acceptance (§8.3)Acceptance (§8.3)


Joint Position Statement CP-30 Joint Position Statement CP-30 Originally released 2003Originally released 2003 CREC & Board of Real Estate CREC & Board of Real Estate

Appraisers Joint StatementAppraisers Joint Statement Seller ConcessionsSeller Concessions Revised to reflect change in IRS Revised to reflect change in IRS

treatment of some providers of down treatment of some providers of down payment assistancepayment assistance No longer treated as tax-exempt No longer treated as tax-exempt

charitiescharities


Seibel v. Colorado Real Estate Seibel v. Colorado Real Estate Commission (1974)Commission (1974)

(ref. 5-5 Colorado Real Estate (ref. 5-5 Colorado Real Estate Manual)Manual)

At issue: At issue: Does the Commission have jurisdiction Does the Commission have jurisdiction

over “non-agency” activities.over “non-agency” activities.


Seibel v. CREC Seibel v. CREC Seibel (buyer in transaction) Seibel (buyer in transaction)

executes receipt and option executes receipt and option agreement through listing brokeragreement through listing broker

Unable to close – accepts return of Unable to close – accepts return of depositdeposit

New buyer – Arvidson – signs a New buyer – Arvidson – signs a receipt and option agreement, again receipt and option agreement, again through listing brokerthrough listing broker

Seibel unaware of new transactionSeibel unaware of new transaction


Seibel v. CREC Seibel v. CREC

Seibel contacts ownersSeibel contacts owners Contact is made directly – not through Contact is made directly – not through

listing brokerlisting broker Contact made without consent of Contact made without consent of

listing brokerlisting broker Seibel records original agreementSeibel records original agreement


Seibel v. CREC Seibel v. CREC

Proceedings heldProceedings held Seibel found in violationSeibel found in violation Seibel appeals to Appellate CourtSeibel appeals to Appellate Court

What did the appellate court conclude?What did the appellate court conclude?


CP-20 Personal AssistantsCP-20 Personal Assistants

Revised October 13, 2009Revised October 13, 2009 This statement was revised to clarify This statement was revised to clarify

relationship between a personal relationship between a personal assistant and the broker who assistant and the broker who employs them vs. the duties of the employs them vs. the duties of the Employing Broker of a real estate Employing Broker of a real estate firm.firm.


DRE Director’s Position DRE Director’s Position Statement on Broker’s Statement on Broker’s Discussion of FinancingDiscussion of Financing

SAFE act defines minimum national SAFE act defines minimum national licensing standardslicensing standards

C.R.S. 12-61-902(7.7)(c)C.R.S. 12-61-902(7.7)(c) C.R.S. 12-61-902(6)(a)C.R.S. 12-61-902(6)(a)


RESPA ReformRESPA Reform New Good Faith Estimate (GFE)New Good Faith Estimate (GFE)

Reduced from 4 to 3 pagesReduced from 4 to 3 pages Includes a page of instructions for Includes a page of instructions for

consumersconsumers Designed to improve consumers’ ability Designed to improve consumers’ ability

to understand and compare loan coststo understand and compare loan costs HUD limits closing costs that can HUD limits closing costs that can

and cannot change at closing, and and cannot change at closing, and by how muchby how much


RESPA ReformRESPA Reform

New HUD-1 Settlement StatementNew HUD-1 Settlement Statement New page to allow borrower to compare GFE New page to allow borrower to compare GFE

estimates with final HUD-1 costsestimates with final HUD-1 costs HUD-1 references specific line items from GFEHUD-1 references specific line items from GFE

New loan charge tolerance requirementsNew loan charge tolerance requirements Lender/settlement service provider has 30 days Lender/settlement service provider has 30 days

after closing to correct overcharges and/or repay after closing to correct overcharges and/or repay borrowerborrower

http://www.hud.gov/offices/hsg/ramh/res/http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfmrespa_hm.cfm


SAFE Act ImplementationSAFE Act Implementation

Term “Mortgage Broker” replaced with Term “Mortgage Broker” replaced with the term “Mortgage Loan Originator” the term “Mortgage Loan Originator” (MLO)(MLO)

All MLOs must be registered with the All MLOs must be registered with the Nationwide Mortgage Licensing System Nationwide Mortgage Licensing System (NMLS) by July 31, 2010.(NMLS) by July 31, 2010.

http://http://mortgage.nationwidelicensingsystem.orgmortgage.nationwidelicensingsystem.org/Pages/default.aspx/Pages/default.aspx


Newly Affected Mortgage Loan Newly Affected Mortgage Loan OriginatorsOriginators

Mortgage loan originators working for Mortgage loan originators working for affiliates of depository institutions, as defined affiliates of depository institutions, as defined in section 1503 (2) of the S.A.F.E. Act;in section 1503 (2) of the S.A.F.E. Act;

Mortgage loan originators involved in chattel Mortgage loan originators involved in chattel financing relating to residential real estate;financing relating to residential real estate;

Mortgage loan originators working for non-Mortgage loan originators working for non-profit organizations; andprofit organizations; and

Independent contractor loan processors and Independent contractor loan processors and underwriters.underwriters.


Foreclosure Protection ActForeclosure Protection Act(Statute Changes)(Statute Changes)

Effective July 1, 2009, the Effective July 1, 2009, the Foreclosure Protection Act was Foreclosure Protection Act was amended to include protection for amended to include protection for primary resident owners who are primary resident owners who are at least 30 days delinquent on at least 30 days delinquent on their mortgage.their mortgage.


CO House Bill 1276 CO House Bill 1276 A delinquent borrower may qualify A delinquent borrower may qualify

for a 90 day deferral of the for a 90 day deferral of the foreclosure process while attempting foreclosure process while attempting a loss mitigation with the servicer. a loss mitigation with the servicer.

Every eligible borrower will receive a Every eligible borrower will receive a posting from the lender with posting from the lender with instructions.instructions.

A borrower must meet with a HUD-A borrower must meet with a HUD-approved Housing Counselor to approved Housing Counselor to determine qualification. determine qualification.


Short Sale TransactionsShort Sale Transactions

Short sale transactions are a function of Short sale transactions are a function of the current economic climate and will the current economic climate and will likely continue as long as lenders see likely continue as long as lenders see them as a better alternative to them as a better alternative to foreclosures.foreclosures.

Offering brokerage services to distressed Offering brokerage services to distressed homeowners is a reasonable and homeowners is a reasonable and necessary service to the public in this necessary service to the public in this market.market.


Short Sale Transactions Short Sale Transactions (cont.)(cont.)

Care should be taken to assure that Care should be taken to assure that all contingencies are clearly all contingencies are clearly disclosed and that buyers and sellers disclosed and that buyers and sellers are given all of the information they are given all of the information they need to make fully informed need to make fully informed decisions.decisions.


Short Sale DisclosuresShort Sale Disclosures A seller facing foreclosure who elects A seller facing foreclosure who elects

to attempt a short sale should be to attempt a short sale should be made aware that there are potential made aware that there are potential ramifications after closing.ramifications after closing.

The lender could elect to take steps The lender could elect to take steps to collect the deficiency from the to collect the deficiency from the seller after agreeing to the short seller after agreeing to the short sale.sale.


Short Sale Disclosures Short Sale Disclosures (cont.)(cont.)

If the deficiency is forgiven, the If the deficiency is forgiven, the difference between the amount owed difference between the amount owed and the short sale payoff could have and the short sale payoff could have tax implications.tax implications.

If a licensee offers negotiation of a If a licensee offers negotiation of a short payoff as a listing-related short payoff as a listing-related service, the cost of that service must service, the cost of that service must be clearly disclosed.be clearly disclosed.


Short Sale Disclosures Short Sale Disclosures (cont.)(cont.)

Having separate “A” and “B” side closings Having separate “A” and “B” side closings does not relieve the real estate licensees does not relieve the real estate licensees from disclosing that one side of the from disclosing that one side of the transaction is contingent on the other. transaction is contingent on the other.

The settlement statement must list the The settlement statement must list the payment for short sale negotiations in a payment for short sale negotiations in a manner that does not attempt to conceal manner that does not attempt to conceal the actual recipient or the true nature of the actual recipient or the true nature of the charge.the charge.


General Short Sale General Short Sale ExpectationsExpectations

Brokers who engage in those services Brokers who engage in those services are expected to exhibit sufficient are expected to exhibit sufficient knowledge of foreclosures and short knowledge of foreclosures and short sales and the competence to assist sales and the competence to assist buyers and sellers in those buyers and sellers in those transactions.transactions.

Supervising brokers should be well Supervising brokers should be well versed in the mechanics of those versed in the mechanics of those transactions as well.transactions as well.


General Short Sale General Short Sale Expectations (cont.)Expectations (cont.)

Brokers who elect to make short sale Brokers who elect to make short sale transactions part of the inventory of transactions part of the inventory of services they provide should take services they provide should take care to ensure that basic disclosures care to ensure that basic disclosures regarding the nature of the regarding the nature of the transaction are clearly made to transaction are clearly made to buyers and sellers, including use of buyers and sellers, including use of forms that comply with the Colorado forms that comply with the Colorado Foreclosure Act.Foreclosure Act.


Seller

$$

Buyer

Seller'sBroker

Contract toBuy & Sell

ForeclosingLien Holder

LicensedReal Estate Broker

Buyer'sBroker

LicensedReal Estate Broker

agrees to lien release

OR a Transaction Broker

Traditional Short SaleTraditional Short Sale


Double Close Short SaleDouble Close Short Sale

Seller


"A"

Foreclosing Lender

Transaction"A" Broker(s)

Lien Release

End Buyer


"B"

Intermediate Buyer(Unlicensed Person)

Transaction"B" Broker(s)

SHOULD NOTBE

SAME PERSON

$$

End Buyer's Lender


Undisclosed Short SaleUndisclosed Short Sale

Seller

Contract AWith Opt-Out Clause Contract B

Not Disclosed

Foreclosing Bank

Financing from End buyer used throughout A&B and B&C transactions

IntermediateBuyer

End Buyer

"B" Contract price - "A" Contract price= Profit for Intermediate Buyer


Short Sale ConcernsShort Sale Concerns

Real Estate Broker

The three areas of concern for brokers are the following:Relationships: Real Estate Brokers should be aware of therelationships that they are contractually obligated to maintain. It isimpossible to maintain fiducary duty to a seller if you attempt torevert to being a transaction broker over two simultaneoustransactions. The broker should also be aware of who the client is,and who is not. The Foreclosing lender is not your client when youhave a listing agreement with the seller, the seller is your client.

Compensation: You should include all compensation on all HUD-1 Settlement Statement, and no one should recieve undisclosedcompensation.

Disclosure: A Broker should use a Short Sale Addendum formwhenever invovled with a transaction that may result in the shortpayoff of a lien holder. All parties to the transaction(s) should bemade aware of each other, every contract and all compensationshould be disclosed. The seller should be advised to seek legalcounsel, and tax advice regarding the potentially negative effectsfrom participating in a short sale


Name RulesName Rules

C.R.S. 12-61-103 (10)C.R.S. 12-61-103 (10) Rule C-18 Brokerage activity only in Rule C-18 Brokerage activity only in

trade name or full licensed nametrade name or full licensed name Rule C-20 disallows identical licensed Rule C-20 disallows identical licensed

entity names.entity names.


Name Rules (cont.)Name Rules (cont.)

Rule C-19 (e) – no broker shall advertise Rule C-19 (e) – no broker shall advertise in such a manner as to mislead the public in such a manner as to mislead the public as to the identity of the licensed broker.as to the identity of the licensed broker.

Rule C-19 (f), (g), (h) and (i) – exception Rule C-19 (f), (g), (h) and (i) – exception for franchise names, requires unlicensed for franchise names, requires unlicensed trade names to “clearly and trade names to “clearly and unmistakably” include licensed name.unmistakably” include licensed name.


Team NamesTeam Names

Teams not prohibited, but must be Teams not prohibited, but must be clearly identified as being a “team”clearly identified as being a “team”

Team advertising must never omit Team advertising must never omit the licensed brokerage name.the licensed brokerage name.

Yes, this includes online social media Yes, this includes online social media sites! sites! All Types of AdvertisingAll Types of Advertising!!


Payment to Wholly Owned Payment to Wholly Owned Employee’s CorporationEmployee’s Corporation

CP-18 – Payment to entities owned CP-18 – Payment to entities owned by employed licensees allowed.by employed licensees allowed.

Does not allow corporation to be Does not allow corporation to be licensed under a broker.licensed under a broker.

Entity name should never appear in Entity name should never appear in any type of advertising!any type of advertising!


Errors & Omissions Errors & Omissions InsuranceInsurance

100% Audit in February of each year100% Audit in February of each year D-14(d), inactivation immediately D-14(d), inactivation immediately

upon expiration of policyupon expiration of policy January 31 coverage purchase January 31 coverage purchase

deadlinedeadline


Errors & Omissions Insurance Errors & Omissions Insurance ((cont.cont.))

Entity/Employing Broker policiesEntity/Employing Broker policies Forged E&O certificateForged E&O certificate


License UpgradesLicense Upgrades 2 years of active licensure required for 2 years of active licensure required for

independent levelindependent level 24 hour Broker Administration required for 24 hour Broker Administration required for

employing levelemploying level If initially licensed as a salesperson (pre If initially licensed as a salesperson (pre

1997), will be required to complete state 1997), will be required to complete state examexam

If license issued after 1997, exam If license issued after 1997, exam requirement has already been metrequirement has already been met


Continuing Education Continuing Education RequirementsRequirements

12 hours CREC Annual Commission Update 12 hours CREC Annual Commission Update (not NAR ethics course)(not NAR ethics course)

12 hours Continuing Education Electives12 hours Continuing Education Electives 24 hours total24 hours total still required during every still required during every

three year renewal periodthree year renewal period Education provider and course must be Education provider and course must be

approved under Rule B-6 or by application.approved under Rule B-6 or by application.


Fee ScheduleFee Schedule

Fee setting takes place once a year, Fee setting takes place once a year, usually around November 15usually around November 15thth

Fees are subject to change at any Fees are subject to change at any time during the year and may go up time during the year and may go up or down, depending on the status of or down, depending on the status of the budget.the budget.


Renewal Notices – Renewal Notices – DiscontinuedDiscontinued

In an attempt to reduce costs, DRE In an attempt to reduce costs, DRE has discontinued the printing of has discontinued the printing of license renewal notices.license renewal notices.

Expiration date is printed on licenses Expiration date is printed on licenses and available on our online e-and available on our online e-services site.services site.


Home Valuation Code of Home Valuation Code of Conduct (HVCC)Conduct (HVCC)

The commission has been receiving The commission has been receiving many inquiries regarding the HVCC. many inquiries regarding the HVCC. These next slides are to clarify what These next slides are to clarify what the HVCC is and what issues you the HVCC is and what issues you may experience as a result of this may experience as a result of this new policy.new policy.


Home Valuation Code of Home Valuation Code of Conduct BackgroundConduct Background

December 23, 2008, Federal Housing December 23, 2008, Federal Housing Finance Agency (FHFA) creates a revised Finance Agency (FHFA) creates a revised Home Valuation Code of Conduct (HVCC) Home Valuation Code of Conduct (HVCC) effective May 1, 2009effective May 1, 2009

HVCC is not legislationHVCC is not legislation Imposes restrictions on selection, Imposes restrictions on selection,

compensation and solicitation of compensation and solicitation of appraisers.appraisers.


Why It MattersWhy It Matters FHFA policy not to purchase mortgages from FHFA policy not to purchase mortgages from

sellers that do not adopt the HVCCsellers that do not adopt the HVCC Complications from increased use of Complications from increased use of

Appraisal Management Companies (AMCs)Appraisal Management Companies (AMCs) Changes appraiser’s administrative Changes appraiser’s administrative

processes.processes. AMCs beginning to have detrimental effectsAMCs beginning to have detrimental effects


ComplicationsComplications

““Cram Down” of Appraisal FeesCram Down” of Appraisal Fees Misrepresentation & Increased Misrepresentation & Increased

Appraisal Fees to the ConsumerAppraisal Fees to the Consumer Less Qualified Pool of AppraisersLess Qualified Pool of Appraisers Processing TimesProcessing Times


Complications (cont.)Complications (cont.)

Geographic CompetencyGeographic Competency Poor CommunicationPoor Communication Coercion Through Fear of RetributionCoercion Through Fear of Retribution


AMCs and the IVPIAMCs and the IVPI

AMCs/Lenders indicate AMCs are not AMCs/Lenders indicate AMCs are not source of problem, but byproduct of source of problem, but byproduct of changing economychanging economy

Independent Valuation Protection Independent Valuation Protection Institute (IVPI), once operational, Institute (IVPI), once operational, should assess complaints of coercive should assess complaints of coercive practicespractices


Recent UpdatesRecent Updates

““Strengthening Appraiser Strengthening Appraiser Independence and Improving the Independence and Improving the Valuation Process” FHFA notice (July, Valuation Process” FHFA notice (July, 2009).2009).

FHFA finalizing complaint form FHFA finalizing complaint form regarding HVCC violationsregarding HVCC violations


Going ForwardGoing Forward

DRE has requested consideration of DRE has requested consideration of legislative proposal to create legislative proposal to create licensure/registration for AMCslicensure/registration for AMCs

Board of Real Estate Appraisers Board of Real Estate Appraisers would be designated regulatory would be designated regulatory body.body.

Contact your state representative Contact your state representative and FHFA to voice your concernsand FHFA to voice your concerns


Broker Price OpinionsBroker Price Opinions C.R.S. 12-61-702(5)(b)(2) – allows C.R.S. 12-61-702(5)(b)(2) – allows

BPOs not used for financingBPOs not used for financing C.R.S. 12-61-718(1)(a) – de minimis C.R.S. 12-61-718(1)(a) – de minimis

exemptionexemption C.R.S. 12-61-718(1)(b) – limits C.R.S. 12-61-718(1)(b) – limits

exemption and requires notice exemption and requires notice regarding absence of appraiser’s regarding absence of appraiser’s licenselicense


Broker Price OpinionsBroker Price Opinions (cont.)(cont.)

Required DisclosuresRequired Disclosures Board rule 15.2: “NOTICE: The preparer Board rule 15.2: “NOTICE: The preparer

of this appraisal is not licensed as a real of this appraisal is not licensed as a real estate appraiser under the laws of the estate appraiser under the laws of the State of Colorado.”State of Colorado.”

CP-24: “NOTICE: The preparer of this CP-24: “NOTICE: The preparer of this appraisal is not registered, licensed or appraisal is not registered, licensed or certified as a real estate appraiser by certified as a real estate appraiser by the State of Colorado.”the State of Colorado.”


Avoiding Rental ScamsAvoiding Rental Scams

Warning Signs:Warning Signs: Security deposits via wire transferSecurity deposits via wire transfer Owner unable to meet in personOwner unable to meet in person Rent amount “too good to be true”Rent amount “too good to be true” Advertisements with grammatical errorsAdvertisements with grammatical errors


Questions to Ask Your Questions to Ask Your Mortgage Loan OriginatorMortgage Loan Originator

What will the monthly payment be for every What will the monthly payment be for every month of the loan, and could it increase? When month of the loan, and could it increase? When could it increase? What would my new payment could it increase? What would my new payment be? Could my monthly payment increase more be? Could my monthly payment increase more than once?than once?

Does the monthly payment include an escrow Does the monthly payment include an escrow amount to pay for my property taxes and amount to pay for my property taxes and homeowners insurance? Or must I pay these homeowners insurance? Or must I pay these costs on my own? If I have to pay on my own, can costs on my own? If I have to pay on my own, can you give me an estimate so I can budget you give me an estimate so I can budget accordingly?accordingly?


Questions to Ask Your Questions to Ask Your Mortgage Loan Originator Mortgage Loan Originator

(cont.)(cont.) What is the term of the loan (for example, 15 What is the term of the loan (for example, 15

years? 30 years?)? How many payments will I years? 30 years?)? How many payments will I have to make? Would the loan be paid off at have to make? Would the loan be paid off at the end or would I still owe a “balloon” the end or would I still owe a “balloon” payment?payment?

Will I have to pay prepayment penalties to Will I have to pay prepayment penalties to refinance and pay off the loan early? If so, refinance and pay off the loan early? If so, how much, and when would they apply? If the how much, and when would they apply? If the loan has an introductory or teaser rate, can I loan has an introductory or teaser rate, can I refinance, without penalties, before the rate refinance, without penalties, before the rate resets and my payment increases?resets and my payment increases?


Questions to Ask Your Questions to Ask Your Mortgage Loan Originator Mortgage Loan Originator

(cont.)(cont.) Is the person I am speaking to about my Is the person I am speaking to about my

mortgage a state of Colorado licensed mortgage a state of Colorado licensed loan originator? loan originator?

Only speak to someone who can verify Only speak to someone who can verify that they are licensed, or otherwise prove that they are licensed, or otherwise prove that they are exempt from licensure, or that they are exempt from licensure, or you may not get the correct information.you may not get the correct information.


Consumer TipsConsumer Tips Consumer Corner: available on the Consumer Corner: available on the

Division’s Website at Division’s Website at http://www.dora.state.co.us/Real-estate/http://www.dora.state.co.us/Real-estate/

Complaints with the Commission can be Complaints with the Commission can be done online by clicking on the button done online by clicking on the button labeled “Complaint Process” from the labeled “Complaint Process” from the Division’s home page.Division’s home page.

License Look-up can be accessed by License Look-up can be accessed by clicking on the button labeled “Search clicking on the button labeled “Search Licensees” from the Division’s home page.Licensees” from the Division’s home page.


Real Estate Newsletters and Real Estate Newsletters and ListservListserv

The Division of Real Estate currently The Division of Real Estate currently offers an electronic version of the offers an electronic version of the quarterly newsletter. Sign up using quarterly newsletter. Sign up using the form located at the bottom of the the form located at the bottom of the Division’s home page.Division’s home page.

Signing up for the newsletter also Signing up for the newsletter also enrolls you in our email listserv to enrolls you in our email listserv to receive important DRE notifications receive important DRE notifications and alerts.and alerts.


DORA WebsiteDORA Website

http://www.dora.state.co.us/real-estate/

Sign up for newsletter, email alerts, Sign up for newsletter, email alerts, renew your license, check the status renew your license, check the status of your license, look up disciplinary of your license, look up disciplinary actions, stay current with new actions, stay current with new legislation and rules or submit a legislation and rules or submit a complaint.complaint.

Also on Twitter! Also on Twitter! www.twitter.com/ColoRealEstatewww.twitter.com/ColoRealEstate




QuizQuiz

2010 commission update course slide #1 2010 crec annual commission update course

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