COLORADO REAL ESTATE EXAM- CH 2 LICENSING REQUIREMENTS ACTUAL EXAM QUESTIONS AND ANSWERS|2025/2026|GRADED A+

COLORADO REAL ESTATE EXAM- CH 2
LICENSING REQUIREMENTS ACTUAL EXAM
QUESTIONS AND ANSWERS|2025/2026|GRADED
A+

E&O Insurance - ANSWER-
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E&O insurance protects the Broker against loss from oversights in filling out
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forms and conducting business. It does not protect the Broker if fraud is
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involved or alleged in the transaction.
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All activelicensed Brokers must carry E&O insurance. The CREC requires that it
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be on file with them or they may inactivate a license. The insurance is
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purchased through private carriers and an Employing Broker can help you with
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obtaining your insurance. Approved vendors are also listed on the DORA web
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pages. An often asked question for testing is who must carry the insurance. The
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answer is all active licensed Agents including the Employing Broker and..... any
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Corporation or LLC that is doing business as a firm. This last part trips new
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Agents up. In this case as in others, a LLC(Limited Liability Corporation) or
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regular Corporation are viewed as a person or personal entity. As such they also
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need E&O insurance. The best example is a Broker that wants to have a
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brokerage firm. Let's say Gary wishes to be an Employing Broker. Gary could
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operate as a sole proprietor and just work as such. Later Gary learns that
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working as a sole proprietor he might be sued one day, and since he is the
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business, his home and personal assets would be at risk. His attorney tells him
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he should consider an LLC or limited liability company as a vehicle to protect
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himself and conduct business. By forming the company, now it is considered its
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own entity. Gary is protected and has limited his liability to the assets of the
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company and is less at risk personally. Since the company has its own liability,
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it must carry E&O insurance and Gary must carry it for himself also. In
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addition, any agent Gary hires must have E&O insurance as well.
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1
Wicky

, Active and Inactive Licenses - ANSWER-
B B B B B How can a license become inactive?
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The most common ways are a broker may
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place his or her license on inactive status voluntarily or the Real Estate
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Commission may suspend your license for cause. B B B B B B




A couple of other ways include: Failure of the Employing Broker to notify the
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Commission of a change of locationor failure of the Broker Associate to notify
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the Commission of a move from one firm or location to another. If the
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Employing Broker moves their office, the Employing Broker's license and all
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the licenses under him or her become inactive if the CREC is not notified, and if
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the Employing Broker's license is suspended or revoked then all licensee under
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him are placed on inactive status. Remember, you are responsible for your
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license always. B




LLC - ANSWER-
B B Limted Liability Company B B




May obtain 90 day temporary license, with one 90 day renewal.
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Three levels of license - ANSWER-
B B B B B Associate Brokers, Independent Brokers, B B B




and Employing Brokers
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Steps to become Employing or Independent Broker? - ANSWER-
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To move from an Associate Broker position to either Employing or
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Independent Broker the requirements are that you have 2 years of active
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license, and that you take a 24 hour Broker Administration course.
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So what is required to get an initial license? - ANSWER-
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1. You must take and pass a 168 hour class or its distance/online
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equivalent hours. Your current class meets this requirement with a
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2
Wicky