Last Updated: 1/26/2010 REAL ESTATE FORECLOSING CREDITORS The "Protecting Tenants at Foreclosure Act of 2009" requires "a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice." The statute is applicable, "In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property..." The statute sunsets in 2012. BROKER ISSUES Phishing Scam The Division of Real Estate reports that licensees are being scammed by spurious calls asking the broker to renew his or her license over the phone. The Division states on its web site: "Please be advised that the Division of Real Estate will never ask for your credit card information over the phone, nor do we accept any payment over the phone. If you receive a suspicious phone call from someone claiming to be from the Division of Real Estate, please ask for their name and call our main customer service line at (303) 894-2166 and ask for the name given to you over the phone." Foreclosure Contracts. The Colorado Real Estate Commission has adopted a Contract To Buy and Sell Real Estate form for use in transactions that may be subject to the Colorado Foreclosure Protection Act. The Commission has also adopted new Rules F-1 and F-7, and Position Statements CP-30 and CP-34. The new Foreclosure Protection Act Form, CBSF1-7-09 is now available on the Commission's web site. Mortgage Brokers The Commission on July 22, 2009 issued Position Statement MB 1.6 stating that: "all independent contractor loan processors and underwriters shall be licensed as state-licensed loan originators by July 31, 2010. On and after August 1, 2010, independent contractor loan processors or underwriters shall not engage in residential mortgage loan origination activities as a loan processor or underwriter unless they are licensed as a state-licensed loan originator." Carbon Monoxide Detectors Don't forget that, effective July 1, 2009 per House Bill 09-1091, carbon monoxide detectors became mandatory in Colorado in certain residential properties offered for sale or lease. We are recommending that brokers decline to begin marketing activities on covered properties until the detectors have been installed. Unlicensed Broker Not Entitled To Commission In Amedeus Corporation v. McAllister , 2009-CO-0220.084 (Colo. App. February 19, 2009), an agreement made by a person not licensed as a broker to find and introduce to a property owner "individuals and/or parties who may have an interest in acquiring, investing or becoming financially involved with" the owner was found to be illegal and unenforceable. "Buyer's Subjective Discretion" The term "buyer's subjective discretion" in the Contract to Buy and Sell Real Estate does not permit the buyer to merely walk away from the contract at will. There is a duty of good faith and fair dealing, and any termination must be for reasons consistent with that duty. See, Albright v. McDermond, 14 P.3d 318 (Colo. 2000). Changing E & O Carriers If you change E & O insurance carriers, it is important that you notify the old carrier, during the reporting period for that policy, of any matters you are aware of that might lead to a claim. If you fail to do so, there exists a significant possibility that neither the old or new carrier will be obligated to defend you if a claim arises. You could find yourself without coverage for any such claim. E & O Insurance We recommend to all brokers that the minimim insurance limits of $100,000/$300,000 required by the Colorado Real Estate Commission are not sufficient. Higher limits are normally available, as is excess insurance that may provide broader coverage. Even simple claims can easily exceed $100,000. E & O claims are stressful enough, but they cause even more concern if there is insufficient coverage available in the event of an adverse outcome. Broker Disclosures Listing brokers: Remember to complete the disclosure section after "End of Contract" on the purchase and sale agreement in order to disclose your relationship with seller. Don't forget to use the change of status form when that relationship changes. CONSUMER REAL ESTATE ISSUES Carbon Monoxide Detectors For Residential Properties Pursuant to the Lofgren and Johnson Families Carbon Monoxide Safety Act, it became the responsibility of the seller or landlord to install carbon monoxide detectors in certain residential properties offered for sale or lease on or after July 1, 2009. Owner-Carries In owner-carry sales transactions, we strongly recommend that the seller consult legal counsel before signing the sales contract. There are serious risks inherent in owner-carries, especially if the seller's lien will be junior to a first lien, and especially if the first loan has a large default interest rate. We also recommend that before signing the sales contract, the seller should read and evaluate the documents that create the senior lien, in order that the seller may evaluate exactly what risks he or she is taking. Mediation and Arbitration With increasing frequency, the Courts are requiring Alternative Dispute Resolution in litigated matters. Two types of ADR are arbitration and mediation. In arbitration, the parties appear before one or more neutral persons who render a decision which resolves the dispute. Mediation is a process for resolving a dispute through negotiation. As in arbitration, the mediator is a neutral person selected by the parties. However, unlike an arbitrator, a mediator has no authority to make decisions or issue rulings. A mediator is simply a facilitator who tries to bring the parties together to resolve their dispute. While arbitration is a process for adjudicating a dispute without a judge or jury, mediation is a process for resolving disputes without the need for further litigation. While the terms mediation and settlement conference are often used interchangeably, an additional element of a settlement conference is that the facilitator normally has legal training and will informally assess the parties' positions and provide the facilitator's perceptions as to the strengths and weaknesses of each side's position. See C.R.S. Section 13-22-302(2.4) and (7). Review of Documents The time to have an attorney review your real estate documents is before you sign them. The cost of hiring an attorney to identify possible problems ahead of time is far less than the cost of litigating a dispute after the fact. Broker Relationships When buying and selling real estate in Colorado, there are several different legal relationships you can enter into with your real estate broker. He or she will provide you with forms which explain these relationships. We suggest that you read the disclosures carefully and ask enough questions so that you can make an informed decision as to which relationship best suits your needs. DIVORCE Common Law Marriage Contrary to a popular misconception, two persons do not enter into a common law marriage merely by cohabitating for a fixed period of time. What is required is the intention by the parties to enter into a marriage. This intent is generally shown by the parties' own conduct, i.e. whether they hold themselves out to third parties as being married. As the Court stated in Whitenhill v. Kaiser Permanente, "A common law marriage is established by the mutual consent or agreement of the parties to be husband and wife, followed by a mutual and open assumption of a marital relationship... Absent an express agreement, the two factors considered the most reliable in determining whether an intent to be married has been established are cohabitation and a general reputation in the community that the parties hold themselves out as husband and wife." INSURANCE In Apodaca v. Allstate Insurance Company , Case No. 08CA2231 (November 25, 2009), the Colorado Court of Appeals reaffirmed the principle that: “...an insurance agent or company does not have a common law duty to ensure complete protection to the policyholder or to recommend higher policy limits, but only has a duty to exercise a reasonable duty of care....Even when an agent represents that he or she is knowledgeable about insurance coverages, and regularly in the course of his or her business, informs, counsels, and advises customers about their insurance needs, the agent does not incur duties beyond those of the standard policyholder-insurance agent relationship. Thus, in most circumstances, an insurance agent does not have a duty to advise of additional and available insurance coverages suitable for the customer's needs.” Misrepresentations by the Insured In Silver v. Colorado Casualty Company (2009), the Colorado Court of Appeals reaffirmed the rule that, under some circumstances, a homeowner's insurance company is not obligated to make loss payments to the insured where the insured has made material misrepresentations. DISCLAIMER: All information provided in this web site is informational only and does not constitute an offer or agreement on our part to enter into an attorney/client relationship with any person. If any person desires legal advice from Balaban & Levinson, P.C., it is first necessary to establish an attorney/client relationship with us in writing pursuant to our standard written fee agreement. We are not licensed to practice law outside of the State of Colorado. For issues involving the laws of other jurisdictions, consult with an attorney licensed in that jurisdiction. No discussion of any taxation issues in this web site is intended to be used, nor shall be used, by any person: (1) for the purpose of avoiding any taxes owed to, or penalties that may be imposed by, the Internal Revenue Service or any other taxing entity, or (2) to promote, market or recommend to another person any matter addressed herein.

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BALABAN & LEVINSON, P.C.
1745 Lafayette Street
Denver, Colorado 80218
Phone: (303) 571-1234  
Fax: (303) 825-7520