On June 1, 2017, Governor Hickenlooper signed SB17-215 Sunset Licensed Real Estate Brokers and Subdivision Developers into law. Aside from continuing the regulation of real estate brokers and subdivision developers until September 1, 2026, the law modifies some of the regulatory requirements for real estate brokers. The changes are as follows:
Effective January 1, 2019, a real estate broker cannot act as an employing broker without having first demonstrated that the broker possesses the experience and knowledge sufficient to enable the broker to employ and adequately supervise other brokers, as appropriate to the broker’s area of supervision. The Real Estate Commission will need to promulgate rules to establish the experience and knowledge requirements for employing brokers, including how one demonstrates possession of those abilities. The Division has assembled a taskforce to assist the Commission in drafting the rules for employing brokers. Prior to January 1, 2019, the Commission will need to audit the existing employing brokers to ensure that they possess the education and experience requirements established by the Commission rules.
Composition of the Real Estate Commission:
Effective June 1, 2017, the Real Estate Commission now consists of two members of the public at large and three real estate brokers, with not less than five years’ experience in the real estate business in Colorado, one of whom has substantial experience in property management. Governor Hickenlooper has appointed Carolyn Rogers to serve as the real estate broker with substantial experience in property management. Ms. Rogers has over 30 years’ experience as a licensed real estate broker practicing property management.
License expiration dates:
Real estate brokers will transition from an anniversary date expiration date to a December 31st expiration date. Real estate broker licenses are still valid for three years. We are working on configuring the licensing database to begin resetting the expiration dates, along with charging the appropriate renewal fees. We anticipate that the system will begin issuing December 31st renewal dates when people begin renewing their licenses on January 1, 2018.
The Commission has the authority to investigate and discipline a real estate broker who has been convicted of, plead guilty to, or entered a plea of nolo contendere (“no contest”) to any of the crimes listed in 12-61-113(1)(m), C.R.S. The law was modified to clarify that a “conviction” includes the imposition of a deferred judgment or deferred sentence.
The law was modified to require that a referral fee can only be paid by a licensed real estate broker when reasonable cause for payment of a referral exists and payment or receipt of a referral fee is allowable under the Real Estate Settlement Procedures Act of 1974. Reasonable cause for payment is defined in 12-61-203.5, C.R.S.
12-61-803, C.R.S. was revised to allow real estate brokers to complete standard forms for use in a real estate transaction, including standard forms intended to convey personal property as part of the real estate transaction, when a real estate broker is performing any of the activities listed or referenced in 12-61-101(2), C.R.S. The law was modified to define a standard form as:
A standard form promulgated by the Real Estate Commission for use by brokers;
A form drafted by a licensed Colorado attorney representing the broker, employing broker, or brokerage firm, so long as the name of the attorney or law firm and the name of the broker, employing broker or brokerage firm for whom the form is prepared are included on the form itself;
A form provided by a party to the transaction if the broker is acting in the transaction as either a transaction broker or single agent for the party providing the form to the broker, so long as the broker retains written confirmation that the form was provided by the party to the transaction;
A form prescribed by a governmental agency, a quasi-governmental agency, or a lender regulated by state or federal law, if use of the form is mandated by such agency or lender;
A form used with the written approval of the Colorado Bar Association or its successor organization and specifically designed for use by brokers in Colorado, so long as the form is used within any guidelines or conditions specified by the Colorado Bar Association or successor organization in connection with the use of the form;
A form used for disclosure purposes only, if the disclosure does not purport to waive or create any legal rights or obligations affecting any party to the transaction and if the form provides only information concerning either:
- The real estate involved in the transaction specifically; or
- The geographic area in which the real estate is located generally;
A form prescribed by a title company that is providing closing services in a transaction for which the broker is acting either as a transaction broker or as a single agent for a party to the transaction; or
A letter of intent created or prepared by a broker, employing broker, or brokerage firm so long as the letter of intent states on its face that it is non-binding and creates no legal rights or obligations.
A broker shall use a commission-approved form when such form exists and is appropriate for the transaction.
- A broker’s use of any standard form provided by a party to a transaction or a government agency/quasi government agency/lender is limited to inserting transaction specific information within the form
- In using a standard form drafted by a Colorado attorney, issued by COBAR, used for disclosure purposes only, prescribed by a title company, or a letter of intent, a broker may advise the parties as to the effects thereof, and the broker’s use of those standard forms must be appropriate for the transaction and the circumstances in which they are used.
- In any transaction in which the broker is acting as a single agent or transaction broker, the broker SHALL advise the parties that the forms have important legal consequences and that the parties should consult legal counsel before signing such forms.
The Commission will need to revise its existing regulations regarding forms usage (the F rules), which you can expect to see later in 2017.
Finally, SB17-215 merged all of the existing cash funds into the Division of Real Estate Cash Fund. The Division will internally track the expenditures and revenues of the different regulatory programs rather than having individual cash funds in place for each program.