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By Jonathan H. Sargent, Esq.

Question: I am a licensed real estate broker who is interested in selling mobile homes. Are there any restrictions on my ability to sell mobile homes in the State of Colorado?

Short Answer:

Yes. The Colorado Division of Housing ("Division") requires any person who is engaged in the sale of mobile homes to register with the Division. However, Real Estate Brokerages may request an exemption from the registration requirement by contacting the Division and requesting an Exemption Letter. Once granted, the Exemption Letter exempts all REALTORS® in the Brokerage from the registration requirement.

Discussion:

There are two different entities whose rules regulate the sales of mobile homes in the State of Colorado:   1) the Colorado Real Estate Commission ("Commission"); and 2) the Colorado Division of Housing. Depending upon the nature of the transaction, it will be governed either solely by the rules of the Commission, or both by the rules of the Commission and the Division. At the outset, it is important to distinguish between the sale of a mobile home that has had its title purged from the records of the Department of Motor Vehicles and is permanently affixed to real property, as opposed to the sale of a mobile home that has not had its title purged and has not been affixed to real property. This distinction is imperative, as it will determine the licensing and registration requirements for the REALTOR® who is brokering the mobile home transaction.

Purged Title:

Where title to the mobile home has been purged and the unit has been permanently affixed to real property, the transaction will be regulated by real estate license law and the rules of the Colorado Real Estate Commission. The Colorado Real Estate Manual provides, "[w]hen engaging in the sale of mobile or manufactured homes, real estate brokers are subject to compliance with license law and the rules of the Real Estate Commission." Colorado Real Estate Manual, 14-14 (July 1, 2005). Additionally, the Colorado Division of Housing requires registration of persons who engage in the business of selling manufactured homes (mobile homes) in Colorado under the Colorado Consumer Protection Act. The relevant statutory provision dictates that "[a]ny person whose business involves the sale of manufactured homes shall be required to register with the division [of Housing] before engaging in the business of selling manufactured homes in Colorado." Colorado Revised Statute ("C.R.S.") § 24-32-3323(1) (2005).

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This publication is intended to provide accurate and authoritative information on the subject matter covered. It is distributed with the understanding that the publisher and distributor are not rendering legal, accounting or other professional service, and assume no liability in connection with its use. Copyright © 2007.

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• Mobile Home Sales By Real Estate Licensees
• Goldilocks & The Foreclosure Protection Act (Part I)
• Meet The Attorneys

By Jonathan A. Goodman, Esq. and
David A. Farus, Esq.

Question: I am listing a property for an owner who is behind in his payments. The mortgage debt secured by the property exceeds it's fair market value. The seller has no ability to bring money to the closing to make up the shortfall, so I am trying to sell the property through a "short pay off." An investor buyer has contacted me about writing an offer.

A.  Do I need to use the Colorado Real Estate Commission's "Foreclosure Property Addendum?"

B.  What if my seller does not speak English, may I use the foreclosure property Addendum to put together a contract that complies with the foreclosure protection act?

Answer:

In 2006, the Colorado legislature passed Senate Bill 71, which has come to be known as the Foreclosure Protection Act. Among other things, the FPA regulates "equity purchasers," who are essentially real estate investors whose business model involves pursuing residential properties in foreclosure. Equity purchasers are more commonly referred to as foreclosure investors.

One way of thinking of the FPA is that if its provisions are triggered, then the contract between the seller and the equity purchaser needs to be "special." That is, if the FPA is triggered, the contract between the seller and the equity purchaser must comply with the FPA, otherwise there are severe consequences for the equity purchaser.

The Real Estate Commission promulgated its Foreclosure Property Addendum to help brokers make the Commission's purchase contract comply with the FPA. Our experience with the Foreclosure Protection Act suggests that brokers already understand how to complete the Addendum. What confuses brokers are the circumstances in which the Addendum can and cannot be used.

One way of thinking about the Addendum is to remember the story of Goldilocks and the Three Bears. Brokers do not need to use the Addendum, and should not use the Addendum, when the deal is too "cold." Brokers cannot use the Addendum when the deal is too "hot." Brokers may only use the Addendum when the deal is "just right"-and few deals are just right.

A deal is too cold when any one of the first three items in the note at the top of the Addendum is not true. The note begins, "This form is to be used only if (1) the Property is in foreclosure; (2) the Property is residential; and (3) the Buyer is not to reside in it for at least 1 year."

   1. The Property is in Foreclosure. The mere failure to make payments on a mortgage does not mean that a foreclosure has been commenced. The statute is somewhat unclear about whether the filing of a Notice of Election and Demand with the Public Trustee marks the commencement of the foreclosure, or whether the recording of the Notice of Election and Demand at the Clerk and Recorder's office marks the beginning of the foreclosure. In light of the ambiguity in the statute, however, brokers should deal with the issues conservatively and treat the filing of the Notice of Election and Demand with the Public Trustee as the event which satisfies (1) in the note.

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Sarah H. Bergeron

Ms. Bergeron received her Juris Doctor from the University of Denver in 2005. Her practice emphasizes Family Law, and Litigation.

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