Broker Can’t Limit Statutory Duties

Read the full decision: Colorado Real Estate Commission v. Vizzi

Colorado appellate court upholds real estate commission’s ability to discipline a licensee who attempted to modify the statutory duties owed to clients through the listing agreements, finding that these duties cannot be modified by licensees.

A Colorado real estate broker (“Broker”) entered into contracts with three clients that unbundled the services he would provide in exchange for a flat fee. In one instance, the Broker agreed to only input the listing into a multiple listing service (“MLS”). In the other two listings, he agreed to provide a yard sign, a lock box, centralized showing services, and listing the properties in the MLS. The Broker was acting as a transaction broker in all three instances.

An anonymous complaint was filed with the Colorado Real Estate Commission (“Commission”) alleging that the Broker failed to provide statutorily mandated services. The Commission charged the Broker and an administrative law judge (“ALJ”) held a hearing. The ALJ found that the duties listed in the state’s transaction brokerage statute are mandatory and cannot be limited via contract. The ALJ imposed discipline on the Licensee and the Commission adopted her findings with a slight modification. The Broker challenged the Commission’s discipline.

The Colorado Court of Appeals affirmed the Commission’s discipline. The Broker argued that the statute allowed him contract out of the duties contained in the transaction brokerage statute and he also argued that the Commission’s discipline against him violated federal antitrust laws based on the United States Supreme Court’s opinion in North Carolina Dental.

The court found that the statutory duties contained in the state’s transaction brokerage law are mandatory. Colorado’s statutes provide that a licensee providing real estate services must either act as a single agent or a transaction broker. If the parties do not specify the nature of their relationship, the default is for the licensee to serve as a transaction broker. A single agent represents only one party in the transaction and owes certain duties to his/her client. Transaction brokers do not represent either party in the transaction and also owe certain duties to their clients, but these duties are more limited than a single agent. A transaction broker’s duties include assisting clients with negotiations, communication, advertising, and the closing. Looking at the legislative history, the court found that there was no evidence that the legislature intended for licensees to unbundle the services and instead concluded that the statutorily defined duties are mandatory.

The court determined that nothing in the state’s transaction brokerage statute allowed the broker to avoid the requirements of the state’s transaction brokerage statute and so affirmed the decision of the Commission. While the state statute did state that the licensee could take on duties “in addition to or different from” the statutorily described duties so long as they are disclosed to the clients, the court found that this language did not allow the licensees to provide fewer services when acting as a transaction broker; instead, this language allowed for transaction brokers to provide more services.

Next, the court rejected the Broker’s argument that the Commission’s actions violated federal antitrust law. Unlike the North Carolina Dental case, here the Commission was enforcing the state statutory provisions and not its own regulations. The court ruled that the Commission was appropriately acting within its regulatory duties prescribed by statute and thus rejected the argument that the Commission was suppressing competition. Therefore, the court upheld the Commission’s discipline imposed on the Broker.

Colorado Real Estate Comm'n v. Vizzi, 2019 COA 33, 2019 WL 1087016 (Col. App. March 7, 2019). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.]