Colorado Real Estate Broker Exam — All Questions

The principle of contribution states that the value of a component or improvement is measured by:

• a.The raw number of square feet of floor area or land area that the improvement happens to occupy
• b.The owner's personal emotional attachment to and sentimental feelings about that improvement
• c.Its original construction or installation cost in every case, dollar for dollar, with no exception
• d.How much it adds to the overall value of the property, not its cost✓

Under contribution, an improvement is worth the amount it adds to the whole property's market value, which may be more or less than its cost. This principle explains why some renovations do not fully return their expense, a key point in over-improvement analysis.

Under Internal Revenue Code Section 121, a qualifying homeowner may generally EXCLUDE from taxable capital gain:

• a.Up to $250,000 of gain if single, or $500,000 if married filing jointly✓
• b.Up to a full one million dollars of gain on any property at all, at any time and any frequency
• c.All gain on any and every investment or rental property the taxpayer happens to own and sell
• d.Absolutely nothing, because gain on the sale of a home is always fully and entirely taxable

Section 121 lets homeowners who owned and used the home as their principal residence for at least two of the prior five years exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). It applies to a primary residence, not to investment property.

Depreciation recapture on the sale of investment real estate means that:

• a.All of the depreciation deductions previously claimed are simply refunded to the investor in cash
• b.The investor is legally required to physically restore and rebuild the depreciated building itself
• c.Gain from prior depreciation may be taxed, often at a special rate✓
• d.No income tax is ever owed at all on the sale of a property that has previously been depreciated

When depreciated property is sold at a gain, the portion of gain due to depreciation deductions is 'recaptured' and taxed under special rules, reflecting the earlier tax benefit. It is a tax concept, not a requirement to rebuild, and it increases, not eliminates, tax on sale.

Which appraisal approach is generally MOST reliable for a special-purpose property, such as a church or public school, that rarely sells and earns no market income?

• a.The sales comparison approach, which depends on recent sales of similar comparable properties
• b.The income approach, which converts a property's market rental income into an indicated value
• c.The gross rent multiplier method, which relies on typical market rents that these lack entirely
• d.The cost approach✓

Special-purpose properties have few or no comparable sales and generate no market rent, so the cost approach (replacement cost new, less depreciation, plus land) is typically most reliable. Sales comparison lacks comparables and the income/GRM methods need market income these properties do not produce.

The four characteristics an item must have to possess value in the market, often remembered as DUST, are:

• a.Debt, Utility, Supply, and Taxes, a mix of unrelated financing and cost terms rather than value
• b.Demand, Utility, Scarcity, and Transferability✓
• c.Depreciation, Use, Sale, and Title, which describe stages of ownership rather than value itself
• d.Demand, Ownership, Scarcity, and Time, which swaps in two terms that are not part of the concept

For something to have market value it must have Demand (buyers who want it), Utility (usefulness), Scarcity (limited supply), and Transferability (the ability to convey it). The DUST acronym captures these four essentials of value.

An owner holds land plus the right to use the airspace above it and the minerals below it. This complete set of legal interests that comes with ownership is best described as the:

• a.Riparian doctrine
• b.Doctrine of emblements
• c.Bundle of rights✓
• d.Fee tail estate

The 'bundle of rights' describes the full set of legal rights an owner enjoys: possession, control, enjoyment, exclusion, and disposition. These rights can be separated and conveyed individually, such as selling mineral rights while keeping surface rights. Ownership is always subject to lawful government powers like taxation and zoning.

A city adopts an ordinance dividing land into residential, commercial, and industrial districts and limiting building heights in each. This exercise of government authority is known as:

• a.A private deed restriction
• b.The power of eminent domain
• c.Police power through zoning✓
• d.Escheat

Zoning is an exercise of a government's police power, the authority to regulate for public health, safety, and welfare, without paying compensation. Eminent domain differs because it takes property and requires just compensation. Escheat returns property to the state when an owner dies without heirs, and deed restrictions are private, not governmental, controls.

An appraiser valuing a single-family home in an established neighborhood relies mainly on recent sales of similar nearby homes, adjusting for differences. Which approach to value is being used?

• a.Sales comparison approach✓
• b.Cost approach
• c.Income capitalization approach
• d.Gross rent multiplier approach

The sales comparison approach estimates value by analyzing recent sales of comparable properties and adjusting for differences such as size, condition, and location. It is the primary method for residential appraisal because an active market of similar homes exists. The income approach fits rental property, and the cost approach fits new or special-use property.

A borrower obtains a loan on which the interest rate stays fixed and each monthly payment fully repays principal and interest so the balance reaches zero at maturity. This describes a:

• a.Balloon loan
• b.Fully amortized fixed-rate loan✓
• c.Reverse annuity mortgage
• d.Interest-only loan

A fully amortized loan has level payments that cover all interest due and gradually reduce principal, leaving a zero balance at the end of the term. A balloon loan leaves a large lump sum due at maturity, and an interest-only loan does not reduce principal during the interest-only period. The fixed rate means the payment does not change with market rates.

A buyer signs an offer to purchase a home. Until the seller accepts, the buyer's signed offer is best characterized as:

• a.A fully executed contract
• b.An offer that can be revoked before acceptance is communicated✓
• c.An implied contract
• d.A voidable contract that cannot be withdrawn

An offer is not a binding contract until the offeree accepts and that acceptance is communicated back to the offeror. Before acceptance, the offeror may generally revoke the offer. Once the seller signs and communicates acceptance, mutual assent exists and an executory contract is formed.

Under the Statute of Frauds, a contract for the sale of real estate is generally enforceable only if it is:

• a.Notarized and recorded with the county
• b.Reviewed by an attorney for both parties
• c.Accompanied by a cash deposit of at least ten percent
• d.In writing and signed by the party to be charged✓

The Statute of Frauds requires contracts for the sale of real property to be in writing and signed by the party against whom enforcement is sought. Recording and notarization affect notice and are not required to form a valid contract. There is no legal minimum deposit or mandatory attorney review to make a purchase contract enforceable.

A real estate licensee owes a client the duties of loyalty, confidentiality, obedience to lawful instructions, and full accounting. These duties arise from the:

• a.Fiduciary relationship created by agency✓
• b.Doctrine of caveat emptor
• c.Rule against perpetuities
• d.Statute of limitations

When an agency relationship is formed, the agent owes the principal fiduciary duties, often summarized as care, obedience, loyalty, disclosure, accounting, and confidentiality. These duties place the client's interests ahead of the agent's own. Caveat emptor, by contrast, is a limitation on what buyers can expect and is not the source of agent duties.

An agent represents the seller in a transaction. Which action would most clearly breach the agent's duty of loyalty to that seller?

• a.Telling a buyer the seller will accept far less than the list price without the seller's authorization✓
• b.Presenting all written offers to the seller
• c.Disclosing known material defects to a buyer
• d.Following the seller's lawful pricing instructions

The duty of loyalty and confidentiality means the agent must not reveal the seller's bargaining position, such as the lowest price the seller will accept, without authorization. Presenting all offers and following lawful instructions are proper duties owed to the seller. Disclosing known material defects to a buyer is required by law and is not a breach.

For a home built before 1978, federal law generally requires sellers and their agents to give buyers a disclosure and pamphlet regarding:

• a.Homeowners association dues
• b.Lead-based paint hazards✓
• c.The seller's original purchase price
• d.Radon gas testing results

The federal Residential Lead-Based Paint Hazard Reduction Act requires disclosure of known lead-based paint and hazards for most housing built before 1978, plus the EPA pamphlet and a ten-day inspection opportunity. Radon and HOA disclosures may be required by state law but are not the subject of this federal pre-1978 rule. A seller's purchase price is not a required federal disclosure.

A property manager who signs a management agreement to operate an apartment building on the owner's behalf functions as the owner's:

• a.Trustee in bankruptcy
• b.Independent adverse party
• c.General contractor
• d.Agent with fiduciary duties✓

A property manager is an agent of the owner and owes fiduciary duties, including loyalty, accounting for funds, and acting in the owner's best interest. The management agreement defines the scope of authority, compensation, and responsibilities such as leasing, maintenance, and rent collection. The manager is not an adverse party and is not merely a construction contractor.

Which type of deed offers the grantee the greatest protection by including full covenants such as the warranty of seisin and the covenant of quiet enjoyment covering the property's entire history?

• a.General warranty deed✓
• b.Quitclaim deed
• c.Special warranty deed
• d.Bargain and sale deed

A general warranty deed provides the broadest protection because the grantor warrants title against all defects arising at any time, even before the grantor owned the property. A special warranty deed only covers the grantor's own period of ownership. A quitclaim deed conveys whatever interest the grantor has with no warranties at all.

A licensee refuses to show homes in a particular neighborhood to a buyer because of the buyer's national origin. This conduct violates the:

• a.Truth in Lending Act
• b.Statute of Frauds
• c.Federal Fair Housing Act✓
• d.Real Estate Settlement Procedures Act

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, familial status, and disability. Steering buyers toward or away from areas based on a protected class is an illegal practice. RESPA governs closing cost disclosures, and TILA governs credit cost disclosures, neither of which addresses this conduct.

The practice of a listing broker refusing to cooperate with buyer brokers who are not members of the same organization, in order to exclude competitors, is best described as a potential violation of:

• a.The Statute of Frauds
• b.The parol evidence rule
• c.The doctrine of laches
• d.Antitrust law prohibiting group boycotts✓

Agreements among competitors to refuse to deal with certain brokers are group boycotts, which are illegal under antitrust law. Other antitrust violations include price fixing of commissions and market allocation. These practices harm competition and can lead to serious civil and criminal penalties independent of any real estate license discipline.

A home sells for $420,000 and the total commission is 6 percent, split evenly between the listing and selling brokerages. How much does the listing brokerage receive?

• a.$8,400
• b.$4,200
• c.$25,200
• d.$12,600✓

The total commission is 6 percent of $420,000, which equals $25,200. Splitting that evenly gives each brokerage half: $25,200 divided by 2 equals $12,600. Always confirm which figure the question asks for, since it requests only the listing side, not the full commission.

In Colorado, when a licensee prepares a standard purchase contract for residential real estate, the licensee generally must use:

• a.Any contract form the broker prefers to draft
• b.A form supplied only by the buyer's lender
• c.The current Colorado Real Estate Commission-approved standard form✓
• d.A National Association of Realtors national form

Colorado licensees are required to use current Colorado Real Estate Commission-approved standard forms, such as the Contract to Buy and Sell Real Estate, when acting within the scope of their license. This protects consumers and keeps licensees from the unauthorized practice of law. Licensees generally may not draft their own contract provisions except by filling in the approved blanks.

A licensee in Colorado wants to add a complex, non-standard legal clause that materially changes a party's rights and is not covered by the Commission-approved form. The proper course is to:

• a.Advise the party to have the clause prepared or reviewed by an attorney✓
• b.Draft the clause personally to save the client legal fees
• c.Leave the issue out of the contract entirely
• d.Copy language from an out-of-state contract

Colorado licensees may complete Commission-approved forms but may not draft complex or non-standard legal provisions, because doing so is the unauthorized practice of law. When a client needs special language that goes beyond the standard form, the licensee should recommend that an attorney prepare or review it. This protects both the consumer and the licensee.

The state body responsible for licensing and disciplining real estate brokers in Colorado, operating within the Department of Regulatory Agencies, is the:

• a.Federal Real Estate Board
• b.Colorado Association of Realtors
• c.Colorado Real Estate Commission within the Division of Real Estate✓
• d.Colorado Department of Housing Finance

The Colorado Division of Real Estate, part of the Department of Regulatory Agencies (DORA), houses the Colorado Real Estate Commission, which licenses and regulates brokers. Trade associations such as the Colorado Association of Realtors are private membership groups and do not issue licenses. The Commission sets rules, approves forms, and can discipline licensees.

In Colorado, real estate licensees are all licensed under a single category. That category is:

• a.Broker (associate, employing, or independent broker)✓
• b.Realtor
• c.Salesperson
• d.Escrow officer

Colorado does not issue a separate salesperson license; everyone is licensed as a broker. The levels include associate broker, employing broker, and independent broker, which differ by supervision and the ability to supervise others. A newly licensed broker typically works as an associate broker under an employing broker before qualifying to work independently.

Under Colorado law, if a licensee works with a buyer or seller but no written agreement establishes single agency, the default brokerage relationship is:

• a.Dual agent
• b.Transaction-broker✓
• c.Subagent of the listing broker
• d.Single agent

In Colorado the default relationship is transaction-broker unless the parties agree in writing to a single agency relationship. A transaction-broker assists a party without being that party's advocate and owes duties such as honesty, disclosure of material facts, and reasonable skill and care. Colorado does not permit dual agency; a licensee is either a single agent for one side or a transaction-broker.

A Colorado buyer wants a licensee to act as an advocate and owe full fiduciary duties, including advising on price and negotiating on the buyer's behalf. The appropriate written relationship is:

• a.Facilitator relationship
• b.Customer relationship with no agency
• c.Transaction-broker
• d.Single agency (buyer agency) by written agreement✓

To obtain advocacy and full fiduciary duties, a Colorado buyer must enter a written single agency (buyer agency) agreement, because the default is transaction-broker. A single agent owes duties such as loyalty, confidentiality, and counsel. A transaction-broker helps facilitate the deal but does not advocate for one party against the other.

In a typical Colorado residential transaction, the document that authorizes the closing entity to disburse funds and directs how the closing is to be conducted is the:

• a.Deed of trust
• b.Listing agreement
• c.Promissory note
• d.Closing Instructions signed by the parties✓

Colorado uses a Commission-approved Closing Instructions form that the buyer and seller sign to authorize and direct the closing company on how to handle the closing and disburse funds. The deed of trust and promissory note relate to the loan security and repayment, not to instructions for conducting the closing. Proper closing instructions help ensure funds and documents are handled correctly.

Colorado secures most real estate loans using a deed of trust. If the borrower defaults, nonjudicial foreclosure is typically carried out through the:

• a.Colorado Real Estate Commission
• b.Public Trustee of the county✓
• c.Listing broker
• d.County sheriff acting as trustee

Colorado is a deed of trust state that uses a Public Trustee, a county office, to conduct nonjudicial foreclosures. The deed of trust conveys the property to the Public Trustee as security for the loan, allowing foreclosure without a full court action in most cases. This system distinguishes Colorado from pure mortgage states that rely on judicial foreclosure.

A person who just passed the Colorado broker exam and obtained an initial license generally must, before performing brokerage activity:

• a.Wait five years to activate the license
• b.Immediately open an independent brokerage
• c.Be associated with and supervised by an employing broker as an associate broker✓
• d.Register with the federal real estate registry

A newly licensed Colorado broker typically starts as an associate broker under the supervision of an employing broker. Only after meeting additional experience and education requirements may a broker qualify to work independently or become an employing broker. This structure ensures new licensees gain supervised experience before operating on their own.

Under Colorado Real Estate Commission rules on trust (escrow) accounts, a broker holding earnest money for others must:

• a.Keep the funds in cash in the office safe
• b.Keep the funds in a separate trust account and retain transaction records for the required retention period✓
• c.Commingle the funds with brokerage revenue for convenience
• d.Deposit the funds into the broker's personal operating account

Colorado brokers must hold other people's money, such as earnest money, in a separate trust or escrow account and must not commingle it with personal or business funds. Brokers must maintain accurate records and retain transaction and account records for the period required by Commission rule, commonly four years. These safeguards protect consumer funds and support Commission audits.

Colorado requires an applicant for an initial broker's license to complete how many hours of Commission-approved pre-licensing instruction?

• a.72 hours
• b.120 hours
• c.168 hours✓
• d.180 hours

Colorado requires 168 hours: 48 in Real Estate Law and Real Estate Practice, 48 in Colorado Real Estate Contracts, and 72 hours spread across Real Estate Closings (24), Trust Accounts and Record Keeping (8), Current Legal Issues (8) and Practical Application (32). Cite: C.R.S. 12-10-203(4)(a); 4 CCR 725-1, Rule 2.1.A.2.

A Colorado associate broker wants to stop working under an employing broker and hold an Independent Broker level license instead. First she must have:

• a.closed at least fifty residential sales transactions during the preceding five years
• b.completed twenty-four hours of instruction in Brokerage Administration
• c.held an Active Associate Broker license for the preceding two years✓
• d.passed the Commission's Employing Broker Refresher Course

An applicant for the Independent Broker level must have held an Associate Broker level license on Active status for at least two years immediately preceding the date of application. The 24-hour Brokerage Administration course and the points worksheet belong to the Employing Broker level. Cite: C.R.S. 12-10-203(5)(c)(I); 4 CCR 725-1, Rule 2.5.B.

An applicant for a Colorado Employing Broker level license documents experience on the Commission's point worksheet. The application must total at least:

• a.20 points accumulated in the preceding three years
• b.75 points accumulated in the preceding five years
• c.100 points accumulated over the applicant's career
• d.50 points accumulated in the preceding five years✓

The applicant must show at least two years of active practice within the five years before application, evidenced by at least fifty points: ten per full year as an employing broker, five per full year of delegated supervisory authority, three per closed residential sale, six per commercial or vacant-land sale, and one point per hour of designated continuing education (capped at twenty). Cite: 4 CCR 725-1, Rule 2.5.C.3.a.

The broker designated to act for a Colorado corporation licensed as a brokerage firm resigns. To prevent hardship, the Division director may issue a temporary license for a period not to exceed:

• a.thirty days, with no extension available
• b.ninety days, extendable once for up to ninety more days✓
• c.six months, after which the entity's license lapses automatically
• d.one year measured from the designated broker's date of departure

If the designated broker of a partnership, LLC or corporation ceases to serve, the director may issue a temporary license for not more than ninety days to the newly designated licensee, and may extend it for one additional period of not more than ninety days for good cause; any further extension requires the Commission. Cite: C.R.S. 12-10-203(6)(c).

A Colorado broker lets her license expire and applies to reinstate it four months later. On top of the renewal fee, she owes a reinstatement fee equal to:

• a.one-half the renewal fee✓
• b.nothing, because reinstatement within one year carries no added fee
• c.the full renewal fee, the same as a three-year reinstatement
• d.twice the renewal fee, plus a separate examination fee

Reinstatement more than thirty-one days but within one year of expiration costs the renewal fee plus a reinstatement fee equal to one-half the renewal fee. More than one year but within three years, the reinstatement fee equals the full renewal fee. Within thirty-one days, only the renewal fee is due. Cite: 4 CCR 725-1, Rule 3.15.

Colorado requires every active broker to carry errors and omissions insurance. The Commission's group policy must provide coverage of at least:

• a.$50,000 for each licensee per covered claim
• b.$100,000 for each licensee per covered claim✓
• c.$300,000 for each licensee per covered claim
• d.$1,000,000 in the aggregate for each brokerage firm

The Commission Insurance Policy must provide not less than one hundred thousand dollars of coverage for each licensed person and entity per covered claim, regardless of how many brokers a claim may touch, not including investigation and defense costs. Cite: 4 CCR 725-1, Rule 3.9.B.4; C.R.S. 12-10-204.

The Colorado Real Estate Commission consists of:

• a.five members: three real estate brokers and two members of the public✓
• b.seven members: five brokers and two public members
• c.nine members, each appointed by the Director of the Division of Real Estate
• d.five members, all of whom must hold an active Colorado broker license

The Commission has five governor-appointed members: three brokers with at least five years of Colorado real estate experience, one of whom must have substantial property management experience, and two representatives of the public at large. Members serve three-year terms. Cite: C.R.S. 12-10-206(1).

A grateful buyer wants to hand a Colorado associate broker a $2,000 bonus directly at closing. The associate broker may accept compensation for licensed acts only from:

• a.any party who discloses the payment in writing before closing
• b.any party, so long as the payment is under five thousand dollars
• c.the closing entity, which must itemize it on the settlement sheet
• d.her employing broker✓

It is unlawful for a broker registered in Commission records as being in the employ of another broker to accept a commission or valuable consideration for licensed acts from anyone except that employing broker, who must be a licensed real estate broker. Cite: C.R.S. 12-10-221.

An associate broker violates the Commission's trust account rules. The Commission may take disciplinary action against her employing broker only if the employing broker:

• a.personally signed the closing statement in the affected transaction
• b.had actual knowledge of the violation or was negligent in supervision✓
• c.received any portion of the commission earned on the transaction
• d.was named in the consumer's written complaint filed with the Division

An unlawful act by an employee, officer or member of a licensed broker is not cause for discipline against that broker unless the Commission is satisfied the broker had actual knowledge of the act or had been negligent in supervising employees. Cite: C.R.S. 12-10-222.

A Colorado broker enters a guilty plea to a misdemeanor theft charge. She must provide written notification to the Commission within:

• a.thirty calendar days✓
• b.three business days
• c.ten calendar days
• d.the next license renewal cycle

A broker must notify the Commission in writing within thirty calendar days of a guilty plea, a plea of nolo contendere or a conviction of any crime, and also of any fair housing violation or out-of-state disciplinary action. Cite: 4 CCR 725-1, Rule 6.23.

Two brokers licensed with the same Colorado firm form a team and want to advertise as 'Summit Peak Realty Group.' Under the Commission's advertising rule the name is:

• a.permitted if the firm files the name as a trade name
• b.permitted so long as the brokerage firm's name is on the team's business cards
• c.prohibited, because a team name may not use 'Realty'✓
• d.prohibited unless the Commission consents to the name in advance in writing

A team name may not include Realty, Real Estate, Realtors, Company, Corporation, Corp., Inc., LLC, LP, LLP, or any other term implying an entity separate from the brokerage firm. All team advertising must also appear with the firm's legal name or trade name. Cite: 4 CCR 725-1, Rule 6.10.B.1.

A listing on a Colorado broker's own website expires. She must remove the expired listing from her electronic media within:

• a.ten days
• b.thirty days
• c.one business day
• d.three days✓

When a broker owns or controls electronic media, every viewable page must carry the brokerage firm's name, and any expired listing must be removed within three days of the listing contract expiring. Cite: 4 CCR 725-1, Rule 6.10.D.1.

A Colorado broker prepares a broker's price opinion for a lender's internal portfolio review rather than for an anticipated sale. The BPO must carry a notice saying it:

• a.was prepared under the Uniform Standards of Professional Appraisal Practice
• b.is not an appraisal and cannot be used to obtain financing✓
• c.expires ninety days after the broker signed it
• d.may be relied upon by any third party who receives a copy of it

A CMA or BPO prepared for any purpose other than an anticipated sale or purchase must state: 'This evaluation was prepared by a licensed real estate broker and is not an appraisal. This evaluation cannot be used for the purposes of obtaining financing.' Brokers are barred from preparing CMAs or BPOs used to obtain financing. Cite: 4 CCR 725-1, Rule 6.12; C.R.S. 12-10-602(9)(b)(II).

A Colorado seller and buyer each ask the same broker to represent them as a limited agent in one transaction, and both will sign a consent. The broker must refuse because Colorado:

• a.requires the written informed consent of the employing broker as well
• b.permits dual agency in commercial deals only
• c.permits dual agency only after the Commission approves the arrangement
• d.forbids a broker to establish dual agency with any party✓

Colorado abolished dual agency outright: a broker shall not establish dual agency with any seller, landlord, buyer or tenant. Consent cannot cure it. Cite: C.R.S. 12-10-406.

A Colorado buyer signs a buyer agency agreement with one designated broker at a forty-broker firm. The agency relationship:

• a.exists only with that designated broker, not with the firm✓
• b.extends to every broker licensed with that brokerage firm
• c.extends to the employing broker but not to the firm's other associate brokers
• d.exists with the firm, which then assigns one of its brokers

The brokerage relationship, including its duties and obligations, runs to the designated broker only. It does not extend to the employing broker, to other undesignated brokers, or to the entity. There is no imputation of knowledge to undesignated brokers. This does not relieve the employing broker of the duty to supervise. Cite: C.R.S. 12-10-403(6)(b) and (6)(f).

One Colorado broker is working with both the buyer and the seller in the same transaction. Which arrangement does the Commission permit?

• a.Single agent for the seller and single agent for the buyer
• b.Transaction-broker for both parties✓
• c.Single agent for the buyer and transaction-broker for the seller
• d.Dual agent for both parties with their written informed consent

One broker or team working both sides may act as transaction-broker for both, as transaction-broker for one while treating the other as a customer, or as single agent for one while treating the other as a customer. Never as single agent for one and single agent or transaction-broker for the other. Cite: 4 CCR 725-1, Rule 6.7; C.R.S. 12-10-403(6)(d).

A Colorado broker listed a seller as a single agent. Her own buyer client now wants that house and both consumers agree she may continue as a transaction-broker for both. She must give the seller the Commission-approved Change of Status form:

• a.when she begins assisting both, and no later than contract signing✓
• b.within three business days after the transaction has closed
• c.at the time the original listing contract was signed by the seller
• d.only if the seller requests the form from her in writing

A broker or team changing from single agent for one consumer to transaction-broker for both must deliver the written Commission-approved Change of Status form to the consumer whose relationship changed, at the time the broker begins assisting both, but not later than the time that consumer signs the contract. Cite: 4 CCR 725-1, Rule 6.9.

A Colorado broker is a single agent for the seller and is treating the buyer as a customer. Which task may she perform for that buyer without creating a brokerage relationship with him?

• a.Advising the buyer what price he should offer for the property
• b.Disclosing the lowest price the seller has said she would accept
• c.Negotiating the repair of defects on the buyer's behalf with the seller
• d.Showing the property and conveying written offers and counteroffers✓

Ministerial tasks, performed after proper disclosure, include showing a property, acting as a scrivener, conveying written offers and counteroffers, explaining financing alternatives, and providing information on professional, governmental and community services. They do not create agency or a transaction-broker relationship with the customer. Cite: 4 CCR 725-1, Rule 6.8.

When must a Colorado broker make the written brokerage-relationship disclosure to a consumer?

• a.At the closing table, before the consumer signs the settlement statement
• b.Before eliciting or discussing confidential information from that consumer✓
• c.Before answering any question about a listed property's price or location
• d.Within twenty-four hours after the first showing of any property

The written disclosure must be made before eliciting or discussing confidential information. Preliminary conversation or small talk about price range, location and property styles, or answering general factual questions about advertised properties, does not trigger it. Cite: 4 CCR 725-1, Rule 6.5; C.R.S. 12-10-408.

A Colorado transaction-broker learns that her seller would take $20,000 less than the asking price. Without the written consent of all parties she:

• a.must disclose it to the buyer as an adverse material fact
• b.may disclose it to the buyer's lender but not to the buyer
• c.must not disclose it✓
• d.may disclose it once the buyer has submitted a written offer

A transaction-broker may not disclose, without the express written consent of all parties, that a seller will accept less or a buyer will pay more, the parties' motivating factors, willingness to accept different financing terms, or facts that would stigmatize the property. Adverse material facts about the property are a different category and must be disclosed. Cite: C.R.S. 12-10-407(3).

A Colorado brokerage agreement is never performed or completed. The statute ends the relationship at the earliest of an agreed expiration date, a termination by the parties, or:

• a.six months after the engagement
• b.two years after the date of the engagement
• c.one year after the date of the engagement✓
• d.the end of the calendar year of the engagement

Relationships under Part 4 commence when the broker is engaged and run until performance or completion. If the agreement is not performed or completed for any reason, the relationship ends at the earlier of an agreed expiration date, termination or relinquishment by the parties, or one year after the date of engagement. Cite: C.R.S. 12-10-409(1).