All right, welcome back. We're going to go ahead and get into some general practice issues now. And this year, we have quite a few to talk about. The first is contract terminations. We're going to talk some about referral business, some leasing issues. We'll discuss social engineering, data security, and CP20. We'll talk about post-closing occupancy agreements. We'll discuss briefly the NAR settlement. And then we'll talk briefly about the new contracts and forms that came out last year. OK, our first scenario. Broker listed a residence on 35 acres in Elbert County and quickly found a buyer. The parties entered into a contract and due diligence commenced. On the day of the mineral rights examination deadline, buyer received unfavorable information and messaged her broker to terminate. Buyer's broker immediately called the listing broker and left a voice message. The next day, broker emailed the notice to terminate. OK, there's our scenario. And here are the questions we want to talk about. Did the buyer's broker properly notify listing broker of their intention to terminate? And how can a party terminate a contract? OK, so these seem like pretty simple questions. Did the buyer's broker properly notify the listing broker of their intention to terminate? No. They sent a voice message before the deadline. And it's lovely that that was communicated. But unfortunately, the contract requires that termination be received in writing. OK, so absent an email or some other written notice, this really wasn't sufficient notice, sufficient to terminate. OK, how can a party terminate the contract? Well, the contract's pretty clear. Written statement is required, and so you need to do it in writing. But there is a little more to this analysis, OK? So bear with me, OK? The legal standard here, which is the one that's found in the contract, that's the one that says that in order to terminate, written notice is required. That's just Colorado law, OK? Therefore, it is very possible that in this scenario, while it was an improper termination, if this came before a judge, the judge would say, well, they probably would get their earnest money back, OK? However, we're not attorneys. We are brokers. And so we need to follow the rules that are set forth by the Division of Real Estate. And we need to not try to practice law in that way. What we should instead is follow the rules that we have, including rule F about forms. And so that's the interesting part that really comes into play, is that there is a form that exists, and we need to use it. What's that form? That's the notice of termination, OK? So while the language in the contract to buy and sell property is clear that termination must be made in writing, rule 7.1 that applies to the broker activity says that if a form exists, you have to use it, OK? So what that means is, since there is a notice of termination form that has been prepared by the Real Estate Commission, brokers need to terminate using that compliant form. They cannot just terminate by phone call or text or email, OK? There are, of course, a few exceptions. Now, in this case, it certainly, there was nothing in the scenario that indicated a really tight timeline. But if the broker received this notice at 11.58 PM, and there was no way they were going to be able to get the form completed and signed and authorized by their client and back in those two minutes, it certainly would have been appropriate to send an email that just said, yikes, we don't have the termination form, but client wishes to terminate. Form will follow in the morning. That still could have been done by text or email, so it would have been a written response. And it needed to be followed up in a very timely manner if you're going to get by with an exception like that. But in reality, there's very unlikely scenarios that you have to consider where you could not use the form that is freely available to you, OK? So while this may end up being fine for the client, and they may end up terminating, especially a court may find that if the other broker knew, I mean, they'll ask him. Well, OK, you didn't receive proper termination, but did you know of their intent to terminate in a timely manner? And the reality is, yes. If the broker is willing to perjure themselves on the stand and say they had no idea, then, well, we can't control that. But in reality, that broker is probably going to say that they knew. And so your client will likely be OK. But there is still a license law violation at hand. And so we definitely need to be aware of that as licensees, OK? Text messages are also common, like we've talked about. But they're also sort of ambiguous. So this is just kind of a reminder that the commission wants us to let you know is clear communication is really imperative. Ambiguous text messages are not a good choice, OK? So for example, what does it mean if you say, fine, the buyer is out? Well, I mean, that could mean they're just out of the state right now and need to sign via DocuSign. It could mean that they are out having a cigarette. It could mean anything. But you need to make sure that you're receiving clear communication and that is a notice to terminate. It's really clear. The other thing, and this is a practice pointer because people do this, unfortunately, do not threaten to terminate without the client's authorization. So as part of your negotiations, you have to be clear that you don't say something like, well, either we're going to need to make that work or my client's going to terminate. Because in reality, that may be interpreted to say, oh, OK, well, then we'll accept your termination and go ahead with our backup offer. And if that was not what your client intended to do, you're not appropriately representing them. So make sure that you're not threatening anything that your client has not authorized you to threaten. The other thing is you do not ever want to delay in preparing for deadlines. So there's no reason that a mineral examination deadline should have been pushed up to the last minute. 1155 kind of problems are not for this. So just as part of your own professional responsibility, make sure you're not delaying on those. Advise the clients well in advance so they have time to get those pieces of information and make informed decisions. And here are our references for this section. And of course, if you need to be able to get a hold of those approved contracts and forms, they are available both in red line and clean versions on the website. So go ahead and use that link. Our next section is a referral business. Here's our scenario. Broker has been working for 20 years and has not needed to advertise services for the better part of 10. 100% of her business is referral business. Broker is deciding to retire soon but wants to continue to earn some residual income. This is pretty normal. We're seeing a lot of retirement. We're seeing a lot of change in the industry. And yet people want to remain licensed, want this to continue to be a passive source of income. So is that possible? Well, here are the questions for us. Does the broker have options to earn residual income from her referrals? What does broker have to do to earn that referral income? And what referral business, what kind of liability does that create for her in those transactions that she has referred? So the first piece, is there an option? Yes, there is. Absolutely. Provided the broker complies with RESPA, they can still receive incentives under certain circumstances. And in this case, they can still get cooperative referral arrangements. And so as a retired broker, you could still make the option to maintain your license and refer business to someone else for a referral fee. Remember that RESPA does permit payment to attorneys for services rendered, payment to title companies for services performed, payment to mortgage loan originators for services performed, payment of salaries for services rendered, payment of cooperative referral arrangements, that's the one that matters here, and promotional or educational activities that do not involve the defraying of expense that would otherwise be incurred. And so this is one of those things that is approved by RESPA. Okay, what do you have to do to earn referral income? Well, you have to maintain an active license. So an inactive license is not sufficient to receive referrals. In order to maintain an active license, you have to continue taking your continuing education, you'll have to continue having your errors and omissions. Anything that's required to keep your license active will still be required. Okay, you must comply with RESPA. RESPA is a federal law. And although theoretically, you think of it as it's involving federally related mortgage transactions, in reality, it touches almost every residential transaction because there's almost always with homes in Colorado, there is almost always some federally related mortgage. So that could be one that on either side of the transaction that has, you know, either a Fannie or Freddie association that has a HUD insured or a VA guaranteed, basically anything made, you know, by a traditional creditor will need to be a conforming loan. And so those are going to be RESPA transactions. You should really just assume that if it's a residential transaction, it's a RESPA transaction, okay? If a broker or brokerage firm pays or receives a referral fee that is in violation of RESPA, that is a violation of license law in addition. So not only then have you run afoul of the federal law that is RESPA, you are also now running afoul of license law by not following RESPA, okay? Does referral business affect the broker's liability for transactions? Yes, sort of. Provided that the referral agreement is, you know, from brokerage firm to brokerage firm, the liability is somewhat limited. But there is such a thing as negligent referrals. You actually do need to know who you're referring your clients to. Make sure you're aware that they will be able to do, you know, to take care of your clients in the appropriate manner. And you need to make sure that any commissions or fees that were received before a brokerage firm's license was revoked, suspended, expired, or transferred, you can still receive those fees, but once they go into referral status, you would not be able to. So, for example, if you placed a referral and then later you went ahead and became inactive, you decided to retire at that time and just refer a business, you would be able to collect on that transaction because your license was active at the time of the consummation of the referral. But after that, you would not be able to place any new referrals, okay? So, just be aware that there are alternative revenue streams out there. Some of the larger brokers have set up, you know, like a secondary kind of like a referral brokerage almost that accommodates brokers looking to capitalize on their book of business. And so, what that does is it helps to reduce the broker's liability when you enter into a proper referral agreement. But just, again, be cognizant that your referrals need to be responsible. Don't just find somebody online and, you know, take the one that offers the largest referral fee, okay? And here are our references for referral business. Okay, this next section, and this is kind of a bigger one than maybe was expected this year, is leasing issues. So, there have been a lot of changes in the last year that apply to residential rentals, which thereby really affect property managers and landlords, okay? So, this subsection of the ACU is an overview of that. We're going to talk about what property managers are responsible for. We're going to talk about the responsibilities of brokers that lease their own properties. And we're going to talk about brokers that work with investors so that they know how these changes affect them. Okay, first scenario here. A broker owns a four-unit residential property that includes 10 parking spaces. Other people living on the block park there regularly without authorization on the parking lot. Broker has signage from an old towing company posted and has issued the towing company blanket authorization to tow when certain cars are parked in the lot, okay? Does the broker have to update its signage? Can the broker give blanket permission to tow unauthorized vehicles? And can the broker have unauthorized cars with expired registration towed? And these are going to be interesting because some of these things would have been a different answer a year ago. So, let's look through them all. Do they need to change their signage? Yes, they do. Signage requirements were updated and modified by House Bill 24, 1051. And they need to be at least two square feet in size. They need to have lettering that's at least an inch tall. The lettering color has to be contrasting. They have to have a sign that cannot be obstructed and cannot be higher than 10 feet or lower than three. And it needs to be printed in both English and Spanish to comply with the new law. So, since it mentioned in the scenario that this was an older towing sign, there's a very good chance that all of these issues are not going to be addressed and it will need to be updated. Can the broker give blanket permission to have cars towed that are unauthorized? No, this used to be true and it is no longer true. Blanket permission is not allowed. Before 24 hours of every tow, the towing company must receive written permission. And so, they need to have a permission generated for each specific tow. They cannot just author blanket authorization. You can no longer have, you know, a contract with a tow company that does a drive-by every so often. Permission must be given regarding each specific vehicle in writing 24 hours in advance. Okay. Can the broker have authorized cars with expired registration towed? No, they cannot. This is basically, it's a common theme with this was expired registration. And basically, we've discussed it a little bit, but there's been a bit of an overhaul of the towing company laws this year. And one of the expressly prohibited things is having a property owner that can authorize the tow because of an expired registration. We do not do enforcement of registration for the Department of Motor Vehicles. That is not a property manager's purview. The only one that would be an exception there is if the tow is at the direction of a peace officer. So, if you have a police officer that comes and requests that it, you know, it be towed, that is a different situation. Okay. Next scenario. Broker manages 250 doors in a college community. The owner of the complex prefers to rent to students because students have a better history of paying rent because they have access to financial aid and family support. Owner directs broker not to renew leases if tenants are no longer students. Hey, this brings up several questions. What is a no-fault eviction? What notice is required to terminate a lease or refuse to renew for no-fault eviction? And can broker not renew tenants' leases? So, no-fault eviction is something that has become a big discussion this year. If you are working in property management, it has likely been on top of mind for you. But no-fault eviction is defined in statute, and basically it is a way to non-renew a lease under certain and particular situations. Okay. So, if there is a requirement for demolition or substantial repair or renovation of a property, that is an opportunity for a landlord to choose to non-renew a lease. They can do a no-fault eviction. If the owner or owner's family is moving back into the property, if they are selling the property, if they have offered a renewal to the tenant and the tenant has chosen not to sign a reasonable new lease, that is an opportunity for a no-fault eviction. Or if payments are made late three times during the lease term, which is specifically outlined in the bill, then that is also an opportunity where a tenant is potentially eligible for a no-fault eviction. So, you're probably seeing that even at the end of a lease now, there's a lot more that you need to do in order to remove a tenant from a property. Okay. Neither the landlord or the tenant can waive or modify the reasons for a no-fault eviction, okay? So, even if the tenant says that they'd like to sign something saying that, you know, it's okay for them to be evicted in shorter than the time provided, they cannot waive it. The reasons have to stay the same. In some cases, mediation is required, and this is for folks that fall under the CARE Act, and so anytime you're dealing with a tenant that is receiving supplemental security income, social security disability, cash assistance through Colorado Works, any of those, mediation is required before the no-fault eviction may be pursued. So, you need to make sure that if you believe that your client or your tenant, rather, is receiving such assistance, you will definitely want to pursue mediation before attempting the no-fault eviction, okay? If a landlord proceeds with an eviction in violation of House Bill 24, it creates a civil cause of action and an affirmative defense to the eviction for the tenant. And so, basically, not following the correct eviction procedures on a no-fault eviction is a very good reason why you could end up with a tenant that gets to stay in the property long after the owner would like them to vacate, okay? What notice is required to terminate a lease or refuse to renew for a no-fault eviction? So, the notice requirement has changed a bit, okay? First of all, it has to be a written notice, and it must include a statement of the legal and factual basis for the no-fault eviction. So, it has to have citations. It must be in both English and Spanish or any other language that the landlord knows that the tenant speaks. So, for example, if you have a client that you know speaks Portuguese as their primary language, you're going to need to provide this to them in Portuguese as well. It also needs to be timely notice. And so, in order to terminate the tenancy and move on, there is a particular date by which it has to be terminated, okay? And these have changed dramatically. Our whole next slide is about timely notice. And so, here are those timing issues, all right? If you have a rental where your client has been living in the home for one year or longer, so anyone who is eligible for renewal of a one-year lease, they are going to need 91 days for the non-renewal, okay? So, if you wish to do a no-fault eviction, it needs to be at least 98 days. If they've been living in the property for less than a year but more than six months, that drops to 28 days, okay? If they've been living in the building for between one month and six months, it will be at least 21 days, okay? So, these old days of three-day evictions for everyone are obviously a bit outdated because you'll notice now these are the first ones with three days. And those are for tenancies of between one week to a month. So, if someone has been a tenant for one week to a month, they would need three days notice and a tenancy at will would also need three days notice. And so, just remember, a tenancy at will could really just be a friend sleeping on the couch, but they need three days notice for this no-fault eviction under the new house bill, okay? As we discussed about this in the 2024 ACU, the Federal CARES Act is still in effect that requires a 30-day eviction notice for any property with federally backed loans. So, be aware of that on those 28 days and so forth. You will still need to give 30 days under Colorado law. All right, can the broker refuse to renew a tenant's lease? For the reasons stated in the scenario, no. Not being a student anymore is not a cause for residential eviction, okay? It actually has to be for cause for you to choose not to renew now. So, squatters can obviously be a situation without permission. Those are a non-renewable option and that is cause automatically. Non-payment of rent is cause, okay, and failure to cure. So, it's an interesting one because it does need to be at least two times in the year. And there are still some questions. Attorneys have not quite settled on whether if it is cured it remains an incident. So, say rent is not paid in January but then is caught up in February and then is not paid again in June and then caught up again in July. Would a no-fault eviction be appropriate at the end of that lease? Well, we're going to have to see what, you know, how this is interpreted because we haven't tested it yet. It's new. But for the for reality, you know, non-payment of rent is one of the causes. Substantial material or repeat violations of the lease are another reason that are cause. And again, we're going to have to start kind of discovering what the courts decide counts as substantial material and repeat. Is, you know, refusing to mow the lawn, is that a substantial and material, you know, damage to the premises? Is it? We don't really know, to be honest, and so we will find out. The other reason that is a valid cause is for possession after a legal sale of the property. And this we are very grateful for as realtors. If you are selling a home, you are still able to do a no-fault eviction to remove the tenant from a home. This does also apply when an heir-devicee continues in possession after the property is sold or when a seller holds over after failing to comply with an agreement to purchase. Okay? All right. So here are some practice pointers from the division for us. Obviously, there's a lot going on here. A lot has changed. Landlords and property managers need to comply with fair housing laws. They cannot discriminate against protected classes at all times. Eviction is a highly technical action, and it may have significant legal consequences if it's not handled properly. So really, this is the rub. Call your attorney. Okay? This is something that needs to be done before any attempt at an eviction proceeding. And remember that non-renewing a lease is now considered an eviction proceeding. And so please make sure that if you are a property manager, either for yourself or for others, that you are ensuring that you are completing your evictions the correct way because it is very different than how it has been in the past. This law does not apply to the management or landlord of a mobile home park unless a couple of things. Unless both the space and the home are being rented to the resident. So if both are part of the ownership and the mobile home resident is not residing in the park under a lease-to-own arrangement. And so it's very rare that these situations would apply. But in those, they would be subject to the new law. Otherwise, they would not. Okay. This house bill does not apply to short-term rental property. It does not apply to a residential tenant of less than 12 months. However, if they are in the property for longer than 12 months, it does apply. So if you do an 11-month lease and then allow it to go month-to-month because you have accepted a rent payment for that next month, you do now have a tenant that has been in the property for 12 months. So it applies. Okay. A residential premises that is adjacent to the property that is occupied and maintained by the owner. And so this is one of those where if you are within the same single-family home, for example, that would not apply. It would not be the same for a multifamily unit of four or more dwelling units. So in our scenario, it was four units. If it had been in a duplex where the owner was living on one side, then this house bill would not apply. But because our scenario was a four-unit building, it does. Okay. Mobile home space with lease-to-own does not count. A residential premises lease which is pursuant to an employer-provided housing agreement does not apply. And so if this is part of a relocation or an employer-provided housing, there's a little different procedure involved than the normal removal. And then a residential tenant who is not known to the landlord to be the tenant. So if you have a true squatter, it doesn't apply. If you didn't know they were the tenant, then it doesn't matter if they've been there for a year. It does not apply. Okay. Another scenario for us on leasing. Broker manages a series of row homes. After a bad traffic accident, tenant is permanently disabled, requiring the use of a wheelchair. Tenant requests that a ramp be installed to access the unit. Due to medical bills, tenant stated that he cannot afford to pay the cost of the installation. Okay. Can the tenant require the owner to install a ramp? If the tenant cannot afford the installation, is the tenant responsible? When the tenant ends the lease, can the ramp be removed? So again, these are ones where some changes have occurred to the answers. So let's look through these. Can the tenant require the owner to install a ramp? Yes. Yes, they can. Colorado requires that tenants are entitled to the full enjoyment of the premises. And a wheelchair user that needs a ramp would need to have full enjoyment. And that would be an absolutely reasonable accommodation. As under the Fair Housing Act, any reasonable accommodation, you know, is a structural change made to the existing premises that allows a disabled person to be afforded full enjoyment of the premises. You know, ramps, grab bars, lowering of the entry threshold, any of those sorts of things that needed to be changed in order to provide enjoyment to the tenant. Now, obviously, it can be a little different when the property is in a common interest community. It can be a much more involved process because there may need to be an architectural review application and so forth. But the reality is the board is, you know, not allowed to deny something that is reasonable so long as they, you know, are only suggesting that you comply with aesthetic or design guidelines, things like that. The board will not, you know, deny a request. And so the procedure is still the same if it's in an HOA, a POA, a condo association, a co-op, right? Now, if the tenant cannot afford the installation, is the landlord responsible? Currently, Colorado law requires that tenants are entitled to the full enjoyment of the premises. And so that makes it a little interesting. Can the tenant require it? Yes, they can. And so if they can't afford it, what do we do? And so in this case, the tenant's ability to pay is not relevant in this case, actually. Prior to the passage of this house bill, 24-1318 property owners were permitted to require tenants making requests for reasonable accommodations to pay for them out of their own pocket, okay? So in the past, if you had a tenant that wanted to make reasonable changes, you could require. Now, basically that requirement has been removed. And so the law now does not expressly say who's responsible. And so it could go to court. If the tenant does not pay, the landlord may be required to pay if it is considered a reasonable modification. What is made clear is that if it is determined to be a reasonable accommodation, it must be done, okay? And so at this point, until the courts are able to parse through some of this and give us some real answers, it's really not up to brokers and landlords to determine whether an accommodation is reasonable or not. That is something that needs to have legal eyes on it to make a wise decision because you just need to contact a licensed attorney, determine how to approach that concept of reasonableness because that's a legal definition that as brokers, we're not prepared to discuss. And we'll discuss with that attorney the responsibility for payment. But in the end, until a judge makes a decision here, only judges will determine what is and is not reasonable. So you'll just need to remember that this is becoming an area where you're going to need to let folks know they need to talk to counsel, okay? When the tenant ends the lease, can the ramp be removed? Yes, it can. Unfortunately, just like installation costs, removal costs are not clear. In the past, landlords were permitted to require tenants to both install and remove at their own cost, and now that is not outlined in the bill anymore. So what we do know is that the language is very clear that the landlord cannot condition approval upon the ability to remove. If the landlord wants to remove the ramp after the lease is terminated, they can do so, but they are not required by this House bill. The tenant is no longer required to restore the property to original condition as they once were. Okay, our next scenario. Broker is a property manager for 100 properties in a mountain community that were built in 1988 during phase one of the community and do not have central air conditioning, but they do have window air units. After a recent wildfire, many of the window units stopped operating and the weather forecast for next week is above 90 degrees for several days. Broker just received a letter from the tenants to repair the AC units. Okay, what is the warranty of habitability? Does it apply to AC? After notice from the tenants, broker orders new units which will arrive in three weeks. What do the broker and landlord do in the meantime? And can tenants withhold rent until the repairs are complete? These answers may be a little different too. So the warranty of habitability is nothing new. This is a long standing legal concept in Colorado that every residential rental agreement is deemed to warrant that the residential premises are fit for habitation by humans. And so you just got to be able to assume that if you're renting an apartment that is designed to be inhabited by humans, that it is warranted that it is fit for that purpose. Okay, does it apply to window AC units? Yes, it does. If those AC units were supplied at the start of the lease, it does apply. If the landlord had them installed previously, they need to respond and fix those situations within days as discussed on the next slide. They may be required to pay for tenant accommodation. Okay, so they are now. So Senate Bill 24-098 became law on May 3rd and it expanded the definition of the warranty of habitability. Two things became required now. One, air conditioning or other permanent cooling devices as an appliance must be required. Okay, so there's you have to have some kind of cooling in Colorado. That was not the case before. You must also include an elevator when the tenant has a disability that prevents them from being able to use the stairs to access the dwelling unit and there are no other operable elevators. Okay, so those are now included and the landlord may be required to locate and install and pay for these devices. So after notice from the tenant, the broker ordered the new units. They'll be there in three weeks. What do the broker and landlord do in the meantime? So once the tenant has already noticed the breach, the tenant has the burden to establish that breach. So once they, you know, send their written notice, they have photos, they've got, you know, their definitions here or their documentation rather. There are 24 hours where the condition materially interferes with the tenant's life, health, or safety or 72 hours where the residential premises are otherwise uninhabitable. Then remedial action has to be set forth pretty immediately. Okay, so, you know, depending 90 degrees, that doesn't sound like life, health, or safety. I would bet you'll get more than 24 hours on 90 degrees with no air, but 72 hours, that is included in that warranty of habitability. So since they are specifically outlined, that's where you are. After receiving the notice, the tenant has to be contacted by the landlord within 24 hours. The landlord needs to indicate what their intention is to either remedy or repair the situation or to replace the unit, including an estimate of when it will start and finish. They need to inform the tenant of their responsibilities and they're the landlord. So the landlord needs to inform the tenant of the landlord's obligations, including the obligation to provide a hotel or comparable unit. So you actually have a specific duty as a landlord that when a tenant reports a warranty of habitability violation, you need to assert that you are required by law to provide them a hotel room or another place to say, and you need to provide at least 24 hours of entrance notice of entry unless it's threatening life or health or safety or threatens to cause substantial damage to the premises. So obviously, if your client says, Hey, the place is flooding as we speak, these pipes have burst. I am leaving. You do not need to provide 24 hours notice of entry to go and handle the property. But please, during this remediation time, communication with tenants is important, and it is very clear that it is the onus is upon the landlord to let the tenant know what they are required to provide. Hey, a practice pointer here. Landlord and property manager should always get an inspection within 24 hours. And for property managers, please consider documenting any advice to landlords that you give in writing. Always commemorate this in writing. Okay. Interference with the tenant's life, health or safety requires. Basically, they need a comparable dwelling unit or a hotel room for up to 60 days within a reasonable distance with at least the same number of beds. And so this can get very tricky. Obviously, if you are renting out a single family home that has four bedrooms and eight beds in it, you're going to have to find either a couple of hotel rooms or a similar Airbnb or something because they are going to need that. If it is required for more than 48 hours, it also pretty much needs a kitchen or a per diem for meals. And so for each tenant that is displaced for more than two days, the unit has to have a fridge, a freezer, a range or oven. So a microwave is not going to cut it. And those are the options. Otherwise, the landlord does need to either provide the per diem and incidentals. And that's established by the Department of Personnel. You can find it through the state. They are also responsible for reasonable costs incurred due to their relocation, including storage of their goods and transportation to the new location. OK, so you're seeing that there's a lot that has come on to the landlord's plate now. If a tenant finds that, you know, the warranty of habitability is in question. OK, the landlord is required to provide the hotel up to 60 consecutive days. The only ways they are relieved of that obligation is if the condition of the property cannot be remediated or repaired and it is outside the landlord's control and they provide written notice that specifies that it cannot be fixed, that the landlord will provide a date certain after which they will no longer pay for the hotel. They must allow the termination of the lease with zero liability or penalty for the tenant, and they must return the tenant's full security deposit on or before the date required by the lease. OK, so that's how things can stop when a warranty of habitability issue makes it so that that hotel room causes a delay. All right. Can tenants withhold rent until the repairs are complete? No, tenants must still pay rent even while they are staying in a hotel or other comparable unit. Now, I guess that's what you get. So they'll still pay their rent while you're paying their hotel room, and hopefully it comes close to balancing if you're the landlord. The practice point or the warranty of habitability here, it really it's huge. It has many requirements on landlords. These issues are big ones. And so we just again, the commission wants to remind you again and again and again that you need to consult an attorney here before you are practicing in this area. Make sure you are competent. OK, we talked about competency at the top of the class, and it is very critical whenever we are talking about issues involving property management, leasing, eviction, you can get out of your competency level very, very quickly and into the unauthorized practice of law. So make sure you're very comfortable with what you're doing. Hey, after January 1st, 2025, so that was a couple weeks ago, every residential rental agreement requires a statement about the warranty of habitability and at least 12 point bold font. So as you are helping your clients this year or as you are renewing your own leases this year, make sure that you are following that directive. It has to be in English and Spanish as well, where the tenant can have the information about where they can mail or personally deliver the written notice of an uninhabitable condition that has got to be included. All right, another scenario. Broker is a property manager and has numerous landlords who have been clients for many years. Broker has always effectively disclosed all markups to his clients. Broker does not require tenants to use his repair services, but tenants do use broker services. Broker has not disclosed any fees or markups received from tenants to the landlords. Are markups to landlord allowed? Are markups to tenants allowed? Does the broker need to disclose the tenant markups to the landlord? That is the question. Markups to the landlord. Are they permitted? Yes, they are, and they are permitted pretty much without exception. Are markup to tenants allowed? Yes, but they are limited to either 2% of the amount the landlord is billed or $10, but not both per month. Okay, does broker need to disclose tenant markups to the landlord? All compensation paid to broker must be disclosed to all parties, including the landlord, even if paid by tenant. So as a broker, any money that you are receiving from either side needs to be disclosed. Okay, some additional bills. Here are some references for you. These we can touch on very briefly here in a second on the next few slides, but these are some that you may want to look into. The first one is House Bill 24, 1007. These are the residential occupancy limits. Okay, in the past, local governments had the authority to issue limits on how many people could live in a single dwelling unit based on familial relationships. And this bill took away that authority from the government and made it a state issue. However, local governments still have the authority to set occupancy limits based on two factors. First is demonstrated health and safety standards, such as fire codes or affordable housing program guidelines, if they are a part of such a program. Okay, fire hardened building materials is one that came into play this year as well. Basically, common interest communities used to be allowed to restrict these fire hardened building materials, and they no longer are. So in the past, simply for aesthetic purposes, unit owners could not take reasonable steps to protect their units from fire, and that is no longer allowed in Colorado. So an association is allowed to develop standards that impose reasonable restrictions, but they can only involve the appearance, like the external appearance of those fire hardened materials. So for fencing, for siding, for roofing, you are allowed to protect your property. It just can only be aesthetic. All right, price gouging in declared disaster areas. I think we all probably can guess that this came from the Marshall fires, but we have a new rule that rent price gouging during disaster is unconscionable, in case we couldn't figure that out. Basically, price gouging is defined as an increase of more than 10% in a year. A disaster declaration is a national emergency by the president or by the governor at the state level. The disaster period is the date from the disaster declaration for at least one year after the initial disaster, and price gouging of rent is now considered an unfair or unconscionable act or practice. So during that disaster period and within the designated area of a disaster declaration, there cannot be an increase of more than 10% based on the material decrease in residential housing units. Just because the competition burned down does not mean that it is appropriate to price gouge. Over the last several years, these laws on property management, landlord tenant relations and leasing issues have really evolved, and there are a lot of changes. If this is your practice area, you really probably want to take a comprehensive property management class because competence is tough to come by in this area. But we're going to discuss a few recently passed bills and what competence looks like in representation and transactions where the broker is a principal. Okay, so here are the ones we're going to look at. The bills are there are a few Senate bills, few House bills. Okay, lots of them. Actually, there's some regarding eviction. Again, all the way from bed bugs. We've got manufacturing of drugs. Again, we have several bills that came into law this time. So if you are a property manager or if you own your own home, please obtaining maintaining competence is imperative. If you are assisting clients in the sector or acting as a principal, you really need to be aware. We just went through 23 bills that became law in the last couple of years. And so if any of these were shocking to you or if you were unaware of them, you really need to make sure that you feel comfortable that you are competent to be a property manager. Okay, and here are our leasing issues references. So we've got the markups. And if you want to look at those general assembly bills, the link is available for you. All right, our next section is social engineering. And this is a really kind of interesting section, but it's pretty quick. We're going to talk about it because this is something that as brokers, you should be aware of. Social engineering is sort of a new variety of deception that manipulates people to give confidential information to be used for fraudulent purposes. But they use human psychology rather than hacking and brute force. So there are lots of different approaches to this social engineering. If you go on those social media platforms and you see the baiting things where they say, we'll give you a free download of an Amazon gift card. Just tell us your grandma's maiden name. Silly things like that. They can include just phishing emails, going out, tricking you into providing information, perhaps by mimicking someone that you may think you know. There's also pretexting, creating a fabricated scenario to gain trust and get information. I get these pretexting ones all the time where they pretend to be my broker and they're like, Hey, Laura, are you at your desk? Well, no, it's not really them. It's a fake fabricated scenario to make it seem like I'm dealing with somebody that I know. There's also tailgating, which is physically following someone into a restricted area. And so beware of these in your brokerage offices. Beware that people will actually just kind of walk up to you. And as you swipe your card, they'll rely on the kindness of your humanity that you'll hold the door for them instead of saying, Oh, let me close this real quick and make sure your badge works too. Then there's also quid pro quo, which is promising a benefit in exchange for sensitive information. So this usually works out like they'll pretend to be tech support and offer to help you with something on your computer. And what they'll get instead is access to your computer. So any type of action where a fraudster is using kind of human interactions and using our human nature against us is that that is the social engineering that we're talking about here. Okay, let's do a scenario. A broker uses a showing service to schedule and share entry credentials for its listing. A person claiming to be a broker contacts the broker saying that they have a very interested buyer and asks if the property is inhabited or not indicates that their buyer is looking for a quick close. Broker gives entry credentials to the person. I mean, I've been given entry credentials this way, so I know what happens. What did the broker do wrong and what could the broker have done differently? Well, the broker should not have provided confidential information about the property unless authorized by the seller. They should not have discussed if the property was inhabited again, unless it was something that they were authorized to discuss. They should not have discussed the interest for the sellers to have a fast close. They didn't confirm whether the other person was a broker or not, and they shouldn't have provided any lockbox information. Okay, what could they have done differently? They could have done a lot differently. In reality, they could have just stuck with the showing service that they were already using and said, just go ahead and call showing time and get your code. Thanks. They could have also verified the license status themselves. They could have found a way to do that, but that is not what happened. Social engineering scams are pretty common. They affect buyers, sellers, landlords, tenants, brokers, title companies, and others. In real estate transactions and just in life. I mean, we see all these on Facebook where people are just trying to get information. Brokers should be on the lookout for basic cues that might indicate fraud. Social engineering scams are very common, but they're also specific, so they will try to find information about you specifically instead of just targeting everyone and casting a huge wide net. But definitely be on the lookout for some of those basic cues. And on the reference slide, there's going to be a list provided to a Google Drive link that's going to show you some of the behaviors that you should be on the lookout for. Okay, let's do another scenario. Brokers contacted by the owner of a 35 acre parcel of land with a small cabin in unincorporated Pueblo County. Seller has one brief telephone call with broker, and all communications thereafter are by email because seller has a lot of travel to do for work. The broker researches ownership records and county records, and the under name matches went to who he spoke to on the phone. As the transaction progresses, the seller refused to meet with the broker in person. The seller misspells his own name a few times in emails and asks for remote closing with a title company of their choosing that broker has never worked with before. What should the broker be looking for from the seller? And what basic cues should broker have picked up on? There are a few here. So what should the broker be looking for? They should look to confirm the identity of their consumer. So they could look in public records. They can look through title company. They could do their own Internet research, skip tracing. They could look through an assessor. They could find deeds. They could meet in person and review government issue IDs. There are so many options they have, but they need to identify their customer. And what basic cues should they have picked up on? Well, the scenario says that they refuse to meet in person, which again, there are some unique times where meeting in person is not practical, but refusing is a little odd. A seller misspelling his own name a few times. Well, I mean, I've misspelled my name because I mistype, but more than once, not so much. Seller asked for remote closing with a title company of their choosing that broker has never worked with before. And that is just uncomfortable. I mean, usually sellers do not have a dog in the fight about which title company they use. And if they do, it's usually a large one that we've heard of. And so those are all kind of things that you should pick up on as a broker. And the practice pointer here is some brokers may rely on their legal counsel to make sure they have practices in place to prevent security breaches or for when they take representation for people that are not the real owners. And there are appropriate times for that, right? Not all brokers have legal counsel at the ready, though. Therefore, all brokers need to be aware of the inherent risks and the increased frequency of these scams. they're just happening all the time. Not every broker has an easily accessible lawyer or law firm at their disposal. So make sure that if that's the case, your office policy manual is reviewed regularly, that it addresses these scams. And that in support of that, the commission has determined that cybersecurity and privacy concerns warranted a new commission position statement. And so back in October, we actually got CP30, which addresses these issues specifically. So the commission is taking it very seriously and you should as well, okay? Here are our social engineering pieces. Let's move on to data security. So data security is big right now. Commission position 30 was passed and became effective on October 1st, addressing some best practices for data security. It suggests that you should conduct a cybersecurity threat assessment. It discusses email security in use, password practices, accesses to networks, including public wifi. It discusses multi-factor authentication and two-factor authentication and wire transfer safety, okay? Basically, it talks about how when conducting scams, fraudsters are gonna look for the weakest link where they can obtain information. So let's not let it be you as the broker, okay? They only have to be right once. We have to be right every single time, okay? For these fraudsters to succeed, they can throw out 7 million emails and they only need one broker to make a mistake for them to get access to something they shouldn't have. So please do not be the weak link. Brokers need to be very careful to verify parties to a transaction before sending any confidential information. That should be obvious, but let's reiterate it. And basically, we're gonna look at the approved position statements. Here's where you can find them, okay? So if you are on the DORA website and scroll down to the bottom of the division, that's where you can find the manual on the commission position statements. If you don't read them regularly, if you haven't read them since you got your license, if you maybe even just skimmed them then, I would suggest that you go ahead and read them. The commission position statements are very helpful and there aren't that many, but they give you some good directives for solid practice. For data security, the important notes we wanna discuss are those commission position statements are from the Real Estate Commission. They're not law, they should not be interpreted as such. They are non-binding directives and they are relevant on laws and regulations. They give us practice-related guidelines for real estate brokers, okay? So you're not going to get arrested for not following a commission position statement. You're not even going to get your license in jeopardy for not following commission position statements, but they are very important practice-related guidance and you just need to pay attention, okay? Here are some quick tips to keep your data secure, okay? And to keep you and your customers safe. The first thing is really slow down. I almost got caught once simply because I didn't notice that it was coming from a Gmail. It wasn't coming from the right address where it said it was. Slow down, look at what's in front of you. Research the facts. Make sure that you are definitely looking out for anything unsolicited. If you didn't ask for it, go ahead and research it before you open it. If it looks like you're getting something from a company you don't normally use, go to the company site. Use a search engine to call them directly. Don't go from the email. Don't ever let a link that was sent to you control where you go. So if you're curious about where to go, you can hover over the link to show the URL, but you don't wanna click it. So if you want to go to a specific location, you can just hover and then type it into the search bar yourself. And then also just be aware of hackers and spammers. I mean, it does happen where your accounts may get taken over. And if they can control your email account, they can start communicating with people as though they were you. So try to make sure that you're taking care of keeping your password safe and discussing with your clients how to keep themselves safe. And that if they're not sure if something came from you or they're not sure if something came from the title, they need to give you a call, okay? They need to call you at the phone number they have where they know you'll answer. So these are your data security references, which will be available on the slides as well. Okay, occupancy agreements. Buyer and seller are both into a post-closing occupancy agreement because the seller needs 30 days to get out of the residence after closing. Buyer is moving from out of state and is in no rush, so they agree. Seller states that because they will be maintaining the property for 30 days, they do not want to pay rent. Buyer agrees and the parties sign an agreement with $0 a month rent and a $3,000 security deposit. Okay, what is a post-closing occupancy agreement? This one should be easy, we know this one, right? It's just an agreement to rent back a property to the sellers, okay? Can the rent be $0 a month? Well, that's a great question. Can the security dollar amount be $3,000? That's another great question. And those answers are a little surprising. Can the rent be zero? Sure, it can. But can the security deposit be zero? No, okay? Basically, if the rent is zero, then unfortunately, Senate Bill 23-184 applies here. And so security deposits can never exceed twice the monthly rent. So two times zero is zero and you can never charge more than zero if you're charging zero for rent, so be very cautious, okay? Remember that a post-closing occupancy agreement, though it is short in duration, it really does create a landlord-tenant relationship. And so the minute that takes effect and the sale has been consummated, the buyer is now the landlord. The seller is now the tenant and all of those landlord-tenant laws apply. Okay, practice pointer. Brokers are acting like property managers and landlords in many situations. Compliance with applicable laws is required, okay? So if you are acting as a property manager or a landlord, if you are assisting your clients, you need to make sure that you are complying with those as well. So return security deposits within 30 days. If it's outlined in the lease itself, it could be as many as 60, but that's it. And if you fail to comply, you are subject to treble damages if it goes to court. Brokers should carefully discuss the specific terms of post-closing occupancy agreements. These are really, these are, they are leases, okay? So make sure that both buyer and seller are comfortable with that, okay? And there is indeed a post-closing occupancy agreement form. So that is the one you would use under Rule F. You would not be writing your own. And there is the Broker Practice Advisory regarding occupancy agreements. Okay, we're getting toward the end of this section. I know it's a long one, so we have a couple more topics. This one's gonna be fast, the NAR settlement. Hopefully, it's January 2025, so we've mostly gotten our brains wrapped around this because it kind of took place, you know, half a year ago. But over the last few years, numerous lawsuits have been filed across the country. The most well-known lawsuit was Sitzer-Burnett, although there really have been several, okay? In these cases, there were pretty much two things that were alleged across the board. One, that realtors conspired to earn more in fees and that they violated antitrust laws, okay? Most major brokerages and NAR did reach a settlement with the other parties, okay? So we're kind of at a place now where, is this the end of the era? Is this the end of the saga? The short answer is we don't really know, to be honest, but we're not here to guess. I'm not really here. I didn't bring my crystal ball. I don't know what's gonna happen. So here are the points that we would like you to remember. One, check in with your MLS about changes, okay? They have to stay very up-to-date on it because your MLS was party to the lawsuit, whether you are a realtor or not. Take the relevant continuing education courses, okay? This is not a huge issue in the annual commission update because quite frankly, NAR is a trade group. It is not part of the division of real estate. It's not part of the state's concern, really. And so since it's not in their purview, they are not responsible for enforcement of the NAR settlement, but do know that NAR settlement did not change Colorado law and it did not change Colorado licensing law. And so you need to make sure that you're not misrepresenting that whenever you are speaking with clients, okay? The laws did not change. I have heard brokers, I know we all have, saying things to clients like, well, you know, because of the new law, we this. Well, there is no new law and you should not misrepresent it that way, okay? As licensees, why does it matter? Well, because most, not all, but a lot of us are either realtors or participating in MLS. And so this settlement affects both MLS participants and realtors. So just because you are a licensee without realtor affiliation does not necessarily mean that this does not apply because if you're using an MLS, it does, okay? Basically, as of the effective date of this settlement, Colorado had 52,000 licensees. And at that time, there were about 26,000 that were members of NAR, the other 26,000 were not, but almost all of those were members of their MLS, okay? So approaching this since August, what has changed? Well, offers of compensation are no longer in the MLS, okay? That's just not happening anymore. Listing agents are not permitted to identify that commission in the MLS. And so the commissions have essentially been decoupled. Buyer's agent and seller's agent compensation aren't connected anymore, and the buyer pays their own agent and the seller pays their own agent. Again, this is just a reminder, license law and the terms of the NAR settlement are different. It is not the law that requires these practice changes. It is compliance with the NAR settlement so that NAR was able to settle with the parties and not move forward with the lawsuit. Brokers need to not misrepresent the law. The division wants it very clear that Colorado law does not represent or require or provide a touring agreement. Many people have adopted that term of a touring agreement after the settlement, but Colorado law simply does not require a written agreement for any relationship in order to tour, and it does not require a written agreement for a transaction brokerage relationship, okay? Those can be in existence without it, but the broker will need authorization to receive compensation. So as always, the best practice is to get your exclusive right to buy signed, okay? Make sure that your client understands clearly what they are doing, okay? It didn't make any changes, so do not misrepresent the law, do not conflate MLS rules with Colorado state law, and do not mischaracterize the purpose of the touring agreement, okay? They really want us to be very clear that we are not saying things to the public that we should not, okay? Here are some practice pointers from the division. One, no broker should refuse to show a property because of the amount of compensation that is offered. Nothing has changed there. Every broker should have a conversation with their consumer about compensation. This really shouldn't have changed either. You should have been having this conversation anyway. The NAR settlement only applies to residential transactions. It does not apply at all to commercial transactions. So this, if you are a broker that works primarily in commercial, this is pretty irrelevant to you, quite frankly. But be aware of the exchange of confidential information and providing the brokerage disclosure to buyer. That has been, that form has been revamped with more information, and so make sure that you are providing that brokerage disclosure to buyer before eliciting any confidential information, okay? And here are your references, okay? That takes us to the end of our general practice section. Actually, wait, no, it doesn't. I totally lied. That takes us to contracts and forms. Basically, we're gonna just do a quick highlight of the contracts and forms that have changed this year, although they all changed in August, which the commission hates to do, but did anyway. So no new changes as of January. They all changed August, 2024, and there were 11 documents updated at that time, okay? You can find all of those CREC-approved forms on their webpage. The link is available here. And the red lines have been available since June, actually, I think, in this case, since they made the change in August. But usually, every year, you can find next year's forms in October, okay? Be aware that the only changes really were those changes that were made last year. Those include the brokerage disclosure to buyer. The first section is unchanged. The second now has just a little bit more information that has the actual agreement involved. This is added and can create a compensation agreement. So the first piece is still just the disclosure. It is nothing more than information that you are providing, but you can now use the brokerage disclosure to buyer form to get more information and to actually enter into an agreement. Okay, this is a contract. So this part, if you have your buyer sign this, it is a compensation agreement, and so that has changed. Okay, paragraph 29 was added to all five versions of the contract to buy and sell. And basically what this does is it just brings commission into the purchase contract. And so you'll see that in all five versions of the purchase and sale agreement. It's there now. Okay, there were a few other changes that came in. They moved the location of home warranty, encumbered inclusions, leased items, and solar power plans. There are some check boxes. It's a little clearer and easier to use. There is now a water rights termination deadline. There is now some loan limitations that closing cots for FHA or VA does not include compensation to be paid by buyer's brokerage form or firm rather. There's a bit of information about assumptions. If the seller's lender does not provide a written consent for a loan assumption, there is a new paragraph that added language showing that buyer representation, or that buyer is representing that buyer will or will not use this as a primary residence. That's now just in that section in paragraph 5.5. The mineral rights review is in paragraph 8.9 on all the contracts now. And there is a bit of language added to the notice to terminate, which shows that after the effective deadline, it does not terminate. So nothing interesting really. Paragraph 10.6.4, the references to the ADA were removed from this section because this is commercial. Okay, all right. The exclusive right to buy, the changes here, basically, well, this one's not a change. Compensation charged by brokerage form is not set by law, it's fully negotiable. The big change, they've switched the word commission out for the word compensation, and they have renamed paragraph 7, compensation to brokerage form. But brokerages just need to be reminded that you do need to have an agreement to act as an agent. And so you are welcome to use this agreement if it is a good one for you. In the exclusive right to sell, we have just, again, noticed that they've put in that compensation is negotiable. Again, these are just additions to help us all comply with that settlement agreement by reiterating over and over that compensation is negotiable. Commission was changed to compensation and brokers have an obligation to disclose compensation. Okay, and so that's what that red line looks like as well. Other documents that were changed were just kind of minor changes to the amend extend to the counter and to the residential agreement to buy. Okay, that takes us to the end of this section. So we're gonna go ahead and take a break now. I'm sure we will have some questions and we'll be back in just a few minutes.

real estate updates

contract terminations

written notice

referral income

RESPA compliance

leasing issues

tenant rights

data security

NAR settlement

MLS rules

legal liabilities