SB 23-077

Senate Bill 23-077, which has been signed into law and will take effect on August 7, 2023, restricts certain provisions in contracts between real estate brokers and homeowners or tenants. The bill prevents these contracts from being binding on future property owners, allowing for the assignment of service rights without homeowner consent, or creating any form of lien or security interest on the property. Violating this law is considered an unfair trade practice. This affects anyone entering into a broker engagement contract for residential properties in Colorado.

Official Summary

The act states that, with certain exceptions, a broker engagement contract for the sale of a residential premises must not: Purport to be a covenant running with the land or to be binding on future owners of interests in the real property; Allow for assignment of the right to provide service without notice and agreement of the owner of the residential premises; or Purport to create a recordable lien, encumbrance, or other real property security interest. Any such lien, encumbrance, or other real property security interest is void and unenforceable. The act defines a "broker engagement contract" as a written contract in which a seller, buyer, landlord, or tenant of a residential premises becomes the client of a broker or agrees to retain the services of a broker in the future and promises to pay the broker a valuable consideration or agrees that the broker may receive a valuable consideration from another person in exchange for the broker producing a seller, buyer, tenant, or landlord ready, able, and willing to sell, buy, or rent the residential premises or for performing other services. A person that offers to a consumer a broker engagement contract that includes a prohibited provision commits an unfair or deceptive trade practice. APPROVED by Governor April 3, 2023 EFFECTIVE August 7, 2023 NOTE: This act was passed without a safety clause and takes effect 90 days after sine die. (Note: This summary applies to this bill as enacted.)

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