There are many varying business models and commission models in the industry, with more emerging every day.  No matter what a broker’s business model is, the law specifies certain duties that must be performed when acting as a real estate broker in Colorado. These obligations and responsibilities are outlined under C.R.S. §§ 12-61-804, 12-61-805, and 12-61-807.    

Key points to remember:

• There are certain duties and obligations that a broker must perform, no matter what commission or fee is being charged.
• Reasonable skill and care is one of these duties, and requires the broker to be involved throughout the entire transaction.
• Brokers cannot solely provide “additional duties”, i.e., cannot only list a property on the MLS but not perform minimum duties.  A consumer cannot relieve their broker of the minimum services requirement.

Brokers can also find clarification on the minimum service requirements and uniform duties in Commission Position 36.

“Entry-Only” Listings: The position statement specifically clarifies that brokers are not solely allowed to perform “additional” services which require a real estate broker’s license.  For example, the position states that “offering the real property of another for sale through advertisements, without providing the minimum duties required by single agency or transaction brokerage” is not allowed.  This has also been known as a “MLS- only” or “entry only” listing. Consumers do not have the ability to relieve a broker of their requirement to perform minimum duties, even if the consumer only wants their property advertised. The Colorado Real Estate Commission has consistently disciplined brokers who are only providing a listing service without performing the minimum service requirements, regardless of whether there was any harm to the consumer.

Reasonable Skill & Care: One minimum service identified in the statute is exercising “reasonable skill and care.”  This can encompass many situations and issues, and the broker needs to remain involved throughout the transaction to ensure they are providing this service.  Brokers must always exercise reasonable skill and care regardless of the type of brokerage relationship they have entered into or amount of commission that has been agreed upon.    The statute specifically spells out what “reasonable skill and care” means for transaction brokerage in 12-61-807 (2)(b). It is important to note that some of these definitions of reasonable skill and care are very all-encompassing; such as, “advising the parties regarding the transaction”, “keeping the parties fully informed regarding the transaction”, and “assisting the parties in complying with the terms and conditions of any contract including closing the transaction.”  One can see how important it is for a broker to be involved from the beginning to the end of the transaction in order to perform these duties.

Failure to Exercise Reasonable Skill and Care Examples

The Commission has rendered discipline to brokers who did not exercise reasonable skill and care, often resulting in harm to their clients.  There are many examples of these situations:

• a broker who does not notice that they did not receive due diligence documents by the deadline set forth in the contract;
• forwarding the wrong offer for a client’s signature;
• not informing a client of an on-site wastewater transfer permit or county inspection that is required prior to closing;
• or breezing right by the loan objection deadline without checking in on the loan.