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Broker Bill Butter is working with Buyer Brian Bread and has found a property on which the Buyer wants to place an offer. The property that he likes is owned by Seller Sammy Samuel and listed by Broker Cherry Cleary. The property is located at 2443 E Westgate Ave in Durango, CO. The asking price is $315,000. Buyer Bread offers $299,000 on April 10th and wants all appliances including the washer and dryer included in the sale price, the appliances were excluded in the listing as was the Hot Tub on the patio. The offer is countered by Seller Samuel on the recommendation of his agent Broker Cherry Cleary on April 11th at $309,000 and will include all appliances except the washer and dryer. Buyer Bread accepts this counter offer on April 12th and the closing is scheduled for May 25. An inspection is held on April 16th and Buyer Bread wants some roof shingles repaired and the carpet in the master bedroom to be replaced. Seller Samuel agrees to the shingles being repaired, but will only give a $750 credit at closing to the Buyer Bread to replace the carpet; Buyer Bread accepts. Prior to closing, Buyer Bread requests that the seller allow them to start a kitchen remodel prior to closing. Seller Samuel will not allow this and Buyer Bread gets angry and wants out of the contract.

When Seller Samuel responded to the initial offer from Buyer Bread which of the following forms should have been used?

Agreement to Amend & Extend Contract
Counterproposal
Counter Offer
Agreement to Amend & Extend Contract with Broker
the buyer fails to find reasonable financing

The contract specifies that earnest money must be returned to the buyer under any one of multiple conditions. Most common are: if a buyer doesn't receive loan approval on agreeable terms by the date specified in contract, or the buyer and seller cannot resolve the inspection objection list, or if the appraisal is less than the selling price, or the title is not satisfactory, or the satisfactory property insurance cannot be attained, or the HOA covenents (if any) are not satisfactory. Any one of these would allow a buyer to back out of a contract if done within the established time frames.

More on the process of returning Earnest Money:

The Colorado Contract to Buy and Sell Real Estate (AKA Purchase Contract) says the agent holding earnest money has 5 days to return earnest money to whomever is supposed to get it after receipt of written instructions to do do. This is covered in the Broker Acknowledgements sections of the purchase contact.

The actual language reads like this - "Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § .., if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder's receipt of the executed written mutual instructions, provided the Earnest Money check has cleared."

BUT!!!!!! to make it even more fun for you, the Real Estate has issued Commission Position 6, whereby they say that if there is no controversy over who gets the earnest money, they want the money returned as quickly as possible and the agent does NOT have to get writen permission from all parties to do so.

Most companies as a prudent measure have both parties sign that they agree who gets the earnest money, before they release it. This just makes sense, woe to the agent who releases the earnest money and one of the parties throws a fit over it. Safer to get the parties to agree in writing first.

However, sometimes the party that is giving up the earnest money and their agent makes this a pretty low priority on their things-to-do-list. Keep in mind, they are grumpy the deal is dead and even if they know they need to release the earnest money, they are not happy about it. In the meantime, the other party wants their money. Buyers in particular are anxious as they are back on the market looking for a property and can't make an offer until they get their earnest money returned. Therefore, the Commission has made is very clear, that they do not want slow paperwork to hold things up when there is no controversy.

Does this occasionally put us in an awkward position? Yup. Smart agents who do not like to even get within sniffing distance of having to write out a personal check to cover a perceived, if not actual screw up (that be me, except my wife would probably dispute the "smart" assertion) will move heaven and earth to get quickly signed releases by both parties before releasing earnest money.

If you find that one of your parties due to the stress of the failed deal ran instantly to consult with the yogi on the mountaintop and are not returning messages. You need to have a talk with your managing broker before doing something you may regret. It is always cooler to share the love and say "my managing broker said to do it and will make it good" then "how do I spell your name on my check".
as the buyer and seller agree


More on the process of returning Earnest Money:



The Colorado Contract to Buy and Sell Real Estate (AKA Purchase Contract) says the agent holding earnest money has 5 days to return earnest money to whomever is supposed to get it after receipt of written instructions to do do. This is covered in the Broker Acknowledgements sections of the purchase contact.



The actual language reads like this - "Broker agrees that if Brokerage Firm is the Earnest Money Holder and, except as provided in § .., if the Earnest Money has not already been returned following receipt of a Notice to Terminate or other written notice of termination, Earnest Money Holder will release the Earnest Money as directed by the written mutual instructions. Such release of Earnest Money will be made within five days of Earnest Money Holder's receipt of the executed written mutual instructions, provided the Earnest Money check has cleared."

BUT!!!!!! to make it even more fun for you, the Real Estate has issued Commission Position 6, whereby they say that if there is no controversy over who gets the earnest money, they want the money returned as quickly as possible and the agent does NOT have to get writen permission from all parties to do so.

Most companies as a prudent measure have both parties sign that they agree who gets the earnest money, before they release it. This just makes sense, woe to the agent who releases the earnest money and one of the parties throws a fit over it. Safer to get the parties to agree in writing first.

However, sometimes the party that is giving up the earnest money and their agent makes this a pretty low priority on their things-to-do-list. Keep in mind, they are grumpy the deal is dead and even if they know they need to release the earnest money, they are not happy about it. In the meantime, the other party wants their money. Buyers in particular are anxious as they are back on the market looking for a property and can't make an offer until they get their earnest money returned. Therefore, the Commission has made is very clear, that they do not want slow paperwork to hold things up when there is no controversy.

Does this occasionally put us in an awkward position? Yup. Smart agents who do not like to even get within sniffing distance of having to write out a personal check to cover a perceived, if not actual screw up (that be me, except my wife would probably dispute the "smart" assertion) will move heaven and earth to get quickly signed releases by both parties before releasing earnest money.

If you find that one of your parties due to the stress of the failed deal ran instantly to consult with the yogi on the mountaintop and are not returning messages. You need to have a talk with your managing broker before doing something you may regret. It is always cooler to share the love and say "my managing broker said to do it and will make it good" then "how do I spell your name on my check".
tenancy at will

A tenancy whereby neither the lessor or the lessee specify a definite starting date or ending date is know as a tenancy at will.

More info on Leasehold Tenancies:

Leasehold Tenancy also known as Nonfreehold Estates

A nonfreehold estate is an interest in real property that is less than a freehold estate. Nonfreehold estates are not inheritable and are said to exist without seisin. Seisin denotes ownership: an individual who is "seised" of an estate is the owner of the estate. Also known as a leasehold estate, a nonfreehold estate is created through a lease or rental agreement that can be either written or oral. The holder of a nonfreehold estate (the tenant or lessee) holds no ownership interest in the real property, and only has the right to use the property as established in the terms of the lease or rental agreement. Ownership remains with the landlord (lessor). (To learn more, see Becoming A Landlord: More Trouble Than It's Worth?)

Types of Nonfreehold Estates

Because nonfreehold estates involve tenants, they are often referred to as "tenancies." There are four types of tenancies:

Tenancy for Years

This is, also called an estate for years or tenancy for a definite term, is an estate that is created by a lease. A lease is a contractual agreement where a tenant takes a leasehold interest in a real property for a specified duration. The defining characteristic of a tenancy for years is that the term must have a definite beginning and end; that is, a beginning date and either a specific time period (such as one year or one month) and an end date must be declared. As long as a lease is for a definite term, it is identified as a tenancy for years. These leases terminate automatically at the specified end date without the need for notice by either party.

Tenancy from Period to Period

A tenancy from period to period is an estate that exists when the tenancy is for a definite initial time, but is automatically renewable unless terminated by the lessor or lessee with prior notice that the tenancy is to be ended. These estates, which are also called periodic tenancies, are of indefinite duration since they can be renewed indefinitely. A tenancy from period to period may be from year to year, month to month, week to week or even day to day, and renews for a like period of time. For example, a month to month periodic tenancy is renewable in one-month periods until it is terminated at the end of a month through proper notice by either party. (See also, 11 Mistakes Inexperienced Landlords Make.)

Tenancy at Will

A tenancy at will, or an estate at will, exists at the pleasure of both the lessor and the lessee. This type of tenancy can be terminated at any time "at the will" of either the owner or the tenant. A tenancy at will lease agreement might contain language that expresses that the lease may be terminated instantly when notice is given. In practice, a tenant is generally entitled to a reasonable amount of time in which to vacate the property. Landlords may prefer a tenancy at will when a property is for sale and any tenants would have to vacate quickly. Tenants may favor a tenancy at will if they plan on renting only for a short period of time; for example, prior to moving or while waiting to move into a new home.

Tenancy at Sufferance

A tenancy at sufferance is the lowest form of estate known to law. Also called an estate at sufferance, it exists indirectly as the result of circumstance, and is never deliberately created. This type of tenancy arises when a person goes into possession of land in a lawful manner, but remains on the property without any right to do so, and without the owner's consent. The only difference between a tenant at sufferance and a trespasser is that the tenant at sufferance had at one time a right to be on the property, but has stayed beyond the terms of the previous agreement. For example, a tenant who remains after a one-year lease has terminated, without consent or recognition from the owner, becomes a tenant at sufferance. The tenant can be evicted at any time without notice.
His license and all associate brokers working for him are inactivated

We have various questions floating around related to what happens when a broker fails to notify the real estate commission of a business address change. Any licensee who does not notify the Commission of an address change will have their license inactivated. When the licensee is also the mama or poppa bear of the office (the employing broker) the penalty goes up. Since an employing broker with an inactive license cannot have licensees reporting to him/her AND a licensee who is not independent cannot have an active licensee without reporting to an employing broker - the effect is catastrophic. Everybody's license in the office is inactive. Here are the applicable statues:


From chapter in real estate manual on License Law


§ 12-61-109, C.R.S. Change of license status - inactive - cancellation.


(1) Immediate notice shall be given in a manner acceptable to the commission by each licensee of any change of business location or employment. A change of business address or employment without notification to the commission shall automatically inactivate the licensee's license.


§ 12-61-110, C.R.S


(5) The suspension, expiration, or revocation of a real estate broker's license shall automatically inactivate every real estate broker's license where the holder of such license is shown in the commission records to be in the employ of the broker whose license has expired or has been suspended or revoked pending notification to the commission by the employed licensee of a change of employment.
As a debit to the broker, single entry

Net Loan Proceeds: Debit broker single entry.

Here is the play: most often seen with new loans (and always on the State Exam). Net Loan Proceeds is a situation when a lender is making a loan for x and part of that loan is covering expenses that the lender is owed. In short - the lender is lending money to the buyer to cover expenses that are going to be paid to the lender. The lender does not want to send the entire loan amount to the closing and wait for a check back to cover the money they are owed, they instead take their money out of the loan up front and send the remaining balance called Net Loan Proceeds to the closer.

To show this on a settlement sheet, the closer enters a series of single entries i.e. there not a debit/credit on every line. Instead there is one big credit all by itself on a line showing the total loan amount the buyer is getting and then two or more debits all by themselves on other lines adding up to the total loan amount.

Example - a lender is making a loan for $100,000 and they are taking their 1% origination fee ($1,000) out of the loan. They send the net loan proceeds $99,000 (remember they are keeping their $1000) to the closing agent.

First up let's handle the credit, enter the entire loan amount on the sheet (put a Credit Buyer $100,000 all by itself on the loan line).

Then you need to show the deposit of $99,000 into the escrow account (Single entry all by itself on line Net Loan Proceeds, Debit Broker $99,000).

Lastly we need to account as a debit the $1,000 the lender held back (single entry all by itself on the Origination Fee line, Debit Buyer $1000).

Tah Dah! You have $100,000 of Debits and $100,000 of

credits and everything is in balance. For more info and examples of this check out the new loan examples in the chapter of the real estate manual on Closings
Deposit security deposit into escrow account

Short version: put it into the escrow account first even if you are going to immediately transfer it to the owner. However, before the owner transfer you need to provide appropriate written notification to the tenant as to who is holding the deposit and the holder's contact info.



CP-5 Commission Position on Advance Rentals and Security Deposits



Pursuant to C.R.S. 12-61-113 (l)(g.5) and Commission Rule E-l and E-16, all money belonging to others which is received by a broker must be placed in an escrow or trust account. This applies to tenant security deposits and advance rental deposits, including credit card receipts, held by a broker.



A broker may not deliver a security deposit to an owner unless notice is given to the tenant in the lease, rental agreement, or in a separate written notice that the security deposit will be held by the owner. Such notice must be given in a manner so that the tenant will know who is holding the security deposit, and shall include either the true' name and current mailing address of the owner or the true name and current mailing address of a person authorized to receive legal notices on behalf of such owner, along with specific requirements for how the tenant is to request return of the deposit.



If, after receipt by the broker, the security deposit is to be transferred to the owner or used for the owner's benefit, the broker, in addition to properly notifying the tenant, must secure the consent of the owner to assume full financial responsibility for the return of any deposit which may be refundable to the tenant. The broker shall not withhold the identity of the owner from the tenant if demand for the return of the deposit is properly
3
First up lets give you some definitions of teanncies:

Tenancy for years

A tenancy for years is for a fixed period of time (e.g., one day or 99 years). The termination date is set at the time the lease is executed. A tenancy for years ends on the last day of the lease term, with no need to give notice.

Periodic tenancy

A periodic tenancy exists when the rental period is indefinitely renewable for a series of same durations (e.g., week-to-week or month-to-month). The most common example is a residential lease requiring a tenant to pay monthly rent, but with no definite termination date. Periodic tenancies are generally created by implication and not by an express provision. According to Colorado law, and that of most states, such tenancies require the giving of proper notice for their termination. Notice to terminate is discussed below under "Termination of leases."

Tenancy at will

A tenancy at will provides that either party may terminate the lease whenever he or she chooses to do so. A tenancy at will also exists when the agreement allows a tenant to occupy the premises until sold, or until the landlord is ready to construct a new building, or some other indefinite happening. Similar to a periodic tenancy, a tenancy at will requires the giving of proper notice for its termination.

Tenancy at sufferance

A tenancy at sufferance arises when a tenant remains in wrongful possession after a lease has ended. In this situation, the tenant is called a "holdover tenant." The landlord may treat the tenant as a trespasser and initiate eviction, or may elect to accept the tenant for a similar term and conditions as in the previous lease. The choice is the landlord's; the tenant has none. If a tenant holds over due to reasons beyond his or her control, such as illness, the tenant may be held liable only for the reasonable rental of the holdover period.

As to how much notice you need to give a tenant to evict them, Here is the straight stuff from the real estate manual:

A tenancy for years ends on the last day of the term, with no notice-to-quit required. ...

• Year-to-year tenancy or longer: three months prior or earlier.

• Six months or more but less than a year: one month prior or earlier.

• Month-to-month or up to but less than six months: at least 10 days' prior notice.

• Tenancy at will: minimum three-day notice.
Tenancy at will
A tenancy at will is a property tenure that can be terminated at any time by either the tenant or the owner (landlord). It exists without a contract or lease, and is unspecific in duration or the exchange of payment. A tenancy at will arrangement is desirable to tenants and owners wishing to have the flexibility to change rental situations easily and without breaking a contract.
In the question - since the signed lease expired, absent a written replacement, the landlord and tenant were in a tenancy at will arrangement.

More info on Leasehold Tenancies:

Leasehold Tenancy also known as Nonfreehold Estates

A nonfreehold estate is an interest in real property that is less than a freehold estate. Nonfreehold estates are not inheritable and are said to exist without seisin. Seisin denotes ownership: an individual who is "seised" of an estate is the owner of the estate. Also known as a leasehold estate, a nonfreehold estate is created through a lease or rental agreement that can be either written or oral. The holder of a nonfreehold estate (the tenant or lessee) holds no ownership interest in the real property, and only has the right to use the property as established in the terms of the lease or rental agreement. Ownership remains with the landlord (lessor). (To learn more, see Becoming A Landlord: More Trouble Than It's Worth?)

Types of Nonfreehold Estates

Because nonfreehold estates involve tenants, they are often referred to as "tenancies." There are four types of tenancies:

Tenancy for Years

This is, also called an estate for years or tenancy for a definite term, is an estate that is created by a lease. A lease is a contractual agreement where a tenant takes a leasehold interest in a real property for a specified duration. The defining characteristic of a tenancy for years is that the term must have a definite beginning and end; that is, a beginning date and either a specific time period (such as one year or one month) and an end date must be declared. As long as a lease is for a definite term, it is identified as a tenancy for years. These leases terminate automatically at the specified end date without the need for notice by either party.

Tenancy from Period to Period

A tenancy from period to period is an estate that exists when the tenancy is for a definite initial time, but is automatically renewable unless terminated by the lessor or lessee with prior notice that the tenancy is to be ended. These estates, which are also called periodic tenancies, are of indefinite duration since they can be renewed indefinitely. A tenancy from period to period may be from year to year, month to month, week to week or even day to day, and renews for a like period of time. For example, a month to month periodic tenancy is renewable in one-month periods until it is terminated at the end of a month through proper notice by either party. (See also, 11 Mistakes Inexperienced Landlords Make.)

Tenancy at Will

A tenancy at will, or an estate at will, exists at the pleasure of both the lessor and the lessee. This type of tenancy can be terminated at any time "at the will" of either the owner or the tenant. A tenancy at will lease agreement might contain language that expresses that the lease may be terminated instantly when notice is given. In practice, a tenant is generally entitled to a reasonable amount of time in which to vacate the property. Landlords may prefer a tenancy at will when a property is for sale and any tenants would have to vacate quickly. Tenants may favor a tenancy at will if they plan on renting only for a short period of time; for example, prior to moving or while waiting to move into a new home.

Tenancy at Sufferance

A tenancy at sufferance is the lowest form of estate known to law. Also called an estate at sufferance, it exists indirectly as the result of circumstance, and is never deliberately created. This type of tenancy arises when a person goes into possession of land in a lawful manner, but remains on the property without any right to do so, and without the owner's consent. The only difference between a tenant at sufferance and a trespasser is that the tenant at sufferance had at one time a right to be on the property, but has stayed beyond the terms of the previous agreement. For example, a tenant who remains after a one-year lease has terminated, without consent or recognition from the owner, becomes a tenant at sufferance. The tenant can be evicted at any time without notice.
24 hours of approved continuing education, of which 12 hrs must consist of the 4 hour Annual Commission Update Course taken each year
The licensee must complete 24 hours of approved continuing education during the three year license period. Twelve of those hours must consist of taking 4 hour Annual Commission Update Course each year.

CE requirements are listed in Commission Rule B-2 below:

B-2. Methods of completing continuing education.

Licensed brokers must satisfy the continuing education requirement before they apply to renew an active license, activate an inactive license or to reinstate an expired license to active status. Licensed brokers may satisfy the entire continuing education requirement through one of the following options:

a) Complete the twelve hours required bysection 12-61-110.5 (1) (c), C.R.S., and required by this rule in annual 4-hour increments developed by the Commission, otherwise referred to as the "Annual Commission Update Course." Licensees who choose this option must complete an additional 12 hours of elective credit hours to meet the 24-hour total continuing education requirement during the license period in subject areas listed in section 12-61-110.5(3), C.R.S. Please note that a licensee may not take the same version of the Annual Commission Update Course more than once. If a licensed broker takes more than 12 hours of the Annual Commission Update Course during a license period, the licensee will receive elective credit hours for any additional hours.

b) Completing the Commission-approved 24-hour "Broker Reactivation Course." This option is available to licensees under one of the following conditions:

(1) Licensee is currently active and did not use the Broker Reactivation Course to satisfy the Rule B-2(a) requirements in the previous license year

(2) Licensee is inactive or expired for up to thirty-six months prior to active status and unable to comply with the education requirements listed in Rule B-2(a).

c) Pass the Colorado state portion of the licensing exam.

d) Completing 72 total hours of pre-licensure education concerning the understanding and preparation of Colorado real estate contracts (48 hours) and real estate closings (24 hours). The courses and course providers are required to comply with the requirements as described at section 12-61-103(4)(a), C.R.S. Any inactive or expired licensees who cannot meet the education requirements listed in Section 4(a), (b), or (c) must comply with the education requirements found in Section 4(d) before activation or reinstatement of the license.