Free Colorado Real Estate Salesperson Practice Exam 2025

To find the commission, multiply the sale price by the commission rate. Commission = $450,000 × 2.5% = $11,250. So, the listing broker earns $11,250 in commission from the sale.

Properties built before 1978 require disclosure of potential lead-based paint hazards.

Any change to an offer constitutes a counteroffer, which nullifies the original offer.

Title insurance protects the lender from title defects or claims against the property.

Adjustments are necessary to reflect differences in features, location, and condition between the subject property and the comparables.

Zoning regulations are established at the local level (city/county) and must be consulted before new construction.

Joint tenancy includes the right of survivorship, meaning if one owner dies, their interest automatically transfers to the other owners.

An abstract of title is a condensed history of the title including all recorded documents affecting ownership.

A deed of trust uses a third-party trustee to hold the property title as security, unlike a mortgage which involves only borrower and lender.

A proprietary lease is used in cooperatives and grants the shareholder the right to occupy a unit.

Tenancy in common means multiple parties share ownership and can pass their share to heirs without survivorship rights.

Tenancy in common allows each owner's interest to be inherited by their heirs, unlike joint tenancy.

Metes and bounds is a legal method for describing land using physical features, directions, and distances.

A valid deed must be in writing, signed by the grantor, and delivered to the grantee to be legally enforceable.

Encroachment occurs when a structure or improvement illegally extends onto a neighboring property.

Police power refers to the government’s authority to regulate property for the health, safety, and welfare of the public, like zoning.

A fixture is a personal item that has been permanently attached to real property, making it part of the real estate.

An easement appurtenant benefits the dominant estate by granting it access to or use of the servient estate’s land.

A deed of trust in Colorado secures a loan by placing a lien on the property and involves a third-party trustee.

Recording a deed provides public notice of the new owner's legal interest in the property, protecting against future claims.

A lien is a legal claim on a property used to secure a debt, which must be satisfied before transfer of ownership.

Real property is immovable and includes land and fixtures; personal property consists of movable items like furniture.

A home inspection helps assess the current physical condition of the property, identifying needed repairs or maintenance.

Colorado law requires a property condition disclosure whenever a licensed broker is involved in a residential transaction.

Puffing refers to subjective opinions or exaggerations that are not legally binding, such as saying a house is 'the best on the block.'

Cracks in the foundation are considered material facts because they affect the property's value and desirability.

A valid contract must include mutual agreement (offer and acceptance), consideration, legal purpose, and competent parties.

An escrow account is used to securely hold funds such as earnest money until all conditions of the transaction are met.

In Colorado, the seller commonly pays for the owner's title insurance policy, though this can be negotiated.

A short sale occurs when a property is sold for less than the mortgage balance, requiring lender approval.

Net listing is generally discouraged or illegal in many states, including Colorado, due to conflicts of interest.

The due diligence clause lets buyers inspect and terminate the contract if major issues are found during inspection.

Title insurance protects buyers and lenders from future title issues like unknown liens or ownership disputes.

A general warranty deed guarantees the title against all claims throughout the property’s history, while a special warranty deed only covers the time during which the seller owned it.

Earnest money is a deposit made by the buyer to show they are serious about purchasing the property, typically held in a trust account.

The Colorado Real Estate Commission's main function is to protect the public through the regulation and oversight of real estate licensees.

A deed is the legal document that conveys ownership of real property from one party to another.

The lead-based paint disclosure alerts buyers and tenants of the potential risks associated with properties built before 1978.

The seller must sign the deed to legally transfer ownership of the property to the buyer.

Broker’s license number is not required in a real estate contract, while legal description, parties, and closing date are essential.

Designated brokerage must be assigned through written office policy to clearly define representation responsibilities.

The termination date is a mandatory component of an exclusive right-to-sell contract to define the agreement’s duration.

Broker commission is typically established through negotiation with the client, not set by law or MLS.

Failure to complete continuing education requirements results in license inactivation until the education is completed.

F-7 protects both parties during closings by clearly assigning duties and outlining cost responsibilities, reducing disputes and liability.

CREC mandates use of Form F-7 to formalize instructions between the broker and title company and support audit procedures.

The standardized Form F-7 improves legal clarity in Colorado closings and ensures mutual understanding between brokers and title officers.

Use of Form F-7 ensures that all instructions for closing are documented and agreed upon by the appropriate parties in writing.

Colorado requires Form F-7 in all real estate closings to clarify broker and title company responsibilities and maintain compliance.

A broker must deliver a complete and accurate closing statement to all parties at or before closing, summarizing all financial terms and allocations.

Transaction files, including contracts and communications, must be retained for four years as required by CREC for audit and recordkeeping purposes.

A licensee must obtain written permission from the property owner before advertising the property to ensure authority and legal compliance.

Licensees must disclose their license status when they are a principal in a transaction to avoid misleading the other party.

Any change to an advertised commission must be documented in writing within the listing agreement to ensure clarity and contract enforceability.

Dual agency is not permitted under Colorado law. Instead, designated brokerage ensures individual representation by specific associates within the same firm.

If earnest money is in the form of a promissory note, the fact must be disclosed in the contract and acknowledged in writing by the seller.

Rule E-13 strictly prohibits acting as an undisclosed dual agent. All licensees must declare agency relationships to prevent conflicts of interest.

A licensee may use a non-approved form only if it is created by the client’s attorney and intended solely for use by that party.

Before acting as a transaction-broker, a licensee must enter a written agreement outlining the limited duties and non-agency relationship with the consumer.

A CMA must state clearly that it is not an appraisal to avoid misleading clients about the value determination's legal status or precision.

Confidential client information can only be disclosed with the client’s written consent unless disclosure is required by law.

Any referral fee from a title company is considered an illegal kickback under RESPA. Licensees may not accept such fees to avoid disciplinary action.

Earnest money must be deposited into the trust account within two business days of receipt to comply with CREC trust account regulations.

Trust account records must be retained for a minimum of four years by the employing broker to meet audit standards and financial transparency.

An employing broker can delegate supervision only through a written office policy and must provide reasonable oversight as defined in CREC rules.

CREC's mission is to protect the public interest by licensing, regulating, and enforcing rules for real estate professionals in Colorado.

Anyone engaging in the sale, lease, or exchange of real estate on behalf of another person for compensation must have a Colorado real estate license.

Colorado requires earnest money to be deposited within 3 business days of contract acceptance, either into a trust account or to a designated escrow holder.

Colorado uses designated brokerage, meaning the individual licensee, not the entire firm, represents the client. This relationship is established through a written agreement.

The Colorado Real Estate Commission oversees licensing, investigates complaints, and ensures that real estate professionals adhere to state laws to protect consumers.

Colorado law requires sellers to disclose all known material defects that could affect the value or desirability of the property. This includes structural issues, environmental hazards, and malfunctioning systems.

Form F-7 is the official and mandatory Colorado Real Estate Commission-approved form used to establish clear and uniform instructions between brokers and title companies during closings.

The Colorado conservation easement tax credit equals 50% of the easement’s market value, capped at $375,000. This incentivizes permanent land preservation through donations to qualified entities.

Changes in business address or broker employment must be reported immediately to the CREC. Failure to do so leads to automatic license inactivation, ensuring current public records and licensee accountability.