CO Real Estate cheat sheet

The Colorado Real Estate Commission (CREC) sits within the Division of Real Estate under the Department of Regulatory Agencies (DORA) and adopts rules implementing CRS Title 12, Article 10.

Colorado has two license levels: broker associate, who must work under an employing broker, and employing broker, who may hire and supervise other licensees; the older 'salesperson' license no longer exists.

A broker associate cannot accept compensation for brokerage services directly from a client or another broker; payment must flow through the employing broker.

Licenses renew every three years; the 24 required continuing-education hours per cycle must include 12 hours of Annual Commission Update courses (4 hours per year).

Active licensees must carry errors and omissions insurance, either through the Commission-approved group policy or a policy meeting the Commission's minimum standards.

Disciplinary tools available to the Commission include letters of admonition, fines, license suspension, license revocation, and cease-and-desist orders against unlicensed activity.

Taking compensation for listing, selling, leasing, or negotiating real property without a license is prohibited and subject to Commission enforcement plus criminal penalties.

The Commission publishes approved forms (listing contracts, Contract to Buy and Sell, disclosure forms) that licensees use for most transactions.

Brokers must keep transaction records and make them available to the Commission on request; paying commissions to unlicensed persons is prohibited.

Colorado recognizes single agency, transaction-brokerage, and dual agency; when no written single-agency agreement exists, the broker is presumed to be a transaction-broker.

The brokerage relationship must be disclosed in writing at the earliest practicable time, and before the party signs a brokerage agreement.

A transaction-broker is not an advocate for either party: the broker assists both sides with documents and process, discloses known material facts, and accounts for funds.

A single agent owes fiduciary duties of loyalty, confidentiality, disclosure, accounting, obedience to lawful instructions, and reasonable care and skill.

Confidential information that could harm a party's negotiating position may not be disclosed without that party's written permission, even after the relationship ends.

Dual agency requires the written informed consent of all parties and limits the broker's ability to advocate for either side.

A broker may act as a single agent for one party while serving as transaction-broker for the other only when the differing roles are disclosed in writing and consented to.

Compensation does not create agency: a buyer's broker can be paid by the seller or listing broker without becoming the seller's agent.

A broker acting as transaction-broker may show properties, prepare and present offers, and explain contract provisions without advocating a position.

The Commission-approved Colorado Contract to Buy and Sell comes in separate versions (residential, land, income property) and carries dates, earnest money, contingencies, and title-review deadlines.

Earnest money is trust funds and is held by the listing broker, a title company, or another holder named in the contract.

Contingency deadlines (title objection, survey, loan, appraisal, inspection) are enforced; missed deadlines waive the associated remedy, and 'time is of the essence' is stated in the form.

Objection and resolution provisions require the party to object in writing by a stated date, after which the parties negotiate a written resolution or the contract may be terminated.

Electronic signatures and records are enforceable in Colorado under the Uniform Electronic Transactions Act adopted in CRS Title 24.

Colorado closings are typically conducted by title companies using written closing instructions; no attorney is required to close.

Colorado statutory deed forms include general warranty, special warranty, bargain and sale, and quitclaim deeds; recording is with the county clerk and recorder.

The documentary fee is one cent per $100 of consideration, paid to the county clerk at recording; Colorado imposes no state or local real estate transfer tax.

Closing statements prorate property taxes, rents, HOA dues, and utilities, and allocate closing costs per the contract and lender instructions.

Funds held for others - earnest money, rents, security deposits, owner reserves - are trust funds and must be placed in a federally insured Colorado account designated as a trust account.

Commingling is prohibited: broker or personal funds may not be deposited in a trust account except minimal amounts needed to cover bank service charges.

Colorado brokers use separate accounts for sales escrow (earnest money), property management operating funds, and tenant security deposits.

Disbursement requires written authorization from the principals or a court order; disputed funds must be held until a written agreement or court order resolves the dispute.

Records must show date, payer, payee, amount, property or transaction identification, purpose, and a running balance for each client ledger.

The trust account checkbook must be reconciled monthly to the bank statement and to the total of all individual client ledgers.

Records must be legible, contemporaneous, and produced to the Commission on request; electronic records are acceptable if secure and reproducible.

A broker must give written accounting of trust funds to the owner or tenant as required by the management agreement and Commission rule.

Estates in land run from fee simple absolute (full ownership of all rights) through life estates to leasehold estates of limited duration.

Joint tenancy requires the four unities (time, title, interest, possession) and carries a right of survivorship; tenancy in common has no survivorship.

A deed of trust is Colorado's standard security instrument, with a public trustee conducting non-judicial foreclosure sales and a Rule 120 court hearing authorizing the sale.

Colorado water follows prior appropriation - first in time, first in right, limited to beneficial use and confirmed by a water court decree; water rights are separate property interests.

The mineral estate can be severed from the surface estate, creating a split estate in which different owners hold the surface and the minerals.

Oil and gas in Colorado is regulated by the Colorado Energy and Carbon Management Commission (formerly the Oil and Gas Conservation Commission).

Counties and municipalities adopt master plans and zoning under state enabling statutes; CRS 24-65.1 (HB 1041) permits designation of areas and activities of state interest.

Subdivision creates lots by recording a plat with the county clerk; special districts (metropolitan, water, fire) may levy taxes or fees on property within their boundaries.

Adverse possession in Colorado generally requires 18 years of actual, open, notorious, exclusive, hostile, and continuous possession.

Sales comparison approach: adjust the comparable sales to the subject - never adjust the subject - adding or subtracting value for each difference.

Cost approach: value = replacement cost new − accrued depreciation + land value; best for new or special-purpose property.

Income approach: value = net operating income ÷ capitalization rate; gross rent multiplier = price ÷ gross rent, and value = GRM × market rent.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Depreciation has three forms: physical deterioration, functional obsolescence, and external (economic) obsolescence.

Elements of value are demand, utility, scarcity, and transferability; market value is the most probable price in an arm's-length transaction.

Price is what was paid, cost is what was spent to build, and value is the present worth of future benefits - the three are not interchangeable.

Licensees may prepare comparative market analyses; federally related transactions require an appraiser credentialed through the Colorado Division of Real Estate.

Loan-to-value = loan amount ÷ value (or purchase price); down payment = price − loan amount, and private mortgage insurance is generally required above 80% LTV.

PITI = principal + interest + property taxes + hazard insurance; taxes and insurance are collected in escrow/impound accounts.

One discount point equals 1% of the loan amount; points paid to buy down the interest rate are prepaid interest.

TRID requires the Loan Estimate within three business days of application and the Closing Disclosure at least three business days before consummation.

RESPA Section 8 prohibits kickbacks and unearned fees; affiliated business arrangements require written disclosure of the affiliation.

Qualifying ratios compare housing expense to gross income (front-end) and total debt to gross income (back-end); automated underwriting commonly allows up to 43% DTI.

The Colorado Housing and Finance Authority (CHFA) provides first mortgages, down payment assistance, and tax credits to eligible Colorado buyers.

Mortgage loan originators are licensed under the SAFE Act through the Colorado Division of Real Estate and must be sponsored by a licensed mortgage company.

Government-backed options: FHA insures loans with low down payments, VA guarantees loans with entitlement for eligible veterans, and USDA programs target rural areas.

The Colorado Seller's Property Disclosure form records the seller's actual knowledge of adverse conditions; it is not a warranty and does not replace the buyer's inspections.

Federal lead-based paint disclosure applies to sales and leases of pre-1978 housing, including a 10-day opportunity for a lead inspection or risk assessment.

Brokers must disclose known material facts about the property and the transaction; they may not give legal, engineering, or environmental advice beyond their expertise.

Colorado requires disclosure of special taxing districts affecting the property and of known material defects.

Radon is widespread in Colorado; radon testing and mitigation are commonly negotiated, and buyers should test rather than rely on a seller's statement.

CERCLA imposes strict liability for contamination; the innocent landowner defense requires all appropriate inquiry, typically a Phase I Environmental Site Assessment.

Developments in floodplains and wetlands are regulated - NFIP and local floodplain rules, plus Section 404 permits for wetland fills.

Asbestos, mold, underground storage tanks, and methamphetamine contamination are common environmental concerns requiring specialized testing and remediation.

A broker's duty to disclose material defects continues throughout the transaction and cannot be waived by the buyer.

Colorado's Security Deposit Act requires the landlord to return the deposit with an itemized written statement within one month, or 60 days if the lease so provides.

The statutory warranty of habitability (CRS 38-12-503) applies to residential rentals and cannot be waived by the tenant or the landlord.

Leasehold estates are estate for years, periodic tenancy, tenancy at will, and tenancy at sufferance; only the periodic tenancy renews automatically.

Notice to terminate a month-to-month tenancy in Colorado is 21 days in writing; longer tenancies require a longer statutory notice period.

An assignment transfers the tenant's entire remaining interest, while a sublease transfers less than the whole; landlord consent is required unless the lease says otherwise.

Eviction proceeds as a forcible entry and detainer action in county court; self-help evictions such as lockouts or utility shutoffs are prohibited.

A written property management agreement is required, and rents, security deposits, and owner reserves are held in trust accounts.

Fair housing rules come from the federal Fair Housing Act and the Colorado Anti-Discrimination Act, which add protected classes such as source of income.

Area conversions: 1 acre = 43,560 square feet; 1 section = 640 acres; 1 township = 36 sections; 1 mile = 5,280 feet.

Property tax = assessed value × (mill levy ÷ 1,000), and in Colorado assessed value = actual value × the statutory assessment rate.

Proration by the daily method: (annual amount ÷ 365) × number of days owned; the contract specifies whether the seller or buyer owns the closing day.

Monthly items such as rent are prorated as (monthly amount ÷ days in month) × days remaining in the month.

Commission = sale price × commission rate; each broker's share is then computed from the agreed split of that total.

Unit price: price per square foot = price ÷ square footage; price per acre = price ÷ acreage; use these to compare like properties.

The Colorado documentary fee is $0.01 per $100 of consideration, so a $450,000 sale generates a $45 fee.

Loan math: loan amount = price × LTV; monthly payment on an amortizing loan is found from the amortization factor per $1,000 of loan.

Net to seller = sale price − loan payoff − closing costs − prorated items owed, plus prorated items owed to the seller.