Separate Accounts and Accounting +9Colorado · Real Estate · English

Any brokerage firm or broker receiving Money Belonging to Others must establish written accounting control policies with adequate checks and balances. All such money must be kept separate from firm funds and deposited into Trust or Escrow Accounts. Accounts must be identified as fiduciary using the word 'trust' or 'escrow' plus a purpose label such as 'sales escrow' or 'security deposit escrow.'

• ✓Written accounting control policies are required for those handling others' money
• ✓Others' money must be kept separate from broker/firm funds
• ✓Accounts must be labeled with 'trust' or 'escrow' and a purpose designation

A brokerage firm engaged in property management must maintain separate Trust or Escrow Accounts, at minimum one for rental receipts and one for security deposits. A firm may maintain zero to unlimited accounts; no account is required if the firm holds no Money Belonging to Others.

• ✓Property management requires separate accounts for rental receipts and security deposits
• ✓Number of accounts may range from zero to unlimited based on funds held

All Money Belonging to Others received for property management must be deposited within 5 business days of receipt or mutual lease execution, whichever is later. All other Money Belonging to Others must be deposited within 3 business days of receipt or mutual contract execution, whichever is later.

• ✓Property management funds: deposit within 5 business days
• ✓All other funds: deposit within 3 business days
• ✓Timing runs from receipt or mutual execution, whichever is later

Money belonging to one beneficiary must not be used for another beneficiary, and Money Belonging to Others must never benefit the firm or broker. Personal or business operating funds cannot be commingled with others' money. Money that becomes due to the firm must be withdrawn monthly, and earned commissions may only be withdrawn after all contracted services are performed.

• ✓Funds of one beneficiary cannot be used for another beneficiary
• ✓Personal/operating funds cannot be commingled with others' money
• ✓Money due to the firm must be withdrawn monthly

A firm holding security deposits will not deliver them to an owner without the tenant's written authorization or proper written notice. When a new firm begins managing a property, it must disclose the security deposit status to owner and tenant within 30 days, and the previous firm must transfer the deposit within 60 days, with confirmation and verification against the current lease.

• ✓Security deposits cannot go to owner without tenant authorization or notice
• ✓New managing firm must disclose deposit status within 30 days
• ✓Previous firm must transfer security deposits within 60 days

An Employing or Independent Broker must maintain a journal recording all money received/disbursed in chronological order and a ledger for each beneficiary. No ledger may have a negative balance, and the sum of all ledger balances must always agree with the journal. Three-way reconciliation (journal, ledger sum, bank balance) must be performed monthly.

• ✓Maintain a chronological journal and separate ledger per beneficiary
• ✓No ledger may have a negative cash balance
• ✓Three-way reconciliation must be performed monthly

A broker receiving earnest money must deliver it to the earnest money holder per the contract and obtain a dated, signed receipt. Firm-held earnest money must be deposited within 3 business days. If a promissory note is received as earnest money, the seller must be informed of the due date; if payment is not made, the broker must promptly notify the seller and deliver the original note.

• ✓Broker must obtain a dated, signed receipt when delivering earnest money
• ✓Firm-held earnest money must be deposited within 3 business days
• ✓Seller must be informed of promissory note due dates

Unless otherwise agreed in writing, Money Belonging to Others must not be invested in any account with a fixed maturity term or withdrawal penalty. In the absence of a written agreement, the cash basis of accounting must be used for Trust or Escrow Accounts.

• ✓Others' money cannot be in accounts with fixed maturity or withdrawal penalties
• ✓Cash basis accounting is the default absent a written agreement

Brokers and firms must obtain prior written consent from the consumer they represent to assess and receive mark-ups or other compensation for services, whether benefiting the broker or a third party. They must disclose all mark-ups paid by any customer and retain accurate records verifying disclosure, consent, and amounts.

• ✓Prior written consent required to assess mark-ups on represented consumers
• ✓All mark-ups paid by customers must be disclosed
• ✓Records verifying consent and compensation amounts must be retained

Firms holding others' money must provide detailed reports to each beneficiary per the management agreement, or within 30 days after month-end absent a contrary provision. Brokers and firms must produce documents for Commission inspection during investigations or audits; failure within the set time is grounds for discipline. The Employing/Independent Broker is jointly responsible with the firm for Chapter 5 compliance.

• ✓Beneficiary reports due within 30 days after month-end absent contrary agreement
• ✓Documents must be produced for Commission audit or investigation
• ✓Employing/Independent Broker is jointly responsible for accounting compliance

Brokers receive written notice when a complaint is filed (with a copy), a complaint is initiated on the Commission's motion (with a summary), or when selected for audit. A written response must be submitted within the Commission's set time; failure to respond is grounds for discipline regardless of the underlying complaint's merit.

• ✓Failure to submit a timely written response is grounds for disciplinary action regardless of the complaint's merit
• ✓The response must give complete/specific answers to allegations and to notification-letter questions
• ✓The response must include a complete transaction file and any requested records
• ✓May include any further relevant/material information

The Commission will grant reasonable extensions of time to respond to complaints or audits upon request. Brokers must retain and produce documents necessary for enforcement; failure to produce within the set time is grounds for discipline unless an extension was granted.

• ✓Reasonable requests for extension of time to respond will be granted
• ✓Brokers must retain and produce records reasonably necessary for investigation or audit
• ✓Failure to produce records timely is grounds for discipline unless an extension was granted

Brokers must place Money Belonging to Others in a Trust or Escrow Account with a Recognized Depository (12-10-217(1)(i)); interest-bearing accounts are permitted. Absent a written agreement to the contrary, accrued interest does not belong to the firm.

• ✓Money Belonging to Others must be in a Trust/Escrow Account with a Recognized Depository
• ✓Absent a written agreement, accrued interest does not belong to the brokerage firm
• ✓Brokers may not take secret/undisclosed compensation or profit (Rule 5.17)

Contracts accruing interest should specify which party is entitled to interest and conditions. The Commission-Approved Contract allows interest to be paid to an affordable housing fund. Property management agreements and leases must specify interest on rents and security deposits.

• ✓Contracts must specify who is entitled to earned interest and under what conditions
• ✓Management agreement and lease must address interest on rents and security deposits
• ✓Interest income in PM trust accounts must be accounted for per Rule 5.14

A Conflict of Interest, defined in Rule 1.13, includes both real and apparent competing professional or personal interests. Conflicts may arise when Designated Brokers from the same firm represent both sides of a transaction, requiring careful safeguarding of confidential information.

• ✓A Conflict of Interest is defined in Rule 1.13 and includes real or apparent competing professional or personal interests
• ✓Before the Employing Broker receives confidential information about clients in the same transaction, Designated Brokers must obtain informed written consent from their clients
• ✓The Employing Broker must safeguard confidential information and not share it with anyone else, including opposing parties
• ✓Dual representation by designated brokers within the same firm must be included in the informed written consent obtained from the client

When an Employing Broker represents themselves or is the Designated Broker for one party, and another Designated Broker in the same firm (the 'opposing broker') represents the other party, special safeguards protect the opposing client's confidential information.

• ✓No confidential information about the opposing broker's client may be shared with the Employing Broker
• ✓The Employing Broker may delegate supervision of the opposing broker to another competent, experienced broker, and the delegation must be made in writing
• ✓Before the Delegated Supervisor receives confidential information, the Designated Broker must obtain informed written consent from their clients
• ✓If delegation within the firm is not possible, representation of the opposing broker's client should be referred to a broker not licensed with the same firm or a licensed attorney

The Commission issues certificates to qualifying developers; the certificate extends authority to sales agents and employees, with the developer responsible for their actions.

• ✓Commission shall register all applicants meeting Part 5 requirements and issue a certificate
• ✓Developer signing as seller/lessor must secure a certificate before offering, negotiating, or agreeing to sell/lease/transfer
• ✓If acting only as trustee, the beneficial owner must secure the certificate
• ✓Certificate entitles all sales agents and employees to act as developer's agent
• ✓Developer is responsible for all actions of sales agents and employees

Certificates expire annually and may be renewed or reinstated within a defined period.

• ✓Certificates expire December 31 following date of issuance
• ✓Renewed by paying renewal fee under section 12-10-215 absent grounds for denial/revocation
• ✓Expired registration may be reinstated within two years upon renewal fee if all Part 5 requirements are met
• ✓All fees deposited per section 12-10-214

A registered developer must separately register each new subdivision before conducting sales activities.

• ✓For any subdivision with information not previously submitted, developer must provide section 12-10-503(3) information before sale, lease, transfer, or negotiating to do so

Records must be available for examination and copying by owners or their agents. The association may require a written request 10 days prior and limit to business hours, but may NOT condition production on stating a proper purpose. Membership lists cannot be used for commercial purposes or sold.

• ✓Association may require a 10-day written request but cannot require the owner to state a proper purpose
• ✓Membership lists cannot be used to solicit money, for commercial purposes, or sold without board consent
• ✓Owners have right to copies including electronic transmission if available

Associations must maintain detailed records including receipts/expenditures, construction defect claims, meeting minutes, owner names/addresses, governing documents, financial statements (3 years), tax returns (7 years), reserve studies, current contracts, and voting records (kept one year).

• ✓Financial statements kept for past three years; tax returns for past seven years to the extent available
• ✓Ballots, proxies, and voting records kept for one year after the election or vote
• ✓Records include governing documents, meeting minutes, and detailed receipts/expenditures

Certain records may be withheld (architectural plans, pending negotiations, attorney-client communications, executive session records, other owners' units). Personnel/salary/medical records and personal identification/account information MUST be withheld.

• ✓Records that MAY be withheld include attorney-client communications and executive session records
• ✓Records that MUST be withheld include personnel/salary/medical records and personal account information
• ✓Owners may consent in writing to disclose their own phone/email to other members

Associations may charge a reasonable fee not exceeding actual production/reproduction costs. Failure to allow inspection within 30 days after a certified-mail request results in penalties of $50/day starting the 11th business day, up to $500 or actual damages, whichever is greater.

• ✓Copying charges may not exceed estimated cost of production and reproduction
• ✓Penalty of $50/day (from 11th business day) up to $500 or actual damages for wrongful refusal
• ✓Association is not obligated to compile or synthesize information

An initial license or certification is valid through December 31 of the year issued. Appraisers who obtain initial licensure prior to July 1 must complete at least 14 hours of approved CE before December 31. Appraisers who renew receive a two-year license and must complete at least 28 hours of CE during the two-year renewal cycle.

• ✓Initial license is valid through December 31 of the year issued
• ✓Initial licensure before July 1 requires 14 hours of CE before December 31
• ✓Renewal issues a two-year license requiring 28 hours of CE per cycle

Appraisers must complete the 7-hour National USPAP Update Course every two calendar years. The update course is credited toward the required 28 hours of CE. The 15-hour National USPAP course cannot be substituted for the 7-hour update course.

• ✓The 7-hour National USPAP Update Course must be completed every two calendar years
• ✓The USPAP update course counts toward the 28-hour CE requirement
• ✓The 15-hour USPAP course cannot substitute for the 7-hour update course

Beginning January 1, 2026, appraiser applicants and licensees must complete a course in Valuation Bias and Fair Housing. Applicants complete it as qualifying education (7-hour plus 1-hour exam = 8 hours). Licensees' first CE completion must be 7 hours (or deemed satisfied if the 8-hour qualifying course was completed). Every two years thereafter, all licensees complete the 4-hour version, credited toward the 28-hour CE requirement.

• ✓Beginning January 1, 2026, a Valuation Bias and Fair Housing course is required
• ✓Applicants complete an 8-hour qualifying version (7 hours plus 1-hour exam)
• ✓Licensees complete 7 hours initially, then a 4-hour version every two years
• ✓Completion is credited toward the 28-hour CE requirement

Any advertisement of a residential mortgage loan product or Rate must only be for products/terms actually available and must specify material requirements/limitations. It must clearly and conspicuously include at least one responsible party (an MLO or Mortgage Company with their NMLS registration number), the name of the Mortgage Company, and the business phone number. Advertisements must not appear to be from a government agency or the borrower's current lender, must not be misleading/deceptive, and must comply with disclosure requirements. Copies must be retained for 4 years.

• ✓Advertisements must include at least one responsible party with their NMLS registration number
• ✓Advertisements must include the Mortgage Company name and the responsible party's business phone number
• ✓Advertisements must not appear to be from a government agency or the borrower's current lender
• ✓The responsible party must retain advertisement copies for 4 years

The Colorado Lock-in Disclosure form is used for all transactions not under the TILA-RESPA Integrated Disclosure Rule. It must be disclosed within 3 Business Days after receipt of a loan application, and again within 3 Business Days after entering a lock-in agreement (before closing documents are signed), if the APR increases by more than 1/8 of one percentage point, or upon any change to the lock-in information including an extension.

• ✓The Lock-in Disclosure must be provided within 3 Business Days after receipt of a loan application
• ✓Re-disclosure is required within 3 Business Days if the APR increases by more than 1/8 of one percentage point
• ✓Re-disclosure is required upon any change to lock-in information, including a lock-in extension

The Board prohibits acting as both an MLO and a real estate broker on the same transaction unless the requirements are met. Dual status is a material fact that must be disclosed. The Colorado Dual Status Disclosure form (or equivalent) must be completed and provided to the borrower within 3 Business Days after receipt of a loan application. The disclosure must be maintained (rule states 4 years and, in amended text, 5 years).

• ✓Dual status as both MLO and real estate broker is a material fact requiring disclosure
• ✓The Dual Status Disclosure must be provided to the borrower within 3 Business Days after receipt of application
• ✓The MLO must be able to prove the disclosure was provided within 3 Business Days

Pursuant to sections 12-10-711 and 12-10-713, an MLO must notify the Board in writing through the online services portal within 30 calendar days of: a guilty/nolo plea or conviction of any felony or misdemeanor (excluding misdemeanor traffic/petty offenses); a violation or aiding a violation of fair housing laws; revocation/suspension of any license for fraud, deceit, misrepresentation, theft, or breach of fiduciary duty; or any disciplinary action against an MLO license in any jurisdiction.

• ✓MLOs must notify the Board within 30 calendar days of a qualifying plea, conviction, or violation
• ✓Fair housing law violations must be reported to the Board within 30 calendar days
• ✓Any disciplinary action against an MLO license in any jurisdiction must be reported within 30 calendar days

Individuals who directly or indirectly take Loan Modification applications or negotiate/offer loan modifications must be licensed as MLOs. MLOs handling loan modifications must use a loan modification contract complying with the Practice Act and Foreclosure Protection Act — the Colorado Loan Modification Services Contract (or an equivalent alternate form) completed at the time of application. Exempt individuals include HUD-approved housing counseling agency employees providing ancillary advice, mortgage loan servicing company employees, and qualifying attorneys.

• ✓Individuals taking or negotiating loan modifications must be licensed as MLOs unless exempt
• ✓MLOs must use the Colorado Loan Modification Services Contract (or equivalent) completed at time of application
• ✓HUD-approved housing counseling agency employees and servicing company employees are exempt from loan modifier licensure

An MLO will only recommend appropriate products after reasonable inquiry into the borrower's current and prospective financial status. Reasonable inquiry requires reviewing and analyzing the borrower's income information (source and likely continuance) but does not require verifying such income. The MLO is deemed in compliance with section 12-10-710(1)(b) upon reviewing all sections of the Uniform Residential Loan Application and completing the Tangible Net Benefit Disclosure.

• ✓An MLO must make reasonable inquiry into the borrower's financial status before recommending products
• ✓Reasonable inquiry does not require the MLO to verify the borrower's income
• ✓Compliance is deemed met upon reviewing the full URLA and completing the Tangible Net Benefit Disclosure

MLOs and Mortgage Companies must respond to investigations and provide all requested information per the notification timeline. Extensions may be requested in writing before expiration. Failure to provide requested information is grounds for disciplinary action regardless of the complaint outcome. Mortgage Companies must maintain origination and marketing documents (URLAs, disclosures, statements, advertisements, credit reports, etc.) for 4 years in a Safe and Secure Manner; electronic storage is acceptable if accessible.

• ✓Failure to provide requested investigation information is grounds for disciplinary action
• ✓Mortgage Companies must maintain origination and marketing documents for 4 years
• ✓Documents must be kept in a Safe and Secure Manner; electronic storage is acceptable if accessible

MLOs must maintain current contact information (email, legal names, physical home address, phone numbers, business address/name) and licensing information (surety bond details, E&O insurance details, and convictions) in both NMLS and Board databases. MLOs must update the Board within 30 calendar days of any changes. Failure to maintain the information is grounds for disciplinary action.

• ✓MLOs must maintain current contact and licensing information on both databases
• ✓MLOs must update the Board within 30 calendar days of any changes
• ✓Failure to maintain required information is grounds for disciplinary action

An MLO must have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public. Compliance is met if the MLO individually holds the agreement, is an officer/partner/member/exclusive agent/employee of a company holding the agreement, is an independent contractor with a Mortgage Company holding the agreement, or is an employee of a lender.

• ✓An MLO must have a written correspondent or loan originator agreement with a lender before soliciting the public
• ✓Compliance can be met individually, through a company holding the agreement, or as an employee of a lender

MLOs must keep records of disclosures under sections 12-10-725(1) and (2) for 4 years for inspection by the Board. Documents must be kept in a Safe and Secure Manner with electronic storage acceptable if accessible. Although a Mortgage Company may provide the documents, the MLO remains responsible for compliance and is subject to discipline if the company fails to provide them. The MLO must be able to prove disclosures were provided within 3 Business Days.

• ✓MLOs must keep disclosure records for 4 years for Board inspection
• ✓The MLO remains responsible for compliance even if the Mortgage Company holds the documents
• ✓The MLO must be able to prove disclosures were provided within 3 Business Days of application

The detailed advertising content requirements of Rule 5.1.B do not apply to advertisements that indirectly promote a consumer credit transaction and contain only limited identifying information (such as a coffee mug, pen, sign, or business card), nor to rate/pricing sheets or similar proprietary information provided to real estate brokers, builders, and other commercial entities not intended for consumer distribution.

• ✓Promotional items like coffee mugs and business cards are exempt from detailed advertising content requirements
• ✓Rate/pricing sheets provided to commercial entities and not intended for consumers are exempt

Condominium ownership consists of a separate estate in an individual air space unit plus an undivided interest in common elements. The separate estate and common ownership are inseparable. The Act was superseded by CCIOA on July 1, 1992, with only timeshare/conversion portions remaining. Key definitions include general common elements, limited common elements, individual air space unit, and declaration.

• ✓Condominium ownership = separate estate in air space unit + undivided interest in common elements
• ✓The separate estate and common element ownership are inseparable
• ✓The Condominium Act was superseded by CCIOA on July 1, 1992
• ✓Limited common elements are reserved for fewer than all owners

Each condominium unit is carried on tax books as a separate parcel and taxed individually, not as part of the building as a whole. Common element valuation is assessed proportionately upon individual units per the declaration. Tax liens are confined to the individual unit and its undivided interest; forfeiture/sale for delinquent taxes does not affect other units.

• ✓Each condominium unit is separately assessed and taxed as a distinct parcel
• ✓Tax liens are confined to the individual unit and its undivided interest in common elements
• ✓Written notice must be delivered to the county assessor when condominium ownership is created

The declaration must be recorded in the county where the condominium is located and provide for filing a map locating units. For post-July 1, 1983 condominiums, the declaration must contain the name (including 'condominium'), county, legal description, unit boundaries with identifying numbers, maximum unit count, descriptions of common elements, allocation of interests, use restrictions, and easement recording data.

• ✓Declaration must be recorded in the county where the property is located
• ✓Condominium name must include the word 'condominium' or be followed by 'a condominium'
• ✓Rule against perpetuities and unlawful restraints on alienation do not defeat certain declaration provisions
• ✓Section 38-33-105.5 contents apply to condominiums created on or after July 1, 1983

A developer converting a multi-unit dwelling into condominiums must notify each residential tenant upon recording the declaration. Notice must be in writing by certified/registered mail or personal delivery. Tenancy cannot be terminated before lease expiration unless consented; if less than 90 days remain or no written lease, tenancy cannot be terminated less than 90 days after notice. The notification procedure is a matter of statewide concern.

• ✓Developer must notify each residential tenant upon recording the conversion declaration
• ✓Notice must be by certified/registered mail or personal delivery
• ✓Residential tenancy cannot be terminated less than 90 days after notice when lease has under 90 days remaining
• ✓Notification procedure is a matter of statewide concern; local governments cannot conflict

Multi-unit condominiums are governed by the declaration; bylaws must be provided to initial buyers before closing. Bylaws must provide for a board of managers (with 1/3 terms expiring annually), officer elections, meeting/voting procedures, records inspection, and other operational matters. Requirements do not apply to commercial/industrial condos, condos of ten units or less, or those with declarations recorded before January 1, 1976.

• ✓Bylaws must be provided to initial buyers at or before contract execution, or before closing
• ✓At least one-third of board members' terms must expire annually
• ✓Bylaw requirements do not apply to condos of ten units or less or non-residential condos
• ✓Any declaration recorded on/after January 1, 1976 must not conflict with the bylaws section

The manager or board of managers must keep detailed, accurate records of receipts and expenditures affecting common elements, available for examination by unit owners at convenient weekday business hours. Any person who knowingly and willfully violates sections 38-33-106 or 38-33-107 is guilty of a misdemeanor punishable by a fine of not more than five hundred dollars.

• ✓Records must be available for examination at convenient weekday business hours
• ✓Knowing/willful violation of §§ 38-33-106 or 38-33-107 is a misdemeanor
• ✓Maximum fine for violation is $500

An individual unit owner's liability in damages/settlement suits against the association is limited to the settlement amount multiplied by their percentage ownership. Timeshare estates include interval estates and time-span estates, each constituting a separate real property interest that may be separately conveyed and encumbered. Time share estates require express provisions in project instruments.

• ✓Unit owner liability is limited to their percentage ownership share of damages/settlement
• ✓Time share estates may only be created pursuant to provisions in project instruments expressly permitting them
• ✓Each time share estate is a separate real property interest that may be separately conveyed

Within 90 days after assuming control from declarant, the association must make identity/contact information available to unit owners, including name, designated agent/management company, physical address and phone, community name, and declaration recording data.

• ✓Identity disclosures required within 90 days after assuming control from declarant
• ✓Updated info must be provided within 90 days of any change to address, agent, or management company
• ✓Must disclose name, agent, address/phone, community name, and declaration recording data

Within 90 days after assuming control and each fiscal year thereafter, the association must disclose fiscal year date, operating budget, assessments, financial statements, audit/review results, insurance policies, bylaws/rules, meeting minutes, and governance policies.

• ✓Annual disclosures include budget, assessments by unit type, financial statements, and audit/review results
• ✓Must disclose all insurance policies with company names, limits, deductibles, and expiration dates
• ✓Disclosure must be at no cost to unit owners via website, literature table, or mail; does not apply to time-share units