Free Colorado Real Estate Practice Exam: 74 Questions

“Any person who willfully fails or neglects to appear and testify or to produce books, papers, or records required by subpoena, duly served upon him or her in any matter conducted under parts 2 and 5 of this article 10 commits a petty offense.” Per Chapter 1: Colorado Real Estate Broker License Law 12-10-225, C.R.S. Failure to obey subpoena – penalty.

The Colorado Real Estate Commission has the option to refer the matter back for rehearing. “If written objections are filed, the Commission may adopt the findings and initial decision of the administrative law judge, modify the disciplinary action, or refer the matter back for rehearing.” Per Chapter 1: Real Estate Broker License Law C. Enforcement Section

“Corporations that do not maintain a permanent place of business in Colorado, and nonresident individuals, estates, and trusts are subject to Colorado income tax withholding on the sales of Colorado real estate in excess of $100,000.” Per Colorado Department of Revenue Taxpayer Service Division

“Money belonging to others shall not be invested in any type of account or security or certificate of deposit which has a fixed term for maturity or imposes any fee or penalty for withdrawal prior to maturity unless the written consent of all parties to the transaction has been secured.” Per E-1. Trust accounts; requirements and purposes C. Escrow funds must be available immediately without penalty

The first three options are all required, the last is not. Coverage does NOT have to be transferable and the contract does not need to mention that. Per Real Estate Part 6 - Preowned Housing Home Warranty Service Contracts 12-61-611.5. Contract requirements

“Real estate brokers are required to use Commission-approved forms as appropriate to a transaction or circumstance to which a relevant form is applicable. Commission-approved forms are posted on the Division of Real Estate’s website.” Per Rule F-7

Commingling is when a licensee mixes funds held in care for a client with their own funds.

“Register HOAs and track and categorize complaints against those HOAs, impose recommended disciplinary actions against licensees, and investigate complaints,” are all objectives of the division, licensing home inspectors is not. Per Chapter 1: Colorado Real Estate Broker License Law

The Colorado Real Estate Commission may, upon written complaint, investigate a broker who has not delivered closing statements to the buyer and seller of real estate. With the results of the investigation, the commission can fine and even potentially revoke a broker's license with sufficient evidence.

Colorado General Assembly passed the Colorado Foreclosure Protection Act with the intent of providing homeowners with information to make informed decisions about foreclosures, prevent unfair dispossession of property, and curtail equity stipping of a property owner's home. In plain terms, it's to protect and simplify things for consumers.

“Immediate notice shall be given in a manner acceptable to the commission by each licensee of any change of business location or employment. A change of business address or employment without notification to the commission shall automatically inactivate the licensee’s license.” Per Chapter 1: Colorado Real Estate Broker License Law 12-10-211, C.R.S. Change of license status – inactive – cancellation.

“The Division has a five-member Commission that meets bi-monthly to conduct rulemaking hearings, make policy decisions, consider licensing matters, review complaints and take disciplinary action against real estate brokers. The five Commission members consist of three real estate brokers, one of whom has substantial experience in property management, and two members of the public. The Commission members serve a three-year term.” Per Colorado Division of Real Estate

Per Colorado License Law Ethics, real estate brokers are not impacted by the actions of a third party if that broker had no specific knowledge of the unlawful act.

Yes, many of the main components of property management are defined as real estate activity under Colorado real estate license law.

Errors and omissions insurance is a type of professional liability insurance that protects agents against claims of inadequate work or negligent actions. Colorado Real Estate Law mandates agents have errors and omissions insurance.

Colorado law requires a licensee to disclose when an offer to purchase real estate is fully executed because that is considered a licensee entering into an Affiliated Business Arrangement. “Real Estate Brokers are required to disclose Affiliated Business Arrangements at the following times: When a licensee enters into an Affiliated Business Arrangement; When a licensee changes Affiliated Business Arrangements; When a licensee applies for a license; When a licensee changes status from inactive to active; When the licensee transfers to another brokerage; and Annually for all Employing Brokers.” Per Broker Affiliated Business Arrangements Disclosure Requirements

Colorado has reciprocity with all other states, only if the license has been held for a year or more and the person passes the Colorado state portion of their exam.

“Any application for licensure from a person whose license has been revoked shall not be considered until the passage of one year from the date of revocation.” Per 12-10-217, C.R.S. Investigation – revocation – actions against licensee or applicant – definition.

The licensee is responsible for all of the duties listed. All of the following are listed on Rule E-5.

To renew your license, you must obtain 24 hours of continuing education during each full licensure renewal period.

Written objections are filed with the Colorado Real Estate Commission. The initial or first decision is based on a hearing from an administrative judge.

Remember, securing the copy of the approval and signatures of the parties is for the licensee's own protection. Primarily in case of a future inspection by the Colorado Real Estate Commission.

First in time, first in right. Or priority is seniority, by date, as of which a water right is entitled to divert. Per Colorado Revised Statutes Title 37. Water and Irrigation 37-92-101

Augmentation is a detailed program to increase the water supply available for beneficial use. Per Colorado Revised Statutes Title 37. Water and Irrigation 37-92-101

“The Division has a five-member Commission that meets bi-monthly to conduct rulemaking hearings, make policy decisions, consider licensing matters, review complaints and take disciplinary action against real estate brokers. The five Commission members consist of three real estate brokers, one of whom has substantial experience in property management, and two members of the public. The Commission members serve a three-year term.” Per Colorado Division of Real Estate

Error & Omissions Insurance for Colorado Real Estate Agent covers all acts requiring a license.

Fees for an attorney representing the parties to a transaction are permitted under Colorado law. All other options are NOT, either by law or by omittance.

“If the complaint against the licensee is made it may result in disciplinary action against a licensee, and a hearing may be held before an administrative law judge. The administrative law judge will make an initial decision of revocation, suspension, censure, or dismissal. If written objections are not filed with the Commission within 30 days, the initial decision becomes final.” Per Chapter 1: Colorado Real Estate Broker License Law C. Enforcement Section

Brokerage firms and brokers are required to retain transaction files for a period of four (4) years, beginning from the consummation date of the transaction or the expiration date of any listing contract that does not consummate. Division of Real Estate 4 CCR 725-1

“The Division has a five-member Commission that meets bi-monthly to conduct rulemaking hearings, make policy decisions, consider licensing matters, review complaints and take disciplinary action against real estate brokers. The five Commission members consist of three real estate brokers, one of whom has substantial experience in property management, and two members of the public. The Commission members serve a three-year term.” Per Colorado Division of Real Estate

A broker is not a licensed attorney and cannot offer legal advice per Colorado Law. The broker should advise the client to seek the advice of counsel.

If a broker is acting either as an agent or as a transaction-broker in Colorado, there are 17 duties that the broker is responsible to perform.

A conservation tax credit is available to Colorado residents, corporations, estates, and trusts who donate a conservation easement. The credit is been valued at 50% of the fair market value of the easement, up to a maximum credit of $375,000. Per Colorado’s Conservation Easement Tax Credit Program

Applicants must be at least 18 years old in order to become a real estate broker in Colorado.

All of the options are permitted in Colorado. A broker may work with a buyer in one transaction and with a seller in another transaction, a broker may work with a single party in separate transactions using different brokerage relationships, and a brokerage firm can work with one designated broker working with a buyer and a different designated broker working with the seller in the same transaction. All of those options are legal.

The Federal Fair Housing Ac covers residential property only and the Colorado Fair Housing Act covers both commercial and residential property. All the other statements are not true.

Colorado Primary Residence and a Credit Check are not requirements for brokers, Error & Omissions Insurance is.

“A real estate broker has the duty to perform the terms of the employment agreement, including exerting reasonable effort to accomplish the sale or purchase of the property. If the broker does not perform, the owner is justified in voiding the contract. It is a violation of the listing agreement and license law for a broker to “sit” on a listing, that is, take a listing and make no attempt to sell or acquire the property.” Per Colorado Division of Real Estate Chapter 15 Listings

No, it is not. “A Broker's or Brokerage Firm's personal or business operating funds must not be commingled with Money Belonging to Others.” Per 4 Colo. Code Regs. § 725-1-5.10

Establish a relationship with the party for both transactions. In CO, brokers must establish a written relationship with an individual each time they act in a different agent capacity.

Colorado, E-46. Affiliated Business Arrangement Disclosure covers affiliated business arrangements. Brokers are required to disclose affiliated business arrangements to consumers in all transactions.

The Federal Fair Housing Act does not prohibit marital status discrimination and the Colorado Fair Housing Act DOES. All the other statements are not true.

The Colorado Supreme Court ruled in the Conway-Bogue decision that real estate licensees could provide the limited legal service of interpreting and completing state-approved forms for buyers and sellers.

Colorado is a title theory state. Title theory states function where banks or mortgage lenders hold the title of a property until it is paid in full.

The Colorado Division of Real Estate Licensing Section issues license histories, reviews, processes all incoming applications, and enters data and upkeep licensing records. Per Division of Real Estate

Appropriation is the application of a certain portion of Colorado waters to beneficial use. Priority is seniority, by date, as of which a water right is entitled to divert. Per Colorado Revised Statutes Title 37. Water and Irrigation 37-92-101

“Any natural person, firm, partnership, limited liability company, association, or corporation violating the provisions of this part 2 by acting as real estate broker in this state without having obtained a license or by acting as real estate broker after the broker’s license has been revoked or during any period for which the license may have been suspended commits a class 2 misdemeanor.” Per Chapter 1: Colorado Real Estate Broker License Law 12-10-223, C.R.S. Violations.

“When acting in a licensed capacity or when a licensee sells, buys, or leases real property on the licensee’s own account, such licensee shall have a continuing duty to disclose any known conflict of interest that may arise in the course of the transaction. In addition, when a licensee sells, buys, or leases real property on the licensee’s own account, such licensee shall disclose in the contracting instrument, or in a separate concurrent writing, that they are a licensed real estate broker. “ Per Rule E-25

Colorado real estate license fees are non-refundable. License fees are deposited within the Colorado Department of Real Estate and are not refundable if a license renewal is denied.

All of the above. Incorporated, Limited Liability Company, and Corporation are all forms of business ownership. Since the broker is licensed as a sole proprietorship or single entity they are not any of the following. Advertising or including a business entity that is not representative of the entity is false, misleading, and considered fraudulent.

All of the following would apply. “Commission Rule E-25 states that when a broker is acting in a licensed capacity or when a broker sells, buys, or leases real property in which the broker has an ownership or financial interest, the broker shall have a continuing duty to disclose any known conflicts of interest. In addition, the broker shall disclose in the real estate contract or in a separate document that the broker has an ownership interest in the property and is a licensed Colorado real estate broker.” Per Colorado Disclosures

In general, sales of Colorado real property valued at more than $100,000 and made by non-residents of Colorado, are subject to a withholding tax in anticipation of any Colorado income tax that could be due on the gain of the sale. This tax is 2% of the selling price via an income tax liability.

Staging services are not to be included in settlement services per RESPA.

Colorado is NOT a Community Property state. The states that have community property laws are: Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. Community property is property acquired that is considered to be obtained by mutual effort.

All of the following are duties or responsibilities of the Colorado Real Estate Commission except hearing disputes between brokers. That is handled elsewhere. Per Chapter 1: Colorado Real Estate Broker License Law

“This Act was created in 2006 because: “Unfortunately, too many homeowners in financial distress, especially the poor, elderly, and financially unsophisticated, are vulnerable to a variety of deceptive or unconscionable business practices designed to dispossess them or otherwise strip the equity from their homes.”” Per Colorado Division of Real Estate

Brokers should not be drafting contracts. Brokers should use Commission approved contracts, have their attorney draft a contract, or recommend an attorney to their clients if they want a contract made.

“Upon the death, resignation, removal, or otherwise of any member of the commission, the governor shall appoint a member to fill out the unexpired term. The governor may remove any member for misconduct, neglect of duty, or incompetence.” Per Chapter 1: Colorado Real Estate Broker License Law 12-10-206, C.R.S. Real estate commission – created – compensation – immunity.

Colorado statute requires that any broker engaging in activities that require a real estate license must be in the capacity of either a single agent or transaction broker. This just means that an agency must be established, and it must be a legal form of agency. In CO, the two legal forms of agency for real estate agents are single agents and transaction brokers.

Inactive licensees are NOT required to maintain Errors and Omissions Insurance. “Every licensee under this part 1, except an inactive” Per Brokers and Salespersons § 12-61-103.6. Errors and omissions insurance required

All of the following are protected. Source of Income being the most recent, effective January 1, 2021.

Unlike some states, in Colorado, there is no state law that dictates what a broker may charge for a commission. The commission is completely negotiable in the listing contract.

The term “trust account” is synonymous with “escrow account.” This is important to understand because trust/escrow accounts have specific rules and can not function like a personal or expense account in Colorado.

“On and after July 1, 2006, an employing broker, in a form and manner acceptable to the commission, shall at least annually disclose the names of all affiliated business arrangements to which the employing broker is a party. The disclosure shall include the physical location of the affiliated businesses.” Per 12-61-113.2, C.R.S. Affiliated business arrangements – definitions – disclosures – enforcement and penalties – reporting – rules – investigation information shared with the division of insurance

“Any natural person, firm, partnership, limited liability company, association, or corporation violating the provisions of this part 2 by acting as real estate broker in this state without having obtained a license or by acting as real estate broker after the broker’s license has been revoked or during any period for which the license may have been suspended commits a class 2 misdemeanor.” Per Chapter 1: Colorado Real Estate Broker License Law 12-10-223, C.R.S. Violations.

Through a written agreement or disclosure agreement. A broker can become a transaction broker by a written agreement or through a disclosure. Per Colorado law.

Under agency law in Colorado, Dual Agency is illegal. Per § 12-10-406, C.R.S. Dual agent. “A broker shall not establish dual agency with any seller, landlord, buyer, or tenant.”

“The director of the Division is an administrative officer who executes the directives of the Commission and is given statutory authority in all matters delegated by the Commission.” Per Chapter 1: Real Estate Broker License Law III. The Commission Office

“Enforce state and federal laws, rules, regulations, and standards and impose disciplinary action when recommended. Register timeshares, raw land subdivision developers and homeowners’ associations. License real estate brokers,” are all objectives of the division, taxing homeowners is not. Per Chapter 1: Colorado Real Estate Broker License Law

The agents license number is not required. “All deposits of funds into an escrow or trust account must be documented ( i.e ., bank deposits) including confirmation of electronic and telephonic transfers or on detailed schedules attached to the deposit slips or confirmations. The documentation must identify each person tendering funds to the broker for deposit, the amount of funds tendered, types of funds received from each person, and the property address, affected.” Per E-1. Trust accounts; requirements and purposes O. Recordkeeping requirements

Disability, Color, and Religion are all included as part of the Federal Fair Housing Act. The Colorado Fair Housing Act protects Creed and/or Belief System.

“An initial broker's license expires at midnight on December 31st of the year in which it was issued. During that initial licensure period, the newly licensed broker will not have any obligation to complete any continuing education. After that initial license period, the active licensee will then be on a three-year license cycle and be obligated to complete 24 hours of continuing education within that licensing cycle.” Per Colorado Department of Real Estate.

Sex, National Origin, and Familial Status are all included as part of the Federal Fair Housing Act. The Colorado Fair Housing Act protects Sexual Orientation.

Three years. “For each three-year license cycle, all active real estate brokers must complete 24 hours of continuing education.” Per Colorado Division of Real Estate