Colorado Real Estate Journal - April 6, 2016
The Colorado Real Estate Commission requires that every licensed broker take an annual update course as part of the continuing education requirement to maintain a brokerage license. Each active real estate broker must complete 12 hours of three different versions of the four-hour Annual Commission Update Course every three years. The course covers updates to the standard forms, compliance issues, general practice issues, new regulations, and CREC news and updates. A hot topic continues to be the use of and modification to CREC approved forms and is a focus of the update course. CREC requires brokers to use CREC approved forms in most contracts and transactions. CREC Rules F-1 to F-7 set forth the requirements for use of CREC-approved forms. Only very limited changes to the CREC forms are permitted by Rule F-1. A broker may add his name and information and fill in the blanks. Any “additional provisions” or “addenda” that amend or delete portions of the approved forms must result from the negotiations or instructions of the party to the transaction and must be made directly on the printed body of the form by striking the amended or deleted portion in a legible manner that does not obscure the deletion that has been made. Certain provisions that are not applicable to the transaction may be omitted and the provision’s caption or heading must remain unaltered on the form followed by the word “omitted.” Rule F-2 again emphasizes that “additional provisions” must contain only those transaction-specific terms or acknowledgements that result from negotiations or instructions from the parties. A broker who is not a principal party to the contract may not insert personal provisions, personal disclaimers or exculpatory language in favor of the broker in the “additional provisions.” Rule F-3 is clear that if a broker initiates the use of a preprinted or prepared addendum that modifies the terms of the CREC-approved forms that is not the result of negotiation by the parties, such addendum must be prepared by an attorney representing the broker, a principal party to the transaction or an attorney representing the principal party and such provisions must not be included in the “additional provisions” portion of the CREC-approved forms. There are additional requirements in Rules F-3 to F-7 to comply with the use of CREC-approved forms. The update course discussed the CREC form “Contract to Buy and Sell Real Estate” to be used by brokers after Jan. 1, 2016, which has substantial changes from the 2015 version. The changes were to address ongoing issues and also to add new provisions. Mineral disclosures and post-occupancy agreements are among the new additions to the form. The redlined forms worthy of review are available at: https:// drive.google.com/folderview?id= 0B1VD36mBqe1EWExDMWJ3UT c5YzQ&usp=sharing#list. CREC will not change the Contract to Buy and Sell Real Estate again until 2019 unless changes are necessary due to 1) a legislative change, 2) a change in the case law or 3) an Office of the Attorney General recommendation to change the form. Various issues related to brokers limiting services or having multiple brokers perform different parts of the transaction are also ongoing issues. “Entry-only” listings are not permitted by statute and brokers should report to CREC properties that are listed as “entry only.” A broker performing activities that require a license requires that the broker act as either a transaction broker or as a single agent, and the broker must fully perform the statutory duties required of the broker in the transaction. Seller agent duties are set forth in CRS 12-61-804, buyer agent duties are set forth in CRS 12-61-805 and transaction broker duties are set forth in CRS 12-61-807. “Limited-services listings” violate the broker’s statutory duties. There must be a designated agent if a party to a transaction has an agent. Business models that have different agents doing different steps of the transaction are problematic because the client must still have a designated agent that both the client and the other party to the transaction can contact at all steps of the transaction. Another ongoing issue for brokers discussed is disclosure of latent defects. Latent defects in the property must be disclosed by sellers in writing. Latent defects are different than “stigmatized properties” as defined in 38-35.5- 101, which does not carry a duty to disclose. Also discussed were the new requirements to manage a common-interest community. A licensed broker must obtain a community association manager-designated manager level license from CREC or work under a CAM-licensed designated manager. All CAMs must be licensed or not participate in activities that require a license. To obtain the CAM license, a broker must have additional insurance and must complete additional continuing education requirements or pass the CAM examination. Broker advertising disclosures continues to be an area of concern for CREC. CREC Rule E-8 (c) sets forth the requirements for advertising on the Internet. If a broker owns a website or controls its content, every page must include the broker’s name (or team name) and the broker’s brokerage firm name. If a broker authorizes a third party to advertise on behalf of the broker, the broker is responsible that all information provided to the third party is accurate. All expired listings must be removed from the advertising media within three days. A broker who communicates through email, chat, instant messages, news groups, discussion lists, blogs or other similar means for purposes of advertising the broker’s real estate services must use the broker’s name (or team name) and the broker’s brokerage firm name; however, once disclosed to a specific client or customer, the broker is not required to continue to make the same disclosure. If it is not reasonable to include the broker’s name (or team name) and the broker’s brokerage firm name because space is limited (i.e., Twitter) the broker must disclose clearly and conspicuously on the broker’s web page to which the advertising links, within the first click of the mouse. A variety of other issues are discussed in the course update; this article only outlines the highlights. Finally, CREC emphasized its new online license management and database (eLicense). All brokers must use eLicense for initial applications, renewals and all other change requests. CREC recommends not waiting until license renewal to set up the eLicense account.