CO Code § 12-10-217 (2021)
2021 Colorado Code|Title 12 - Professions and Occupations|Article 10 - Real Estate|Part 2 - Brokers and Salespersons|§ 12-10-217. Investigation - Revocation - Actions Against Licensee or Applicant - Definition

  The commission, upon its own motion, may, and, upon the complaint in writing of any person, shall, investigate the activities of any licensee or any person who assumes to act in the capacity of a licensee within the state, and the commission, after holding a hearing pursuant to section 12-10-219, has the power to impose an administrative fine not to exceed two thousand five hundred dollars for each separate offense and to censure a licensee, to place the licensee on probation and to set the terms of probation, or to temporarily suspend a license, or permanently revoke a license, when the licensee has performed, is performing, or is attempting to perform any of the following acts and is guilty of:   Knowingly making any misrepresentation or knowingly making use of any false or misleading advertising;    Making any promise of a character that influences, persuades, or induces another person when he or she could not or did not intend to keep the promise;    Knowingly misrepresenting or making false promises through agents, advertising, or otherwise;    Violating any provision of the “Colorado Consumer Protection Act”, article 1 of title 6;    Acting for more than one party in a transaction without the knowledge of all parties thereto;    Representing or attempting to represent a real estate broker other than the licensee's employer without the express knowledge and consent of that employer;    In the case of a broker registered as in the employ of another broker, failing to place, as soon after receipt as is practicably possible, in the custody of that licensed broker-employer any deposit money or other money or fund entrusted to the employee by any person dealing with the employee as the representative of that licensed broker-employer;    Failing to account for or to remit, within a reasonable time, any money coming into the licensee's possession that belongs to others, whether acting as real estate brokers or otherwise, and failing to keep records relative to the money, which records shall contain such information as may be prescribed by the rules of the commission relative thereto and shall be subject to audit by the commission;    Converting funds of others, diverting funds of others without proper authorization, commingling funds of others with the broker's own funds, or failing to keep the funds of others in an escrow or a trustee account with some bank or recognized depository in this state, which account may be any type of checking, demand, passbook, or statement account insured by an agency of the United States government, and to keep records relative to the deposit that contain such information as may be prescribed by the rules of the commission relative thereto, which records shall be subject to audit by the commission;    Failing to provide the purchaser and seller of real estate with a closing statement of the transaction, containing such information as may be prescribed by the rules of the commission or failing to provide a signed duplicate copy of the listing contract and the contract of sale or the preliminary agreement to sell to the parties thereto;    Failing to maintain possession, for future use or inspection by an authorized representative of the commission, for a period of four years, of the documents or records prescribed by the rules of the commission or to produce the documents or records upon reasonable request by the commission or by an authorized representative of the commission;    Paying a commission or valuable consideration for performing any of the functions of a real estate broker, as described in this part 2, to any person not licensed under this part 2; except that a licensed broker may pay a finder's fee or a share of any commission on a cooperative sale when the payment is made to a real estate broker licensed in another state or country. If a country does not license real estate brokers, then the payee must be a citizen or resident of the country and represent that the payee is in the business of selling real estate in the country.    Disregarding or violating any provision of this part 2 or part 4 of this article 10, violating any reasonable rule promulgated by the commission in the interests of the public and in conformance with the provisions of this part 2 or part 4 of this article 10; violating any lawful commission orders; or aiding and abetting a violation of any rule, commission order, or provision of this part 2 or part 4 of this article 10;      Conviction of, entering a plea of guilty to, or entering a plea of nolo contendere to any crime in article 3 of title 18; parts 1, 2, 3, and 4 of article 4 of title 18; part 1, 2, 3, 4, 5, 7, 8, or 9 of article 5 of title 18; article 5.5 of title 18; parts 3, 4, 6, 7, and 8 of article 6 of title 18; parts 1, 3, 4, 5, 6, 7, and 8 of article 7 of title 18; part 3 of article 8 of title 18; article 15 of title 18; article 17 of title 18; section 18-18-404, 18-18-405, 18-18-406, 18-18-411, 18-18-412.5, 18-18-412.7, 18-18-412.8, 18-18-415, 18-18-416, 18-18-422, or 18-18-423; or any other like crime under Colorado law, federal law, or the laws of other states. A certified copy of the judgment of a court of competent jurisdiction of the conviction or other official record indicating that the plea was entered shall be conclusive evidence of the conviction or plea in any hearing under this part 2. (n) (I) Conviction of, entering a plea of guilty to, or entering a plea of nolo contendere to any crime in article 3 of title 18; parts 1, 2, 3, and 4 of article 4 of title 18; part 1, 2, 3, 4, 5, 7, 8, or 9 of article 5 of title 18; article 5.5 of title 18; parts 3, 4, 6, 7, and 8 of article 6 of title 18; parts 1, 3, 4, 5, 6, 7, and 8 of article 7 of title 18; part 3 of article 8 of title 18; article 15 of title 18; article 17 of title 18; section 18-18-404, 18-18-405, 18-18-406, 18-18-411, 18-18-412.5, 18-18-412.7, 18-18-412.8, 18-18-415, 18-18-416, 18-18-422, or 18-18-423; or any other like crime under Colorado law, federal law, or the laws of other states. A certified copy of the judgment of a court of competent jurisdiction of the conviction or other official record indicating that the plea was entered shall be conclusive evidence of the conviction or plea in any hearing under this part 2.    As used in this subsection (1)(n), “conviction” includes the imposition of a deferred judgment or deferred sentence.       Violating or aiding and abetting in the violation of the Colorado or federal fair housing laws;    Failing to immediately notify the commission in writing of a conviction, plea, or violation pursuant to subsection (1)(n) or (1)(o) of this section;    Having demonstrated unworthiness or incompetency to act as a real estate broker by conducting business in such a manner as to endanger the interest of the public;    In the case of a broker licensee, failing to exercise reasonable supervision over the activities of licensed employees;    Procuring, or attempting to procure, a real estate broker's license or renewing, reinstating, or reactivating, or attempting to renew, reinstate, or reactivate, a real estate broker's license by fraud, misrepresentation, or deceit or by making a material misstatement of fact in an application for the license;    Claiming, arranging for, or taking any secret or undisclosed amount of compensation, commission, or profit or failing to reveal to the licensee's principal or employer the full amount of the licensee's compensation, commission, or profit in connection with any acts for which a license is required under this part 2;    Using any provision allowing the licensee an option to purchase in any agreement authorizing or employing the licensee to sell, buy, or exchange real estate for compensation or commission, except when the licensee, prior to or coincident with election to exercise the option to purchase, reveals in writing to the licensee's principal or employer the full amount of the licensee's profit and obtains the written consent of the principal or employer approving the amount of the profit;    Effective on and after August 26, 2013, fraud, misrepresentation, deceit, or conversion of trust funds that results in the entry of a civil judgment for damages;    Any other conduct, whether of the same or a different character than specified in this subsection (1), that constitutes dishonest dealing;    Having had a real estate broker's or a subdivision developer's license suspended or revoked in any jurisdiction, or having had any disciplinary action taken against the broker or subdivision developer in any other jurisdiction if the broker's or subdivision developer's action would constitute a violation of this subsection (1). A certified copy of the order of disciplinary action shall be prima facie evidence of the disciplinary action.    Failing to keep records documenting proof of completion of the continuing education requirements in accordance with section 12-10-213 for a period of four years from the date of compliance with the section;      Violating any provision of section 12-10-218. (z) (I) Violating any provision of section 12-10-218.    In addition to any other remedies available to the commission pursuant to this article 10, after notice and a hearing pursuant to section 24-4-105, the commission may assess a penalty for a violation of section 12-10-218 or of any rule promulgated pursuant to section 12-10-218. The penalty shall be the amount of remuneration improperly paid and shall be transmitted to the state treasurer and credited to the general fund.       Within the last five years, having a license, registration, or certification issued by Colorado or another state revoked or suspended for fraud, deceit, material misrepresentation, theft, or the breach of a fiduciary duty, and such discipline denied the person authorization to practice as:   A mortgage broker or mortgage loan originator;    A real estate broker or salesperson;    A real estate appraiser, as defined by section 12-10-602 (9);    An insurance producer, as defined by section 10-2-103 (6);    An attorney;    A securities broker-dealer, as defined by section 11-51-201 (2);    A securities sales representative, as defined by section 11-51-201 (14);    An investment advisor, as defined by section 11-51-201 (9.5); or    An investment advisor representative, as defined by section 11-51-201 (9.6).          Every person licensed pursuant to section 12-10-201 (6)(a)(X) shall give a prospective tenant a contract or receipt; and the contract or receipt shall include the address and telephone number of the commission in prominent letters and shall state that the regulation of rental location agents is under the purview of the commission.    In the event a firm, partnership, limited liability company, association, or corporation operating under the license of a broker designated and licensed as representative of the firm, partnership, limited liability company, association, or corporation is guilty of any of the foregoing acts, the commission may suspend or revoke the right of the firm, partnership, limited liability company, association, or corporation to conduct its business under the license of the broker, whether or not the designated broker had personal knowledge thereof and whether or not the commission suspends or revokes the individual license of the broker.    Upon request of the commission, when any real estate broker is a party to any suit or proceeding, either civil or criminal, arising out of any transaction involving the sale or exchange of any interest in real property or out of any transaction involving a leasehold interest in the real property and when the broker is involved in the transaction in such capacity as a licensed broker, it shall be the duty of the broker to supply to the commission a copy of the complaint, indictment, information, or other initiating pleading and the answer filed, if any, and to advise the commission of the disposition of the case and of the nature and amount of any judgment, verdict, finding, or sentence that may be made, entered, or imposed therein.    This part 2 shall not be construed to relieve any person from civil liability or criminal prosecution under the laws of this state.    Complaints of record in the office of the commission and commission investigations, including commission investigative files, are closed to public inspection. Stipulations and final agency orders are public records subject to sections 24-72-203 and 24-72-204.    When a complaint or an investigation discloses an instance of misconduct that, in the opinion of the commission, does not warrant formal action by the commission but that should not be dismissed as being without merit, the commission may send a letter of admonition by certified mail, return receipt requested, to the licensee against whom a complaint was made and a copy thereof to the person making the complaint, but the letter shall advise the licensee that the licensee has the right to request in writing, within twenty days after proven receipt, that formal disciplinary proceedings be initiated to adjudicate the propriety of the conduct upon which the letter of admonition is based. If the request is timely made, the letter of admonition shall be deemed vacated, and the matter shall be processed by means of formal disciplinary proceedings.    All administrative fines collected pursuant to this section shall be transmitted to the state treasurer, who shall credit the same to the division of real estate cash fund.    Any application for licensure from a person whose license has been revoked shall not be considered until the passage of one year from the date of revocation.    When the division becomes aware of facts or circumstances that fall within the jurisdiction of a criminal justice or other law enforcement authority upon investigation of the activities of a licensee, the division shall, in addition to the exercise of its authority under this part 2, refer and transmit the information, which may include originals or copies of documents and materials, to one or more criminal justice or other law enforcement authorities for investigation and prosecution as authorized by law.     History. Source: L. 2019: Entire title R&RE with relocations,(HB 19-1172), ch. 136, p. 631, § 1, effective October 1.    Editor's note:   This section is similar to former § 12-61-113 as it existed prior to 2019.   Cross references:   For alternative disciplinary actions for persons licensed pursuant to this part 2, see § 24-34-106 .   ANNOTATION   Law reviews. For article, “Colorado ‘Buyer Brokerage': Does it Still Exist After Velten v. Robertson?”, see 55 U. Colo. L. Rev. 83 (1983). For article, “Affiliated Business Arrangements: Compliance with RESPA and H.B. 06-1141”, see 35 Colo. Law. 65 (Nov. 2006).   Annotator's note. The following annotations include cases decided under former provisions similar to this section.   Terms “unworthiness” and “incompetency” are not unconstitutionally vague as used in subsection (1)(n). Eckley v. Colo. Real Estate Comm'n, 752 P.2d 68 (Colo. 1988).   The legislature intended the commission's sanction authority to extend to a broker's improper conduct outside the real estate context, particularly when it speaks to the broker's honesty, dignity, or moral character. McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   The legislature's inclusion of the phrase “or otherwise” in subsection (1)(g) indicates its intention to discipline brokers for failing to account or remit others' funds, even in non-real estate transactions. McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   Commission had authority to sanction licensed broker for conduct, even though that conduct did not involve “selling, exchanging, buying, renting, or leasing” real estate. McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   Commission has jurisdiction over broker dealing for own account. Where a real estate broker is dealing in real estate for his own account, the Colorado real estate commission has jurisdiction over his acts and can suspend or revoke his license for proven violations of the licensing statute or of the commission's rules. Seibel v. Colo. Real Estate Comm'n, 34 Colo. App. 415, 530 P.2d 1290 (1974).   Real estate agent has duty to act with utmost faith and loyalty. Under both the common law and applicable statutes, a real estate agent, in all dealings affecting the subject matter of his agency, has a fiduciary duty to act with the utmost faith and loyalty in behalf of his principal. This duty requires the agent to make a full and complete disclosure before he becomes the purchaser of property which is the subject of his agency with his principal. M.S.R., Inc. v. Lish, 34 Colo. App. 320, 527 P.2d 912 (1974).   Unless otherwise agreed, in all dealings affecting the subject matter of his agency, a real estate broker or salesman has a fiduciary duty to act with the utmost faith and loyalty in behalf of, and to act solely for the benefit of, his principal. Lestoque v. M.R. Mansfield Realty, Inc., 36 Colo. App. 32, 536 P.2d 1146 (1975).   Where real estate agents had a combined two-thirds interest in the buyer corporation, they did not act with the utmost loyalty to their principal, and, because they initially failed to advise their principal that they owned two-thirds of the buyer corporation, they did not make a full and complete disclosure of their interests to her. Since the agents in fact own a controlling interest in the buyer corporation, knowledge of the breach of their fiduciary duty as licensed real estate agents is imputed to the buyer. M.S.R., Inc. v. Lish, 34 Colo. App. 320, 527 P.2d 912 (1974).   Complete disclosure to and informed consent of principal required. The fiduciary duty of a real estate agent to act with faith and loyalty requires that the agent make a full and complete disclosure to, and obtain the informed consent from, the principal before the agent can sell his own property to the principal or can himself buy the principal's property. Lestoque v. M.R. Mansfield Realty, Inc., 36 Colo. App. 32, 536 P.2d 1146 (1975).   If there is no such disclosure or consent, there is a breach of duty. A sale by the real estate broker of his own property to the principal or purchase of the principal's property for his own without the informed knowledge and consent of the principal is a breach of duty, and, in such a transaction, if the agent makes a profit, he must account therefor to his principal. Lestoque v. M.R. Mansfield Realty, Inc., 36 Colo. App. 32, 536 P.2d 1146 (1975).   Accounting is required. Rule requiring real estate broker to account to principal if the agent makes a profit in violation of fiduciary duty applies regardless of whether there is any harm to the principal as a result of the self-dealing by the agent. In such event, the principal can disaffirm and avoid the deal or can ratify the deal and take the profits. Lestoque v. M.R. Mansfield Realty, Inc., 36 Colo. App. 32, 536 P.2d 1146 (1975).   Absent fiduciary duty, evidence of misconduct insufficient to suspend license. Absent a fiduciary duty incumbent on an agent, evidence of real estate broker's misconduct was insufficient to sustain a suspension of his license under subsections (1)(n) and (1)(t). Hiller v. Real Estate Comm'n, 627 P.2d 769 (Colo. 1981).   Fiduciary duty imposed on licensed brokers pursuant to subsections (1)(g) and (1)(g.5) fall within the meaning of § 523 (a)(4) of the federal bankruptcy code. In re Currin, 55 B.R. 928 (Bankr. D. Colo. 1985 ).   Commission had authority to sanction licensed broker's non-real estate conduct under subsection (1)(g). McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   Subsection (1)(m) of this section, read together with § 24-5-101 , does not authorize the commission to revoke a broker's license based solely on his or her conviction of a felony. The commission bears the burden of proving not only that the licensee was convicted of a felony, but also that he or she has not been rehabilitated. Colo. Real Estate Comm'n v. Bartlett, 272 P.3d 1099 (Colo. App. 2011).   Failure to provide purchaser with sufficiently detailed closing statement in violation of rule E-5(b) of the rules of the real estate commission was violation of subsections (1)(h) and (1)(n). Eckley v. Colo. Real Estate Comm'n, 752 P.2d 68 (Colo. 1988).   Failure to properly deposit escrow funds in violation of subsection (1)(g.5) and rule E-1 of the rules of the real estate commission was incompetency and unworthiness in violation of subsection (1)(n). Eckley v. Colo. Real Estate Comm'n, 752 P.2d 68 (Colo. 1988).   Commission had authority to sanction licensed broker's conduct under subsection (1)(t), even though that conduct did not involve a real estate transaction. McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   Commission did not have authority to punish licensed broker under subsection (1)(n) because the charged conduct was unrelated to real estate and did not fall within any of the punishable grounds listed in rule G-7. McDonnell v. Colo. Real Estate Comm'n, , 361 P.3d 1138 .   Application of disciplinary sections. The disciplinary sections apply even when the broker is selling or buying his own property. Hammer v. Real Estate Comm'n, 40 Colo. App. 260, 576 P.2d 191 (1977).   Disciplinary action of real estate commission was not arbitrary or capricious. Order of real estate commission suspending license of broker in reliance upon hearing officer's finding that broker's failure to disclose financial records, making material misrepresentations, failure to deposit trust funds into escrow account, failure to provide sufficiently detailed closing statement and other misconduct constituted a violation of subsection (1)(n) was neither arbitrary nor capricious. Eckley v. Colo. Real Estate Comm'n, 752 P.2d 68 (Colo. 1988).   The imposition of sanctions is a discretionary function that cannot be overturned unless it is an abuse of that discretion. As long as the record as a whole provides sufficient evidence that the penalty is not manifestly excessive in relation to the misconduct and the public need, the penalty will be upheld. The “reasonable basis” standard does not apply to the review of an agency's imposition of sanctions. Colo. Real Estate Comm'n v. Hanegan, 947 P.2d 933 (Colo. 1997).   The commission is not required to impose the same disciplinary sanction in all comparable cases. Colo. Real Estate Comm'n v. Bartlett, 272 P.3d 1099 (Colo. App. 2011).   Real estate commission may discipline real estate agents for related activities that do not require a license. Hart v. Colo. Real Estate Comm'n, 702 P.2d 763 (Colo. App. 1985).   Violation of requirements of this section may not be vindicated by action of another agency. The fact that liquor license authority issued license based upon certain documents does not cure violations of this section represented by those documents. Eckley v. Colo. Real Estate Comm'n, 752 P.2d 68 (Colo. 1988).   Private cause of action not inferred. In light of enforcement procedures provided in this section, coupled with lack of legislative intent authorizing a private cause of action, such a cause of action must not be inferred. Holter v. Moore & Co., 681 P.2d 962 (Colo. App. 1983).   Applied in Holter v. Moore & Co., 702 F.2d 854 (10th Cir. 1983); Hart v. Colo. Real Estate Comm'n, 702 P.2d 763 (Colo. App. 1985).