Declaratory Orders +14Colorado · Real Estate · English

Under section 24-4-105(11), C.R.S., a petitioner may ask the Commission for a declaratory order to end controversies or remove uncertainty about how a statute, rule, or order applies to the petitioner. The petition must state specified contents, and the parties are the Commission and petitioner.

• ✓A petition seeks to terminate controversies or remove uncertainty about applicability to the petitioner
• ✓Petition must state petitioner's name/address, the statute/rule/order involved, and a concise statement of facts and law
• ✓Parties are the Commission and petitioner; others may intervene only at the Commission's sole discretion

The Commission decides in its sole discretion whether to rule on a petition, considering factors like pending investigations, hypothetical questions, and adequacy of other remedies. A decision NOT to rule is not subject to judicial review, but a declaratory order that IS issued constitutes reviewable agency action under section 24-4-106, C.R.S.

• ✓The Commission has sole discretion to rule, without prior notice to petitioner
• ✓A decision NOT to rule is not final agency action subject to judicial review
• ✓A declaratory order that is issued is agency action subject to judicial review under section 24-4-106, C.R.S.
• ✓At a formal hearing, the petitioner bears the burden of proving all facts stated in the petition

Third parties selling manufactured homes must register with the Division of Housing, but brokers are exempt when the sale accompanies negotiation of real property (sale of real property or transfer/signing of a lease). Transactions without real property require dealer registration.

• ✓Broker exemption applies when sale includes negotiation of real property (24-32-3323(4)(b))
• ✓Selling a manufactured home with no real property/lease requires dealer registration
• ✓Broker must be competent to perform such transactions (Rule 6.2)

For permitted transactions, Commission-Approved Forms include the Manufactured Home Addendum (when sale includes real property) and the Manufactured Home Contract, Counterproposal and Amend/Extend (when sale includes a lease for real property).

• ✓Use Manufactured Home Addendum when sale includes real property
• ✓Use Manufactured Home Contract/Counterproposal/Amend-Extend when a lease is included

If a unit is acquired by eminent domain, the award must compensate the owner for the unit and allocated interests; allocated interests are reallocated to remaining units proportionately. For partial takings of common elements, the award goes to the association; limited common element awards are divided equally among the owners it served. The court decree and reallocation amendments must be recorded in every county.

• ✓Eminent domain awards must include compensation for the unit and its allocated interests
• ✓Allocated interests are automatically reallocated to remaining units proportionately
• ✓Court decree and reallocation amendments must be recorded in every county where the CIC is located

Principles of law and equity (corporations, real property, agency, eminent domain, estoppel, fraud, etc.) supplement CCIOA except where inconsistent. CCIOA is intended as unified coverage not impliedly repealed by later legislation, and shall be applied to make uniform the law among states. Provisions are severable.

• ✓Common law principles supplement CCIOA except where inconsistent
• ✓CCIOA provisions are severable if any part is held invalid
• ✓CCIOA is construed to make uniform the law among enacting states

Boundaries between adjoining units may be relocated by declaration amendment upon an application to the executive board that includes compliance evidence, proposed reallocations, amendment forms, and a fee deposit.

• ✓Relocation requires an executed application to the executive board with local compliance evidence
• ✓Relocation requires amendments to declaration, plats, or maps recorded per 38-33.3-217(3) and (5)
• ✓All costs and attorney fees are the sole obligation of the applicant

A unit may be subdivided into two or more units only if the declaration expressly permits. The owner must apply to the executive board with evidence of code compliance, proposed reallocations, and amendment forms.

• ✓Subdivision is permitted only if the declaration expressly so permits
• ✓Application must show compliance with building, fire, zoning codes and PUD requirements
• ✓No subdivision is effective without recorded amendments; applicant bears all costs and fees

After a hearing, the Commission may impose an administrative fine up to $2,500 per separate offense, censure, place on probation, temporarily suspend, or permanently revoke a license for prohibited acts. The Commission must investigate upon written complaint and may investigate on its own motion.

• ✓Administrative fine may not exceed $2,500 per separate offense
• ✓Commission may censure, suspend, revoke, or place a licensee on probation
• ✓Commission must investigate upon written complaint

Prohibited acts include knowingly making misrepresentations or false/misleading advertising, making promises without intent to keep them, violating the Colorado Consumer Protection Act, acting for multiple parties without knowledge of all, and any conduct constituting dishonest dealing.

• ✓Knowing misrepresentation or false advertising is grounds for discipline
• ✓Acting for more than one party without knowledge of all parties is prohibited
• ✓Any conduct constituting dishonest dealing is a violation

Prohibited acts include failing to account for or remit money belonging to others, converting or diverting funds, commingling others' funds with the broker's own, and failing to keep others' funds in an escrow/trust account in a Colorado bank or recognized depository. Records must be kept and are subject to audit.

• ✓Commingling clients' funds with broker's own funds is prohibited
• ✓Failing to keep others' funds in an escrow/trust account is a violation
• ✓Trust fund records must be maintained and are subject to Commission audit

Brokers must maintain transaction documents/records for 4 years for inspection by the Commission. They must provide closing statements to buyers and sellers and signed duplicate copies of listing and sale contracts. CE completion records must be kept for 4 years.

• ✓Transaction records must be retained for 4 years for Commission inspection
• ✓Brokers must provide closing statements and signed copies of contracts to the parties
• ✓CE completion records must be kept for 4 years

A broker may not pay a commission or valuable consideration for brokerage functions to any unlicensed person, except a finder's fee or share of commission on a cooperative sale paid to a broker licensed in another state or country.

• ✓Brokers may not pay commissions to unlicensed persons
• ✓Cooperative commissions/finder's fees may be paid to out-of-state licensed brokers

Conviction, guilty plea, or nolo contendere plea to specified crimes (offenses against persons, property, fraud, computer crimes, controlled substances, etc.) is grounds for discipline. 'Conviction' includes deferred judgments/sentences. Licensees must immediately notify the Commission in writing of any such conviction or plea.

• ✓Conviction of specified crimes is grounds for discipline; 'conviction' includes deferred judgment/sentence
• ✓Licensees must immediately notify the Commission in writing of a conviction or plea
• ✓A certified judgment copy is conclusive evidence of the conviction

Grounds for discipline include failing to exercise reasonable supervision over licensed employees, violating fair housing laws, taking secret/undisclosed compensation, using an option to purchase in a listing without disclosing profit and getting written consent, and demonstrating unworthiness endangering the public.

• ✓Failing to supervise licensed employees is grounds for discipline
• ✓Violating Colorado or federal fair housing laws is a violation
• ✓Taking secret compensation or undisclosed profit is prohibited

Having a broker's or subdivision developer's license suspended/revoked in any jurisdiction is grounds for discipline. Within the last 5 years, having a license (mortgage, appraiser, insurance, attorney, securities, investment advisor) revoked/suspended for fraud, deceit, misrepresentation, theft, or breach of fiduciary duty is also grounds.

• ✓Out-of-state discipline can be grounds for Colorado discipline
• ✓Recent (5-year) discipline in related professions for fraud/theft is grounds for action

Complaints and investigative files are closed to public inspection; stipulations and final orders are public records. Administrative fines go to the division cash fund. An application from a person whose license was revoked cannot be considered until one year from the date of revocation.

• ✓Investigative files are confidential; final orders and stipulations are public
• ✓A revoked licensee cannot reapply until one year after revocation

For misconduct not warranting formal action but not without merit, the Commission may send a letter of admonition by certified mail. The licensee may request formal disciplinary proceedings in writing within 20 days; if requested timely, the letter is vacated.

• ✓A letter of admonition may be sent by certified mail for minor misconduct
• ✓Licensee may request formal proceedings within 20 days, vacating the letter

The board MAY deny, refuse to renew, or revoke a license for material misstatements, convictions within five years for fraud/theft/breach of fiduciary duty, prior license revocations in related professions, injunctions for deceptive conduct, appraiser influencing, failing character/fitness, or not meeting education/exam requirements.

• ✓Board may act for material misstatements or omitted disclosures
• ✓Board may act for a fraud/theft/fiduciary-breach conviction within the last five years
• ✓Board may act for failing to demonstrate financial responsibility, character, and fitness
• ✓Board may act for not completing prelicense education or passing the exam

The board SHALL deny, refuse to renew, or revoke a license for an applicant/licensee whose MLO license was revoked in any jurisdiction, who was ever convicted of a felony involving fraud/dishonesty/breach of trust/money laundering, or who was convicted of any felony within the preceding seven years.

• ✓Mandatory action if an MLO license was revoked in any jurisdiction
• ✓Mandatory action for any felony involving fraud, dishonesty, breach of trust, or money laundering (ever)
• ✓Mandatory action for any felony conviction within the preceding seven years
• ✓A pardon or formal nullification removes the mandatory disqualification

The board may investigate, summarily suspend an unqualified MLO pending hearing, and issue cease-and-desist orders. Fines are up to $1,000 per occurrence in a first proceeding and $1,000-$2,000 in subsequent proceedings. Records of licensees and disciplinary proceedings are open to public inspection.

• ✓First administrative proceeding fine: not more than $1,000 per act/occurrence
• ✓Second/subsequent proceeding fine: $1,000 to $2,000 per act/occurrence
• ✓Fines credited to the division of real estate cash fund
• ✓Board may summarily suspend an MLO pending a revocation hearing

An individual whose license was revoked is ineligible for licensure for two years. The board must maintain a consumer complaint system and promulgate rules allowing licensed MLOs to hire unlicensed MLOs under temporary licenses, with the employer responsible for the temporary licensee's actions.

• ✓Revoked individual is ineligible for licensure for two years
• ✓Board must maintain a consumer complaint system (hotline or website)
• ✓Employer MLO is responsible for the actions of a temporarily licensed MLO

All pleadings must be written, may be filed by mail or email, and must be filed with the Commission (not the Office of Administrative Courts) by the due date. A pleading is filed upon receipt with no extra time for mail service, and must be served on the opposing party the same day with a certificate of service.

• ✓Pleadings must be filed with the Commission, not the Office of Administrative Courts
• ✓A pleading is considered filed upon receipt; no additional time is provided for mail service
• ✓Pleadings must be served on the opposing party on the filing date and include a certificate of service

After an Administrative Law Judge files an initial decision, the Division mails it to the parties. The Commission may review it on its own motion within 30 days of mailing. If no party files exceptions, the initial decision becomes the final order after 30 days, and failure to file exceptions waives judicial review rights.

• ✓The Commission may initiate review on its own motion within 30 days of the Division mailing the initial decision
• ✓If neither party files exceptions, the initial decision becomes the final order 30 days after mailing
• ✓Failure to file exceptions waives the right to judicial review unless the final order differs from the initial decision

A party seeking to reverse/modify an initial decision must file exceptions per Rule 9.5. A designation of relevant record/transcript parts is due within 20 days of mailing. If no transcript is designated, exceptions are due within 30 days; if a transcript is designated, deadlines shift to receipt notification. The designating party must order and pay for transcripts.

• ✓Designation of record/transcript parts is due within 20 days of the Division mailing the initial decision
• ✓If no transcript is designated, exceptions are due 30 days from mailing (both parties same day)
• ✓If a transcript is designated, exceptions are due 30 days after the Commission mails notice that transcripts were received
• ✓A supplemental designation must be filed within 10 days of the original; the designating party must order and pay for transcripts
• ✓Exceptions must include specific objections; responses are due within 10 days of the exceptions being filed

Requests for oral argument must be written and included with exceptions or a response. The Commission may grant/deny; if granted, each party gets 10 minutes (Commission questioning not counted). The Commission may deliberate immediately or later; a ruling is not final until a written order is signed, and the order's date is the signing date.

• ✓Oral argument requests must be in writing and included with the exceptions or response
• ✓If granted, each party gets 10 minutes; Commission questioning does not count against that time
• ✓A Commission ruling is not final until a written order is issued; the final order's date is the date it is signed

Personal property may be included in a real estate transaction, but improper handling (omitting it, claiming zero value, or handling outside closing) can constitute loan fraud. Lenders may deduct personal property value from the sales price/appraised value.

• ✓Do not omit personal property or claim zero/unrealistic value; may be loan fraud
• ✓Never handle personal property 'outside of closing' when buyer is financing
• ✓Lender may deduct personal property value from sales price or appraised value

Best practice is to use the Commission-Approved Personal Property Agreement, paid separately at fair market value (brokers should not determine value). Personal property may be subject to sales/use tax, and should not be included on the Real Property Transfer Declaration.

• ✓Use Commission-Approved Personal Property Agreement paid separately at fair market value
• ✓Brokers should not determine fair market value
• ✓Personal property may be subject to sales/use tax and excluded from the Real Property Transfer Declaration

Registration renewal and required change notifications follow strict timelines.

• ✓Renewal must use the Commission form with proper fees, delivered on or before December 31 each year
• ✓Written notice of change in principal office address or other 12-10-503 information within 10 Days
• ✓Registration/certification does not exempt developer from real estate broker licensing under Part 1

Developers must maintain business records securely and may use electronic records.

• ✓Electronic Records must remain retrievable and legibly printable; printed records produced upon request
• ✓Business Records must be maintained in a Safe and Secure Manner for seven (7) years from each record's effective date
• ✓No amendment filing required for document revisions if they still comply with law and accurately reflect the offering

Developers must notify the Commission of material events within set timeframes.

• ✓Notice within 10 Days for changes to ownership info, nondisturbance agreements, new liens, or cancellation/revocation of authority
• ✓Notice of escrow/letter of credit/bond termination or transfer must be filed BEFORE the effective date
• ✓Notice within 10 Days of material pending legal proceedings affecting title or developer obligations
• ✓Notification must be on a Commission-approved form; developer has 10 Days to take required action

CCIOA applies to all common interest communities created on or after July 1, 1992. Sections 38-33-101 to 109 do not apply to communities created after that date, but sections 38-33-110 to 113 remain in effect for all. For preexisting communities (before July 1, 1992), enumerated sections in § 38-33.3-117 apply to events occurring on or after July 1, 1992.

• ✓CCIOA applies to all common interest communities created on or after July 1, 1992
• ✓Certain enumerated CCIOA sections apply to preexisting communities for events after July 1, 1992
• ✓Sections 38-33-110 to 113 remain in effect for all common interest communities

Small cooperatives/planned communities (nonresidential, 20 or fewer units with no development rights, or with limited common expense liability) are subject only to §§ 38-33.3-105 to 107. Large planned communities (200+ acres, approved for 500+ residential units plus 20,000+ sq ft commercial) that file an affidavit are exempt from specified provisions. Communities may elect full CCIOA coverage by amending the declaration.

• ✓Small cooperatives/planned communities may be subject only to §§ 38-33.3-105 to 107
• ✓Large planned communities require 200+ acres and approval for 500+ residential units plus 20,000+ sq ft commercial
• ✓A large planned community must record an affidavit to obtain exemptions
• ✓Communities may elect full CCIOA coverage by amending the declaration under § 38-33.3-217

Organizations created before July 1, 1992 may elect CCIOA treatment: with voting members, a 67% vote is required; without members, a majority vote of directors. A statement of election must be executed, acknowledged, and recorded. Amendments to preexisting instruments may be made under prior law or CCIOA. A declaration term may be extended up to 20 years by 67% vote.

• ✓Electing CCIOA treatment requires 67% approval where there are voting members
• ✓Election requires a majority vote of directors where there are no voting members
• ✓Statement of election must be recorded to become effective
• ✓Declaration term extensions cannot exceed 20 years and require 67% approval

CCIOA does not apply to a planned community with all nonresidential units unless the declaration so provides. CCIOA does not apply to common interest communities or units located outside Colorado.

• ✓CCIOA does not apply to all-nonresidential planned communities unless the declaration provides
• ✓CCIOA does not apply to common interest communities or units located outside Colorado

The current edition of USPAP is adopted by the Board. A licensee using unlicensed assistants or another licensee must supervise them in an active, diligent, and personal manner, and must summarize each contributor's research, analysis, and reporting contributions per USPAP Standard 2 when significant appraisal assistance is provided.

• ✓The current USPAP edition is adopted by the Board
• ✓Supervision must be active, diligent, and personal
• ✓Significant appraisal assistance must be disclosed per USPAP Standard 2

A licensee performing consulting services must not represent analysis as an independent appraisal. A licensee compensated by a contingent fee must disclose clearly and conspicuously in any oral report or letter of transmittal that a contingent fee is being paid, that the service is consulting not an independent appraisal, and that attainment of a stipulated result is not subject to USPAP compliance.

• ✓Consulting services must not be represented as independent appraisals
• ✓Contingent fee, consulting nature, and non-USPAP compliance must be disclosed clearly and conspicuously
• ✓Disclosure required in oral reports and written report transmittal/certifications

Licensed and certified appraisers performing Evaluations must include a disclaimer on the first page stating it is an evaluation not subject to compliance with Standards 1 and 2 of USPAP. Appraisers performing Evaluations must still comply with USPAP's Ethics, Record-keeping, Competency, and Scope-of-Work Rules.

• ✓Evaluations require a first-page disclaimer excluding USPAP Standards 1 and 2
• ✓Evaluations must still comply with USPAP Ethics, Record-keeping, Competency, and Scope-of-Work Rules

To the extent a unit or common element encroaches on another, a valid easement exists. The easement does not relieve liability for willful misconduct or failure to adhere to plats/maps.

• ✓A valid easement exists for any encroachment between units or common elements
• ✓The easement does not relieve liability for willful misconduct or failure to follow plats/maps

A declarant may maintain sales offices, management offices, and models only if the declaration provides. If a declarant ceases to be a unit owner, sales-related rights cease unless promptly removed under a reserved right.

• ✓Declarant may maintain sales/management offices and models only if the declaration so provides
• ✓Real estate used as a sales office/model not designated a unit is a common element
• ✓Declarant ceasing to be a unit owner loses rights unless the property is promptly removed

A declarant has an easement through common elements to discharge obligations or exercise special declarant rights. In planned communities, unit owners have easements for access to units and to use common elements.

• ✓Declarant has an easement through common elements to exercise special declarant rights
• ✓In planned communities, unit owners have easements for access and use of common elements

Nonprofit corporations may merge into another entity or convert to another form if the board adopts a plan and members entitled to vote approve it. If there are no voting members, a majority of directors in office must approve.

• ✓Merger or conversion requires board adoption of a plan and member approval if members are entitled to vote
• ✓If there are no voting members, approval requires a majority of directors elected and in office
• ✓Notice to members must state the meeting's purpose and include a copy or summary of the plan

All fees, penalties, and fines collected under part 6 (except contractor-retained fees) are transmitted to the state treasurer and credited to the Division of Real Estate cash fund created in section 12-10-215.

• ✓Fees, penalties, and fines are transmitted to the state treasurer
• ✓Funds are credited to the Division of Real Estate cash fund

An affiliated business arrangement (ABA) exists when a settlement service provider has an affiliate relationship or ownership over 1% in another provider and refers business to it. If a licensee is part of an ABA when an offer is fully executed, the licensee must disclose it in writing, signed by all parties, complying with RESPA.

• ✓ABA requires disclosure over 1% ownership interest and referral of business
• ✓Written disclosure signed by all parties is required when an offer is fully executed
• ✓Disclosure must comply with the federal RESPA (12 U.S.C. 2601)

A licensee may not require the use of an ABA or particular settlement service provider as a condition of services. No licensee may give or accept any fee, kickback, or thing of value for referring settlement service business. Payment for actual services rendered is permitted.

• ✓A licensee may not require use of an ABA or particular provider
• ✓No fees, kickbacks, or things of value may be given/accepted for referrals
• ✓Payment for services actually rendered is permitted

On and after July 1, 2006, a licensee must disclose ABA names and physical locations when entering or changing an arrangement. An employing broker must disclose ABA names and locations at least annually. Penalties for violations equal the improperly paid remuneration.

• ✓Licensees must disclose ABA names and locations upon entering/changing arrangements
• ✓Employing brokers must disclose ABAs at least annually
• ✓Violation penalty equals the remuneration improperly paid