Hello, readers, I'm back! I've had a couple of family issues going on that have kept me busy. Around all that, I have still been studying like crazy.
One of the topics that I have been studying that is complicated in real estate is water rights. Everybody needs water, but not everyone can own water. And, certainly in Colorado, people cannot do whatever they want with water.
A long time ago, when Colorado became a state in 1876, the founders placed water issues directly into their state Constitution. If you want to see, there is a copy of the Colorado Constitution held in the archives. If you look on page 42, you will see Article 16, Section 5 states: "The water of every natural stream, not heretofore appropriated, within the state of Colorado, is hereby declared to be the property of the public, and the same is dedicated to the use of the people of the state, subject to appropriation as hereinafter provided."
What this means is that the State of Colorado governs the use of water in the state. Section 5 essentially states that any water not already claimed and being used, was owned by the public and the state would make decisions about it. The next section, Section 6, states that if someone wants to use unclaimed water for beneficial reasons, there is a priority about that use. When there isn't enough water for all uses, domestic use has first priority. After that, agricultural use is second, and manufacturing use is third and last.
This makes good sense, as long as farmland isn't condemned and replaced by subdivisions, making us lose too much of our food source. However, it seems that the court cases since then have been interested in paying farmers for their water rights.
In the constitution, Sections 7 & 8 cover the "right of way" across land for constructing waterways for those mentioned uses, and establishing rates for water use. Obviously lots of tweaking has occurred with water rights since 1876, but the state still has a tight hold on water. Since the public owns the water, people only get the right to USE the water and only if it's for an ACCEPTABLE USE. Also there is a "pecking order" of who gets to use water, like from a river, before other people get to use it.
This means that in order to do something like build a water fountain in your backyard, unless you want to use your domestic, drinkable water, lots of issues would need to be addressed first. You would definitely need a permit. Whether or not you could get a permit would depend on if you were disturbing a shallow water table beneath your yard, if you even have the right to store water, if you would be "impounding water" (like a dam) above the ground's surface, where you would get the water for filling the fountain, etc.
In another example, let's say you wanted to buy a house with a plot of land or a farm with some acreage. You'd need to make sure you understand where the potable, or drinkable, water comes from. If you are interested in real estate, make sure you notice on the listing contract, the sales contract, and/or the seller's property disclosure information about the water source. The drinkable water could come from a well, a company or municipality, or neither, in which case the water source has to be mentioned. For example, it could be a cistern that you need to refill by hauling water in a tank with a truck. If other water is needed for animals, gardens, or fields, it is important to find out if stocks are needed to purchase the use of that water, whether it comes canals or ditches, and whether using that water involves an additional purchase and real estate deed. Water doesn't automatically go with the land; it's treated as a separate transaction.
There are two more things I want to share with you. The first is that the Colorado Division of Water Resources has a lot more information. It is also the "Office of the State Engineer" that "administers water rights, issues water well permits, represents Colorado in interstate water compact proceedings, monitors stream flow and water use, approves construction and repair of dams and performs dam safety inspections, issues licenses for well drillers and assures the safe and proper construction of water wells, and maintains numerous databases of Colorado water information."
The second thing is that there are attorneys in Colorado who specialize in water rights and uses. If you are buying land that needs irrigation or has a well, you might want to get help with it. If you go to the Colorado State Bar Association directory and look up "Water Law," attorneys are listed.
You may find it easiest to have someone who's specialized in learning about these things help you, like a Grand Junction broker!
Sunday, January 2, 2011
Friday, November 26, 2010
Real Estate Brokerage Relationships in Colorado
I hope everyone had a nice Thanksgiving Day yesterday! I did. We ate, were disappointed to see the Dallas Cowboys lose to the New Orleans Saints, and Skyped with our children. Holidays aside, I have been studying like crazy. There is so much to learn. Not only does Colorado want real estate people to learn everything at the broker level, but the Real Estate Commission also wants to go to great lengths to protect the public. They want the people to understand what's going on.
Today I'd like to talk about the different relationships someone (who could be an individual, more than one person, a partnership, and a company) can have with a Colorado real estate broker. I'd also like to give you a link to the "Consumer Corner" of Colorado's Division of Real Estate. They have lots of good information for people interested in buying or selling a house.
Now, in plain words I'll tell you the three basic ways I can have a working relationship with you, and then I'll tell you my obligations to you based on that relationship. The first type of relationship is as a customer. If I meet you and I don't know your name, or I meet you when I am working as an agent for someone else, you are a customer to me. We do not have any written agreement.
The next type of relationship is as an agent. I could be a seller's agent or a buyer's agent, but we have a written contract and I have obligated myself to "represent you" or work FOR you. You are my client or principal, or whatever the legal jargon is, and I may not necessarily get paid by you, but I will work on your behalf.
The third type is as a transaction broker. There may or may not be a written contract and the relationship is in-between a customer and a client. If there is no written contract and I am working with you in some way, Colorado considers the transaction-broker relationship as the default way that we are working together.
You don't get any special designation if you are in a transaction brokerage relationship with me or any Colorado real estate broker, although maybe the law will eventually come up with a name besides "party." However, I have more obligations to you when you are a party than when you are a customer.
Although it may seem obvious, in any of these relationships, I want you to know that I do not have any obligation to do anything illegal.
Now, to help you choose, I'd like to spell out some of the obligations I have to you. I have the fewest obligations to a customer and the most obligations to a client. However, I do have responsibilities to customers.
When I am a Colorado real estate broker, and you are a customer, I owe to you all the obligations owed under state and federal consumer protection laws. I owe you:
(1) Honest and fair dealings—For example, this means that if we are trying to work a deal together, I must tell you if I am an agent for someone else in the same deal, so that you don't tell me information that I can use FOR my client.
(2) Reasonable care and skill in performance—For example, if you give me a "good faith deposit," I must be very careful to deposit it into an appropriate trust or escrow account.
(3) Disclosure of all material facts about the property that I know or that I should have known—For example, if the property has a house built before 1978 and there is a possibility of lead-based paint, I need to tell you about that possibility as well as give you federal information.
When I am a Colorado real estate broker, and we are in a transaction broker relationship, I still owe you the same obligations I owe to a customer. The examples may be different, but I still need to treat you ethically and responsibly. In addition to those obligations, I owe you:
(1) Performance of the terms we set in the written agreement—For example, I will present all offers to you and help you fill out any Colorado Real Estate Commission approved forms.
(2) Neutrality and confidentiality—I may be working with another person as a transaction broker in the same purchase, so I need to advocate for neither and neutrally help both parties. I also need to not disclose to either party confidential information about the other party. What you tell me, stays with me and what the other person tells me, stays with me. However, in following "disclosure of all material facts," including information about the seller’s property, I must disclose a buyer's financial ability to complete the transaction and whether the buyer intends to live in the residential property.
(3) Assistance with closing—For example, I will help organize a list of deadlines so that obligations can get done before the closing.
When I am a Colorado real estate broker, and I am an agent for the seller or the buyer, I still owe the same obligations as to a customer. I also owe you all the obligations in a transaction brokerage, except for neutrality. I go beyond neutrality and I work FOR you. I work hard to fulfill the terms of our contract. I advocate for you, which means I encourage and protect your interests with maximum loyalty and faithfulness. My focus becomes figuring out the best way to solve any issues and presenting that information to you. I spend lots of time and effort trying to accomplish the goal of the contract. I also want to give you any knowledge, experience, and advice that will help you along the way.
The best reason to have an agency relationship - to be my client - is to have an ally during a very complicated process that involves a lot of your money. An advocate is someone who stands beside you and fights for you. I would also want to make sure that you understand everything as things happen. I absolutely hate buying or selling houses when I'm surprised about what's happening. I really want to know BEFORE it happens. By the way, something interesting about Colorado real estate law is that I can be a buyer's agent and get paid by the seller, so it may not cost the buyer any extra to have my help.
In case you want more information about Colorado real estate working relationships, you can also look at Chapter 14 of the 2009 Colorado Real Estate Manual.
Today I'd like to talk about the different relationships someone (who could be an individual, more than one person, a partnership, and a company) can have with a Colorado real estate broker. I'd also like to give you a link to the "Consumer Corner" of Colorado's Division of Real Estate. They have lots of good information for people interested in buying or selling a house.
Now, in plain words I'll tell you the three basic ways I can have a working relationship with you, and then I'll tell you my obligations to you based on that relationship. The first type of relationship is as a customer. If I meet you and I don't know your name, or I meet you when I am working as an agent for someone else, you are a customer to me. We do not have any written agreement.
The next type of relationship is as an agent. I could be a seller's agent or a buyer's agent, but we have a written contract and I have obligated myself to "represent you" or work FOR you. You are my client or principal, or whatever the legal jargon is, and I may not necessarily get paid by you, but I will work on your behalf.
The third type is as a transaction broker. There may or may not be a written contract and the relationship is in-between a customer and a client. If there is no written contract and I am working with you in some way, Colorado considers the transaction-broker relationship as the default way that we are working together.
You don't get any special designation if you are in a transaction brokerage relationship with me or any Colorado real estate broker, although maybe the law will eventually come up with a name besides "party." However, I have more obligations to you when you are a party than when you are a customer.
Although it may seem obvious, in any of these relationships, I want you to know that I do not have any obligation to do anything illegal.
Now, to help you choose, I'd like to spell out some of the obligations I have to you. I have the fewest obligations to a customer and the most obligations to a client. However, I do have responsibilities to customers.
When I am a Colorado real estate broker, and you are a customer, I owe to you all the obligations owed under state and federal consumer protection laws. I owe you:
(1) Honest and fair dealings—For example, this means that if we are trying to work a deal together, I must tell you if I am an agent for someone else in the same deal, so that you don't tell me information that I can use FOR my client.
(2) Reasonable care and skill in performance—For example, if you give me a "good faith deposit," I must be very careful to deposit it into an appropriate trust or escrow account.
(3) Disclosure of all material facts about the property that I know or that I should have known—For example, if the property has a house built before 1978 and there is a possibility of lead-based paint, I need to tell you about that possibility as well as give you federal information.
When I am a Colorado real estate broker, and we are in a transaction broker relationship, I still owe you the same obligations I owe to a customer. The examples may be different, but I still need to treat you ethically and responsibly. In addition to those obligations, I owe you:
(1) Performance of the terms we set in the written agreement—For example, I will present all offers to you and help you fill out any Colorado Real Estate Commission approved forms.
(2) Neutrality and confidentiality—I may be working with another person as a transaction broker in the same purchase, so I need to advocate for neither and neutrally help both parties. I also need to not disclose to either party confidential information about the other party. What you tell me, stays with me and what the other person tells me, stays with me. However, in following "disclosure of all material facts," including information about the seller’s property, I must disclose a buyer's financial ability to complete the transaction and whether the buyer intends to live in the residential property.
(3) Assistance with closing—For example, I will help organize a list of deadlines so that obligations can get done before the closing.
When I am a Colorado real estate broker, and I am an agent for the seller or the buyer, I still owe the same obligations as to a customer. I also owe you all the obligations in a transaction brokerage, except for neutrality. I go beyond neutrality and I work FOR you. I work hard to fulfill the terms of our contract. I advocate for you, which means I encourage and protect your interests with maximum loyalty and faithfulness. My focus becomes figuring out the best way to solve any issues and presenting that information to you. I spend lots of time and effort trying to accomplish the goal of the contract. I also want to give you any knowledge, experience, and advice that will help you along the way.
The best reason to have an agency relationship - to be my client - is to have an ally during a very complicated process that involves a lot of your money. An advocate is someone who stands beside you and fights for you. I would also want to make sure that you understand everything as things happen. I absolutely hate buying or selling houses when I'm surprised about what's happening. I really want to know BEFORE it happens. By the way, something interesting about Colorado real estate law is that I can be a buyer's agent and get paid by the seller, so it may not cost the buyer any extra to have my help.
In case you want more information about Colorado real estate working relationships, you can also look at Chapter 14 of the 2009 Colorado Real Estate Manual.
Tuesday, November 9, 2010
The Fair Housing Act Prohibits Discrimination
Today I want to talk about the federal laws regarding housing discrimination. They are actually about eliminating discrimination when people want to buy a home. This topic is really important. To start with, Title VIII of the Civil Rights Act of 1968 (Fair Housing Act), prohibits discrimination in the sale, rental and financing of dwellings based on race, color, religion, sex or national origin. This was amended in 1988 to include discrimination because of disabilities or family status. At the United States Department of Justice, Civil Rights Division, the latest Fair Housing Act directive is spelled out, including how to file complaints and criminal penalties.
What are the exceptions? Who is exempt from following these laws when selling their property to someone?
There is an exception to the family status (children or pregnant women in the family) which is based on the Housing for Older Persons Act of 1995 (HOPA). To qualify for the exception, the housing development must advertise that it is for older adults and there must be a person who is 55 years of age or older living in at least 80% of the occupied units. If you want more information about the "older people" exception, it's available in the Federal Register for Friday, April 2, 1999.
Religious organizations and private clubs can still limit their property to just their own members as long as the restriction is only based on religion or club membership. Also exempt is someone selling their own home as long as that person doesn't own more than three homes at a time. Another exemption is an owner who lives in a unit of a fourplex or smaller.
However, if the person or property doesn’t fit into any of these categories, he or she does not have to worry about discriminating against someone who has been convicted of illegally manufacturing or selling "controlled substances" (drugs). It is okay to not sell their property to someone like that.
Now that we've talked about exemptions, let's talk about what the Fair Housing Act basically means. Ignore the exceptions for now. Let's say I'm a Colorado real estate broker, which I'm going to be some day, and someone comes in to buy or sell a house.
Let's take two imaginary people. We'll call them Jang and Vanar, using names from a "neutral baby name" site. We will say that they are two people, but beyond that I don't know anything about them: their genders, ages, nationalities, functionalities, or beliefs. One or both of them could need my services.
If one or both want to sell a house and I create a legal contract with them to list and sell the house, I would want to see the house and get the best value possible, which means showing the house to anyone who qualifies financially and is interested in that type of housing.
If one or both want to buy a house, and if I have a policy of asking people to prequalify financially, I would ask the prospective buyer to do that first. If I am truly acting without discrimination, I treat everyone equally. I find out what kind of housing is wanted and I try to show places that will work.
Basically, if we ignore the exceptions (housing for only those over 55 years of age, religious or private clubs, someone convicted of involvement with illegal drugs), it is not okay to treat someone differently when selling, buying, renting, leasing, etc., because of their family status, ethnicity, age, religion, gender, or physical or mental disability. The only way to differentiate people is on their "ability to pay" or for economic reasons.
What are the exceptions? Who is exempt from following these laws when selling their property to someone?
There is an exception to the family status (children or pregnant women in the family) which is based on the Housing for Older Persons Act of 1995 (HOPA). To qualify for the exception, the housing development must advertise that it is for older adults and there must be a person who is 55 years of age or older living in at least 80% of the occupied units. If you want more information about the "older people" exception, it's available in the Federal Register for Friday, April 2, 1999.
Religious organizations and private clubs can still limit their property to just their own members as long as the restriction is only based on religion or club membership. Also exempt is someone selling their own home as long as that person doesn't own more than three homes at a time. Another exemption is an owner who lives in a unit of a fourplex or smaller.
However, if the person or property doesn’t fit into any of these categories, he or she does not have to worry about discriminating against someone who has been convicted of illegally manufacturing or selling "controlled substances" (drugs). It is okay to not sell their property to someone like that.
Now that we've talked about exemptions, let's talk about what the Fair Housing Act basically means. Ignore the exceptions for now. Let's say I'm a Colorado real estate broker, which I'm going to be some day, and someone comes in to buy or sell a house.
Let's take two imaginary people. We'll call them Jang and Vanar, using names from a "neutral baby name" site. We will say that they are two people, but beyond that I don't know anything about them: their genders, ages, nationalities, functionalities, or beliefs. One or both of them could need my services.
If one or both want to sell a house and I create a legal contract with them to list and sell the house, I would want to see the house and get the best value possible, which means showing the house to anyone who qualifies financially and is interested in that type of housing.
If one or both want to buy a house, and if I have a policy of asking people to prequalify financially, I would ask the prospective buyer to do that first. If I am truly acting without discrimination, I treat everyone equally. I find out what kind of housing is wanted and I try to show places that will work.
Basically, if we ignore the exceptions (housing for only those over 55 years of age, religious or private clubs, someone convicted of involvement with illegal drugs), it is not okay to treat someone differently when selling, buying, renting, leasing, etc., because of their family status, ethnicity, age, religion, gender, or physical or mental disability. The only way to differentiate people is on their "ability to pay" or for economic reasons.
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