Are you in full compliance with Colorado Real Estate Commission Rule E-1(o)? That rule requires a monthly three-way reconciliation for each trust account that holds money belonging to others. Compliance with E-1(o) entails more than just reconciling your monthly bank statements. In the event of an audit by the Commission, you should be able to readily produce monthly three-way reconciliations for each of your trust accounts.
Pursuant to C.R.S. 12-61-706.5, appraisers are now required to procure Errors and Omissions (“E&O”) insurance. The Colorado Department of Regulatory Agencies (“DORA”) has entered into a contract with a group provider to offer E&O insurance to appraisers. You may purchase your coverage through the group program, but may also buy insurance from other carriers, as long as their coverage complies with DORA’s requirements. For more information, click on this link to DORA’s website.
REAL ESTATE BROKERS
Inspection Notice and Resolution Issues — “Dual Contracts”. We strongly recommend that brokers read The Colorado Real Estate Commission’s Position Statement CP-43, Commission Position on Property Inspection Resolutions. The Commission makes reference to Section 18-5-208, C.R.S., which makes it a class 3 misdemeanor for any person to knowingly make, issue, deliver, or receive dual contracts for the purchase or sale of real property. The term “dual contracts”, either written or oral, means two separate contracts concerning the same parcel of real property, one of which states the true and actual purchase price and one of which states a purchase price in excess of the true and actual purchase price, and is used, or intended to be used, to induce persons to make a loan or a loan commitment on such real property in reliance upon the stated inflated value. This means that “side deals”–especially when not disclosed to the lender–may be tantamount to criminal activity.
DORA Position Statement on “Coming Soon” Listings. On June 3, 2014, the Colorado Real Estate Commission adopted a new CP-44, “Commission Position on Coming Soon Listings”. The Position Statement, which is available for review on the Commission’s web site, has implications for all listing brokers beyond merely the issue of “coming soon” listing arrangements.
Property Management. Pursuant to Senate Bill 13-126, landlords and Common Interest Communities may impose only specified limits on a tenant or owner desiring to install certain types electric vehicle charging systems.
Revised Commission Statement CP-27. The Colorado Real Estate Commission in August, 2013 issued a revised Commission Position CP-27 regarding the Performance of Residential Property Management Functions. We recommend that all managers read that document. It is becoming increasingly important to distinguish your leasing activities from your property management activities. Property Managers should also be aware of CP-42, the Commission Position on Apartment Building or Complex Management.
Source of Water. Brokers: Just a reminder that CRS 38-35.7-104, the Source of Water disclosure statute, provides: “If the seller complies with this section, the purchaser shall not have any claim under this section for relief against the seller or any person licensed pursuant to article 61 of title 12, C.R.S. [the brokerage relationships statute], for any damages to the purchaser resulting from an alleged inadequacy of the property’s source of water.” [emphasis and bracketed material supplied]. This is another reason to make certain the Source of Water form is used in every transation.
Owner-Carries. We are strongly recommending that brokers advise the parties to use legal counsel in all owner-carry transactions. This has become a complicated legal issue with potentially serious implications for brokers.
Errors and Omissions Insurance – Limits of Liability We strongly suggest to all brokers that the minimum insurance limits of $100,000/$300,000 required by the Colorado Real Estate Commission are not sufficient to protect you in the event of an E&O claim. Higher limits are normally available, as is excess insurance that may provide broader coverage. E & O claims are stressful enough, but they can cause even greater concern if you have insufficient coverage. Coverage may also be available for instances where the broker is an owner of the property being bought or sold. Your coverage may also include defense costs for DORA complaints.
Broker Disclosures. Listing brokers: Remember to complete the disclosure section after “End of Contract” on the Contract to Buy and Sell Real Estate in order to disclose your relationship with seller.
Mediation and Arbitration. With increasing frequency, the Courts are requiring Alternative Dispute Resolution (“ADR”) in litigated matters. Two types of ADR are arbitration and mediation. In arbitration, the parties appear before one or more neutral persons who render a decision on the merits of the dispute. Mediation is a process for resolving disputes through negotiation. As in arbitration, the mediator is a neutral person selected by the parties. However, unlike an arbitrator, a mediator has no authority to make decisions or issue rulings. He or she is solely a facilitator who tries to bring the parties together to resolve their dispute. Even if a matter does not settle, mediation can be a useful process for gathering information and helping the parties communicate as to the key issues in their dispute.
CONSUMER REAL ESTATE ISSUES
Carbon Monoxide Detectors For Residential Properties. Pursuant to the Lofgren and Johnson Families Carbon Monoxide Safety Act, it is now the responsibility of the seller or landlord to install carbon monoxide detectors in certain residential properties offered for sale or lease.
Review of Documents. The time to have an attorney review your real estate documents is before you sign them. The cost of hiring an attorney to identify possible problems ahead of time is far less than the cost of litigating a dispute after the fact.
Broker Relationships. When buying and selling real estate in Colorado, there are several different legal relationships you can enter into with your real estate broker. The broker can act as your agent or as a non-agent “transaction-broker”. He or she will provide you with forms which explain these relationships. We suggest that you read the disclosures carefully and ask enough questions so that you can make an informed decision as to which relationship best suits your needs.
Assignment of Husband’s Interest in Closely Held LLC. In Coldo v. Conners, the Colorado Supreme Court held that an attempted assignment by Husband to Wife of his interest in a closely-held limited liability company as part of a divorce settlement was unenforceable where the consent of the other members of the LLC was required and such parties refused to give their consent.
Common Law Marriage. Contrary to a popular misconception, two persons do not enter into a common law marriage merely by cohabitating for a fixed period of time. What is required is the intention by the parties to enter into a marriage. This intent is generally shown by the parties’ own conduct, i.e. whether they hold themselves out to third parties as being married. As the Court stated in Whitenhill v. Kaiser Permanente, “A common law marriage is established by the mutual consent or agreement of the parties to be husband and wife, followed by a mutual and open assumption of a marital relationship… Absent an express agreement, the two factors considered the most reliable in determining whether an intent to be married has been established are cohabitation and a general reputation in the community that the parties hold themselves out as husband and wife.”
No Duty For Brokers to Ensure Complete Protection. In Apodaca v. Allstate Insurance Company , the Colorado Court of Appeals reaffirmed the principle that: “…an insurance agent or company does not have a common law duty to ensure complete protection to the policyholder or to recommend higher policy limits, but only has a duty to exercise a reasonable duty of care….Even when an agent represents that he or she is knowledgeable about insurance coverages, and regularly in the course of his or her business, informs, counsels, and advises customers about their insurance needs, the agent does not incur duties beyond those of the standard policyholder-insurance agent relationship. Thus, in most circumstances, an insurance agent does not have a duty to advise of additional and available insurance coverages suitable for the customer’s needs.”
DISCLAIMER: All information provided in this web site is informational only and does not constitute an offer or agreement on our part to enter into an attorney/client relationship with any person. If any person desires legal advice from Balaban, Levinson, Costigan & Wasilik, P.C.it is first necessary to establish an attorney/client relationship with us in writing pursuant to our standard written fee agreement. We are not licensed to practice law outside of the State of Colorado. For issues involving the laws of other jurisdictions, consult with an attorney licensed in that jurisdiction. No discussion of any taxation issues in this web site is intended to be used, nor shall be used, by any person: (1) for the purpose of avoiding any taxes owed to, or penalties that may be imposed by, the Internal Revenue Service or any other taxing entity, or (2) to promote, market or recommend to another person any matter addressed herein.