Last Updated: 12/20/2011 IMPORTANT E&O CLAIM ISSUES FOR 2012 1. If you are insured through Williams Underwriting, you will presumably be changing E & O insurance carriers with your next renewal. It is very important that, before the expiration of your current policy's reporting period, you report to the current carrier any matters you are aware of that might lead to a claim. In the past, we have seen situations where a claim was not covered because the new carrier contended the existing carrier should cover the claim; however, since the claim had not been reported to the existing carrier during the policy period, the existing carrier declined to provide a defense or indemnity. 2. The Colorado Rules of Civil Procedure are changing effective January 1, 2012. These changes make it more important than ever that you promptly notify your insurance carrier if you receive a Summons and Complaint, because it will be extremely difficult for us to procure an extension of time to file a response. Failure to file a timely response can lead to the entry of a default judgment against you, depriving you of your right to defend against the claims being made against you. MORTGAGE ASSISTANCE RELIEF SERVICES The Federal Trade Commission has adopted regulations that affect real estate brokers with regard to short sales, 16 C.F.R.322.1. If you are handling any short sale transactions, you should seek contact your attorney about those rules. REAL ESTATE Brokers Working in Teams The Colorado Real Estate Commission has issued CP-40 Commission Position on Teams (4-5-2011). The Commission states, "While there is no prohibition of teams, real estate brokers need to ensure that they do not advertise in a manner that misleads the public as to the identity of the brokers’ licensed brokerage. Real estate brokers that function as teams should not advertise teams using the terms “realty”, “real estate”, “company”, “corporation”, “corp.”, “inc.”, “LLC” or other similar language that would indicate a company other than the employing brokerage firm. Advertising includes, but is not limited to, websites, signage, property flyers, mailings, business cards, letterhead and contracts. The advertising of team names should never give the impression that the team is an entity separate from the licensed real estate brokerage. If the identity of the employing broker or the brokerage firm is difficult for the public or the Commission to ascertain, the team may be in violation of Rule E-8 Advertising." [emphasis added] 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). 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 & Costigan, 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.

Company | Staff | Clients | Errors & Omissions | What's New | Contact Us | Home

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