Author(s): Richard K. "Dick" Clark
Published: 03/30/2009
Much is happening at the Colorado Division of Real Estate (DRE). Here are some developments that may be of interest to you.
1. Affiliated Business Arrangements (AfBAs): The DRE continues to investigate marketing agreements because of possible violations of RESPA and Colorado's AfBA statute CRS 12-61- 113.2. The DRE and HUD are working together on these investigations. If you are a party to a marketing agreement with another settlement service provider (e.g., mortgage lender, mortgage broker, title company), or are considering entering into a marketing agreement, it would be wise to seek legal advice.
2. Errors & Omissions Insurance (E&O): The DRE estimates that over 6,000 licensees in Colorado do not have mandatory E&O insurance. Such licensees will be placed on inactive status and they shall be obligated to show proof of insurance and pay an increased fee to become active again. To understand one potential effect of having an inactive license, please read the article above, "Good News for Licensed Brokers" in this publication. Remember to maintain your mandatory E&O insurance coverage.
3. Revised Approved Forms: There may be new revised forms approved by the Colorado Real Estate Commission published this summer. We recognize that Colorado licensees are inundated with many forms and that some of the forms are long. Many of these forms, including their length, are mandated by laws passed by the state legislature. The DRE and the Colorado Real Estate Commission must assure that the forms accurately reflect the new laws.
4. Par 4.3 of the Buy Sell Contract: Please understand that The Forms Committee is recommending to the Colorado Real Estate Commission that Par 4.3 of the standard buy sell contract (CBS1-11- 08) be clarified to provide that if the party who must bring funds to the closing fails to do so because their lender fails to timely fund, that party (buyer or seller) is in default under the contract. This clarification raises concerns for some licensees, buyers, and sellers who do not want to create a default under the contract based on failures of a third party (the lender). If you want to express your thoughts on this issue, contact the DRE or the Colorado Real Estate Commission, which will consider this recommendation at future meetings. If approved by the Colorado Real Estate Commission, this clarification will appear in the revised buy sell contract to be published in July, 2009.
Dick Clark is a senior partner at Rothgerber Johnson & Lyons LLP, working in its Denver office. He has served as legal counsel to the Colorado Association of REALTORS ® since 1990 and regularly represents and advises real estate brokers on all legal matters related to their brokerage business. Mr. Clark can be reached at 303-628-9531 or by e-mail at rclark@rothgerber.com