AN ACT

642 Professions and Occupations Ch. 179

CHAPTER 179

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PROFESSIONS AND OCCUPATIONS

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HOUSE BILL 10-1288

BY REPRESENTATIVE(S) Nikkel, Rice, Ferrandino, Kerr J., Lambert, Liston, McNulty, Peniston, Priola, Scanlan, Waller,

Frangas, Massey, Roberts, Bradford, Vigil;

also SENATOR(S) Williams, Kopp, Penry, Tochtrop, Newell, Schwartz, Steadman.

AN ACT

CONC ERN ING THE ABILIT Y OF A COM M ERC IA L REA L ESTAT E BRO K ER TO SECUR E PAYM E NT O F

COM M ISS IONS EAR NED , A ND, IN CO NNE CTIO N THE REW IT H , E NAC TIN G THE "CO M M E RCIA L REA L

EST ATE BRO K ER S CO M M ISSIO N SECURIT Y AC T".

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1. Title 38, Colorado Revised Statutes, is amended BY THE

ADDITION OF A NEW ARTICLE to read:

ARTICLE 22.5

Commercial Real Estate Brokers

Commission Security Act

38-22.5-101. Short title. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS

THE "COMMERCIAL REAL ESTATE BROKERS COMMISSION SECURITY ACT".

38-22.5-102. Definitions. AS USED IN THIS ARTICLE, UNLESS THE CONTEXT

OTHERWISE REQUIRES:

(1) "AGREEMENT" MEANS A WRITTEN LISTING AGREEMENT, WRITTEN

COMPENSATION AGREEMENT, OR OTHER WRITTEN AGREEMENT BETWEEN A REAL

ESTATE BROKER AND AN OWNER THAT GRANTS THE REAL ESTATE BROKER A RIGHT

TO COMPENSATION FOR PROFESSIONAL SERVICES IN CONNECTION WITH LEASING OR

ATTEMPTING TO LEASE COMMERCIAL REAL ESTATE.

(2) "COMMERCIAL REAL ESTATE" MEANS ANY REAL PROPERTY OTHER THAN REAL

PROPERTY CONTAINING ONE TO FOUR RESIDENTIAL UNITS. "COMMERCIAL REAL

ESTATE" DOES NOT INCLUDE SINGLE-FAMILY OR MULTI-FAMILY RESIDENTIAL UNITS

)) ) ) )

Capital letters indicate new material added to existing statutes; dashes through words indicate deletions

from existing statutes and such material not part of act.

Ch. 179 Professions and Occupations 643

INCLUDING CONDOMINIUMS, TOWNHOUSES, OR HOMES IN A SUBDIVISION WHEN SUCH

REAL ESTATE IS SOLD, LEASED, OR OTHERWISE CONVEYED ON A UNIT-BY-UNIT BASIS

EVEN THOUGH THE UNITS MAY BE PART OF A LARGER BUILDING OR PARCEL OF REAL

PROPERTY CONTAINING MORE THAN FOUR RESIDENTIAL UNITS.

(3) "OWNER" MEANS THE OWNER OF RECORD OF REAL ESTATE AND INCLUDES AN

AGENT OF SUCH OWNER.

(4) "REAL ESTATE BROKER" HAS THE MEANING SET FORTH IN SECTION 12-61-101,

C.R.S.

(5) "RENEWAL COMMISSION" MEANS AN ADDITIONAL COMMISSION THAT MAY

BECOME PAYABLE TO A REAL ESTATE BROKER IF A LEASE IS LATER RENEWED OR

MODIFIED TO EXPAND THE LEASED PREMISES OR EXTEND THE LEASE TERM.

38-22.5-103. Brokers' lien for compensation for services - requirements.

(1) A REAL ESTATE BROKER SHALL HAVE A LIEN ON COMMERCIAL REAL ESTATE, IN

THE AMOUNT OF THE COMPENSATION AS SET FORTH IN THE AGREEMENT, IF:

(a) SUCH REAL ESTATE IS LISTED WITH THE REAL ESTATE BROKER UNDER TERMS

OF AN AGREEMENT OR IS THE SUBJECT OF AN AGREEMENT; AND

(b) THE REAL ESTATE BROKER HAS PROVIDED LICENSED SERVICES THAT RESULTED

IN THE PROCURING OF A PERSON OR ENTITY WHO HAS LEASED ANY INTEREST IN THE

COMMERCIAL REAL ESTATE IN ACCORDANCE WITH THE AGREEMENT.

(2) THE GENERAL ASSEMBLY INTENDS THAT NOTHING IN THIS SECTION IS SUBJECT

TO A PROSPECTIVE WAIVER BY EITHER PARTY WITHOUT CONSIDERATION ACCEPTABLE

TO THE PARTIES TO THE WAIVER.

(3) NOTWITHSTANDING SUBSECTION (1) OF THIS SECTION, COMMERCIAL REAL

ESTATE IS NOT SUBJECT TO A REAL ESTATE BROKERS' LIEN TO ENFORCE THE PAYMENT

OF A RENEWAL COMMISSION IF THE PROPERTY IS CONVEYED TO A BONA FIDE

PURCHASER BEFORE THE RECORDING OF A NOTICE OF LIEN PURSUANT TO SECTION

38-22.5-104.

38-22.5-104. Notice of intent - lien notice - service - contents - filing. (1) THE

REAL ESTATE BROKER SHALL SERVE A NOTICE OF INTENT TO RECORD A NOTICE OF

LIEN UPON THE OWNER AT LEAST THIRTY DAYS BEFORE RECORDING THE NOTICE OF

LIEN WITH THE COUNTY CLERK AND RECORDER OF THE COUNTY IN WHICH THE

COMMERCIAL REAL ESTATE IS LOCATED. SUCH NOTICE OF INTENT SHALL BE SERVED

BY PERSONAL SERVICE OR BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT

REQUESTED, ADDRESSED TO THE LAST-KNOWN ADDRESS OF THE OWNER OR THE

OWNER'S AGENT, AT LEAST THIRTY DAYS BEFORE RECORDING OF THE NOTICE OF LIEN

WITH THE COUNTY CLERK AND RECORDER. IF THE NOTICE OF INTENT IS SERVED UPON

THE OWNER'S AGENT, A COPY OF THE NOTICE SHALL ALSO BE SERVED UPON THE

OWNER OF RECORD BY PERSONAL SERVICE OR BY REGISTERED OR CERTIFIED MAIL,

RETURN RECEIPT REQUESTED, ADDRESSED TO THE OWNER'S LAST-KNOWN ADDRESS,

AT LEAST THIRTY DAYS BEFORE RECORDING OF THE NOTICE OF LIEN WITH THE

COUNTY CLERK AND RECORDER.

644 Professions and Occupations Ch. 179

(2) THE NOTICE OF LIEN SHALL STATE THE NAME OF THE REAL ESTATE BROKER,

THE NAME OF THE OWNER, A LEGAL DESCRIPTION OF THE PROPERTY UPON WHICH THE

LIEN IS BEING CLAIMED, THE AMOUNT FOR WHICH THE LIEN IS CLAIMED, AND THE

REAL ESTATE LICENSE NUMBER OF THE REAL ESTATE BROKER. THE REAL ESTATE

BROKER SHALL SIGN THE NOTICE OF LIEN, AND ATTEST THAT THE INFORMATION

CONTAINED IN THE NOTICE IS TRUE AND ACCURATE AS TO HIS OR HER KNOWLEDGE

AND BELIEF.

38-22.5-105. Mediation period. THE REAL ESTATE BROKER SHALL MAKE A

GOOD FAITH EFFORT TO ATTEMPT TO RESOLVE THE NONPAYMENT OF THE

COMMISSION THROUGH MEDIATION. THE MEDIATOR'S RECOMMENDED RESOLUTION

IS NOT BINDING UNLESS THE PARTIES SO AGREE IN WRITING. THE PARTIES SHALL

JOINTLY APPOINT AN ACCEPTABLE MEDIATOR AND SHALL SHARE EQUALLY IN THE

COST OF THE MEDIATION. MEDIATION SHALL COMMENCE WHEN A WRITTEN NOTICE

REQUESTING MEDIATION IS DELIVERED BY ONE PARTY TO THE OTHER AT THE PARTY'S

LAST-KNOWN ADDRESS, AND, UNLESS OTHERWISE AGREED, THE MEDIATION SHALL

TERMINATE IF THE ENTIRE DISPUTE IS NOT RESOLVED WITHIN THIRTY DAYS

THEREAFTER. THIS SECTION DOES NOT IMPAIR THE ABILITY OF A REAL ESTATE

BROKER TO RECORD A NOTICE OF LIEN IF A RESOLUTION IS NOT AGREED UPON BY

BOTH PARTIES.

38-22.5-106. When lien attaches - effect of payment by installments -

affirmative defense. (1) THE LIEN CREATED BY SECTION 38-22.5-103 ATTACHES

TO AN INTEREST IN COMMERCIAL REAL ESTATE WHEN ALL OF THE FOLLOWING

CONDITIONS ARE MET:

(a) THE REAL ESTATE BROKER EITHER:

(I) PROCURES A PERSON OR ENTITY WHO LEASES THE PROPERTY IN ACCORDANCE

WITH THE AGREEMENT; OR

(II) HAS OTHERWISE EARNED A FEE OR COMMISSION IN ACCORDANCE WITH THE

AGREEMENT;

(b) THE REAL ESTATE BROKER SERVES A NOTICE OF INTENT TO RECORD A NOTICE

OF LIEN UPON THE OWNER OR OWNER'S AGENT AS PROVIDED IN SECTION 38-22.5-104;

SETTLEMENT THROUGH MEDIATION AS PROVIDED IN SECTION 38-22.5-105; AND

(d) AT LEAST THIRTY DAYS AFTER SERVING THE OWNER WITH NOTICE OF INTENT

TO RECORD A NOTICE OF LIEN, BUT NOT MORE THAN NINETY DAYS AFTER THE

TENANT TAKES POSSESSION OF THE LEASED PROPERTY OR NINETY DAYS AFTER THE

COMPENSATION IS DUE UNDER THE AGREEMENT, WHICHEVER IS LATER, THE REAL

ESTATE BROKER RECORDS A NOTICE OF THE LIEN IN THE OFFICE OF THE CLERK AND

RECORDER OF THE COUNTY IN WHICH THE COMMERCIAL REAL ESTATE IS LOCATED.

(2) NOTWITHSTANDING PARAGRAPH (d) OF SUBSECTION (1) OF THIS SECTION:

(a) IF PAYMENT IS DUE IN INSTALLMENTS AND A PORTION OF THE PAYMENT IS DUE

AFTER THE LEASING OF ANY INTEREST IN COMMERCIAL REAL ESTATE, A CLAIM FOR

Ch. 179 Professions and Occupations 645

A LIEN FOR ONLY THAT PORTION MAY BE RECORDED WITHIN NINETY DAYS AFTER THE

TENANT TAKES POSSESSION OF THE LEASED PROPERTY OR NINETY DAYS AFTER THE

COMPENSATION IS DUE UNDER THE AGREEMENT, WHICHEVER IS LATER; AND

(b) THE LIEN SHALL BE EFFECTIVE AS A LIEN AGAINST THE COMMERCIAL REAL

ESTATE ONLY TO THE EXTENT MONEYS ARE STILL OWED TO THE REAL ESTATE

BROKER BY THE OWNER. ANY CLAIMS FOR A LIEN FOR FUTURE INSTALLMENT

PAYMENTS SHALL ONLY BE RECORDED WITHIN NINETY DAYS AFTER THOSE

INSTALLMENT PAYMENTS BECOME DUE IN ACCORDANCE WITH THE AGREEMENT.

(3) THE LIEN ATTACHES FOR PURPOSES OF THIS SECTION WHEN THE CLAIM FOR

LIEN IS RECORDED, AND SHALL NOT RELATE BACK TO THE DATE OF THE AGREEMENT.

(4) NOTWITHSTANDING ANY PROVISION OF THIS ARTICLE TO THE CONTRARY, IT

SHALL BE AN AFFIRMATIVE DEFENSE IN AN ACTION TO FORECLOSE A LIEN PURSUANT

TO THIS ARTICLE THAT THE OWNER HAS PAID ANY COMPENSATION OWED TO THE

LISTING BROKER IN AN AMOUNT SUFFICIENT TO SATISFY THE CONTRACTUAL AND

LEGAL OBLIGATIONS OF THE OWNER, INCLUDING COMPENSATION TO THE TENANT'S

BROKER.

38-22.5-107. Conditions on validity of lien - subsequent service of notice to

owner - action commenced within six months. (1) NO LIEN CLAIMED BY VIRTUE

OF THIS ARTICLE SHALL HOLD THE PROPERTY LONGER THAN TEN DAYS AFTER THE

RECORDING OF THE NOTICE OF LIEN UNDER SECTION 38-22.5-104 UNLESS THE REAL

ESTATE BROKER PROVIDES A COPY OF THE NOTICE OF LIEN TO THE OWNER OR

OWNER'S AGENT BY PERSONAL SERVICE OR BY REGISTERED OR CERTIFIED MAIL,

RETURN RECEIPT REQUESTED, ADDRESSED TO THE LAST-KNOWN ADDRESS OF SUCH

PERSON, WITHIN TEN DAYS AFTER RECORDING THE NOTICE OF LIEN.

(2) NO LIEN CLAIMED BY VIRTUE OF THIS ARTICLE SHALL HOLD THE PROPERTY

LONGER THAN SIX MONTHS AFTER THE RECORDING OF THE NOTICE OF LIEN UNDER

SECTION 38-22.5-104 UNLESS AN ACTION TO FORECLOSE THE LIEN HAS BEEN

COMMENCED WITHIN THAT TIME, AND UNLESS ALSO A NOTICE STATING THAT SUCH

ACTION HAS BEEN COMMENCED IS FILED FOR RECORD WITHIN THAT TIME IN THE

OFFICE OF THE COUNTY CLERK AND RECORDER OF THE COUNTY IN WHICH THE

PROPERTY IS SITUATED. WHERE TWO OR MORE LIENS UNDER THIS ARTICLE ARE

CLAIMED OF RECORD AGAINST THE SAME PROPERTY, THE COMMENCEMENT OF ANY

ACTION AND THE FILING OF THE NOTICE OF THE COMMENCEMENT OF SUCH ACTION

WITHIN THAT TIME BY ANY ONE OR MORE OF SUCH LIEN CLAIMANTS IN WHICH

ACTION ALL THE LIEN CLAIMANTS AS APPEAR OF RECORD ARE MADE PARTIES, EITHER

PLAINTIFF OR DEFENDANT, SHALL BE SUFFICIENT.

38-22.5-108. Priority of liens. THE PRIORITY OF A LIEN CREATED UNDER THIS

ARTICLE IN RELATION TO OTHER INTERESTS IN THE SUBJECT PROPERTY SHALL BE

DETERMINED IN ACCORDANCE WITH SECTION 38-35-109.

38-22.5-109. Satisfaction or release of brokers' lien - written demand by

owner - obligation to record. IF A REAL ESTATE BROKERS' LIEN HAS BEEN

RECORDED PURSUANT TO SECTION 38-22.5-106 AND THE INDEBTEDNESS HAS BEEN

PAID IN FULL OR THE LIEN IS NOT VALID AND ENFORCEABLE IN ACCORDANCE WITH

THIS ARTICLE AND OTHER APPLICABLE LAW, THE REAL ESTATE BROKER SHALL

646 Professions and Occupations Ch. 179

ACKNOWLEDGE SATISFACTION OR RELEASE OF SUCH LIEN IN WRITING WITHIN TEN

DAYS AFTER RECEIVING WRITTEN DEMAND FROM THE OWNER AND SHALL RECORD

A WRITTEN RELEASE OR SATISFACTION OF THE LIEN IN THE OFFICE OF THE CLERK AND

RECORDER OF THE COUNTY IN WHICH THE PROPERTY IS LOCATED.

38-22.5-110. Spurious liens. SECTION 38-35-204 APPLIES TO LIENS ASSERTED

PURSUANT TO THIS ARTICLE.

38-22.5-111. Substitution of bond allowed - lien to be discharged.

(1) WHENEVER A BROKERS' LIEN HAS BEEN RECORDED IN ACCORDANCE WITH THIS

ARTICLE, THE OWNER OF ANY INTEREST IN THE PROPERTY SUBJECT TO THE LIEN MAY,

AT ANY TIME, FILE WITH THE CLERK OF THE DISTRICT COURT OF THE COUNTY

WHEREIN THE PROPERTY IS SITUATED A CORPORATE SURETY BOND OR SIMILAR

FINANCIAL ASSURANCE. SUCH BOND OR ASSURANCE SHALL BE IN AN AMOUNT

EQUAL TO ONE AND ONE-HALF TIMES THE AMOUNT OF THE LIEN PLUS COSTS

ALLOWED TO DATE AND IS SUBJECT TO APPROVAL BY A JUDGE OF THE DISTRICT

COURT WITH WHICH SUCH BOND OR ASSURANCE IS FILED.

(2) THE BOND OR ASSURANCE SHALL BE CONDITIONED THAT, IF THE LIEN

CLAIMANT IS FINALLY ADJUDGED TO BE ENTITLED TO RECOVER ON THE CLAIM UPON

WHICH THE LIEN IS BASED, THE PRINCIPAL OR SURETY SHALL PAY TO SUCH CLAIMANT

THE AMOUNT OF THE JUDGMENT, INCLUDING ANY INTEREST, COSTS, OR OTHER SUMS

TO WHICH THE CLAIMANT WOULD BE ENTITLED UPON FORECLOSURE OF THE LIEN.

(3) UPON THE FILING OF A BOND OR UNDERTAKING AS PROVIDED IN THIS SECTION,

THE LIEN AGAINST THE PROPERTY SHALL BE IMMEDIATELY DISCHARGED AND

RELEASED IN FULL, AND THE REAL PROPERTY DESCRIBED IN SUCH BOND OR

UNDERTAKING SHALL BE RELEASED FROM THE LIEN AND FROM ANY ACTION

BROUGHT TO FORECLOSE THE LIEN, AND THE BOND OR UNDERTAKING SHALL BE

SUBSTITUTED. THE CLERK OF THE DISTRICT COURT WITH WHICH THE BOND OR

UNDERTAKING HAS BEEN FILED SHALL ISSUE A CERTIFICATE OF RELEASE, WHICH

SHALL BE RECORDED IN THE OFFICE OF THE CLERK AND RECORDER OF THE COUNTY

IN WHICH THE ORIGINAL REAL ESTATE BROKERS' LIEN WAS FILED, AND THE

CERTIFICATE OF RELEASE SHALL SHOW THAT THE PROPERTY HAS BEEN RELEASED

FROM THE LIEN AND FROM ANY ACTION BROUGHT TO FORECLOSE THE LIEN.

SECTION 2. Act subject to petition - effective date - applicability. (1) This

act shall take effect at 12:01 a.m. on the day following the expiration of the

ninety-day period after final adjournment of the general assembly (August 11, 2010,

if adjournment sine die is on May 12, 2010); except that, if a referendum petition

is filed pursuant to section 1 (3) of article V of the state constitution against this act

or an item, section, or part of this act within such period, then the act, item, section,

or part shall not take effect unless approved by the people at the general election to

be held in November 2010 and shall take effect on the date of the official

declaration of the vote thereon by the governor.

(2) The provisions of this act shall apply to cases in which an agreement, as

defined in section 38-22.5-102, Colorado Revised Statutes, is entered into on or

after the applicable effective date of this act.

Approved: April 29, 2010