Colorado Real Estate Exam- Ch 2 Licensing Requirements Questions and Answers Fully Solved

Colorado Real Estate Exam- Ch 2 Licensing Requirements Questions and Answers Fully Solved E&O Insurance E&O insurance protects the Broker against loss from oversights in filling out forms and conducting business. It does not protect the Broker if fraud is involved or alleged in the transaction. All active​licensed Brokers must carry E&O insurance. The CREC requires that it be on file with them or they may inactivate a license. The insurance is purchased through private carriers and an Employing Broker can help you with obtaining your insurance. Approved vendors are also listed on the DORA web pages. An often asked question for testing is who must carry the insurance. The answer is all active licensed Agents including the Employing Broker and..... any Corporation or LLC that is doing business as a firm. ​This last part trips new Agents up. In this case as in others, a LLC​(Limited Liability Corporation) or regular Corporation are viewed as a person or personal entity. As such they also need E&O insurance. The best example is a Broker that wants to have a brokerage firm. Let's say Gary wishes to be an Employing Broker. Gary could operate as a sole proprietor and just work as such. Later Gary learns that working as a sole proprietor he might be sued one day, and since he is the business, his home and personal assets would be at risk. His attorney tells him he should consider an LLC or limited liability company as a vehicle to protect himself and conduct business. By forming the company, now it is considered its own entity. Gary is protected and has limited his liability to the assets of the company and is less at risk personally. Since the company has its own liability, it must carry E&O insurance and Gary must carry it for himself also. In addition, any agent Gary hires must have E&O insurance as well. Active and Inactive Licenses How can a license become inactive?​The most common ways are a broker may place his or her license on inactive status voluntarily or the Real Estate Commission may suspend your license for cause. A couple of other ways include: Failure of the Employing Broker to notify the Commission of a change of location​or failure of the Broker Associate to notify the Commission of a move from one firm or location to another​. If the Employing Broker moves their office, the Employing Broker's license and all the licenses under him or her become inactive if the CREC is not notified, and if the Employing Broker's license is suspended or revoked then all licensee under him are placed on inactive status. ​Remember, you are responsible for your license always. LLC Limted Liability Company May obtain 90 day temporary license, with one 90 day renewal. Three levels of license Associate Brokers, Independent Brokers, and Employing Brokers Steps to become Employing or Independent Broker? To move from an Associate Broker position to either Employing or Independent Broker the requirements are that you have 2 years of active license, and that you take a 24 hour Broker Administration course. So what is required to get an initial license? 1. You must take and pass a 168 hour class or its distance/online equivalent hours. Your current class meets this requirement with a combination of online, at home and in‐class hours. At completion you will be given a REC‐33 Certificate that is your proof of course completion. 2. You must be 18 years of age to obtain a license. 3. You must submit fingerprints to the Colorado Bureau of Investigation. 4. You must pass the background check. 5. You must be lawfully present in the United States. 6. You must take and pass the Colorado Real Estate Broker Exam given by PSI. License renewal requirements- Years? CE? Once you have your license you will need to renew it every three years.​In order to do this, the state requires that you complete 24 hours of continuing education​. Twelve of these hours must be the annual update course; each annual update course counts as 4 hours equaling 12 hours over three years. You may only take the update course within it current year. In addition, you would need to take 12 hours of elective credit. The National Association of Realtors Ethics class counts within those credit hours What if I did not take the update or for some reason did not complete the 24 hour requirements?​ ​A provision has been made for such a circumstance. The first option is to take the Colorado portion of the exam and pass it again​. You may only do this one time and it is not the most popular option. A second option is to take and pass a 24 hour Broker Reactivation course​. You may only do this one time as well. Many people choose this option. I would encourage our students to keep up the annual updates and not let them get behind. They contain needed information for the professional licensee each year. When does the license expire? ​In Colorado the license expires three years from the date of issue; however, an important thing to know is that you have a 31 day grace period ​to renew an expired license. You will not have to pay the additional fee for renewal until your license is 32 days late for renewal. What does it cost to renew your license? From 32 days to one year Renewal Fee +​Reinstatement Fee = to ½ Renewal Fee 1‐3 years late Renewal Fee +​Reinstatement Fee = to full Renewal fee Over 3 years Treated as a new applicant Inactive status renewal rules? Brokers that put their license in an inactive status will still need to have the 24 hours of continuing education credits inclusive of the 12 hours of annual update courses to reinstate a license. The same rules apply if you do not have the 24 hours. You may take and pass the Broker Administration course or the Colorado exam one time in lieu of the annual update and CE hours How can a license become inactive?​ ​The most common ways are a broker may place his or her license on inactive status voluntarily or the Real Estate Commission may suspend your license for cause. A couple of other ways include: Failure of the Employing Broker to notify the Commission of a change of location​or failure of the Broker Associate to notify the Commission of a move from one firm or location to another​. If the Employing Broker moves their office, the Employing Broker's license and all the licenses under him or her become inactive if the CREC is not notified, and if the Employing Broker's license is suspended or revoked then all licensee under him are placed on inactive status. ​Remember, you are responsible for your license always. Who must hold an active license? Anyone who is engaged in the sale or lease of real property may be required to hold a license with some exceptions. All of the following must hold a license: 1. Those people who are selling or leasing property for others for a fee. 2. Those who sell business opportunity that involves real property. 3. Those selling real estate options. Note: The sale of real estate securities requires a securities license not a real estate license. So who is exempt from licensing? There are four exemptions from licensing. 1. A non‐licensed salesperson working directly for a new home builder. 2. A regularly salaried employee of an apartment complex who reports to the owner and does not negotiate leases or sales. 3. An attorney may draft contracts or close property for a client. 4. A Broker with an inactive license may work for either a builder or an apartment complex. 90 Day Temp License Temporary licenses can be issued to a Corporation or LLC. Such a temporary permit will be for 90 days and may be renewed for 90 days.​ This is a common test item and should be memorized exactly. Who must have Errors and Omission insurance and what does it do? E E&O insurance protects the Broker against loss from oversights in filling out forms and conducting business. It does not protect the Broker if fraud is involved or alleged in the transaction. All active​licensed Brokers must carry E&O insurance. The CREC requires that it be on file with them or they may inactivate a license. The insurance is purchased through private carriers and an Employing Broker can help you with obtaining your insurance. Approved vendors are also listed on the DORA web pages. An often asked question for testing is who must carry the insurance. The answer is all active licensed Agents including the Employing Broker and..... any Corporation or LLC that is doing business as a firm. ​This last part trips new Agents up. In this case as in others, a LLC​(Limited Liability Corporation) or regular Corporation are viewed as a person or personal entity. As such they also need E&O insurance. The best example is a Broker that wants to have a brokerage firm. Let's say Gary wishes to be an Employing Broker. Gary could operate as a sole proprietor and just work as such. Later Gary learns that working as a sole proprietor he might be sued one day, and since he is the business, his home and personal assets would be at risk. His attorney tells him he should consider an LLC or limited liability company as a vehicle to protect himself and conduct business. By forming the company, now it is considered its own entity. Gary is protected and has limited his liability to the assets of the company and is less at risk personally. Since the company has its own liability, it must carry E&O insurance and Gary must carry it for himself also. In addition, any agent Gary hires must have E&O insurance as well.