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CO Real Estate practice questions

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Question 1Colorado Real Estate License Law and Commission Rules

A person who passes the Colorado broker licensing examination and will work under the supervision of another licensee holds which license?

  1. Salesperson
  2. Associate broker Correct answer.
  3. Transaction-broker
  4. Employing broker

Explanation

Colorado eliminated the salesperson license, so every individual licensee is a real estate broker. A broker who practices under another broker's supervision holds an associate broker license, while the supervising licensee holds the employing broker license.

Question 2Colorado Real Estate License Law and Commission Rules

Which body issues and regulates Colorado real estate broker licenses?

  1. Colorado Division of Insurance
  2. The county clerk and recorder
  3. Colorado Real Estate Commission Correct answer.
  4. Colorado Secretary of State

Explanation

The Colorado Real Estate Commission operates within the Division of Real Estate in the Department of Regulatory Agencies. It adopts rules, licenses brokers, and imposes discipline.

Question 3Colorado Real Estate License Law and Commission Rules

What is the minimum age for an applicant to be licensed as a Colorado real estate broker?

  1. 16
  2. 21
  3. 19
  4. 18 Correct answer.

Explanation

An applicant must be at least 18 years old, in addition to meeting the education, examination, and character requirements.

Question 4Colorado Real Estate License Law and Commission Rules

How long is a Colorado real estate broker license valid, and when does it expire?

  1. Four years, expiring on the licensee's birthday
  2. One year, expiring on the licensee's birthday
  3. Three years, expiring December 31 Correct answer.
  4. Two years, expiring December 31

Explanation

Colorado broker licenses run on a three-year cycle and expire on December 31 of the third year. The licensee must renew and show completion of continuing education.

Question 5Colorado Real Estate License Law and Commission Rules

How many hours of approved pre-licensing education must a Colorado broker applicant complete before taking the licensing examination?

  1. 90
  2. 120
  3. 240
  4. 168 Correct answer.

Explanation

Colorado requires 168 hours of approved pre-licensing education, including the Colorado-specific contracts and closings coursework, before the applicant may sit for the examination.

Question 6Colorado Real Estate License Law and Commission Rules

A brokerage relationship in which the broker works with a party but does not represent that party as an agent is called:

  1. Subagency
  2. Dual agency, if both parties consent
  3. Transaction-broker Correct answer.
  4. Single agency

Explanation

A transaction-broker facilitates a transaction without being an agent of either party. The relationship carries statutory duties rather than full agency duties such as loyalty and advocacy.

Question 7Colorado Real Estate License Law and Commission Rules

During each three-year license cycle, a Colorado broker must complete which continuing education?

  1. 24 hours, including 8 hours of fair housing
  2. 16 hours, including 4 hours of the Annual Commission Update
  3. 12 hours, all of which must be the Annual Commission Update
  4. 24 hours, including 12 hours of the Annual Commission Update Correct answer.

Explanation

Colorado requires 24 continuing education hours per three-year cycle. At least 12 of those hours must come from the Annual Commission Update, which is offered as 4 hours each year.

Question 8Colorado Real Estate License Law and Commission Rules

Under Colorado law, when must a broker disclose the type of brokerage relationship to a prospective buyer or seller?

  1. At the first substantive contact, in writing Correct answer.
  2. At the closing table
  3. Within 30 days after closing
  4. Only when a written agreement is signed

Explanation

The brokerage disclosure must be given at the first substantive contact and must be in writing. It explains the available relationship types and the duties the broker owes.

Question 9Colorado Real Estate License Law and Commission Rules

A firm holds an exclusive listing for a seller and is asked to also represent the buyer in the same transaction as an agent. The broker should:

  1. Act as a transaction-broker, because Colorado does not permit dual agency Correct answer.
  2. Become a dual agent if both parties consent in writing
  3. Represent the buyer and treat the seller as a customer without any disclosure
  4. Refer the buyer to another brokerage and keep the listing

Explanation

Colorado does not recognize dual agency, in which one broker is an agent of both sides. When the same brokerage works with both parties, it does so as a transaction-broker under the required written engagement.

Question 10Colorado Real Estate License Law and Commission Rules

A buyer represented by a single agent says she would pay $20,000 above the asking price if necessary. The agent may:

  1. Share the information with the seller's agent to speed the transaction
  2. Keep the information confidential and use it to advise the buyer Correct answer.
  3. Disclose it once the buyer submits a written offer
  4. Disclose it to the seller to encourage a higher offer

Explanation

A single agent owes the client confidentiality, and a client's willingness to pay more is confidential information. The agent may not reveal it to the other side without the client's authorization, even after an offer is written.

Question 11Colorado Real Estate License Law and Commission Rules

An associate broker receives a $5,000 earnest money check made payable to the brokerage. The broker must:

  1. Deposit it in the general operating account and record it as a liability
  2. Hold the uncashed check in the file until closing
  3. Endorse it over to the seller immediately
  4. Deposit it in the brokerage's trust account Correct answer.

Explanation

Money received on behalf of others must be placed in a trust account and kept separate from the broker's own funds. Commingling client money with operating funds violates Commission rules.

Question 12Colorado Real Estate License Law and Commission Rules

Which task may an unlicensed assistant legally perform for a Colorado brokerage?

  1. Negotiate counteroffer terms with the buyer's agent
  2. Explain the terms of the contract to a buyer
  3. Prepare listing flyers at the broker's direction Correct answer.
  4. Solicit new listings at an open house

Explanation

Unlicensed staff may perform clerical and administrative work at the direction of a licensee. Activities that require a license, such as negotiating, soliciting listings, or interpreting contract terms for clients, may not be delegated.

Question 13Colorado Real Estate License Law and Commission Rules

An associate broker earns a commission on a closing. Who may pay that commission to the associate?

  1. The seller, if the purchase contract so provides
  2. The buyer, as a separate fee
  3. The title company, directly at the associate's direction
  4. The employing broker Correct answer.

Explanation

An associate broker may not be paid brokerage compensation directly by a client. Compensation flows to the employing broker, who then pays the associate under their independent contractor arrangement.

Question 14Colorado Real Estate License Law and Commission Rules

Colorado advertising rules require that a licensee's advertisement for a listed property identify:

  1. No brokerage identification if the property address is shown
  2. The licensee's home address
  3. The employing broker's name Correct answer.
  4. The agent's license number on every flyer

Explanation

Advertisements must identify the brokerage by the employing broker's name. A team or trade name may be used only in conjunction with the required brokerage identification.

Question 15Colorado Real Estate License Law and Commission Rules

Which of the following is a disciplinary action the Colorado Real Estate Commission may take against a licensee?

  1. Imposing a jail sentence
  2. Issuing a letter of admonition Correct answer.
  3. Suspending the licensee's driver's license
  4. Recording a lien on the licensee's personal residence

Explanation

Commission remedies include letters of admonition, fines, probation, suspension, and revocation of the real estate license. The Commission cannot impose criminal sentences or affect licenses and property unrelated to real estate practice.

Question 16Colorado Real Estate License Law and Commission Rules

A broker wants to thank an unlicensed friend who introduced the buyer who purchased a listed home. The broker may:

  1. Pay the friend a percentage of the commission
  2. Give a modest gift, but pay no referral fee Correct answer.
  3. Pay the friend a flat $500 referral fee
  4. Split the commission equally with the friend

Explanation

A licensee may not share compensation with an unlicensed person for activity that requires a license, including procuring a buyer. A gift of nominal value that is not tied to the transaction is permissible.

Question 17Colorado Real Estate License Law and Commission Rules

An associate broker at a firm fails to deliver a required disclosure and the buyer complains to the Division of Real Estate. Who may be disciplined?

  1. The buyer's own broker
  2. Only the associate broker, because the employing broker had no knowledge
  3. No one, because a disclosure omission is not a violation
  4. The employing broker Correct answer.

Explanation

The employing broker is responsible for supervising the firm's associate brokers and the brokerage's activities. Lack of personal knowledge of a specific transaction does not shield the employing broker from discipline.

Question 18Colorado Real Estate License Law and Commission Rules

A licensee wants to buy a home that her own firm has listed. Before writing the offer, she must:

  1. Make a written disclosure that she is a licensed real estate broker Correct answer.
  2. Have a relative submit the offer instead
  3. Place her license on inactive status
  4. Do nothing beyond making an ordinary offer

Explanation

A licensee who is a party to a transaction must disclose her licensed status in writing. The disclosure alerts the other party that they are dealing with a professional who knows the market and the contract forms.

Question 19Colorado Real Estate License Law and Commission Rules

A Colorado broker's license expired December 31 and was not renewed. In February she lists a friend's home and collects a commission. What is her legal position?

  1. Lawful, because she had completed her continuing education
  2. Lawful, if she files a late renewal within 30 days
  3. Unlicensed activity subject to discipline Correct answer.
  4. Lawful, because she works under an employing broker

Explanation

Brokerage activity requires a currently active license. Performing licensed acts after expiration is unlicensed activity that exposes the person to Commission action and possible criminal penalties.

Question 20Colorado Real Estate License Law and Commission Rules

An unlicensed person wants to manage 12 rental units for the owners, advertise vacancies, screen tenants, and collect rents for a fee. Under Colorado law this person:

  1. May do so if the units are residential rather than commercial
  2. May do so, because managing rentals is not brokerage
  3. Must hold a real estate broker license Correct answer.
  4. May do so if each owner signs a written waiver

Explanation

Colorado treats leasing and managing property for another person for compensation as brokerage activity. Activities such as advertising rentals, screening tenants, and collecting rents therefore require a broker license.

Question 21Brokerage Relationships and Agency

Under Colorado law, when must a broker give a prospective buyer or seller the written brokerage relationship disclosure?

  1. At the closing of the transaction
  2. Only if the party asks the broker about agency relationships
  3. At the first substantive contact with the prospective party Correct answer.
  4. Only after the party signs a listing or buyer agency agreement

Explanation

Colorado requires the written brokerage relationship disclosure at the first substantive contact so the consumer knows the available relationship options before receiving brokerage services. Waiting until an agreement is signed is too late, and the duty is not triggered only by a consumer's question.

Question 22Brokerage Relationships and Agency

A Colorado broker has no written agreement with a buyer and has begun assisting the buyer. What brokerage relationship does the broker generally have?

  1. Transaction-broker Correct answer.
  2. Single agent for the seller
  3. Single agent for the buyer
  4. Dual agent for buyer and seller

Explanation

In Colorado, a broker is presumed to be a transaction-broker absent a written agreement establishing a different relationship. Single agency requires a written agreement, and dual agency requires consent from both parties.

Question 23Brokerage Relationships and Agency

Which duty is owed by a Colorado transaction-broker to the parties in a transaction?

  1. Obedience to the seller's instructions
  2. Advocacy for the party who pays the commission
  3. Disclosure of adverse material facts actually known Correct answer.
  4. Undivided loyalty to the buyer

Explanation

A transaction-broker owes duties such as reasonable skill and care, good faith and fair dealing, confidentiality, accounting, and disclosure of known adverse material facts. A transaction-broker does not owe undivided loyalty, obedience, or advocacy to either party.

Question 24Brokerage Relationships and Agency

A Colorado broker may act as a dual agent in a transaction only when:

  1. the transaction is a residential resale
  2. the broker receives written permission from the seller alone
  3. the broker is also the listing broker
  4. both parties give informed written consent Correct answer.

Explanation

Dual agency requires the informed written consent of both the buyer and the seller because the broker represents both parties with limited confidentiality. Consent from only one side is insufficient.

Question 25Brokerage Relationships and Agency

A buyer's broker is paid a commission by the seller. What does Colorado law say this payment establishes about the broker's agency relationship?

  1. The broker represents neither party in the transaction
  2. The broker represents the seller because the seller pays the commission
  3. The written agreement controls the relationship, not who pays Correct answer.
  4. The broker automatically becomes a dual agent for both parties

Explanation

The source of compensation does not determine the brokerage relationship. The relationship is established by the written brokerage agreement, so a buyer's broker may be paid from the seller's proceeds without representing the seller.

Question 26Brokerage Relationships and Agency

After a single-agent brokerage relationship ends in Colorado, the broker's duty to keep confidential information learned during the relationship:

  1. applies only until the closing date
  2. continues after termination Correct answer.
  3. passes to the other party in the transaction
  4. ends immediately when the agreement expires

Explanation

The duty of confidentiality continues after the brokerage relationship terminates, so the broker may not later reveal confidential information learned during the representation. The duty is not limited to the closing date or the agreement term.

Question 27Brokerage Relationships and Agency

A seller's agent learns from the seller that the basement has recurring water intrusion, and the seller has not disclosed it. What must the seller's agent do?

  1. Tell the buyer only if the buyer asks about the basement
  2. Disclose the known adverse material fact to the buyer Correct answer.
  3. Keep the information confidential because the seller is the client
  4. Resign from the listing without notifying anyone

Explanation

A broker must disclose adverse material facts actually known about the property, even when the seller is the client. Confidentiality does not permit a seller's agent to conceal known property defects from a buyer.

Question 28Brokerage Relationships and Agency

A transaction-broker represents both the buyer and seller in the same transaction. The buyer privately says the buyer will pay $10,000 more than the list price. What should the broker do?

  1. Keep the buyer's statement confidential Correct answer.
  2. Tell the seller only if the seller asks directly
  3. Tell the seller after the contract is signed
  4. Tell the seller so the seller can negotiate a higher price

Explanation

A transaction-broker owes confidentiality to both parties and may not reveal one party's negotiating position to the other. The broker must remain neutral rather than use the buyer's private statement to benefit the seller.

Question 29Brokerage Relationships and Agency

An exclusive right-to-buy agreement with a Colorado broker generally gives the broker:

  1. an exemption from providing the brokerage relationship disclosure to the buyer
  2. the right to compensation if the buyer buys covered property during the term Correct answer.
  3. the right to represent the seller in the same transaction as well as the buyer
  4. the authority to set the price that the buyer must offer for the property

Explanation

An exclusive right-to-buy agreement entitles the broker to compensation if the buyer purchases covered property during the agreement term, even if another broker shows the property. The agreement does not authorize representation of the seller or control the buyer's offer price.

Question 30Brokerage Relationships and Agency

A dual agent represents both the buyer and the seller. The seller tells the dual agent that the seller will accept $15,000 less than the asking price. What should the dual agent do with that information?

  1. Tell the buyer so the buyer can make a lower offer
  2. Tell the buyer's lender but not the buyer
  3. Tell the buyer only after the buyer makes a full-price offer
  4. Keep it confidential and not disclose it to the buyer Correct answer.

Explanation

A dual agent may not disclose one party's confidential information to the other party. The seller's willingness to accept less is confidential negotiating information that the broker must keep from the buyer.

Question 31Brokerage Relationships and Agency

A broker represents the seller, and the buyer has no broker. What must the seller's broker disclose to the unrepresented buyer?

  1. That the broker represents the seller and does not represent the buyer Correct answer.
  2. That the buyer has no right to receive adverse material facts
  3. That the broker will represent the buyer as well as the seller in the transaction
  4. That the buyer must pay the broker a commission

Explanation

A broker working with an unrepresented party must make clear which party the broker represents and that the other party is not represented. The seller's broker does not become the buyer's agent merely by communicating with the buyer.

Question 32Brokerage Relationships and Agency

A broker associate affiliated with a Colorado brokerage makes an error while handling a listing. Who may be responsible for supervising the associate's brokerage activities?

  1. The employing broker of the brokerage Correct answer.
  2. The title company
  3. The buyer's lender
  4. The seller's attorney

Explanation

The employing broker is responsible for supervising the brokerage activities of affiliated licensees and for ensuring compliance with real estate laws and rules. Attorneys, lenders, and title companies do not supervise the broker associate.

Question 33Brokerage Relationships and Agency

What is a primary responsibility of a Colorado employing broker?

  1. Setting commission rates for all brokers in the state
  2. Supervising affiliated licensees and ensuring brokerage compliance Correct answer.
  3. Guaranteeing the buyer's financing
  4. Personally showing every property listed by the brokerage firm in Colorado

Explanation

An employing broker is responsible for supervising affiliated licensees and ensuring that the brokerage operates in compliance with Colorado law and Commission rules. The employing broker does not personally show every property or set statewide commission rates.

Question 34Brokerage Relationships and Agency

A real estate team advertises its services in Colorado. The advertisement must include:

  1. the name of the team leader's spouse
  2. the seller's asking price and estimated closing costs
  3. the license number of every broker on the team
  4. the name of the affiliated brokerage firm Correct answer.

Explanation

Colorado advertising rules require team advertising to identify the affiliated brokerage firm so consumers know which brokerage stands behind the team. The advertisement need not list the team leader's spouse, the seller's price, or every broker's license number.

Question 35Brokerage Relationships and Agency

A seller's broker receives a written offer. The seller says, "Do not present that offer to me until next week." What is the broker's best course of action under Colorado practice?

  1. Hold the offer until the seller requests it
  2. Present the offer promptly and let the seller decide Correct answer.
  3. Reject the offer without telling the seller
  4. Present it to another buyer instead

Explanation

A broker must present offers promptly so the seller can decide whether to accept, reject, or counter. The broker should not withhold the offer or reject it without the seller's direction.

Question 36Brokerage Relationships and Agency

A transaction-broker is helping both parties negotiate. Which conduct is consistent with the transaction-broker role?

  1. Telling the buyer to offer less because the seller is desperate
  2. Telling the seller to reject the buyer's offer because the buyer seems difficult
  3. Providing information and assistance without advocating for either party's position Correct answer.
  4. Promising the buyer that the broker will get the lowest possible price

Explanation

A transaction-broker assists the parties and provides information but does not advocate for either side or promote one party's negotiating position over the other. The broker must remain neutral throughout the transaction.

Question 37Brokerage Relationships and Agency

A consumer receives the Colorado brokerage relationship disclosure form but signs no brokerage agreement. What does receipt of the form by itself create?

  1. A single-agent relationship with the broker
  2. No brokerage relationship; it only discloses the options Correct answer.
  3. A dual-agency relationship with the broker
  4. A transaction-broker relationship that cannot be changed

Explanation

The brokerage relationship disclosure explains the available relationship options but does not itself create an agency or transaction-broker relationship. A brokerage relationship is established through the appropriate written agreement.

Question 38Brokerage Relationships and Agency

A broker wants to buy a property that is currently listed by the broker's own seller-client. What must the broker do before acquiring an interest in the property?

  1. Obtain the seller's oral approval after closing
  2. Ask the title company to approve the purchase
  3. Disclose the broker's interest and obtain the seller's informed consent Correct answer.
  4. Rely on the listing agreement's general authority

Explanation

A broker's fiduciary duty of loyalty prohibits self-dealing without full disclosure and the client's informed consent. The broker must reveal the broker's interest and obtain consent before acquiring the property.

Question 39Brokerage Relationships and Agency

A dual agent learns that the seller is motivated to sell quickly because of a divorce. The property also has a known roof leak. How should the dual agent handle this information?

  1. Keep both facts confidential because the seller is a client
  2. Disclose both facts to the buyer because the buyer needs all information
  3. Disclose the divorce but keep the roof leak confidential
  4. Keep the divorce motivation confidential but disclose the roof leak Correct answer.

Explanation

A dual agent must keep confidential a party's personal motivation while still disclosing known adverse material facts about the property. The divorce motivation is confidential negotiating information, but the roof leak is an adverse material fact that must be disclosed.

Question 40Brokerage Relationships and Agency

A Colorado broker wants to pay part of the commission to a person who referred a buyer. What is required for the referral fee to be lawful?

  1. The recipient must be the buyer's relative
  2. The payment must be made after closing in cash
  3. The seller must approve the payment in writing before closing
  4. The recipient must be licensed or lawfully permitted to receive it Correct answer.

Explanation

Referral fees for brokerage services may generally be paid only to licensed brokers or to persons otherwise lawfully permitted to receive them. Paying an unlicensed person for a referral can violate Colorado licensing law.

Question 41Contracts and Closings

Which document must a Colorado licensee use when preparing a residential resale purchase contract?

  1. A form provided by the title company at closing
  2. A purchase agreement copied from a prior transaction
  3. A national franchise's standard purchase agreement
  4. The Commission-approved purchase contract Correct answer.

Explanation

Colorado Real Estate Commission rules require licensees to use Commission-approved forms for the type of transaction involved, and the Contract to Buy and Sell Real Estate is the approved form for residential resales. Licensees may not substitute brokerage, franchise, or title company forms for the approved contract.

Question 42Contracts and Closings

Which type of deed gives the grantee the broadest warranty of title under Colorado law?

  1. General warranty deed Correct answer.
  2. Quitclaim deed
  3. Special warranty deed
  4. Bargain and sale deed

Explanation

A general warranty deed contains the full set of covenants of title, including the covenant against encumbrances and the promise to defend the grantee against all lawful claims. A special warranty deed limits the grantor's warranty to claims arising through the grantor.

Question 43Contracts and Closings

In a customary Colorado residential resale closing, who pays the premium for the owner's title insurance policy?

  1. The buyer
  2. The seller Correct answer.
  3. The lender
  4. Split equally between buyer and seller

Explanation

Colorado custom places the cost of the owner's title insurance policy on the seller, while the buyer typically pays for the lender's policy and loan-related costs. The contract may allocate these costs differently if the parties agree.

Question 44Contracts and Closings

Which legal doctrine requires that an agreement for the sale of real estate be in writing to be enforceable?

  1. Doctrine of part performance
  2. Doctrine of merger
  3. Rule against perpetuities
  4. Statute of frauds Correct answer.

Explanation

The statute of frauds requires that contracts for the sale of an interest in real property be evidenced by a writing signed by the party to be charged. Oral real estate sale agreements are generally unenforceable, subject to limited exceptions such as part performance.

Question 45Contracts and Closings

If the contract says nothing about possession, when does the buyer normally take possession of the property?

  1. Thirty days after closing
  2. When the earnest money is deposited
  3. When the deed is recorded
  4. At closing Correct answer.

Explanation

Possession passes to the buyer at closing unless the contract provides for a different arrangement, such as a seller leaseback or a later delivery date. Any delayed possession should be spelled out in the contract to avoid a dispute.

Question 46Contracts and Closings

Which document contains the borrower's personal promise to repay a real estate loan?

  1. The deed of trust
  2. The title commitment
  3. The closing statement
  4. The promissory note Correct answer.

Explanation

The promissory note is the borrower's written obligation to repay principal and interest according to its terms. The deed of trust is the security instrument that gives the lender a lien and the power to foreclose if the note is not paid.

Question 47Contracts and Closings

A buyer deposits $10,000 in earnest money and then terminates during the inspection period, as the contract permits. What happens to the deposit?

  1. It is returned to the buyer Correct answer.
  2. It is paid to the seller as damages
  3. It is retained by the listing brokerage
  4. It is split evenly between the parties

Explanation

When the buyer terminates within the inspection period, the contract allows the buyer to walk away and the earnest money is refunded. The deposit only becomes a potential seller remedy if the buyer defaults outside an allowed termination right.

Question 48Contracts and Closings

A buyer delivers a timely inspection objection, and the seller fails to respond by the resolution deadline. Under the Colorado Contract to Buy and Sell Real Estate, what happens?

  1. The contract automatically closes on the originally scheduled date
  2. The contract terminates and earnest money is returned to buyer Correct answer.
  3. The objection automatically becomes a binding amendment to the contract
  4. The buyer waives the objection and must close on the original date

Explanation

If the seller does not respond to the buyer's inspection objection by the inspection resolution deadline, the contract terminates by its own terms and the earnest money is returned to the buyer. The seller must respond in writing to keep the transaction alive.

Question 49Contracts and Closings

The Colorado Seller's Property Disclosure form primarily requires the seller to disclose which of the following?

  1. The seller's reason for moving and motivation for selling
  2. The names of every prior owner in the past ten years
  3. The appraised value determined by the buyer's lender
  4. Known material defects and adverse conditions Correct answer.

Explanation

The Seller's Property Disclosure is a Commission-approved form on which the seller discloses known adverse conditions and material defects affecting the property. It is not a marketing document and does not ask the seller to justify the sale or supply valuation or chain-of-title information.

Question 50Contracts and Closings

A Colorado listing broker advertises the square footage of a home. What must the broker disclose along with the figure?

  1. That the figure was taken only from the county assessor's records
  2. That the figure has been verified by a licensed appraiser
  3. That the seller personally measured each room of the home
  4. The source of the measurement and an estimate disclaimer Correct answer.

Explanation

Commission rules require a licensee who advertises square footage to identify the source of the measurement and to make clear that the figure is not guaranteed. Buyers are expected to verify dimensions independently.