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2010 CREC Annual Commission Update Course

2010 CREC Annual Commission Update Course. Slide # 1. Table of Contents. Carbon Monoxide Property Management Issues Warranty of Habitability 2010 New & Revised Forms Seibel Case RESPA Reform. SAFE Act Update Foreclosure Protection Act License Management & Continuing Education HVCC

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2010 CREC Annual Commission Update Course

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  1. 2010 CREC Annual Commission Update Course 2010 Commission Update Course Slide #1

  2. Table of Contents • Carbon Monoxide • Property Management Issues • Warranty of Habitability • 2010 New & Revised Forms • Seibel Case • RESPA Reform • SAFE Act Update • Foreclosure Protection Act • License Management & Continuing Education • HVCC • Consumer Tips • Quiz 2010 Commission Update Course Slide #2

  3. Carbon Monoxide Legal Compliance Properties Covered By The Law Single-Family Dwellings Multi-Family Dwellings All Residential Rental Properties 2010 Commission Update Course Slide #3

  4. Triggering Features & Events Triggering Appliances and Structures Triggering Events Compliance Scenario Analysis Local Laws and Ordinances 2010 Commission Update Course Slide #4

  5. Alarms & Installation Complying Alarms – National Fire Alarm Protection Association Distinct audible alarm Conform to standards Power source Combination detectors Installation Methods Installation Location 2010 Commission Update Course Slide #5

  6. Maintenance Responsibilities Landlords and Managers New tenancy – replace New tenancy – battery Written notice – repair/replace Tenants Keep, test, maintain Notify landlord – issues 2010 Commission Update Course Slide #6

  7. Limits on Liability Generally 38-45-106(1) C.R.S.: No claim against Property owner Agent for owner Installer If installed to manufacturer’s instructions and CO statute 38-45-106(2) C.R.S.: Purchaser Real Estate Brokers 2010 Commission Update Course Slide #7

  8. Property Management Without Employing Broker’s (EB’s) Knowledge You could be violating several rules and statutes by performing property management without the EB’s knowledge, especially if representing a separate company to the consumer. There are significant trust accounting and transaction file problems because the EB has no knowledge of their employee doing property management Accounts must be in the name of the employing broker, license is non-transferable, and supervision is required Rules E-1 (a) (c) (p), E-29 – E-32 2010 Commission Update Course Slide #8

  9. Property Managers May Not Markup Services Without Disclosure 2010 Commission Update Course Taking any undisclosed amount (due to the principal) of compensation or commission is a violation of C.R.S. 12-61-113 (1) (q) Payment to broker for services are considered “earned”…..after contracted services have been performed. See Rule E-1 (f) Slide #9

  10. HB 08-1356: Warranty of Habitability • Applies to all leases after 9-1-08 • Defines Uninhabitable Premises • Establishes a Statutory Warranty of Habitability • Defines when the Warranty of Habitability is breached • Resident remedies for breach of the Warranty of Habitability 2010 Commission Update Course Slide #10

  11. The Landlord Has Breached the Warranty of Habitability if: 2010 Commission Update Course The condition which makes the premises unfit for human habitation is materially dangerous or hazardous to a tenant’s life, health or safety and Landlord has received written notice of the condition and Landlord hasfailed to cure the problem within a reasonable time. Slide #11

  12. Required Property Conditions 2010 Commission Update Course • Functioning heating, lighting, running water, and reasonable amounts of hot water. • Common areas that are clean and free from debris and garbage. • Unbroken windows and doors with working locks. • An appropriate extermination response to rodent/vermin infestation throughout the premises. • Compliance with all applicable building and health codes. Slide #12

  13. Tenants Now Have a Statutory Duty to Maintain the Premises 2010 Commission Update Course Should the tenant fail to maintain the premises, he/she may be evicted under HB 08-1356. Tenants are now statutorily liable for knowingly, intentionally, deliberately, or negligently destroying, defacing, damaging, impairing, or removing any part of the premises. Slide #13

  14. Tenant Remedies 2010 Commission Update Course Lease Termination. Injunctive Relief: The court may order landlord or tenant to immediately fix the problem. Withholding of Rent: The tenant may claim breach, withhold rent, and then later assert the breach as a defense to an eviction action. Slide #14

  15. Tenant Remedies (cont’d) • Payment of Rent: If the tenant withholds rent because s/he alleges a breach of the Warranty of Habitability, the law requires the court to order the tenant to immediately pay all or part of the rent due into the court registry at the time the tenant asserts a breach of warranty of habitability claim. 2010 Commission Update Course Slide #15

  16. Tenant Remedies – Lease Termination if the Warranty of Habitability is Breached 2010 Commission Update Course • The problem must make the premises uninhabitable. • The tenant has given written notice of the problem and landlord failed to cure within a reasonable time. • Tenant must send a 2nd written notice of intent to terminate if the problem is still not remedied within 5 business days. Slide #16

  17. 2010 New Foreclosure Forms • CBSF1-7-09 Contract to Buy & Sell (Foreclosure) • NCF34-7-09 Notice of Cancellation • NTCF43-7-09 Inspection Notice • CPF40-7-09 Counterproposal • AEF41-7-09 Amend/Extend Contract • SWF30-7-09 Seller Warning (NEW) • The Seller Warning and the Notice of Cancellation must accompany the CBSF1. 2010 Commission Update Course Slide #17

  18. Strike Through Example • Strike-Thru Allowed: Second to last sentence of Sect. 10.5 in the Listing Contract • …Therefore, if the Act applies, Seller agrees that Broker is not authorized to prepare such a contract for the sale of the Property… 2010 Commission Update Course

  19. When to use the Foreclosure Forms? • The property is Residential • There is a mortgage against the property • The seller is a Homeowner • The Buyer will not live on the property for at least one year * There may be situations where the foreclosure forms may not be necessary even though it meets the above test. Brokers should seek advice from legal counsel. 2010 Commission Update Course Slide #19

  20. Can NOT draft the Contract if… • The Seller does not speak English as their principal language • The Seller will lease the property after closing • The Seller has a right to repurchase the property after closing 2010 Commission Update Course Slide #20

  21. List of New Forms • DSD17-1-09 Dual Status Disclosure • SPD29-5-09 Seller’s Property Disclosure (Residential) • BDT20-5-09 Brokerage Disclosure to Tenant • NTT44-5-09 Notice to Terminate 2010 Commission Update Course Slide #21

  22. List of Revised Forms • CBS1 Contract to Buy & Sell • CL8 Closing Instructions • CP40 Counter Proposal • AE41 Agreement to Amend/Extend • LB36 Licensee Buyout Addendum • SSA38 Short Sale Addendum • SPD19 Seller’s Property Disclosure (All Properties) • BD24 Buyer Disclosure • SD16 Seller Disclosure 2010 Commission Update Course Slide #22

  23. List of Revised Forms (cont’d) • DD25 Working Relationships Definitions • BDD56 Broker Duties Disclosure REO • TD72 Deed of Trust (Strict) • TD73 Deed of Trust (Creditworthy) • TD74 Deed of Trust (Assumable) • SS60 Closing Statement • SS61 Closing Statement Worksheet 2010 Commission Update Course Slide #23

  24. List of Revised Forms (cont’d) • EBA53 Exclusive Brokerage Listing Addendum to Exclusive Right-to-Sell Listing Contract • OLA54 Open Listing Addendum to Exclusive Right-to-Sell Listing Contract 2010 Commission Update Course

  25. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • Mandatory 2009 • §2.5 Computation of Time • “Day” clarified to include entire day ending at 11:59pm MT • Computing time periods • When no deadline is specified • 1st day excluded/Last day included • Example: “3 days after MEC” • When deadline falls on weekend or holiday • Check box: Deadline extended to next weekday that is not a weekend or holiday 2010 Commission Update Course Slide #25

  26. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §3.1.6 Water Rights • Change in Well Ownership form filed with Division of Water Resources within 60 days after Closing • Filed by Closing Services Provider or Buyer • “Small capacity” water wells and “Domestic exempt” water wells • The Division of Water Resources website: http://water.state.co.us/ 2010 Commission Update Course Slide #26

  27. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §3.1.6.3 Water Tap/Sewer Tap • Note: Buyer is advised to obtain, from the provider, written confirmation of the amount remaining to be paid, if any, time and other restrictions for transfer and use of the tap. 2010 Commission Update Course Slide #27

  28. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §2.3 Dates & Deadlines • Line 10. Appraisal Objection Deadline (§6.2.2) • §6.2.2 Appraisal Provisions/Conventional • Objection Deadline language added • This deadline of course is NOT applicable to transactions using FHA or VA financing. 2010 Commission Update Course Slide #28

  29. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §4.2 Earnest Money • If Earnest Money Holder will not be one of the brokers to the transaction, Closing Instructions must be completed no later than when Earnest Money Holder receives the Earnest Money • Broker signature lines at end of Contract restate this point 2010 Commission Update Course Slide #29

  30. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §4.3 Cash at Closing • Failure to have necessary funds at Closings = DEFAULT 2010 Commission Update Course Slide #30

  31. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §6.1 Property Approval • For repairs required by lender: • Seller’s right to cancel no longer subject to “5 days before Closing” requirement • Avoids the time trap created by lenders who notify parties of required repairs late in the transaction • Especially FHA & VA 2010 Commission Update Course Slide #31

  32. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §7.1 Evidence of Title • Sellers must provide Abstracts of Title in their possession to Buyers 2010 Commission Update Course Slide #32

  33. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §9 Lead-Based Paint • Buyer must sign and return disclosure to Seller at time of or before executing the Contract to Buy & Sell • Disclosure must be signed by seller, buyer, and real estate brokers • Transaction cannot legally continue without this step. Contract will be considered VOID. • Don’t forget to provide Lead Based Paint information booklet! 2010 Commission Update Course Slide #33

  34. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §10.2 Inspection Objection Deadline • New language adds proximity to existing or proposed roads, highways, and other environmental issues (noises, odors) to list of items which permit Buyer to cancel contract • §10.8 Carbon Monoxide Alarms 2010 Commission Update Course Slide #34

  35. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §15.4 Closing Instructions • Text revised to emphasize the importance of completing the Closing Instructions early (before delivery of Earnest Money) • Joint Position Statement with Division of Insurance • Closing Instructions form removed from the Contract to Buy & Sell but preferred treatment is to complete them at the time of executing the Contract to Buy & Sell 2010 Commission Update Course Slide #35

  36. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §16.1 Tax Proration • Tax proration will be adjusted if the Seller qualifies for the “qualifying seniors property tax exemption” • Please note that SB09-276 suspended this tax exemption for the period beginning January 1, 2009 and ending January 1, 2010. 2010 Commission Update Course Slide #36

  37. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §16.2 Rents • Adds language telling Seller to notify tenants in writing that their security deposits will be transferred to Buyer 2010 Commission Update Course Slide #37

  38. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §17 Possession • Clarifying language makes clear that Per Diem charge accrues for the entire day if Seller fails to deliver possession as called for by the Contract, despite §2.5.1 which defines a “day” to mean one ending at 11:59pm 2010 Commission Update Course Slide #38

  39. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §24 Earnest Money Dispute • New last sentence added to emphasize that this section only applies if Earnest Money Holder is one of the real estate brokers to the transaction • Reinforces importance of having Closing Instructions signed by all parties before delivery of earnest money to Closing Company 2010 Commission Update Course Slide #39

  40. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §30 Colorado Foreclosure Protection Act • Buyer now required to check a box indicating whether buyer intends to occupy property as personal residence for at least 1 year after Closing • This provides an easy way to determine whether the Foreclosure Protection Act may apply 2010 Commission Update Course Slide #40

  41. Contract to Buy & SellCBS 1-5-09 and CBSF 1-7-09 • §31 Notice, Delivery and Choice of Law • §31.1 Adds word “document” providing for any notice “or document” to be effective upon physical delivery to buyer or seller • §31.2 Adds “internet” as acceptable method of electronic delivery 2010 Commission Update Course Slide #41

  42. Closing InstructionsCL8-9-08 • Form separated from Contract to Buy & Sell • Text updated to reflect changes to Contract to Buy & Sell • Important form when Earnest Money Holder will be a closing company instead of one of the brokers 2010 Commission Update Course Slide #42

  43. Counter Proposal CP 40-5-09Agreement to Amend/ExtendAE 41-5-09Licensee Buyout AddendumLB 36-9-08 • Updated to reflect changes to Dates & Deadlines table and section numbers in Contract to Buy & Sell 2010 Commission Update Course Slide #43

  44. Brokerage Relationship DisclosuresBD24-5-09, BDT20-5-09, BDD56-5-09, SD 16-5-09 • Buyer or Seller not vicariously liable for acts of broker unless approved, directed, or ratified • Buyer or Seller’s relationship with brokerage firm is at the designated broker level, not with the entire firm • Reminder to Buyer or Seller that they may shop for settlement services and prices/quality vary 2010 Commission Update Course Slide #44

  45. Broker Disclosure to Tenant(BDT 20-5-09) 2010 Commission Update Course As of 1-1-09 there is a new BROKERAGE DISCLOSURE TO TENANT form, required in all leasing transactions. Based on broker disclosure to buyer form, a major change is Seller is now Landlord and Buyer is now Tenant. This new form was mandatory as of 1-1-09. Slide #45

  46. Brokerage Disclosure to BuyerBD 24-5-09 • Added Megan’s Law disclosure • Megan’s Law: If the presence of a registered sex offender is a matter of concern to the Buyer, Buyer understands that Buyer must contact local law enforcement officials regarding obtaining such information. 2010 Commission Update Course Slide #46

  47. Seller’s Property Disclosure(all Types of Properties)SPD 19-9-08 • Toll roads • Transportation projects • Carbon Monoxide alarm • “N/A” column replaces “Not Present” column 2010 Commission Update Course Slide #47

  48. Seller’s Property Disclosure(Residential) SPD 29-5-09 • Shorter form easier for most residential transactions • Review Notices to buyer and seller on the last page 2010 Commission Update Course Slide #48

  49. Notice to TerminateNTT 44-5-09 • New form • Provides precise, clear language when one party to the Contract to Buy & Sell wishes to terminate • Is not an agreement to terminate, just a notice. Remember to include earnest money release. 2010 Commission Update Course Slide #49

  50. Closing StatementSS 60-9-08 • Formerly called “Statement of Settlement” • Updated to reflect typical costs and fees • Checkbox to indicate “estimate” or “final” • Name change reduces confusing it with HUD-1 Statement of Settlement 2010 Commission Update Course Slide #50

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