CO Real Estate key terms

The state agency that licenses Colorado real estate brokers, writes and enforces Commission rules, reviews applications, and investigates complaints that can lead to discipline such as fines, suspension, or license revocation.

The licensed broker who runs a Colorado brokerage, supervises its broker associates and employees, and is responsible for the firm's trust accounts, records, advertising, and compliance with Commission rules.

Professional liability coverage that pays claims arising from mistakes or negligence in real estate services. Colorado requires actively licensed brokers to maintain E&O coverage and to report a lapse or cancellation.

A relationship in which a broker owes fiduciary duties such as loyalty, obedience, disclosure, confidentiality, and accounting to a client, and may bind that client in negotiations or contracts.

A Colorado brokerage relationship in which the broker represents only one party in a transaction and owes that client full fiduciary duties, while treating the other party honestly and fairly without representing them.

A Colorado broker who assists one or more parties through a transaction without being an agent for either, providing services like showings, paperwork, and negotiation help while owing honesty, disclosure, and accounting duties.

A party whom a transaction broker assists but does not represent. The customer is not owed fiduciary duties, though the broker must still be honest, disclose known material facts, and account for money.

A listing agreement giving one brokerage the right to a commission no matter who produces the buyer, whether the listing broker, another broker, or the seller personally, during the listing term.

A written contract in which a buyer engages a broker as the buyer's agent, setting out the term, the services to be provided, and how and when the broker earns compensation.

A buyer's good-faith deposit, held in trust, showing the buyer intends to complete the purchase. The contract states who holds it and what happens to it if the deal closes or fails.

A contract clause setting a pre-agreed amount, often the earnest money, that the seller keeps if the buyer breaches, instead of forcing the seller to prove actual losses in court.

A contract condition that must be satisfied or waived before the sale closes, such as loan approval, a satisfactory inspection, an appraisal, or the sale of the buyer's current home.

The standard Colorado Real Estate Commission form used for most residential resale transactions, with blanks for price, dates, deadlines, financing, title matters, and required disclosures.

The final settlement step where the buyer pays the price, the seller conveys title, and the closing agent disburses funds, records documents, and prorates taxes, rent, and other items.

A bank account, typically non-interest-bearing, that a Colorado brokerage uses to hold money belonging to clients or others, such as earnest money and security deposits, separate from company funds.

Mixing client or trust funds with the brokerage's own money, or handling them so it is unclear whose funds they are, which violates Colorado trust account rules.

The unauthorized use of trust funds for the broker's own purposes, such as spending a client's earnest money. Conversion is a serious license law violation and may be prosecuted as theft.

Colorado's requirement that a brokerage keep transaction files, trust account records, and related documents for at least three years after the transaction, available for Commission inspection.

The most complete form of ownership, giving the owner indefinite title to the whole property, freely transferable and inheritable, subject only to government powers and recorded encumbrances.

A right to use another person's land for a specific purpose, such as a utility line, driveway, or access. It is an encumbrance that runs with the land and may be appurtenant or in gross.

Any claim, lien, easement, restriction, or other interest that burdens a property and may reduce its value or limit the owner's use, though not necessarily preventing transfer of title.

Local government rules that divide land into districts and control how each may be used, including density, setbacks, height, and use type; changes require rezoning or sometimes a variance.

The use of a property that is legally permitted, physically possible, financially feasible, and produces the greatest value; it is the starting point for most appraisals.

An appraisal method that estimates value by analyzing recent sales of similar properties, then adjusting those prices for differences in size, condition, location, and features.

A broker's opinion of a property's likely selling price based on active, pending, and recently sold listings; it is not an appraisal and cannot substitute where an appraisal is required.

Colorado's usual security instrument for home loans: the borrower conveys title in trust to a public trustee, who can sell the property at foreclosure if the borrower defaults.

The borrower's written promise to repay a loan, stating the principal, interest rate, payment schedule, and any late fees or prepayment terms; it works together with the deed of trust.

The loan amount divided by the property's value or purchase price, expressed as a percentage. Higher LTV loans usually require mortgage insurance and may carry a higher interest rate.

The schedule by which a loan is paid off in equal periodic payments, with each payment covering interest first and applying the remainder toward reducing the principal balance.

Insurance that protects the lender if a borrower defaults; it is typically required when the loan-to-value ratio exceeds 80 percent and can often be removed as equity grows.

A Colorado form in which the seller discloses known defects and material facts about the home's condition, systems, water, and environmental issues before the buyer is committed.

A federal disclosure required for sales and leases of most pre-1978 housing, giving buyers and tenants known lead hazard information and a 10-day opportunity to test for lead.

A colorless, radioactive gas that can enter homes from soil and raise lung cancer risk. Colorado's approved purchase contract includes a radon disclosure and a testing advisory.

A contract transferring the right to possess and use property for a stated term in exchange for rent; the tenant receives a leasehold interest while the landlord keeps a reversion.

Money a tenant pays to protect the landlord against unpaid rent or damage beyond normal wear, which the landlord must hold and return under Colorado's time limits and itemization rules.

A Colorado landlord's duty to keep rental housing fit and safe for living and to meet building, health, and safety codes; it cannot be waived and may be raised as a defense in an eviction.

The Colorado court action a landlord files to remove a tenant who has breached the lease, commonly called an eviction; the court decides possession, while money claims may be handled separately.

Splitting an expense or income item, such as property taxes or rent, between buyer and seller based on the closing date, so each party pays a fair share of that item.

The property tax rate in Colorado, expressed in mills, where one mill equals one dollar of tax per thousand dollars of assessed value; local districts set the rate.