CP-9 Working With a For Sale By Owner (FSBO) +16Colorado · Real Estate · English

A broker representing a buyer should discuss with the client how to proceed before contacting the FSBO owner, review Section 7 (Compensation) of the listing contract, and consider potential brokerage relationship implications, possibly using a Change of Status Form or treating the owner as a Customer.

• ✓Discuss compensation and relationship implications before contacting the FSBO owner
• ✓Consider a Change of Status Form or treating the owner as a Customer

A broker may treat the FSBO owner as a Customer. If a cooperating fee is offered, obtain a written compensation agreement. Provide the Commission-Approved Brokerage Disclosure to Seller checking the Customer box. Only ministerial tasks under Rule 6.8 may be performed.

• ✓Obtain written compensation agreement if owner offers a cooperating fee
• ✓Provide Brokerage Disclosure to Seller checking the Customer box
• ✓Only ministerial tasks under Rule 6.8 permitted with a Customer

A broker may secure a short single-party listing when they have an interested buyer; the owner risks two commissions if also listing with another broker. Advertising an unrepresented owner's property requires written permission and conspicuous disclosure that the owner is not represented; cannot be submitted to MLS.

• ✓Single-party listing is limited to one buyer for a short period
• ✓Advertising FSBO requires written permission and conspicuous non-representation disclosure
• ✓FSBO advertising cannot be submitted to MLS

Chapter 1 defines terms used in the Commission Rules, including Business Record, Consumer, Consumer Agreement, Day, Deemed Complete, and Nondisturbance Agreement.

• ✓Business Record includes Consumer Agreement, financing agreement, settlement statements, title policy, trust deed, escrow agreement, and HOA money records
• ✓Consumer means a natural person, corporation, company, LLC, partnership, firm, association, or other legal entity
• ✓Day means any calendar day and includes Saturday, Sunday, and legal holidays
• ✓Deemed Complete means a complete and satisfactory application with fee and required documentation per Chapter 2
• ✓Nondisturbance Agreement means the blanket encumbrance holder agrees its rights are subordinate to purchasers' rights

An Equivalency Filing allows out-of-state-regulated developers to apply based on substantially equivalent protection; the Practice Act is the Subdivision Developer's Act.

• ✓Equivalency Filing applies when developer is regulated in another state with substantially equivalent or comparable purchaser protection
• ✓Practice Act means the Subdivision Developer's Act at sections 12-10-501 et seq.
• ✓Reservation Agreement is a revocable right to purchase before a Developer Certificate is obtained
• ✓Fee means the prescribed non-refundable license fee set by the Division

Associations cannot prohibit unit owners from installing level 1 or level 2 EV charging systems, charge fees beyond electricity reimbursement, or restrict parking based on vehicle type. Associations must consent to systems on owned/assigned limited common elements if the owner complies with design specs, uses licensed electricians, bears installation costs, and provides insurance within 14 days. Applies only to residential units; excludes timeshare units.

• ✓Associations cannot prohibit level 1 or level 2 EV charging system installation by unit owners
• ✓Associations may require registration within 30 days and reasonable aesthetic provisions
• ✓Certificate of insurance must be provided within 14 days after receiving association consent
• ✓This section applies only to residential units and excludes timeshare units

Associations shall not effectively prohibit installation/use of energy efficiency measures, limited to: shade structures marketed for energy reduction, garage/attic fans, evaporative coolers, energy-efficient outdoor lighting, retractable clotheslines, and heat pump systems. Exceptions include reasonable aesthetic provisions and bona fide safety requirements. The section does not confer rights on property owned by others or common elements.

• ✓Associations cannot effectively prohibit installation of qualifying energy efficiency measures
• ✓Reasonable aesthetic provisions and bona fide safety requirements are permitted exceptions
• ✓Rights do not extend to property owned by another, leased property, or common elements

Members cannot be expelled or suspended except through a fair and reasonable procedure carried out in good faith. A fair procedure includes 15 days prior written notice, reasons, and an opportunity to be heard at least 5 days before the effective date. Challenges must be brought within one year.

• ✓Expulsion/suspension requires a fair and reasonable procedure carried out in good faith
• ✓Requires at least 15 days prior written notice and opportunity to be heard 5 days before effective date
• ✓Challenges to expulsion/suspension must be commenced within one year

Associations with voting members must hold annual meetings unless bylaws eliminate them. Notice must be given 10-60 days before (30 days if by other than first-class/registered mail). Unless bylaws state otherwise, 25% of votes entitled to be cast constitutes a quorum.

• ✓Meeting notice must be given no fewer than 10 days (30 if non-first-class mail) and no more than 60 days before
• ✓Default quorum is 25% of the votes entitled to be cast unless bylaws provide otherwise
• ✓Special meeting may be demanded by members holding at least 10% of votes

Unless bylaws provide otherwise, members may vote in person or by proxy. Proxy appointments are effective when received and valid for 11 months unless a different period is stated. Each member gets one vote per matter unless bylaws provide otherwise.

• ✓A proxy appointment is valid for 11 months unless a different period is expressly stated
• ✓Each member is entitled to one vote per matter unless bylaws provide otherwise
• ✓Proxy is revocable by attending and voting in person or by written revocation

Actions may be taken without a meeting by unanimous written consent (unless bylaws allow less), with consents received within 60 days. Alternatively, actions may be taken by written ballot delivered to every voting member, valid only when votes cast meet quorum and approval thresholds.

• ✓Action without meeting generally requires unanimous written consent within 60 days
• ✓Written ballots must be delivered to every member entitled to vote and meet quorum/approval thresholds
• ✓Written ballot solicitations must state quorum needed, approval percentage, and deadline

The Board of seven members is appointed by the governor with consent of the senate, with the same composition detailed earlier. Members serve three-year terms; vacancies are filled by the governor for the unexpired term. The governor may remove any member for misconduct, neglect of duty, or incompetence.

• ✓Members are appointed by the governor with consent of the senate
• ✓Members serve three-year terms
• ✓The governor may remove members for misconduct, neglect of duty, or incompetence

The Board is a type 1 entity under the Division of Real Estate, providing autonomy to avoid conflicts of interest. Members, consultants, and expert witnesses are immune from civil liability for good-faith official acts. A majority of the Board constitutes a quorum, and actions require a majority vote of members present. This part 6 is repealed effective September 1, 2031.

• ✓The Board is a type 1 entity under the Division of Real Estate
• ✓Members, consultants, and expert witnesses have immunity for good-faith acts
• ✓A majority constitutes a quorum; actions require majority vote of members present
• ✓Part 6 is repealed effective September 1, 2031

The Board may issue licenses by endorsement only to persons holding an active, Good Standing license from a Title XI-compliant jurisdiction that is substantially equivalent to a Colorado credential. The applicant must apply on a Board form, pay fees, submit fingerprints for a CBI criminal history check, and be issued the endorsement before undertaking Colorado appraisal activities.

• ✓Endorsement requires an active, Good Standing license from a Title XI-compliant jurisdiction
• ✓Qualifications must be substantially equivalent to the Colorado credential
• ✓Fingerprint-based criminal history check required
• ✓Must be issued the endorsement before performing Colorado appraisal work
• ✓Endorsement licenses are subject to the same renewal requirements

When a servicemember or spouse relocates residency to Colorado due to military orders and holds a valid credential from another jurisdiction, the Board grants authority to practice at a substantially equivalent level. Requirements include military orders, Good Standing, an active license during the two years preceding relocation, application with fee, E&O proof, and submission to Board authority.

• ✓Must provide military orders indicating new Colorado residency
• ✓Must have held an active license during the two (2) years preceding relocation
• ✓Must provide proof of E&O insurance per Rule 6.10
• ✓Authority to practice is valid as long as the military orders are in effect

Part 7 does not apply to certain persons, including sellers financing no more than three of their own properties in 12 months, individuals financing up to three loans without compensation for family members, banks/savings associations/credit unions and their employees, certain attorneys, funders not soliciting borrowers, and non-independent loan processors.

• ✓Seller financing exempt for no more than three properties in a 12-month period
• ✓Family-member financing exempt for up to three loans in 12 months without compensation
• ✓Banks, savings associations, credit unions, and their employees are exempt
• ✓Attorneys not primarily in mortgage business are exempt
• ✓Exemptions do not apply to persons acting beyond the exemption's scope

Exemptions apply to government agencies providing affordable housing programs, quasi-government agencies, HUD-approved housing counseling agencies, community development organizations, and self-help housing organizations, plus their employees/volunteers.

• ✓Government agencies providing affordable housing programs are exempt
• ✓HUD-approved housing counseling agencies and their employees are exempt
• ✓Community development and self-help housing organizations are exempt

Board Position Statements offer practice-related guidance but are NOT law and do not carry the full force and effect of laws and regulations. They should be interpreted as non-binding direction and read as a series of best practices. They provide insight into the Practice Act (12-10-701 et seq.) and the Rules (4 CCR 725-3).

• ✓Position Statements are not law and do not carry the full force and effect of laws or regulations
• ✓Position Statements are non-binding best-practice guidance

Persons who supervise MLOs are not required to be licensed if their duties are purely administrative (setting goals, overseeing production, delegating duties, evaluating performance) and do not amount to taking an application or offering/negotiating terms. Support staff performing purely clerical tasks under supervision of a licensed individual (obtaining information for processing/underwriting, receiving and analyzing common processing information) are also exempt, as long as they do not offer/negotiate rates or terms or counsel consumers about them.

• ✓Supervisors performing purely administrative duties are not required to be licensed
• ✓Support staff performing purely clerical tasks under a licensed individual's supervision are not required to be licensed
• ✓If an unlicensed person's activities fall within 'originate a mortgage' or 'mortgage loan originator,' licensure is required

Section 12-10-709 defines exempt individuals and entities. SB 13-118 added an exemption for real estate brokers who represent persons providing seller financing for the sale of no more than three residential properties in any twelve-month period. 'Represents' means acting in the capacity of a real estate broker, which does NOT include offering or negotiating terms of proposed financing — that activity falls under mortgage origination. Brokers must take care not to perform acts requiring licensure under the federal S.A.F.E. Act.

• ✓A real estate broker may be exempt when representing a person providing seller financing for no more than three residential properties in a 12-month period
• ✓Acting as a real estate broker does not include offering or negotiating financing terms, which requires MLO licensure
• ✓Care must be taken not to perform acts requiring licensure under the federal S.A.F.E. Act

Individuals who offer or negotiate loan modifications are, at a minimum, indirectly acting as mortgage loan originators and must be licensed. They must comply with all MLO laws including a duty of good faith and fair dealing, prohibitions on misleading promises and 'best efforts' fee contracts. If a borrower fails to close through no fault of the MLO after a written commitment, the MLO may charge a fee not exceeding $300 for services/documents (if not prohibited by the Truth in Lending Act). Exempt parties include non-profit HUD-approved housing counseling employees (receiving no compensation) and mortgage servicing company employees.

• ✓Individuals offering or negotiating loan modifications must be licensed as MLOs
• ✓MLOs owe a duty of good faith and fair dealing and are prohibited from 'best efforts' fee contracts
• ✓The MLO may charge a fee not to exceed $300 if a borrower fails to close through no fault of the MLO
• ✓Non-profit HUD-approved housing counseling employees receiving no compensation are not required to be licensed

There is a presumption of compliance with the financial responsibility requirement in section 12-10-711(1)(g) for individuals who have complied with both the errors and omissions insurance requirements (section 12-10-707) and the surety bond requirements (sections 12-10-704(8) and 12-10-717) and related Board/Director rules.

• ✓Compliance with E&O insurance and surety bond requirements creates a presumption of financial responsibility
• ✓The financial responsibility presumption is grounded in section 12-10-711(1)(g)

Real estate brokers perform duties involving financial matters (accounting for money, keeping parties informed, assisting with contract compliance and closing, disclosing adverse material facts about financial ability). While these could be construed as requiring an MLO license because they involve financing matters, the Board has determined these real estate brokerage activities are exempt from the MLO licensing act. However, brokers who take a residential loan application or offer/negotiate loan terms must be licensed as MLOs.

• ✓Real estate brokerage activities involving financing matters are exempt from the MLO licensing act
• ✓A real estate broker who takes a residential loan application or offers/negotiates loan terms must be licensed as an MLO

The Board excludes certain entities from the mortgage company definition: entities (other than individuals) that only fund loans taken by a licensed/exempt person and do not take applications, solicit borrowers, or negotiate terms; private mortgage insurance companies providing contract underwriting; and lead generating companies that do not take applications or offer/negotiate terms. These excluded entities are not required to register as Mortgage Companies.

• ✓Entities that only fund loans (without taking applications, soliciting, or negotiating) are excluded from the mortgage company definition
• ✓Private mortgage insurance companies providing contract underwriting are excluded
• ✓Lead generating companies that do not take applications or offer/negotiate terms are excluded and need not register

Subject to the declaration, a unit owner may make improvements that do not impair structural integrity or systems, may not change common element appearance without association permission, and may remove partitions between adjoining units under certain conditions.

• ✓Alterations must not impair structural integrity, electrical/mechanical systems, or lessen support
• ✓A unit owner may not change common element appearance without association permission
• ✓Removal of partitions or creation of apertures between adjoining units is not an alteration of boundaries

A nonprofit corporation may indemnify a director acting in good faith who reasonably believed conduct was in the corporation's best interests. Indemnification is mandatory for a director wholly successful in defending a proceeding, limited to reasonable expenses.

• ✓Permissive indemnification requires good faith conduct reasonably believed to be in the corporation's best interests
• ✓A corporation must indemnify a director wholly successful in defense against reasonable expenses unless limited by articles
• ✓A corporation may not indemnify a director adjudged liable to the corporation or for improper personal benefit

A corporation may advance expenses before final disposition if the director provides a written good-faith affirmation and undertaking to repay. The corporation may also purchase liability insurance for directors, officers, employees, and agents.

• ✓Advance of expenses requires a written affirmation of good faith and a written undertaking to repay if the standard is not met
• ✓Determinations of indemnification must be made by disinterested directors, a committee, independent counsel, or voting members
• ✓A corporation may purchase insurance for directors/officers even for liabilities it could not directly indemnify

Rule 2.3 requires developers to supply disclosures to the Commission and disclose to purchasers in the Consumer Agreement or separate document before contracting.

• ✓Must disclose developer/subdivision name and address and type of ownership/occupancy rights
• ✓Must describe facilities, amenities, accommodations, and for uncompleted subdivisions the access/utilities provisions
• ✓Must include bold-print rescission disclosure immediately before purchaser's signature: minimum 5 Days after execution, non-waivable
• ✓Must disclose judgments/administrative orders material to the development and any taxes/assessments
• ✓Must state sales require Colorado-licensed brokers unless exempt under 12-10-201(6)(b)
• ✓Separate disclosure documents must display bold statement that the Commission has not prepared, issued, or passed on merits

A Consumer Agreement requiring a note that accrues interest or requires payments before deed recording is deemed an installment contract with specific required disclosures.

• ✓Must state whether deed is escrowed with an independent escrow agent and identify the agent
• ✓Must disclose amount, name/address of encumbrancers, and cure conditions
• ✓Must clearly state that default on underlying encumbrance could cause loss of purchaser's entire interest
• ✓Must advise purchaser to record the installment contract
• ✓Must include blanket encumbrance subordination or other purchaser-protecting arrangement

The person authorized to apply for a Developer Certificate depends on the entity type.

• ✓Corporation: a director or authorized officer must apply
• ✓Partnership/limited partnership: one general partner must apply
• ✓Joint owner: may apply on behalf of all joint owners
• ✓LLC: one manager or member-manager must apply
• ✓Other non-natural-person entity: a person authorized by satisfactory documents must apply

Applicants must provide specific documentation for each subdivision, including title evidence, sample documents, and nondisturbance agreements for timeshare blanket encumbrances.

• ✓Must provide address/physical location, recorded deed/title evidence, and title commitment/policy
• ✓Must provide sample Consumer Agreement, notes, deeds, and legal documents
• ✓Timeshare subdivisions with blanket encumbrances must submit a Nondisturbance Agreement subordinating encumbrance rights to timeshare use purchasers
• ✓Non-natural-person developers must provide proof of formation and registration
• ✓Must provide copies of the recorded declaration of the subdivision

Additional disclosures apply when the subdivision has an HOA or involves timeshare sales, including component-site timeshare plans.

• ✓HOA disclosures: mandatory membership, dues estimates, services/amenities, developer voting control, and developer financial interest
• ✓Timeshare disclosures: unit descriptions, managing entity, dues/taxes estimates, insurance, mechanic's lien warning, term length, and tax lien warnings
• ✓Multi-component-site timeshares require detailed reservation system, one-to-one use ratio, escrow, and modification disclosures
• ✓Escrow with independent agent must be evidenced for funds collected for taxes, insurance, and common expenses

Rules govern invalid payments, completeness review, issuance timing, and offering reservations during pendency.

• ✓Invalid/denied payment renders application incomplete and canceled; reinstatement is discretionary with additional fees
• ✓Commission allows an additional 60 Days for required information before denial, extendable for good cause
• ✓Commission issues or denies within 60 Days from receipt of a Deemed Complete application
• ✓Reservations during pendency require escrow of all funds or a letter of credit/bond/other financial arrangement to ensure completion
• ✓Reservation Agreement approvals expire December 31 following issuance

An MLO has a duty of good faith and fair dealing in all borrower communications and transactions. This includes not recommending transactions without a reasonable tangible net benefit, making reasonable inquiry into the borrower's finances, and not violating section 38-40-105.

• ✓MLO owes a duty of good faith and fair dealing in all communications/transactions
• ✓Must not recommend transactions lacking a reasonable, tangible net benefit
• ✓Must make reasonable inquiry into borrower's income, debts, and obligations
• ✓A violation is a deceptive trade practice under the Colorado Consumer Protection Act

Unless articles provide otherwise, each nonprofit must have a board of directors managing corporate affairs. A board consists of one or more directors, each of whom must be an individual. In absence of a stated term, each director's term is one year.

• ✓A board must consist of one or more directors, each of whom must be an individual
• ✓Default director term is one year in absence of a stated term
• ✓All corporate powers are exercised under the board's direction unless articles provide otherwise

Voting members may remove directors they elected with or without cause (unless bylaws require cause), only at a meeting called for that purpose with proper notice. Vacancies may be filled by voting members or the board; a director elected by a voting group may only be removed/replaced by that group.

• ✓Voting members may remove elected directors with or without cause unless bylaws require cause
• ✓Removal requires a meeting called for that purpose with notice stating removal as a purpose
• ✓Directors may be judicially removed for fraud, dishonesty, or gross abuse of authority

A nonprofit corporation may amend its articles at any time to add, change, or delete provisions. Members do not have vested property rights from provisions in articles or bylaws relating to management, control, purpose, or duration.

• ✓Articles may be amended at any time to add, change, or delete permitted provisions
• ✓A member has no vested property right resulting from any article or bylaw provision
• ✓The board may adopt certain housekeeping amendments without member approval

The board or members representing at least ten percent of votes may propose amendments for member submission. The board must recommend the amendment (with exceptions), and members must approve it with proper notice stating the amendment's purpose.

• ✓The board or members holding at least 10% of votes may propose an amendment for member vote
• ✓Notice of the member meeting must state consideration of the amendment and include a copy or summary
• ✓The amendment must be approved by every voting group entitled to vote as required by statute or a greater required vote

The board may amend bylaws at any time unless reserved to members, prohibited by a particular bylaw, or affecting class membership rights. Members may also amend bylaws even if the board can. Bylaws fixing greater quorum/voting requirements have special amendment rules.

• ✓The board may amend bylaws unless power is reserved to members, a bylaw prohibits it, or it changes class membership rights
• ✓A bylaw fixing a greater member quorum/voting requirement may not be amended by the board alone
• ✓A member-adopted bylaw fixing a greater director quorum/voting requirement may only be amended by the members

The Board may promulgate rules to implement part 6 and comply with FIRREA. The Board shall not establish requirements more stringent than applicable federal law. Ad valorem appraisers are not regulated by federal amendments, but the Board must adopt rules for their minimum qualifications and standards. The Board must separately account for AMCs overseeing more than 15 appraisers in Colorado or 25+ in all states.

• ✓The Board cannot establish requirements more stringent than applicable federal law
• ✓The Board must adopt rules for ad valorem appraiser qualifications and standards
• ✓AMCs overseeing 15+ appraisers in Colorado or 25+ in all states must be separately accounted for

The Board may charge non-refundable fees, employ administrative law judges, issue/deny/refuse to renew licenses, take disciplinary actions, delegate authority to the director, develop examinations offered at least twice yearly, make investigations, subpoena persons/documents, and issue cease-and-desist orders. The Board must maintain licensing history records for seven years. Complaints and investigative files are closed to public inspection; stipulations and final orders are public record.

• ✓The Board shall not refund fees received from applicants
• ✓Examinations must be offered at least twice a year
• ✓The Board must maintain licensing history records for seven years
• ✓Complaints and investigative files are closed to public inspection; final orders are public

A Temporary Practice Permit may be issued to an active, Good Standing out-of-state appraiser for a specific federally related transaction assignment. The applicant must apply before commencing the appraisal, identify the assignments in writing, and the permit is valid only for the listed assignments. Permits are available only to those holding licensure substantially equivalent to Certified Residential, Certified General, or Ad Valorem levels, not entry-level.

• ✓Must apply for and be issued the permit before commencing a federally related appraisal
• ✓Permit is valid only for the specific assignments listed
• ✓No person may receive more than four (4) permits in any rolling 12-month period
• ✓Not available to trainee, apprentice, associate, intern, or entry-level licensees
• ✓Additional or update assignments on the same property require a new permit or endorsement

Fees collected go to the state treasurer credited to the division of real estate cash fund. Fees are adjusted so revenue approximates the Division's direct and indirect costs. Money in the fund is not deposited or transferred to the general fund except as specifically provided.

• ✓Fees are credited to the division of real estate cash fund
• ✓Fund money generally may not be transferred to the general fund

The costs of the HOA information and resource center are paid from the division of real estate cash fund. The annual HOA registration fee is set to recover these costs, subject to a maximum limit of fifty dollars.

• ✓HOA annual registration fee is capped at a maximum of $50
• ✓HOA resource center costs are paid from the division of real estate cash fund

Certified copies of Commission records are admissible in court as evidence equal to originals. Commission records are open to public inspection under Commission rules. The Commission need not preserve licensing history records longer than seven years.

• ✓Certified Commission records are admissible in court equal to originals
• ✓Commission records are open to public inspection per Commission rules