Brokers must disclose material/latent defects they know about to the parties.
Before you read
Test yourself first: 5 questions
Question 1 of 5
A Colorado brokerage maintains separate trust accounts. Which separation is required by Commission rule?
Answer: B. Commission rules require sales escrow money and money held in connection with property management (such as security deposits and rents) to be kept in separate trust accounts, preventing improper mixing of different fund types.
Question 2 of 5
How must a Colorado broker handle earnest money and other client funds received in a transaction?
Answer: B. Client funds such as earnest money must be held in a separate escrow or trust account and may not be commingled with the broker's own funds.
Question 3 of 5
A Colorado broker deposits an earnest money check into a personal checking account instead of a designated trust or escrow account. This conduct is BEST described as which prohibited act?
Answer: A. Mixing client/customer money with the broker's own funds is commingling, and using those funds for personal purposes is conversion. Both are serious license-law violations that can lead to discipline.
Question 4 of 5
Under Colorado Real Estate Commission rules, when must an employing broker deposit a buyer's earnest-money check into a trust (escrow) account?
Answer: A. Commission rules require funds belonging to others, including earnest money, to be deposited into the broker's trust account promptly, generally not later than the third business day after the contract is accepted, unless the parties agree in the contract to a different handling of the deposit.
Question 5 of 5
A Colorado broker deposits a client's earnest money into the broker's personal operating account so the funds 'don't get lost.' What violation has occurred?
Answer: C. Placing money belonging to others into a personal or business operating account is commingling, which is prohibited. Funds of others must be held in a designated trust or escrow account separate from the broker's own money.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Sellers complete the Commission's Seller's Property Disclosure describing the property's condition.
- Brokers must disclose material/latent defects they know about to the parties.
- Colorado is NOT a community-property state; marital-property rules differ accordingly.
- Brokers must use current Commission-approved contracts and forms for transactions.
- Trust/escrow money must be held in a separate trust account and not commingled with personal/business funds.
- Earnest money and trust funds must be deposited and accounted for promptly per Commission rules.
- Brokers must keep accurate trust-account records available for Commission audit.
Colorado Required Disclosures & Escrow/Trust Timeframes: FAQs
Is Colorado Required Disclosures & Escrow/Trust Timeframes on the real estate exam?
Yes. State License Law is a scored domain on the Colorado real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Colorado test this differently?
Colorado applies its own license law on top of the national portion. This page covers the Colorado rules specifically, which is what the state section of your exam tests.
