Definitions +7Colorado · Real Estate · English

Colorado brokers hold licenses in one of several statuses. Active means a current, valid license allowing engagement in Real Estate Brokerage Services. Inactive means the broker holds a valid license but cannot perform brokerage services; they must continue renewing to maintain the inactive license. Expired means the license was not renewed by the last day of the cycle and is no longer valid; expired persons cannot hold themselves out as brokers.

• ✓Active license permits engaging in Real Estate Brokerage Services
• ✓Inactive brokers must still renew to maintain licensure but cannot perform brokerage services
• ✓Expired license holders cannot advertise or represent themselves as brokers

Colorado uses three broker license levels. An Associate Broker works under the supervision of an Employing Broker. An Independent Broker acts as their own brokerage firm/sole proprietor and does not employ or supervise Associate Brokers. An Employing Broker may employ and supervise Associate Brokers. All brokerage firms employing Associate Brokers must have an Active Employing Broker.

• ✓Associate Brokers must work under an Employing Broker's supervision
• ✓Independent Brokers cannot employ or supervise Associate Brokers
• ✓Brokerage Firms employing Associate Brokers must have an Active Employing Broker

A Trust or Escrow Account is any checking, demand, passbook, or statement account meeting four minimum elements: it is separate and contains only Money Belonging to Others; it is custodial and fiduciary; all funds are available on demand; and it is held with a Recognized Depository (bank, savings and loan, or credit union insured by FDIC or NCUA).

• ✓Account must be separate and contain only Money Belonging to Others
• ✓Account must be custodial, fiduciary, and available on demand
• ✓Account must be held with a Recognized Depository (FDIC/NCUA insured)

Colorado recognizes distinct appraiser credentials: Licensed Appraiser, Certified Residential Appraiser, Certified General Appraiser, and Licensed Ad Valorem Appraiser. Each has a defined scope of practice tied to statute section 12-10-606. A Licensed Appraiser is limited to non-complex 1-4 unit residential under $1,000,000 and complex 1-4 unit under $400,000. A Certified Residential Appraiser can appraise 1-4 unit residential regardless of value or complexity. A Certified General Appraiser can appraise all types of real property.

• ✓Licensed Appraiser: non-complex 1-4 unit residential under $1,000,000; complex 1-4 unit under $400,000
• ✓Certified Residential Appraiser: 1-4 unit residential without regard to value or complexity
• ✓Certified General Appraiser: all types of real property if competent
• ✓Licensed Ad Valorem Appraiser: limited to official duties as County Assessor employee or Division of Property Taxation employee
• ✓No credential level includes land requiring subdivision development analysis method (Rule 1.52)

The Anniversary Year Cycle is a three-year licensing period beginning on a broker's initial licensure date and expiring three years later on the same date. The Calendar Year Cycle is a three-year period starting January 1 of year one and ending December 31 of year three. All brokers will eventually be on a Calendar Year Cycle for renewal.

• ✓Anniversary Year Cycle spans three years from initial licensure date
• ✓Calendar Year Cycle runs January 1 to December 31 over three years
• ✓All brokers eventually convert to Calendar Year Cycle

A Conflict of Interest exists when a broker has a real or apparent competing professional or personal interest that may influence their actions or hinder their ability to fulfill client duties. Personal Identifying Information includes SSN, passwords, driver's license numbers, passport numbers, biometric data, and financial transaction devices.

• ✓Conflict of Interest may hinder a broker's ability to fulfill client duties
• ✓Personal Identifying Information must be protected under statute 6-1-713

Money Belonging to Others includes money accepted by a broker or brokerage firm for deposit in a Trust or Escrow Account, such as management agreement funds, rental receipts, security deposits, earnest money deposits, guest deposits for short-term rentals, advance fee contracts, and syndication funds.

• ✓Includes rental receipts, security deposits, and earnest money
• ✓Includes guest deposits, advance fees, and syndication funds

A Team is two or more brokers within a brokerage firm who cooperate on an ongoing basis to conduct a substantial portion of their brokerage services together. An Unlicensed On-Site Manager fills in blanks on lease forms, shows units, quotes owner-established prices, arranges maintenance, and collects monies; they must be employed as a salaried employee or independent contractor and paid through the brokerage firm.

• ✓A Team requires two or more brokers within the same firm cooperating ongoing
• ✓Unlicensed On-Site Managers must be paid through the brokerage firm, not by commission

The Colorado Board of Real Estate Appraisers operates within a federal framework established by FIRREA (Financial Institutions Reform, Recovery and Enforcement Act of 1989). Title XI of FIRREA (12 U.S.C. 3331-3355) created the appraiser regulatory system. The Appraisal Subcommittee (ASC) provides oversight, The Appraisal Foundation (TAF) is the source of standards, the AQB establishes minimum qualifications, and the ASB develops USPAP.

• ✓FIRREA Title XI is codified at 12 U.S.C. sections 3331 through 3355
• ✓The ASC oversees the appraiser regulatory system and determines Title XI compliance of jurisdictions
• ✓The AQB sets minimum education, experience, and examination requirements
• ✓The ASB develops, interprets, and amends USPAP

Transaction Value for loan transactions means the amount of the loan; for non-loan transactions, it means the market value of the real property interest. Residential Property means 1-4 residential units including suitable building sites. Non-Residential Property is everything else including 5+ dwelling units. Complex Residential Property exhibits atypical factors such as ownership form, size, design, location, or non-conforming zoning.

• ✓Transaction Value for a loan = amount of the loan
• ✓Transaction Value for non-loan = market value of the real property interest
• ✓Residential Property = 1 to 4 residential units, excluding land needing subdivision analysis
• ✓Non-Residential includes 5+ dwelling units, farm/ranch, retail, and large vacant land parcels

A Licensee, AMC, or Controlling Appraiser is in Good Standing if they have not been subject to a stipulation/final agency order (terms completed less than three years prior) or had a license revoked/permanently surrendered for statutory violations. A license is considered in good standing three years following completion of all terms of an executed stipulation or final agency order.

• ✓Good Standing requires three (3) years following completion of all disciplinary order terms
• ✓Cannot be subject to a stipulation for diversion with terms not fully completed
• ✓Good standing restored once all terms of stipulation of diversion successfully completed

A Contingent Fee is compensation paid based on reporting a predetermined value, direction of value favoring the client, amount of value opinion, attainment of a stipulated result, or occurrence of a subsequent event. A person employed by an entity compensated by contingent fee is also considered contingent-fee compensated.

• ✓Contingent Fee is tied to predetermined value or attainment of stipulated result
• ✓An appraiser employed by an entity paid a contingent fee is deemed contingent-fee compensated

Active means a current, valid license allowing appraisal activities within scope. Inactive means a valid license where the Licensee cannot engage in activities requiring licensure but must still renew and meet CE requirements. Valid means approved and shown as either Active or Inactive and eligible for renewal.

• ✓Active license permits engaging in appraisal within licensed scope
• ✓Inactive license prohibits all activities requiring licensure but requires continued renewal and CE
• ✓Valid license is approved and eligible for renewable status

Commercial Real Estate is any real property other than property containing one to four residential units. Residential includes single-family or multi-family units, condominiums, townhouses, or homes sold on a unit-by-unit basis even if part of a larger parcel with more than four units.

• ✓Commercial Real Estate excludes 1-4 residential unit properties
• ✓Units sold on a unit-by-unit basis are residential even in larger buildings

A Trade Name is the name a brokerage firm does business under other than its legal name; it must be on file with the Commission and filed with the Colorado Secretary of State. A Trademark is any logo, service mark, or identifying mark used with the firm's legal name or Trade Name and may be registered with the Secretary of State.

• ✓Trade Names must be filed with both the Commission and Secretary of State
• ✓Trademarks may be registered with the Colorado Secretary of State

Distance Education is based on geographical separation of student and instructor, with three components: Synchronous (simultaneous online interaction), Asynchronous (non-simultaneous, self-paced), and Hybrid (both in-person and online). Bio-Metric Proctoring continually verifies student identity through facial recognition, keystroke cadence, and activity observation.

• ✓Synchronous Distance Education = simultaneous instructor-student interaction (video chat, live webinar)
• ✓Asynchronous Distance Education = non-simultaneous, self-paced with structured schedule
• ✓Hybrid = both in-person and online interaction
• ✓Bio-Metric Proctoring is acceptable for identity verification

In real estate transactions involving a federally related residential mortgage, a Broker or Brokerage Firm—whether in an Affiliated Business Arrangement or not—cannot accept or give any incentive, disincentive, remuneration, commission, fee, or other Thing of Value to or from a settlement service provider for referring business. This mirrors RESPA anti-kickback rules.

• ✓No Thing of Value may be exchanged with a settlement service provider for referrals in a federally related residential mortgage transaction
• ✓A bona fide salary, commission, or return on ownership interest in an Affiliated Business Arrangement is still permitted
• ✓This applies whether or not the broker is engaged in an Affiliated Business Arrangement under section 12-10-218, C.R.S.

In real estate transactions NOT involving a federally related residential mortgage, a Broker or Brokerage Firm may accept a placement fee, commission, or Thing of Value for referring a settlement service provider only if the compensation is first disclosed in writing to the party being referred at the time of the referral.

• ✓Written disclosure of the compensation must be made to the party being referred
• ✓Disclosure must be given at the time of making the referral
• ✓Applies to placement fees, commissions, or other Thing of Value received directly or indirectly

Only Colorado-licensed Brokerage Firms may receive a commission on Colorado real estate transactions. Per section 12-10-217(1)(l), C.R.S., a Colorado Brokerage Firm may pay a referral fee to a firm or broker licensed in another jurisdiction or country under specific conditions.

• ✓The out-of-state/country firm or broker must have actually referred a client to the Colorado broker
• ✓The payee must reside and maintain an office in the other jurisdiction or country
• ✓All advertising, negotiations, contracting, and conveyancing of the Colorado property must be performed by a Colorado-licensed Broker
• ✓All money collected before closing must be deposited in the name of the Colorado-licensed Brokerage Firm per Chapter 5
• ✓Applies to citizens/residents of countries that do not license brokers if the payee represents they are in the real estate business there

A broker acting as a seller's or landlord's agent must not disclose specified confidential information about their client without the client's informed consent. This protects the client's negotiating position and personal circumstances.

• ✓Cannot disclose that seller/landlord will accept less than asking price or lease rate without informed consent
• ✓Cannot disclose the motivating factors of the party selling or leasing
• ✓Cannot disclose that seller/landlord will agree to financing terms other than those offered
• ✓Cannot disclose material information about seller/landlord unless required by law or nondisclosure would constitute fraud or dishonest dealing
• ✓Cannot disclose facts or suspicions that may psychologically impact or stigmatize property under § 38-35.5-101

The Subdivision Developer's Act affects which subdivisions must register with the Real Estate Commission before offering, negotiating, or agreeing to sell, lease, or transfer any portion. This applies both to subdivisions within Colorado and those located outside the state being offered for sale in Colorado.

• ✓Registration is required BEFORE offering, negotiating, or agreeing to sell, lease, or transfer any portion of the subdivision
• ✓Applies to Colorado subdivisions AND out-of-state subdivisions offered for sale in Colorado
• ✓Division of real property into 20 or more interests intended solely for residential use, each 35+ acres, must register
• ✓20 or more timeshare interests must register
• ✓20 or more residential units created by converting an existing structure (condominium conversions) must register
• ✓Cooperative housing corporations with 20 or more shareholders holding proprietary leases must register

Certain transactions are exempt from the Act's registration requirements, including campground memberships, bulk developer transfers, completed residential buildings, fully-improved lots, planning-authority-approved subdivisions, and public official sales.

• ✓Selling of memberships in campgrounds is exempt
• ✓Bulk sales and transfers between developers are exempt
• ✓Newly-erected, previously-unoccupied residential buildings where consideration includes building cost are exempt (but NOT conversions, timeshares, or cooperative housing)
• ✓Lots with fully-improved streets/roads, feasible potable water/sewage plan, and installed telephone/electricity facilities are exempt
• ✓Subdivisions approved after Sept 1, 1972 by regional/county/municipal planning authority under Article 28 of Title 30 or Article 23 of Title 31 are exempt
• ✓Sales by public officials in official conduct of their duties are exempt

A subdivision registration expires annually and must be renewed to continue business. Expired registrations may be reinstated within a limited window, but developers cannot transact during the lapse period.

• ✓Registration expires December 31st each year unless renewed
• ✓Expired registration may be reinstated within two (2) years upon renewal application, fee payment, and meeting Act requirements
• ✓A Developer is NOT authorized to transact business between expiration and reinstatement

The Act guarantees purchasers a non-waivable cancellation right for any subdivision regulated under the Act.

• ✓Five (5) day cancellation period applies after execution of a contract
• ✓The cancellation right CANNOT be waived
• ✓Cancellation period runs until midnight on the fifth (5th) day following execution of the contract

Contracts made by an unregistered developer are legally vulnerable, protecting purchasers.

• ✓Any agreement/contract for sale or lease is voidable by the purchaser if developer was not registered when made
• ✓Contract is unenforceable by the Developer if not duly registered at time of contract

A timeshare interest for registration purposes includes a broad range of ownership arrangements, both deeded and non-deeded.

• ✓Timeshare interest includes deeded or non-deeded interests
• ✓Includes fee simple interest, leasehold, contract to use, membership or club agreement, or interest in common
• ✓20 or more timeshare interests trigger registration requirement

The Act defines Developer broadly to cover all participants in subdivision activities.

• ✓Developer means any person, firm, partnership, joint venture, association, or corporation
• ✓Includes participation as owner, promoter, developer, or sales agent
• ✓Covers planning, platting, development, promotion, sale, or lease of a subdivision

Associations must maintain property insurance on common elements and commercial general liability insurance beginning no later than the first conveyance of a unit to a non-declarant. Property insurance must cover broad form causes of loss at full insurable replacement cost less deductibles, excluding land, excavations, and foundations.

• ✓Property insurance must equal full insurable replacement cost less deductibles, exclusive of land, excavations, and foundations
• ✓Liability insurance covers claims arising from ownership, existence, use, or management of common elements
• ✓Declarant is an additional insured in capacity as unit owner/board member; unit owners are additional insureds for common element claims
• ✓Coverage must begin no later than first conveyance to a person other than the declarant

For buildings in a cooperative or with units having horizontal boundaries, insurance must include the units but not finished interior surfaces of walls, floors, and ceilings. Improvements and betterments by owners need not be covered, but if covered, increased charges are assessed to those owners.

• ✓Insurance must include units but not finished interior surfaces of walls, floors, and ceilings
• ✓Owner-installed improvements/betterments need not be covered; increased cost assessed to those owners if covered

Required policies must name each unit owner as insured for common element liability, waive subrogation against unit owners and household members, provide that owner acts/omissions do not void the policy, and make the association policy primary over any owner's other insurance.

• ✓Insurer must waive subrogation rights against any unit owner or household member
• ✓Association's policy provides primary insurance if owner has other coverage for same risk
• ✓No unit owner act/omission (unless within association authority) voids the policy

Property insurance losses are adjusted with the association; proceeds are payable to an insurance trustee or the association, held in trust, and disbursed first for repair or restoration. No party receives payment unless a surplus remains after repair or the community is terminated.

• ✓Proceeds must be held in trust for the association, unit owners, and lienholders
• ✓Proceeds disbursed first for repair or restoration; surplus distributed only after complete repair or termination
• ✓Proceeds are not payable to holders of security interests

If required insurance is not reasonably available or is cancelled/not renewed without replacement, the association must promptly hand-deliver or mail notice to all unit owners. Associations may also carry additional insurance beyond requirements.

• ✓Association must promptly notify all unit owners if required insurance becomes unavailable or is cancelled
• ✓Insurers must give 30 days' notice before cancellation or nonrenewal to the association and covered parties

Associations with thirty or more units whose owners/employees control or disburse funds must maintain fidelity insurance of at least two months' current assessments plus reserves. Independent contractors managing such communities must also carry fidelity insurance unless named as insured employees.

• ✓Fidelity coverage must be at least two months' current assessments plus reserves for associations with 30+ units
• ✓Independent managers must carry equal fidelity insurance unless named as insured employee
• ✓Insurance premiums are common expenses

The Colorado Board of Real Estate Appraisers meets every other month and consists of seven members appointed by the Governor. Its overall objective is to protect the public. The legislature granted the Board rulemaking authority for matters related to real estate appraisers and Appraisal Management Companies (AMCs). Rules are made after notice and public hearings in which interested parties may participate.

• ✓The Board consists of seven members appointed by the Governor
• ✓The Board meets every other month
• ✓The Board's overall objective is to protect the public
• ✓Rules are made after notice and public hearings

The Division of Real Estate is part of the Department of Regulatory Agencies and is responsible for budgeting, purchasing, and related management functions. The director of the Division is an administrative officer who executes the directives of the Board and has statutory authority in all matters delegated by the Board. The Board exercises its duties through licensing, certification, and enforcement.

• ✓The Division is part of the Department of Regulatory Agencies
• ✓The Division director executes the directives of the Board
• ✓The Board exercises authority through licensing, certification, and enforcement

All applications are reviewed by the Division for completeness of supporting documents and the Fee. If deemed incomplete, the Applicant is notified in writing of deficiencies and has thirty (30) days to provide documentation; otherwise the application is canceled and the Fee is forfeited.

• ✓The Division reviews applications for completeness of documents and Fee
• ✓Applicant gets written notice of deficiencies and thirty (30) days to cure
• ✓Failure to cure within 30 days results in cancellation and forfeiture of the Fee

If a licensed or certified appraiser is removed from a Panel under Rule 17.21, but the Controlling Appraiser subsequently accepts the appraiser for consideration or engages them within twelve months after removal, the removal is treated as if it never occurred and the appraiser is considered part of the Panel without interruption.

• ✓Reinstatement window is twelve (12) months after removal
• ✓If re-accepted or re-engaged within 12 months, the removal is deemed not to have occurred
• ✓Appraiser is treated as part of the Panel without interruption

If Fees for an application are paid by check that is not immediately honored upon presentment, or payment by any other manner is denied, rescinded, or returned as invalid, the application is canceled. It must be re-submitted with full payment plus the fee required by State Fiscal Rules for clerical services caused by the invalid payment.

• ✓A dishonored check or denied payment results in cancellation of the application
• ✓Re-submission requires full payment of any Fees
• ✓An additional clerical services fee required by State Fiscal Rules must be paid for invalid payment

Submitting an application does not guarantee issuance of a license or issuance within a specific timeframe. Applicants may not represent themselves as Licensees of the Board until the license is actually issued.

• ✓Application submission does not guarantee a license will issue
• ✓No guarantee of issuance within any specific period of time
• ✓Applicants must not represent themselves as Licensees until the license is issued

Once an application is Deemed Complete, the Board timely processes it. The Board may require additional information and documentation to determine compliance with laws and regulations and to verify submitted information.

• ✓The Board timely processes applications that are Deemed Complete
• ✓The Board reserves the right to require additional information and documentation
• ✓The Board may verify any information and documentation submitted

Understanding the three key license status definitions is essential. An Active license is a current, Valid license allowing residential mortgage loan origination activities. An Inactive license holder holds a Valid license shown in Board records as Inactive and CANNOT engage in origination activities but must still renew and meet continuing education requirements. A Valid license is one that is approved and shown as either Active or Inactive and eligible for renewal.

• ✓An Active license permits residential mortgage loan origination activities
• ✓An Inactive license prohibits origination but requires continued renewal and CE compliance
• ✓A Valid license means approved and shown as either Active or Inactive, eligible for renewal

Offering or negotiating terms means presenting particular loan terms for consideration or communicating to reach mutual understanding about prospective terms. Taking a residential mortgage loan application means receiving an application to facilitate a decision whether to extend loan terms. A generic referral to or recommendation of a particular lender, in and of itself, is NOT offering/negotiating or taking an application.

• ✓A generic referral to or recommendation of a particular lender is not offering or negotiating terms
• ✓A generic referral or recommendation of a lender is not taking a residential loan application
• ✓Taking an application means receiving it to facilitate a decision whether to extend loan terms

A Bona Fide Nonprofit Organization must meet six specific criteria including 501(c)(3) tax-exempt status, promoting affordable housing or homeownership education, conducting activities for public/charitable rather than commercial purposes, receiving funding that does not incentivize acting against clients' interests, compensating employees to act only in clients' best interests, and providing loans with terms favorable to borrowers.

• ✓Must have 501(c)(3) tax-exempt status under the Internal Revenue Code of 1986
• ✓Must serve public and charitable purposes rather than commercial purposes
• ✓Must provide residential mortgage loans with terms favorable to the borrower

An Employee is an individual whose work performance is subject to control by a person and whose compensation is reported on a W-2 form. An Independent Contractor performs duties other than at the direction/supervision of a licensed individual, or is exempt under specific categories (depository institution employees, government/housing finance agency employees, or bona fide nonprofit organization employees).

• ✓An Employee's compensation is reported on a W-2 form issued by the controlling person
• ✓Independent Contractor status depends on lack of direction/supervision or specific statutory exemptions
• ✓Bona fide nonprofit employees acting as loan originators must only handle loans with terms favorable to the borrower

A Loan Modification is a temporary or permanent change in one or more terms of a mortgagor's existing loan, allowing reinstatement and often a more affordable payment, with the borrower retaining ownership and the note/deed of trust remaining intact. A Loan Modifier offers to assist, provide, or negotiate on behalf of a borrower to facilitate a loan modification, generally for a fee.

• ✓In a loan modification the borrower retains ownership and the note/deed of trust remain intact
• ✓A Loan Modifier acts on behalf of the borrower with their current mortgage lender, generally for a fee

A Short Sale is the sale of real property for less than the mortgage loan balance. In settlement of the short sale transaction the existing mortgage is extinguished. Any deficiency created may be transformed into a promissory note, charged off, forgiven, or pursued as a judgment against the previous owner.

• ✓A short sale involves selling property for less than the mortgage loan balance
• ✓In a short sale settlement the existing mortgage is extinguished
• ✓Any deficiency may be transformed into a promissory note, charged off, forgiven, or pursued as judgment

Sponsorship is a relationship status shown in NMLS records between a Mortgage Company and a Mortgage Loan Originator, under which the MLO only conducts business under that company. A Responsible MLO holds an Active license and is shown in Board records as supervising a Mortgage Loan Originator holding a temporary license.

• ✓An MLO under Sponsorship conducts business only under the Mortgage Company shown in NMLS records
• ✓A Responsible MLO must hold an Active license and supervises a temporary license holder

Important defined forms include the Uniform Residential Loan Application (Freddie Mac form 65 / Fannie Mae form 1003 for properties of four or fewer units), the Good Faith Estimate Disclosure (RESPA Regulation X, Appendix C), the Truth-in-Lending Disclosure (Regulation Z), and the Colorado Lock-in Disclosure. The TILA-RESPA Integrated Disclosure Rule became effective October 3, 2015.

• ✓The Uniform Residential Loan Application is Freddie Mac form 65 or Fannie Mae form 1003 for four or fewer units
• ✓The TILA-RESPA Integrated Disclosure Rule became effective October 3, 2015
• ✓The Colorado Lock-in Disclosure is used for transactions not under the TILA-RESPA Integrated Disclosure Rule

Jurisdiction includes all fifty states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. A Family Member is a person related by blood, marriage, civil union, or adoption. These definitions matter for licensing history requirements and disclosures.

• ✓Jurisdiction includes all 50 states, D.C., Guam, Puerto Rico, and the U.S. Virgin Islands
• ✓A Family Member is related by blood, marriage, civil union, or adoption