DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
REAL ESTATE COMMISSION
4 CCR 725-1

RULE E.  SEPARATE ACCOUNTS – RECORDS – ACCOUNTINGS - INVESTIGATIONS

Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado and to all persons who have requested to be advised of the intention of the Colorado Real Estate Commission (the “Commission”) to promulgate rules, or to amend, repeal or repeal and re-enact the present rules of the Commission.  

STATEMENT OF BASIS

The statutory basis for the rules titled Rules of the Colorado Real Estate Commission is Part 1 of Title 12, Article 61, Colorado Revised Statutes, as amended.
  
STATEMENT OF PURPOSE

The purpose of this rule is to effectuate the legislative directive to promulgate necessary and appropriate rules in conformity with the state statutes of the real estate practice act.

SPECIFIC PURPOSE OF THIS RULEMAKING

The specific purpose of this rule is to amend or repeal existing rules with respect to required actions following the suspension, revocation, expiration or inactivation of a real estate broker’s license. 

Proposed New, Amended and Repealed Rules

Deleted material shown struck through, new material shown ALL CAPS. Rules, or portions of rules, which are unaffected are reproduced.  

Proposed New, Amended and Repealed Rules

Rule E.  Separate Accounts – Records – Accountings - Investigations

E-44. Actions when license is SUSPENDED, revoked, expired or inactive
Upon suspension, revocation, expiration or transfer to inactive status of a real estate license, the licensee is responsible for immediate compliance with the following:
(1)	Cease any activities requiring a license.
(2)	Return the license and pocket card to the commission.  If an employing broker, inform all employed licensees of the change in license status and the effect of such change on the license status of those licensees.
(3)	Cease all advertising, including but not limited to, use of office signs, yard signs, billboards, newspapers, magazines, the internet, direct mailings, and multiple listing services:.
(4)	Inform all owners, buyers and tenants of the action taken and the impact that the change in license status will have on any pending transaction.  IT IS THE RESPONSIBILITY OF THE EMPLOYING BROKER TO ENSURE THAT ANOTHER BROKER IS DESIGNATED TO PERFORM THE DUTIES REQUIRING A LICENSE IN ALL PENDING TRANSACTIONS, OR TO RELEASE THE AFFECTED PARTIES FROM ANY LISTING CONTRACT(S) WITH THE REAL ESTATE BROKERAGE. If an employing broker, release all principals from any listings, management agreements, or other contractual obligations which require a license.  The employing broker must instruct all owners, buyer or tenants with pending transactions to seek guidance from a licensed attorney or an actively licensed real estate broker.
(5)	IF AN INDEPENDENT BROKER:
a.	INFORM ALL OWNERS, BUYERS AND TENANTS OF THE ACTION TAKEN AND THE IMPACT THAT THE CHANGE IN LICENSE STATUS WILL HAVE ON ANY PENDING TRANSACTION.
b.	RELEASE THE AFFECTED PARTIES FROM ANY ACTIVE LISTING CONTRACT(S) WITH THE BROKER.
c.	INSTRUCT THE AFFECTED PARTIES TO SEEK GUIDANCE FROM A LICENSED ATTORNEY OR AN ACTIVELY LICENSED REAL ESTATE BROKER REGARDING ANY PENDING TRANSACTIONS.
d.	THE BROKER IS RESPONSIBLE FOR ACCOUNTING FOR ALL FUNDS AND MAKING ALL FINAL DISBURSEMENTS.  THE BROKER IS RESPONSIBLE FOR MAINTAINING ALL RECORDS FOR FOUR YEARS.
(6)	IF AN EMPLOYING BROKER:
a.	THE BROKER IS PERSONALLY RESPONSIBLE FOR THE HANDLING OF ANY AND ALL EARNEST MONEY DEPOSITS, ESCROW OR TRUST FUNDS RECEIVED OR DISBURSED BY THE BROKERAGE.  THE BROKER MUST ACCOUNT FOR ALL ENTRUSTED FUNDS.  A BROKER WHO WILL NO LONGER BE RESPONSIBLE FOR THE LICENSED ACTIVITIES OF THE BROKERAGE IS RESPONSIBLE FOR RETURNING ALL ESCROW RECORDS TO THE LICENSED BROKERAGE AND TRANSFERRING ALL ENTRUSTED FUNDS TO THE NEW EMPLOYING BROKER.
b.	THE LICENSED BROKERAGE MUST DESIGNATE A QUALIFIED, ACTIVE BROKER, WHO IS APPROVED BY THE COMMISSION, TO BE RESPONSIBLE FOR THE MANAGEMENT AND SUPERVISION OF THE LICENSED ACTIONS OF THE BROKERAGE AND ALL LICENSEES SHOWN IN THE COMMISSION’S RECORDS AS BEING IN THE EMPLOY OF THE BROKERAGE.  PURSUANT TO 12-61-103(7)(C), C.R.S., THE BROKERAGE MAY ALSO SEEK A TEMPORARY LICENSE TO PREVENT HARDSHIP. 
c.	IF THE BROKERAGE IS UNABLE TO DESIGNATE A QUALIFIED, ACTIVE BROKER OR IS NOT GRANTED A TEMPORARY LICENSE, THE LICENSE OF THE BROKERAGE WILL BE PLACED ON INACTIVE STATUS AND ALL ACTIVITIES REQUIRING A REAL ESTATE BROKER’S LICENSE MUST IMMEDIATELY CEASE.  
d.	AN INACTIVE BROKERAGE WILL HAVE SEVEN (7) DAYS TO NOTIFY ALL OWNERS, BUYERS AND TENANTS OF THE IMPACT THE LICENSE STATUS CHANGE WILL HAVE ON THE EMPLOYED LICENSEES AND ALL PENDING TRANSACTIONS.  THE BROKER IS RESPONSIBLE FOR ACCOUNTING FOR ALL FUNDS, RETURNING ALL ESCROW RECORDS TO THE LICENSED BROKERAGE AND MAKING ALL FINAL DISBURSEMENTS.WITHIN THIRTY (30) DAYS OF THE CHANGE IN LICENSE STATUS.ensure that all entrusted funds have been properly accounted for and that all closings are properly completed.
e.	IN THE CASE OF AN EMPLOYING BROKER WHO WILL NOT BE REPLACED AND THE LICENSED BROKERAGE WILL BE DISSOLVED, THE EMPLOYING BROKER IS RESPONSIBLE FOR ACCOUNTING FOR ALL FUNDS AND MAKING ALL FINAL DISBURSEMENTS WITHIN 30 DAYS OF THE LICENSE STATUS CHANGE.  THE EMPLOYING BROKER IS RESPONSIBLE FOR MAINTAINING ALL RECORDS FOR FOUR YEARS.
(7)	Commissions or fees may be received by A licensees only for transactions where the commission or fee was earned prior to the THAT LICENSEE’S suspension, revocation, expiration or transfer to inactive status.