Question 1
A Colorado property manager is managing a residential rental property on behalf of an owner. The property manager's license is placed on inactive status while the management agreement is still in effect. Under Colorado law, which of the following is accurate?
- A. The property manager may continue managing the property for up to 90 days while seeking to reactivate their license
- B. The property manager may continue to collect rents but may not sign new leases until reactivation
- C. The property manager must immediately cease all property management activities requiring a license ✓ Answer
- D. The property manager may continue managing the property provided the employing broker cosigns all documents
Explanation: Under C.R.S. 12-10-201 et seq. and DORA rules, an inactive license does not authorize any activities that require a real estate license, including property management functions such as leasing, collecting rents, and negotiating agreements on behalf of another. An inactive licensee must immediately cease all licensed activities; there is no grace period permitting continued management, and co-signature by an employing broker does not cure the inactive status problem.
Question 2
Under DORA rules applicable to Colorado real estate brokers performing property management, which of the following events requires a broker to immediately notify DORA in writing?
- A. The broker changes the name of their property management company
- B. The broker is convicted of a felony ✓ Answer
- C. The broker takes on a new property management client with more than 10 units
- D. The broker hires a new unlicensed administrative assistant
Explanation: Under Colorado real estate license law and DORA rules, a licensed broker is required to self-report a felony conviction (or certain other criminal convictions) to DORA promptly. A felony conviction is a grounds for discipline under C.R.S. 12-10-217 and triggers mandatory self-disclosure. Changing a business name, adding clients, or hiring administrative staff do not trigger the same immediate mandatory notification requirement.
Question 3
A Colorado residential property manager receives a written habitability complaint from a tenant describing a non-functioning heating system in January. Under C.R.S. 38-12-505, a heating failure in winter is treated as an emergency condition. What is the maximum time a landlord generally has to begin remediation of an emergency habitability condition after receiving proper written notice?
- A. 72 hours
- B. 24 hours ✓ Answer
- C. 48 hours
- D. 96 hours
Explanation: Under Colorado's Residential Tenants Health and Safety Act, C.R.S. 38-12-505, emergency conditions — including a loss of heat during winter — require the landlord to begin remediation within 24 hours of receiving proper written notice from the tenant. Non-emergency habitability violations allow a longer remediation period.
Question 4
A tenant in a Colorado apartment managed by a licensed brokerage firm delivers written notice to the firm stating she is a victim of domestic violence, attaches a copy of a valid civil protection order, and vacates the unit with eight months remaining on her lease. Under C.R.S. 38-12-402, what is the tenant's remaining rent obligation after she vacates?
- A. Rent for the remainder of the lease term or until the unit is re-rented, whichever occurs first
- B. One month's rent following her vacating the premises, payable within 90 days after she vacates ✓ Answer
- C. No further rent; the tenant is released from all financial obligations as of the date of her written notice
- D. Two months' rent as an early termination fee, which the firm may deduct directly from the security deposit
Explanation: C.R.S. 38-12-402(2) allows a residential tenant who is a victim of unlawful sexual behavior, stalking, domestic violence, or domestic abuse to terminate the lease early after giving the landlord written notice and evidence such as a police report written within the prior 60 days, a valid protection order, or a statement from a qualified medical professional or victim's advocate. The statute limits the tenant's liability to one month's rent following the date the tenant vacates, which is due and payable within 90 days after vacating; the landlord is not required to return the security deposit until that obligation is satisfied. The tenant is not liable for the balance of the lease term, is not fully released from all rent, and the statute does not authorize a two-month termination fee.
Question 5
Under Colorado Commission rules, if an employing broker's trust account is at risk of a negative balance due to a bank fee or charge applied directly to the trust account, which of the following best describes the broker's obligation?
- A. The broker may allow the account to go negative temporarily, provided it is corrected within 30 days.
- B. Bank fees charged to a trust account are automatically absorbed by the state's real estate recovery fund.
- C. The broker must promptly deposit personal or operating funds into the trust account in an amount sufficient to cover only the specific bank fee, to prevent the trust account from going negative. ✓ Answer
- D. The broker must close the trust account and open a new one at a different institution to avoid future fees.
Explanation: Colorado Commission rules prohibit a trust account balance from going negative. The one permissible reason a broker may deposit personal funds into a trust account is to cover bank service charges or fees that would otherwise cause a shortage. The deposit must be limited to the amount needed to cover the fee — depositing additional personal funds for any other purpose would constitute commingling.
Question 6
Under Colorado law, a real estate broker is holding earnest money in trust when the seller dies prior to closing. The seller's heir contacts the broker and demands release of the earnest money to the estate. The buyer makes no competing claim and wants to close. What is the broker's most appropriate action?
- A. Disburse the earnest money to the estate immediately, because the heir is the successor to all seller rights.
- B. Return the earnest money to the buyer immediately because the seller is deceased and cannot perform.
- C. Continue to hold the funds and not disburse to any party without either a written mutual release signed by the authorized representative of both parties or a court order, and consult legal counsel. ✓ Answer
- D. Deposit the earnest money with the Colorado Division of Real Estate pending appointment of an estate representative.
Explanation: A seller's death does not automatically authorize the broker to disburse trust funds to the estate or any third party. Under Colorado Commission rules, disbursement requires a written mutual release from all authorized parties or a court order. Until the estate is properly authorized (e.g., letters testamentary) and both parties agree on a course of action, the broker must hold the funds, consult legal counsel, and not disburse unilaterally.