This article summarizes a few of the proposed changes to the Rules and standard forms that will be considered at the hearing. However, a discussion and analysis of all of the proposed changes is beyond the scope of this article. All of the proposed changes can be found on the Division website.
The Colorado Real Estate Commission will hold a rule-making hearing on Tuesday, August 2, 2011, at the Colorado Division of Real Estate, 1560 Broadway, Suite 1250-C, Denver starting at 9 AM. Interested persons may submit written input to the Division of Real Estate on or before July 5, but all written submittals received prior to closure of the hearing shall be considered. Here are a few of the changes which will be considered by the Commission.
Continuing Education Change
One proposed rule change recommended by the Division of Real Estate would preclude a licensee from taking the same version of the Annual Update Course more than once.
Changes to Standard Contracts to Buy and Sell
The Forms Committee is recommending several changes to standard contracts CBS 1-8-10 (residential), CBS 2-8-10 (income-residential), CBS 3-8-10 (commercial), CBS 4-8-10 (land), and CBSF 1-8-10 (Colorado Foreclosure Protection Act); some minor, some substantive.
A recommended change to all of these standard contracts is to add a new paragraph 25.1 Right to Terminate, which provides that if a party is given a right to terminate by the terms of the Contract, that party may terminate the Contract if the other party receives written notice of the termination on or before the applicable deadline specified in the Contract, in which event the Contract is terminated effective upon the other party's receipt of the written notice. If the notice is not timely received, the party with the right to terminate is deemed to have accepted the situation/condition and waived the right to terminate based on that specific situation/condition. Conditions addressed in the contract which may create a right to terminate are being amended to correlate and fold into the new paragraph 25.1 (for example: loan conditions 5.2; credit information 5.3; lender property requirements 6.1; buyer review of association documents 7.3.3; buyer rights regarding title matters 8.3.2; buyer rights regarding survey objections 9.2; and buyer rights regarding inspection objections 10.2.2; just to name a few).
Another change recommended by the Forms Committee is to add a new paragraph 29 Good Faith to all of these standard Contracts (See list above), which expressly states that each party has an obligation to act in good faith including, but not limited to, exercising rights and obligations pertaining to financing conditions and obligations, record title and off-record title matters, survey review, property disclosures, inspections, indemnity, insurability, due diligence, disclosures, and source of water.
Proposed Revisions to Short Sale Addendum
One of the most substantive changes is to revise the Short Sale Addendum SSA 38.8.10, including splitting it into two forms: one as an addendum to the listing contract and the other as an addendum to the contract to buy and sell. These changes are in part an attempt to comply with the disclosure requirements contained in the Mortgage Assistance Relief Services Rule (MARS Rule), 16 CFR Part 322, published in November 2010, by the Federal Trade Commission (FTC). Intended to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis, the MARS Rule has been applied by the FTC to real estate brokers who merely provide real estate brokerage services in a short sale. The Commission may rethink the addition of language to address the MARS Rule given the unanimous decision of the FTC on July 15 to forbear from enforcing the disclosure requirements of the Rule against licensed real estate brokers who comply with state law when assisting financially distressed consumers in obtaining short sales from their lenders or servicers. This positive development was obtained through the efforts of the National Association of REALTORS®. The stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications.
The changes to the Short Sale Addendum recommended by the Forms Committee to address the MARS Rule would create a Short Sale Addendum SSA 39-8-11 to the Seller Listing Contract which in part states:
?4.1 Seller may stop doing business with the Brokerage Firm and Broker at any time. Seller may accept or reject the offer of mortgage assistance Brokerage Firm or Broker obtains from your lender (or servicer). If Seller rejects the offer, Seller does not have to pay Brokerage Firm. If Seller accepts the offer, Seller will have to pay Brokerage Firm as set forth in Seller Listing Contract for Brokerage Firm's and Broker's services.
4.2 Brokerage Firm is not associated with the government, and Brokerage Firm's Services are not approved by the government or Seller's lender.
The revisions recommended by the Forms Committee would also create a Short Sale Addendum SSA 38-8-11 to the Contract to Buy and Sell Real Estate. Among other changes, it contains new paragraphs 8.3.1 and 8.3.2, which state when the Seller and Buyer may terminate the contract related to conditions arising because the transaction is a short sale. This second Addendum is not the result of the MARS Rule.
If you are interested in reviewing all of the proposed rule and form changes, please access the Division's website. If you are concerned about any of the proposed changes, you should make a timely written submittal and attend the hearing on August 2.