§ 38-33.3-218, C.R.S. Termination of common interest community +17Colorado · Real Estate · English

Except for eminent domain or cooperative foreclosure, a community may be terminated only by agreement of owners holding at least 67% of votes (or larger per declaration). A smaller percentage is allowed only if all units are nonresidential.

• ✓Termination requires at least 67% of votes or any larger percentage the declaration specifies
• ✓A smaller percentage is allowed only if all units are exclusively nonresidential
• ✓Termination agreement must be executed like a deed and recorded in every county to be effective

After termination, sale proceeds and association assets are held in trust for owners and lienholders as their interests appear. Owner interests are based on combined fair market values determined by independent appraisers.

• ✓Sale proceeds and assets are held by the association as trustee for owners and lienholders
• ✓Owner interests are based on combined fair market values determined by independent appraisers
• ✓Appraiser decision is final unless disapproved within 30 days by owners holding 25% of votes

Foreclosure against the entire community does not, of itself, terminate it. Foreclosure of a lien with priority over the declaration allows exclusion of that real estate, with reallocation as if taken by eminent domain.

• ✓Foreclosure against the entire community does not, of itself, terminate the community
• ✓A priority lienholder foreclosing may record an instrument excluding the real estate and the board reallocates interests

Complaints must be in writing on a Board form; the Board may also act on its own motion. Licensees and permit holders have a duty to respond to investigations, providing a complete and specific answer to allegations, requested documents, and any relevant information within the notification timeline. Extensions may be requested in writing before the deadline. Failure to respond is grounds for discipline.

• ✓Complaints must be in writing; the Board may act on its own motion
• ✓Licensees must respond completely and specifically to investigation notifications
• ✓Extension requests must be reasonable, in writing, and before the deadline
• ✓Failure to provide requested information is grounds for disciplinary action regardless of the underlying complaint
• ✓Documents must be kept in a Safe and Secure Manner

Holders must inform the Board in writing within 30 days of any disciplinary action by another jurisdiction's appraiser/AMC authority. Licensees must report within 30 days any felony/misdemeanor conviction (excluding minor offenses) or any disciplinary action against other professional licenses. Controlling Appraisers must report qualifying convictions and owner convictions/license actions.

• ✓Report out-of-state disciplinary actions within 30 days
• ✓Report qualifying criminal convictions within 30 days
• ✓Report disciplinary actions against other professional licenses within 30 days
• ✓Owner of more than 10% of a licensed AMC also has reporting duties

Board members, Division staff, and Division contractors are not required to comply with USPAP when performing official duties such as investigations, work experience reviews, and work product reviews. An investigation or review by staff, Board members, or contractors is not considered an 'appraisal review' or 'appraisal' under USPAP.

• ✓Board members, staff, and contractors are exempt from USPAP in official duties
• ✓Official reviews are not 'appraisal reviews' or 'appraisals' under USPAP

A Petitioner may seek a declaratory order to resolve controversies or uncertainties about statute, rule, or order applicability under section 24-4-105(11).

• ✓Petition must state Petitioner name/address, the statute/rule/order involved, and a concise statement of facts and law
• ✓Parties are the Commission and Petitioner; others may seek discretionary leave to intervene
• ✓Commission may in its sole discretion decide whether to rule on a petition
• ✓A decision NOT to rule is not final agency action subject to judicial review; a declaratory order IS subject to judicial review under 24-4-106

A nonprofit corporation generally may not make distributions except as authorized. Permitted distributions include those to nonprofit members, reasonable compensation for services, and conferring benefits consistent with the corporation's purposes.

• ✓Nonprofit corporations may not make distributions except as authorized by statute
• ✓Permitted actions include distributions to nonprofit-corporation members, reasonable compensation for services, and conferring benefits in conformity with purposes
• ✓Distributions upon dissolution must conform to Article 134

Brokers acting as principals remain under Commission jurisdiction (Seibel v. Colorado Real Estate Commission). They must disclose in writing that they are licensed brokers (Rule 6.17.B) and give the appropriate Brokerage Disclosure checking the Customer box.

• ✓Brokers acting as principals remain subject to license law (Seibel case)
• ✓Must disclose license status in writing per Rule 6.17.B
• ✓Give appropriate Brokerage Disclosure checking the Customer box

When a broker wants to buy their own listing, a conflict arises due to confidential information. The broker should terminate/amend the listing (designate another broker), disclose in writing acting as principal, disclose license status, and give the seller an option to terminate before closing.

• ✓Terminate or amend the listing to designate another broker for the seller
• ✓Disclose in writing that the broker acts as principal and had access to confidential info
• ✓Include a seller option to terminate any time before/on closing

For guaranteed buyout/sale programs where a broker continues marketing the property, the broker must use the Commission-Approved Licensee Buy-Out Addendum, which requires continuing to market the property as active. Financing is usually treated as a non-owner-occupied purchase.

• ✓Use the Commission-Approved Licensee Buy-Out Addendum for guaranteed buyout programs
• ✓Addendum requires continuing to market the property as 'active'
• ✓Must use Commission-Approved Forms when they exist (Rule 7.1.A)

No broker is entitled to a commission for finding a ready, willing, and able purchaser until the sale is consummated OR is defeated by the owner's refusal or neglect to consummate as agreed.

• ✓Commission is earned when the sale is consummated
• ✓Commission is earned if the sale is defeated by the owner's refusal or neglect

A licensee may pay or receive a referral fee only in accordance with RESPA and when reasonable cause exists: an actual introduction of business, a contractual referral fee relationship, or a contractual cooperative brokerage relationship. Interfering with a brokerage relationship (demanding a fee without reasonable cause) is prohibited.

• ✓Referral fees must comply with RESPA and require reasonable cause
• ✓No person may interfere with a brokerage relationship by demanding a fee without reasonable cause
• ✓Aggrieved parties may recover actual damages plus up to treble damages and attorney fees

No broker is entitled to a commission when a purchaser refuses to complete due to defects in the owner's title, unless the owner within a reasonable time corrects the defects by legal proceedings or otherwise.

• ✓No commission when a purchaser refuses due to title defects
• ✓Exception: owner corrects defects within a reasonable time

The owner is not required to begin legal proceedings to correct a title until the broker secures an enforceable written contract from the purchaser binding them to complete the purchase once defects are corrected.

• ✓Owner need not correct title until broker secures an enforceable written contract
• ✓The contract must bind the purchaser to complete once defects are corrected

Every licensee under part 6, except appraisers employed by a state/local government entity, inactive appraisers, or AMCs, must maintain errors and omissions insurance covering all activities. The division contracts for a group policy after competitive bidding, available to all licensees with no right of the insurer to cancel. Licensees may obtain independent coverage meeting minimum requirements.

• ✓Every licensee must maintain E&O insurance except government-employed, inactive, or AMC licensees
• ✓The division makes a group policy available; insurer cannot cancel any licensee
• ✓Licensees may obtain independent coverage meeting minimum requirements

The division determines coverage terms based on Board rules. Each licensee must be notified of required terms at least 30 days before the annual renewal date and must file a certificate of coverage showing compliance by that date.

• ✓Licensees must be notified of E&O terms at least 30 days before renewal
• ✓Each licensee must file a certificate of coverage by the annual renewal date

Chapter 6 governs the appeal of ALJ initial decisions, including filing, service, and exception timelines.

• ✓All pleadings must be filed with the Commission (not the Office of Administrative Courts) and served on opposing party same day
• ✓Commission may review an initial decision on its own motion within 30 days of mailing
• ✓If no exceptions are filed, the initial decision becomes final after 30 days from mailing; failure waives judicial review rights
• ✓Designation of record/transcript parts due within 20 days of mailing; exceptions due within 30 days (or 30 days from transcript-received notification)
• ✓Responses to exceptions due within 10 days; the final order date is when the written order is signed

The declaration may require lender approval for specified owner/association actions, but no approval requirement may deny control over administrative affairs, prevent litigation, or prevent distribution of insurance proceeds.

• ✓Lender approval requirements may not deny owners/board control over general administrative affairs
• ✓Lender approval requirements may not prevent the association from commencing or settling proceedings
• ✓Lender approval requirements may not prevent distribution of insurance proceeds under 38-33.3-313

If the declaration delegates unit owners' association powers to a master association, this article applies to the master association except as modified. Board members have no liability for master association acts after delegation.

• ✓This article applies to master associations except as modified by section 220
• ✓Board members have no liability for master association acts once powers are delegated
• ✓The master association board must be elected after declarant control by one of the specified methods

Two or more communities of the same ownership form may merge or consolidate by owner agreement, making the resultant community a legal successor. A qualifying community may withdraw from a merged community meeting specific criteria.

• ✓Merger requires approval by the percentage of votes required to terminate each community and must be recorded
• ✓A qualifying community may withdraw with a majority vote where 75% of allocated interests participated
• ✓Withdrawal requires meeting all criteria including being a separate platted subdivision self-operating for at least 25 years

If originally reserved, a declarant may amend the declaration to add unspecified real estate, but added area may not exceed 10% of the described total, and units may not exceed the number in the original declaration.

• ✓Right to add unspecified real estate must be originally reserved in the declaration
• ✓Added real estate may not exceed 10% of the total area described
• ✓Declarant may not increase units beyond the number stated in the original declaration

A nonprofit with no members may be dissolved by a majority of directors or incorporators. Otherwise, dissolution requires the board to adopt and recommend the proposal and members to approve it, with a plan of dissolution indicating asset distribution after creditors are paid.

• ✓A corporation with no members may dissolve by majority vote of directors or incorporators
• ✓Dissolution with members requires board adoption/recommendation and member approval with proper notice
• ✓A plan of dissolution must indicate to whom assets will be distributed after all creditors are paid

A dissolved corporation continues its existence only to wind up and liquidate affairs. A 501(c)(3) organization's assets must be distributed for exempt purposes or to government. Dissolution does not transfer property title or abate proceedings.

• ✓A dissolved corporation may only carry on activities appropriate to winding up and liquidation
• ✓A 501(c)(3) corporation's assets must be distributed for exempt purposes or to a government for public purpose
• ✓Dissolution does not transfer property title, change standards of conduct, or abate pending proceedings

A nonprofit may be judicially dissolved by the attorney general, a director/member, or a creditor on specified grounds such as fraud, deadlock, oppressive conduct, waste, or insolvency. Courts may appoint receivers or custodians to wind up or manage affairs.

• ✓Directors/members may seek dissolution for deadlock, illegal/oppressive/fraudulent conduct, or wasting of assets
• ✓Creditors may seek dissolution when a judgment is unsatisfied and the corporation is insolvent, or when insolvency and debt are admitted
• ✓Courts may appoint a receiver to liquidate or a custodian to manage the corporation's affairs

A Petitioner may petition the Board for a declaratory order to terminate controversies or remove uncertainties about the applicability of a statute, rule, or order. The petition must state the petitioner's name and address, the statute/rule/order at issue, and a concise statement of facts and law. The Board has sole discretion whether to rule, and a decision not to rule is not final agency action subject to judicial review.

• ✓Petitions filed under section 24-4-105(11), C.R.S.
• ✓Petition must state name, address, the statute/rule/order at issue, and facts/law
• ✓Board has sole discretion whether to rule on a petition
• ✓A decision not to rule is not final agency action subject to judicial review
• ✓A declaratory order that is ruled upon is subject to judicial review under 24-4-106

Proceedings may be conducted by an authorized representative or administrative law judge under sections 24-4-104 and 24-4-105. No license is denied/suspended/revoked until the board decides. Board decisions are subject to judicial review by the court of appeals.

• ✓Hearings held where the board has its office or as designated
• ✓No license denied, suspended, or revoked until the board makes its decision
• ✓Board decisions are subject to judicial review by the court of appeals
• ✓Employer must be notified when licensee is employed by another MLO or broker

'Customer' is a party with no brokerage relationship. 'Single agent' represents only one party (buyer's, seller's, landlord's, or tenant's agent). 'Transaction-broker' assists parties without being an agent/advocate. 'Dual agent' represents both sides (prohibited). 'Designated broker' is designated in writing to serve a party.

• ✓A customer has no brokerage relationship with the broker
• ✓A single agent represents only one party; a transaction-broker is not an agent
• ✓A designated broker is designated in writing to work with a party

The public is best served by understanding their legal relationships with brokers and by engaging brokers as single agents or transaction-brokers on acceptable terms. Members of the public are not liable for broker acts they have not approved, directed, or ratified.

• ✓Brokers may be engaged as single agents or transaction-brokers
• ✓The public is not vicariously liable for unapproved broker acts

A 'limited agent' has only the duties set forth in 12-10-404 or 12-10-405 plus any agreed additional duties. A 'subagent' acts for another broker performing tasks for a principal and owes the same obligations to the principal as the principal's broker.

• ✓A limited agent has only statutory duties plus agreed additions
• ✓A subagent owes the same obligations to the principal as the principal's broker

Leasing and management of real estate for a fee require a license (12-10-201(6)). PM is a complex practice area; brokers must be worthy and competent (Rule 6.2) and comply with Rule 6.2.B if lacking competency. PM must be contracted in the firm's name with the employing broker's permission.

• ✓Leasing/management for a fee requires a license (12-10-201(6))
• ✓Broker must be worthy and competent or comply with Rule 6.2.B
• ✓PM services must be performed/contracted in the firm's name

Money Belonging to Others must be deposited within 5 business days (Rule 5.7.A) in separate accounts (min. one for rental receipts, one for security deposits). Cash-basis accounting is required; an owner's ledger may never be negative; records retained 4 years (12-10-217(1)(k)).

• ✓Deposit Money Belonging to Others within 5 business days (Rule 5.7.A)
• ✓Maintain separate accounts for rents and security deposits (Rule 5.5)
• ✓An owner's ledger may never have a negative balance
• ✓Retain records for 4 years (12-10-217(1)(k))

Security deposits must be returned within one month (or up to 60 days if the lease specifies) after termination/vacancy (38-12-103). Cannot be retained for normal wear and tear. A written statement of reasons must accompany any retained amount; wrongful withholding can result in treble damages plus attorney fees.

• ✓Return security deposit within 1 month (max 60 days if lease specifies) per 38-12-103
• ✓Cannot retain deposit for normal wear and tear
• ✓Written statement of reasons required for retention
• ✓Wrongful withholding may result in treble damages plus attorney fees

Rule 5.8.A prohibits delivering security deposits to an owner unless tenant's written authorization is in the lease or written notice is given to the tenant identifying who holds it and the return procedure. The broker may not use any portion of the deposit for the broker's benefit.

• ✓Cannot deliver deposit to owner without tenant authorization or written notice (Rule 5.8.A)
• ✓If owner holds deposit, management agreement must state owner responsibility and allow revealing owner's identity in a dispute
• ✓Broker may not use any portion of the security deposit for personal benefit

Leasing is a one-time activity where the broker is a special agent; PM is an ongoing relationship where the broker is a general agent. A broker performing PM may also do leasing, but leasing-only brokers are not performing PM.

• ✓Leasing broker = special agent; property manager = general agent
• ✓Leasing duties end once the lease is executed; PM duties are ongoing

There are no Commission-Approved leases or Management Agreements; these must be drafted by an attorney engaged by the specific firm (Rule 7.1.B). Copying another firm's forms is non-compliant. Owner-provided (Client) leases require written confirmation of source.

• ✓Leases and Management Agreements must be drafted by the firm's attorney (Rule 7.1.B)
• ✓Owner-provided leases require written confirmation of source (Rule 7.1.C)
• ✓Provide executed copies to consumers (tenants get leases, owners get agreements)

When PM ends, the broker transfers the entire file (lease, condition report, keys, tenant balances, deposits, owner funds accounting) to the owner or new broker. Security deposit transfers require written notice to the tenant; new firm must disclose deposit status within 30 days.

• ✓Transfer entire file to owner or new broker when PM ends
• ✓Give tenant written notice of security deposit transfer (Rule 5.8)
• ✓New firm must disclose deposit status to owner/tenant within 30 days (Rule 5.8.B)

Brokers managing their own rental property are subject to license law (Seibel), must disclose conflicts and license status (Rule 6.17), use an attorney-drafted lease, disclose brokerage relationships (Rule 6.5), and place any receipted security deposit in a trust/escrow account (Rule 5.11).

• ✓Managing own property is subject to license law and requires conflict/license disclosure
• ✓Must use an attorney-drafted lease and disclose brokerage relationships
• ✓Receipted security deposit on own property must be placed in a trust/escrow account (Rule 5.11)

Before the Board issues an AMC license, the applicant must post a surety bond of $25,000. A licensed AMC must maintain the bond at all times. The surety must provide notice to the Board within 30 days if payment is made from the bond or if the bond is cancelled.

• ✓AMCs must post a surety bond of $25,000 before licensure
• ✓The bond must be maintained at all times
• ✓The surety must notify the Board within 30 days of payment or cancellation

Licensees must be aware of planning, zoning, and subdivision laws and avoid misrepresentation through ignorance.

• ✓Licensees should be aware of planning laws, ordinances, and zoning requirements even if not completely familiar
• ✓If uninformed, the licensee should seek information from the proper source or refer clients before making representations
• ✓Selling a portion of land divides it into two parcels, creating a subdivision requiring approval
• ✓Zoning for a use (horses, home business) does not guarantee the property meets all requirements (acreage, employee prohibitions)

Colorado treats cooperative housing corporations as real estate subdivisions, unlike many states that treat them as securities.

• ✓Cooperative apartment sales are accomplished by transfer of a stock certificate plus a proprietary lease
• ✓In Colorado such sales are exempt from the Securities Act and declared real estate (38-33.5-101 et seq.)
• ✓Cooperatives must be registered as subdivisions, and stock/proprietary lease sales must be performed by licensed real estate brokers
• ✓Commercial banks and savings and loan associations may make first mortgage loans on the stock and proprietary lease

A unit owners' association must be organized no later than the date the first unit is conveyed to a purchaser. Membership consists exclusively of all unit owners. It may be a nonprofit, for-profit, or LLC under Colorado law.

• ✓The association must be organized no later than conveyance of the first unit to a purchaser
• ✓Membership consists exclusively of all unit owners
• ✓The association may be organized as a nonprofit, for-profit corporation, or LLC; failure to incorporate does not affect community existence

A nonprofit corporation must keep permanent records of meeting minutes, actions without meetings, committee actions, and waivers. It must maintain accounting records, a member list, and keep specified records (articles, bylaws, minutes, communications, director/officer list, reports, financial statements) at its principal office.

• ✓Must keep permanent records of all board and member meeting minutes and actions taken without a meeting
• ✓Must maintain accounting records and an alphabetical member list showing voting rights
• ✓Must keep articles, bylaws, resolutions, three years of minutes/communications, a director/officer list, the latest periodic report, and three years of financial statements at the principal office

A member may inspect records at the principal office with at least five business days' written demand. Broader records require the member to meet good-faith and proper-purpose requirements. This inspection right cannot be abolished by articles or bylaws.

• ✓A member must give at least five business days' written demand to inspect and copy records
• ✓Inspection of broader records requires membership for three months (or 5% voting power), a good-faith proper purpose, and reasonable particularity
• ✓The right of inspection may not be abolished or limited by the articles or bylaws

If a corporation wrongly refuses inspection, a court may order it and award the member costs and counsel fees unless the refusal was in good faith. A membership list may not be used for purposes unrelated to membership, for commercial purposes, or be sold.

• ✓A court may order inspection and award costs/counsel fees unless the corporation refused in good faith with reasonable doubt
• ✓A membership list may not be used for purposes unrelated to a member's interest without board consent
• ✓A membership list may not be used for commercial purposes, improper solicitation, or be sold or purchased

Upon written member request, the corporation must mail its most recent annual and published financial statements showing assets, liabilities, and operations. The corporation must also file periodic reports with the secretary of state.

• ✓The corporation must mail its most recent financial statements to any member upon written request
• ✓Domestic and authorized foreign nonprofit corporations must file periodic reports with the secretary of state
• ✓Financial statements must show assets, liabilities, and results of operations in reasonable detail