Broker engagement contracts
- residential premises
- prohibited terms
(1)As used in this section, unless the context otherwise requires, “broker engagement contract” means a written contract in which a seller, buyer, landlord, or tenant of a residential premises becomes the client of a broker or agrees to retain the services of a broker in the future and promises to pay the broker a valuable consideration or agrees that the broker may receive a valuable consideration from another person in exchange for the broker:
(a)Producing a seller, buyer, tenant, or landlord ready, able, and willing to sell, buy, or rent the residential premises; or
(b)Performing other services.
(2)A broker engagement contract must not:
(a)Purport to be a covenant running with the land or to be binding on future owners of interests in the real property;
(b)Allow for assignment of the right to provide service without notice and agreement of the owner of the residential premises; or
(c)Purport to create a recordable lien, encumbrance, or other real property security interest. Any such lien, encumbrance, or other real property security interest is void and unenforceable.
(3)A person who offers to a consumer a broker engagement contract that includes a provision in violation of subsection (2) of this section commits an unfair or deceptive trade practice, as provided in section 6-1-105 (1)(uuu).
(4)This section does not apply to:
(a)A home warranty service contract, as defined in section 12-10-901 (2)(a);
(b)A building warranty or similar product that covers the cost of maintenance of a major housing or building system, such as a plumbing or an electrical system, for a specific period of time after the date on which a house or building is sold;
(c)An insurance contract;
(d)An option to purchase, a put requirement to purchase, a right of first offer, or a right of refusal;
(e)A declaration created in the formation of a common interest community, as defined in section 38-33.3-103 (8), or an amendment to the declaration;
(f)A maintenance or repair agreement entered into by a unit owners’ association, as defined in section 38-33.3-103 (3);
(g)A loan or a commitment to make or receive a loan, which loan or commitment is secured by real estate;
(h)A security agreement under the “Uniform Commercial Code” relating to the sale or rental of personal property or fixtures;
(i)Water, sewer, electrical, telephone, cable, or other regulated utility service providers; or
(j)A property management agreement by which the owner of real property contracts with a party to provide management services for the maintenance, ownership, operation, or lease of a residential premises.
Section 12-10-403.5 — Broker engagement contracts - residential premises - prohibited terms - definition,
https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-12.pdf (accessed Oct. 20, 2023).