All right, welcome to the 2025 Annual Commission Update. As usual, this is an overview provided by the Commission to inform licensees of some timely and important real estate matters. As always, it's not meant to be an in-depth instruction on any area, so if anything is particularly important to your practice, please make sure to seek additional information. Let's get going. Our first section is, as usual, compliance. After that, we'll have a few general practice issues that we'll discuss. We'll talk about some of the current legislation, and then we'll provide some news and resources and wrap up with a quick exam at the end. As usual, this is a four-hour course that is required annually. We will be covering, for broker competency, we're going to cover four topics. We're going to cover the, I'm sorry, for compliance, we're going to cover four topics. We're going to cover broker competency. We're going to cover continuing education audits, which are on the rise, by the way. We're going to talk about transaction files and retention, and we're going to talk about the complaint process. All right, our first section is broker competency. And as we know, the real estate market is in flux in Colorado, and there are some relevant laws and regulations that we want to keep your eyes on at this point. The first thing is competency. And this is something that, you know, we talk about, it seems like, every year, right? But as usual, the division is regularly referred complaints and questions about broker competency. And you know, we want to talk over and make sure that brokers are out there working in areas in which they are competent. So the next few slides are going to be about that specifically. So I guess the first question is, what is broker competency, right? What are we worried about? So let's talk about a scenario here, okay? After a buyer is under contract, but before closing, the buyers offered a job requiring 95% of travel. Without informing the broker about the job offer, the buyer asked the broker, what do you think I can rent this condo for? The broker responds, I know you could get $1,500 a month in short-term rentals, maybe even $2,000 in a few years as rents are likely going up. Reading that from the broker and believing it, buyer decided to go ahead and close with the intention of renting out the property when she was traveling. The buyer was then informed by the HOA board that short-term rentals are actually prohibited, okay? So there are obviously a few areas here where that broker's competency may be coming into question. So the first question, did the broker exercise competency? And I think it's arguable that no, there are a few areas where we definitely could have done better. There's a little bit of unworthy practice here. A second question to think about is, where do you gain that competency? And so basically to answer that first question, did the broker exercise competency? Number one, effective communication is vital to broker success. So communication could have been better here, right? Normally if a buyer asks you a question like, how much do you think this would rent for? That should trigger in your mind, maybe they're not planning for this to be their full-time residence. If that was the case, you could have let them know that they might have a little more investigating to do. So that effective communication is really important. There wasn't much punctuation. That was actually a pretty sloppy text. It was conclusory language. The broker sort of made a decision and said, yeah, this is a fact without doing any research. So there was some definite communication problem there. The second area is the actual understanding of short-term rentals and long-term rentals. This broker was selling a home for a person to live in, not a home that was intended for rental. And it seems that the broker failed to actually do any digging and determine what the requirements were for short-term rentals in this area, or apparently determine if they were even permitted. The same could be said about long-term as well. And so anytime someone asks about renting, that should notice you that you should be looking to see, because in this case, no, the broker did not act competently. The third thing is understanding common interest communities. And this is, obviously it's a condo. It is located in a condominium association. So it has a common interest community, but even if it were an HOA, a POA, a metro district, any of those sorts of things where there are restrictions on the deed in use, that broker needed to let the client know. And so there were definitely a few areas here where competency could be improved. So how do we do that? Well, there are a few ways. You could take training. I mean, I don't know if there's a whole lot of training specific to listening to your clients and thinking about what they're asking, but there certainly is training available. We have classes about property management. We have classes about helping folks work with rentals. Shadowing is always a great idea, especially for newer brokers. Work with another broker through several deals until you have a complete understanding of the type of transaction. In this case, this is not an unusual question, and so it seems likely that this broker may have gained some of this information through shadowing. Consultation. This is a really easy one. Call someone in your office, call your employing broker, call a designated broker, call somebody with experience or call the Colorado attorney. I mean, you have options here, but you can always consult with someone if you feel that your competency may be lacking slightly. The other thing is you can always partner. You can co-list with a broker with experience in that particular type of transaction. Now, in this particular transaction, they probably came into it thinking it was a very standard residential transaction, and they should have been right. So this one seems more appropriate if you're dealing with commercial for the first time or if you're dealing with a farm and ranch property, and that's just not your specialty. All right. Can a broker learn as they go? Well, in a lot of ways, this job does sort of purport to have on-the-job training, but in reality, it's just inappropriate. Can you learn as you go? No. You should not be figuring out everything as you work through a transaction. You need to be able to understand these difficult concepts before you work through a transaction so that you can serve your clients at the highest level. If you learn as you go, you're definitely going to increase the likelihood of being disciplined, but you're also going to increase the likelihood of letting your client down. So if you're in doubt, please consult with your managing or employing broker in situations that arise during a transaction. Okay. These are our broker competency references. These come from the CREC Rule 6.2 from 12.10.217 of the Colorado Revived Statutes, and really your biggest reference should be from your office manual and the people in your brokerage. Okay. We're going to talk a little bit about continuing education, and here's our first scenario for that. Broker had a difficult few years coming out of the pandemic. After a sharp decrease in business, broker picked up a different job, ceased working in real estate, and did not take any more education courses, but kept their license active with the Division of Real Estate. Last week, the broker received a notice from the division that they were selected for a continuing education audit. They do not have the required certificates. Okay. So obviously, there are lots of continuing education audits, and anecdotally, it may seem like they are on the rise, and in reality, they are on the rise at this point. The University Commission is increasing its audits of broker education because we are seeing a lack of competency. Those are the complaints that the division is hearing this year from the public. So we might be wondering, what do those audits look like? So what happens during a continuation audit, and what rules apply? So we'll talk over those right now. What does that audit process look like? Okay. So there are a few ways that an audit process gets started. Audited brokers are selected from a list of all active brokers. They are random audits for the most part. Once you've been selected for an audit, the first notice that you're going to receive is going to be an email, okay, and you'll get an email from the division. That email will give you two weeks to provide a response, okay? Read it carefully. Make sure that you are following the expectations that are set forth, and, you know, another point here that I really just want to point out is that it is crucial. It is really essential that all licensees have a current email address and file with the division so that the division staff can get in contact with you. It's not just for audit purposes, but it could also be for discipline. It could be for lots of reasons, and so just remember, if you have changed brokerages or changed your email for any other reason, make sure to check in and make sure the division has your correct email address. It'll keep you a little bit out of hot water with them, okay? If you have the wrong email address on file with the division and you fail to receive that email, you likely won't respond to it, and so what will happen is you will then be deemed nonresponsive, okay? Once you have been deemed nonresponsive, a second and final notice is going to get sent out by U.S. Mail, so you can see where that's really important. If we have the wrong email for you at the division, you're not going to ever get that first notice. You're not going to find out until you're already in trouble for nonresponse, okay? Failure to respond for an audit is actually additional grounds for discipline, okay? In the event that no response is received, a second notice will also be sent by U.S. Mail, and this will go to both you at your address and your employing broker, so that catch-all of the U.S. Mail will get you, but you'll already be already running a little bit late, okay? The first notice is a description of kind of everything that you'll go through in that audit process, okay? The first thing we just want to remind you is don't panic. It's really, it's a pretty calm process. Just read it carefully and make sure that you follow what is asked of you. It'll let you know that the broker has been selected for an audit, and it will let you know the legal authority for the audit. It will tell you which cycle is being audited, okay? So license cycles always begin on January 1st, and they always end on December 31st, three years later. So the ones that just ended in December 2024 were cycles that began on January 1st of 2022. So all courses that are being audited during that cycle do have to have been completed during the license cycle, okay? So that means when you receive the notice of the audit, please only submit certificates that apply to that cycle, okay? You want to make sure that you're submitting certificates that are pursuant to the audit, okay? Email attachments as, email the certificates as attachments. They don't want them in the body. Do not use regular mail or UPS or FedEx or, I don't know, a pony. If the broker does not have the required certificates, so let's say you did not actually take those courses, you've got three options to remediate the situation, okay? The first is you can take a course that is a 24-hour course called broker reactivation. It's 24 hours of continuing ed, so it's a long one, but you are allowed to take that course every other license cycle, and it will complete your full requirement for the cycle. So it will be all 24 hours. If you've taken 20 and didn't quite meet your compliance deadline, you will still get to take an extra 24, so it's not just a one-for-one. The other thing is you need to remember this is only available every other license cycle, so it's not going to be a good option to rely on that each time, because you'll find that if you've already done it three, you know, two, three years ago and try to do it again for the current cycle, it won't be an option for you, and you'll have one of the other two options, which are a little more aggressive, okay? The second option for you would be you can take the Colorado portion of the exam again, and a passing score on that will satisfy your requirement, or you can do the really difficult option of going ahead and doing all 72 hours of pre-licensure, so you get to do all the Colorado licensing courses that you did before you got your license all over again. So that's 48 hours of contracts and regs and 24 hours of closings. It's a long class. It's pretty brutal. You may not love it. This will also tell you when your response is due, and like we said, it's two weeks, and it will give you an outline of what would happen if you did not, if you did not unfortunately meet the requirement, okay? What comes next? So once you've submitted all of your certificates, I think most people kind of sit down and just hope they're never going to hear anything again, and usually if there is nothing, there will not be a lot going on at this point. If the broker is compliant, you're just going to get an approval notification via email. However, if you're not compliant, division staff will let you know what the next steps are, okay? So they may refer you to the enforcement program. They may let you know what sort of classes you will need to take, and they'll also let you know, they'll call you, they'll let you know what you're missing, why specific certificates were not accepted if there were some that were not. So it's not going to be just a mystery for you, okay? If a determination has been made that the broker is noncompliant, so either they don't have the certificates or they just don't respond to the notice, the auditor will deliver the broker to the enforcement team. That's a part of the expedited settlement program at the division, and they will basically create a stipulation for diversion, and what that will do is it will summarize the details of the case, and it will provide what makeup, coursework, and remediation is necessary, and whether there will be a fine for noncompliance as well, okay? On this image, you can see there are a few things that are incorrect on this statement, and so if you'd sent this in, this would come back as noncompliant. Well, what is inaccurate, okay? Well, in this case, it is missing a license number. It definitely has to have a license number, okay? Without a license number, it is not going to be accurate, so if you have some that were printed out, whether in your brokerage or from an online provider like APEX, and you notice that your license number is not on the certificate, that's likely because you didn't provide it to your provider before you took the class, which is not a problem. You can write it in. Just make sure you do write it in before you send it to the commission, okay? There's another problem that I see here, too, and that is that this purports to be a 2024 annual commission update certificate, but it seems to have been taken in 2023. Unfortunately, that means that this is either invalid or fraudulent. You're not allowed to take the annual commission update in a year other than the calendar year for which it's written, so right now, this is the 2025 course. It's only available until December 31st of this year. Once the clock strikes midnight and it is 2026, you have missed it, and you are out of compliance, so at that point, it cannot be fixed. You got to make sure that the courses are taken in the correct calendar year, okay? There are a few rules that apply to your continuing education that the commission just wants us to highlight. These are some that often confuse students or cause noncompliance inadvertently, so the first thing is there are 24 credits required each license cycle, so that means you have to take 12 units of annual commission update in those three years, so you'll take one for each calendar year, and remember, they don't get taken in other years, so you're always going to have at least one class per year. Then you have 12 units of electives also in that three-year period, and those do not have to be taken four per year. You can take all 12 your first year, second year, or third year, and that will be acceptable, okay? There are a couple of interesting rules, however. One that tends to cause problems, especially for people that like to do online courses, is that Rule 4.5a states that a minimum, or I'm sorry, a maximum of eight credits per day is all you get, okay? So what that means is if you end up having to, you know, make up some of those continuing education units, you really cannot sit at home and do 12 units of electives plus an ACU all on a big snowy day, because unfortunately, only eight of those credits will count. This is the most commonly violated CE audit rule. People don't realize it, and so unfortunately, it's one of those where if you procrastinate, a lot of times you will get burned. The other thing that can cause this by accident is if people are taking, for example, you're taking the 24-unit broker reactivation course. You're only allowed to receive eight hours of credit per day, so if you put off taking all of the final exams for those sections until one day, and you just said, okay, today's exam day, I'm going to take all of my tests, you'll pass them all on the same day, and you won't be able to get credit on the same day. So anytime you're taking online courses, make sure that you just can't, you just can't do more than four or eight credits a day. The next one that unfortunately gets a little confusing for people is that you cannot repeat a course in the same calendar year, and this does apply also to the ACU. Sometimes people take the credit, the ACU early in the year, and then they take it again by accident sometimes, oh, it's being offered free in my office or something, and they take it again in October, and then they think that those two certificates mean that they have taken eight units, when in reality, those are only four units and those will not count. The other important piece here is credits can't be carried forward into the next licensing cycle. And so if your license ends this year, at the end of 2025, you need to make sure that all 24 units have been taken now, and then go ahead and stop, because anything you take this year before your license renewal on January 1st will not count. So just hang on to it and go ahead and take those courses or finish those courses in January so that you get proper credit for them. Any course that is taken to satisfy discipline cannot be used to fulfill the license cycle requirements. So what that would look like for you as a scenario is if you had taken the 24-hour broker reactivation course, for example, because you were audited for the previous license cycle, you might think, well, I did 24 hours this cycle, so I am good. And the reality is those punitive courses don't get to count. Those have already satisfied your discipline requirement, and so you'll need to take an additional 24 hours in the current license cycle. They don't get to count twice. The other interesting point, and this is a really important one, is only fully attended courses can be credited. So if you are taking a four-hour course, whether it's in the classroom or online, and you are only able to attend for two or three hours, you cannot get those two or three hours of credit. You will receive a partial certificate. There's no such thing as partial credit. So unfortunately, if you are not able to complete the entire course, you will receive no credit for that. There's no certificate issue. It's also really important to discuss a quick change that they made in 2024. You can get credit for attending meetings. So if you attend a CREC meeting, you're eligible for continuing education credits for up to two hours per license cycle, or I'm sorry, per calendar year, actually. So you can do two hours by attending a public meeting every year. And what has been added this year that makes it even easier to attend those meetings is that it used to be only in-person attendance would be eligible, but the truth is now that the commission has approved online attendance at their meetings for credit. And so if you do attend a meeting that lasts at least two hours, two electives credits can be awarded for that. And so that's fantastic. We can now do that online as well. Okay, a couple of just quick practice pointers to make sure that we remember how to stay compliant. First thing, regularly review your contact information in the division's licensing system. An old email address, no email address with the license is going to be a danger for you. You can become non-compliant for not providing a response to an audit you didn't even know was going on. The only official license cycle is the division's license cycle. So do not rely on third-party CE trackers like our school. Don't listen to Apex, listen to the division. It is your responsibility to confirm your license cycle and whether you're in compliance with continuing education requirements. It's really easy to do. Just Google DORA license lookup real estate. You'll find it, type in your name, and it'll tell you when you expire. So you should not have to wonder, okay? Another one, all email that comes from the division will always come with that stem of at state.co.us. So what you can do is you can actually whitelist that in your email program, make it a safe sender so that you always get those. Otherwise, sometimes they can actually go to spam or junk and that really can bite you a little bit, okay? The other thing you can do is just before you take a course, verify that it is approved for continuing education credits on the division's website. You may not realize that that is something that we're kind of jointly responsible for. As a school, it's our responsibility to maintain those approvals, but you also need to make sure that the courses you're taking are currently approved and that list is available online on the division's website. This course is approved, by the way. All right. Our next section, we're going to look over what all of the required contents of the certificates are. And the reason we're going over this is it's actually, it is the broker's responsibility to verify that they are compliant. It's not necessarily just the responsibility of the education provider, because there's some times where we will provide one that is missing some information that was not provided to us by you, okay? But these contents have to be there every time. There has to be the name of the course provider or the school. There has to be the course title, which must describe the topical content. There needs to be the number of continuing education hours offered. It will have a course date or dates on it. It needs to have your name. It needs to show what authentication we have provided by the course provider. And it needs to have a course approval number as issued by the division, okay? You're responsible to make sure that these certificates are complete. So do not submit a certificate for an audit that's not complete. If you have one that is incomplete, contact the education provider to see what we can, you know, get corrected. If for some reason, you know, it does happen, education providers sometimes go out of business. So say you took a course a couple of years ago and you go online to look for that provider and that school's gone now. The sad fact is a few schools have lost their accreditation over the last year or two. And that, you know, that certificate may not be easy for you to obtain from the school. So just make sure that you're kind of getting these and gathering them in your own files in a more timely manner, just in case you get audited later on, okay? And here are our references for the continuing education audit. And there are a couple of links for you available if you want to figure out which courses are completely approved and which information the division will offer for audit compliance. They have a page regarding audits as well. Okay. Our next section is going to be about transaction files, okay? So this is our next scenario. Broker entered into a buyer listing contract in October of 2019 and successfully closed the transaction on January 2nd, 2020. On December 5th of 2023, the buyer filed a complaint with the division and the broker was notified by the division of the complaint on December 25th, 2023. In early January 2024, broker begins to search for their transaction files, but the broker's brokerage had already deleted the transaction file, okay? So we're going to pay a lot of attention to these dates, but there are a lot of moving parts, right? Okay. Who has the obligation to ensure that the transaction file is complete? Well, in this case, both, right? Both the broker has the obligation and their employing broker has an obligation, okay? What is required to have in a complete transaction file? Well, we'll find out about that one. And when do the CREC rules permit transaction files to be disposed? So those are the questions we need to consider, okay? So first one, whose responsibility is it to keep it, basically? The broker does have the obligation to ensure that the transaction file is complete, okay? And what is required to be in there is right there in rule 6.20. It says that you can review and update, they need all sales transaction files, they need all property management files, all of those things are there. What other materials might be appropriate to maintain above and beyond the documents required by the commission? And this is kind of an interesting rub. This is kind of where license law meets regular law, right? So I'm not an attorney, and this is obviously not legal advice, but there are some times where it might be really important to you to keep a little more information. So while, for example, the commission does not require that you contain, you keep copies of emails, texts, and contain those in your files, if there's a complaint, it would certainly be helpful to you to have those, right? If, you know, God forbid, it ends up in a courtroom someday, it would be really important to have that, okay? If you retain the correspondence with your consumer as well as other brokers, other consumers, other professionals, you know, if you have correspondence with inspectors, roofers, crews that clean, all of those things, it really is a best practice for you to hang on to that, even though it's a bit outside of what the commission requires, okay? The only thing that is not required to be contained in those transaction files that do apply to the transaction pretty much every time are those which are available publicly. And so you don't have to save to your file existing public records, title commitments, loan applications, any of the lender disclosures that are not required by you. You do not need to store those. But again, it really is probably worth just hanging on to all the information that you have for each transaction, okay? Let's talk a little bit about the file retention requirements. So basically, you're required to hang on to your transaction files for four years, beginning from either the consummation date of the transaction or the expiration date of any listing contracts, okay? So, and by consummation, we mean closing. But let's look back here. So if this was actually closed on January 2nd of 2020, they did receive that information they needed to hang on to it for four years. So they needed it until January 2nd of 2024. So the broker definitely should have still had it, and the brokerage firm should have still had the transaction file at that point. Now, if we look back, though, we notice that the broker was notified on Christmas, but the brokerage firm may have been closed, may not have received that notice, probably didn't, quite frankly. And they purged their files in early January, which was entirely appropriate because they did not have notice of it. Who did have notice, however, was the broker. And so hopefully, they will still have those files, even though technically, four years out, they do not have to. Okay, these are our references for transactions. It talks about which transactions are required, which documents are required for your transaction file. And there's a checklist right here on the division website. Again, use that link if you've never seen it. It's very handy. You can make sure that each of your files are compliant ahead of time so that if you receive a complaint, everything is ready to go. Now, complaints can be opened a couple of different ways. Complaints can be opened by members of the public via U.S. mail, in-person, email, fax, or submitted through the division's website. Almost all of them are submitted through the division's website, so that's usually how it happens. They can also be opened by the division if it receives information that necessitates an investigation. And so it doesn't necessarily have to be a client that initiates the complaint. The division could have received information some other way, and they could initiate the investigation themselves, okay? All complaints are reviewed for jurisdiction, okay? And what that means is the division needs to determine whether or not it's even appropriate for it to, you know, address this complaint, okay? If a complaint is not dismissed, then that means that it is in the purview of the commission and it will be assigned to an investigator. The licensee will be notified and given an opportunity to respond, okay? The notice is, again, it's going to be sent via email. So we've talked about it a little bit, but please make sure your email is correct. All complaints should be responded to by the broker regardless of license status, okay? This is kind of an interesting, you know, thing. We all sort of, you know, maybe we watch too much TV and think that we can plead the fifth, but do know that if you do not communicate and cooperate and you do not respond, that is an additional charge if the commission moves forward with disciplinary action. You have to respond to complaints. You do not have the option to not respond, okay? That will be held against you. All complaints, regardless of licensee status, so that means if you receive a complaint regarding something that happened six months ago, but you have retired and iced your license and you are gone away, you still need to respond because it can still affect you even if your licensee status has changed since the time of the complaint, okay? The notice that you receive will have a copy of the complaint. It will have a request for supporting documents and response, and it will have your deadline to respond, okay? And so it's going to ask for not only documents, but a narrative response, so it wants you to just, you know, write out a little essay almost or an email explaining the situation so that they can get some understanding of what went on, okay? The division investigator will then review the complaint, the response, and anything that you submitted or collected. They will also interview people, so if you were hoping that you could mail off your little package of documents and the investigator would go, oh, this broker, you know, is definitely in the clear, and you would just, like the continuing education audit, you would just get an email saying it's all over, it's great, sadly, that is not the case. You will definitely be interviewed, as will the complainant and any other relevant parties, so you will talk to the investigator, your broker will. The other side of the complaint will, and then after it's completed, results will be presented to the commission. Upon completion of that, the commission will take, you know, reasonable steps to prevent names and confidentiality from being broken, but that's when discipline may be approved. The commission recommendation will be to either approve, adjust, or deny the discipline that was suggested by the division, and then typically, the licensee will receive an initial stipulated agreement, which reflects a proposed settlement term, okay, so they'll receive that from the commissioners afterwards. They will help kind of, you know, they do this in order to normalize discipline for similar actions, but they also will look at the specific facts of the scenario and recommend discipline based on those facts, so if there's something just crazy egregious, the discipline could be more severe, okay? Do know that agreeing to a stipulation is voluntary, but those stipulations are generally faster and cheaper and less severe than if it actually goes to the attorney general, so it's much like a plea deal when you get pulled over in your car, okay? You definitely want to make sure that if the stipulation is workable, you may not want to go forward to the attorney general. You are, however, responded to request mediation with the division. If the ESP program and the respondent just do not agree, if you cannot come to a stipulation that you want to voluntarily enter into, the attorney generals will take the case to an ALJ, so an administrative law judge will then take up the case, and you'll get an initial decision, okay? So this is an actual court case where you'll have, you know, a formal evidentiary hearing in court. The court will determine wrongdoing, and they will issue an order, and so this is not a voluntary option anymore. This is their initial decision. Respondents can then appeal that decision if there are legal grounds for appeal. If there are no legal grounds, then the commission will just issue a final order, okay? Depending on the complexity of the investigation and, you know, the caseload, it really varies how long things take. It could be fairly quick, but it can actually take, you know, several months. On average, they say it takes about 10 months, but in rare cases, the division has seen cases that have taken more than two years, and so this can really drag on and, you know, become really an interference in your daily practice, so we really want to make sure that you're taking care of these as quickly as possible. All right, that takes us to the end of the first module, so we're going to go ahead and take a quick break. If you need to run to the bathroom or grab a drink of water, this is a great time to do that. We'll come back and answer any student questions that we have. All right, thanks.

real estate

broker competency

compliance

continuing education

transaction file management

complaint process

legislation