CR 3

Market Value: Estimate of how much a property should sell on the open market.
Assessment Rate: Percentage provided by the county assessor to adjust the market value, used to determine the assessed value.
- Formula:
  - $ext{Assessed Value} = ext{Market Value} imes ext{Assessment Rate}$
Mill Rate (Mill Levy): Tax rate expressed in mills (e.g., 30 mills is used as a reference). This must be converted to a decimal for the calculation.
- Definition: A mill is equal to one-tenth of a cent.
Annual Taxes: Total property tax calculated by multiplying the assessed value by the mill rate.
- Formula:
  - $ext{Annual Taxes} = ext{Assessed Value} imes ext{Mill Rate}$

Problem Statement: A property has a market value of $185,000, an assessment rate of 70%, and a tax rate of 10.8 mills. Calculate the assessed value and the property taxes.
- Step 1: Calculate the Assessed Value:
- Market Value = $185,000
- Assessment Rate = 70% = 0.70
- Calculation:
  - $ext{Assessed Value} = 185,000 imes 0.70 = 129,500$
- Step 2: Calculate the Annual Taxes:
- Assessed Value = $129,500
- Mill Rate = 10.8 mills = 0.0108
- Calculation:
  - $ext{Annual Taxes} = 129,500 imes 0.0108 = 1,398.60$

Overview: Understanding how agency relationships can end is crucial in real estate.

Acts of the Parties:
- Mutual Consent: Both parties agree to end the agency relationship.
- Terms of the Agency Contract: The contract may specify conditions under which the agency can be terminated (e.g., if the seller's brother buys the property).
- Revocation: The principal (client) or agent can terminate the contract. Note: The terminated party can sue for breach of contract.
Operation of Law:
- Definition: Certain legal events can automatically terminate the agreement, irrespective of the parties' wishes.
- Examples:
  - Destruction of Subject Matter: If the property is destroyed (e.g., burned down), the agency relationship ends as it cannot be sold.
  - Death of One of the Parties:
    - Listing agreements and buyer agency agreements are personal services agreements and end with the death of one party.
    - Purchase contracts remain valid post-death, the estate is obligated to fulfill the contract.
  - Incapacity: If a party is deemed legally incompetent, the agency contract can end.
  - Bankruptcy: One party may end the contract through bankruptcy.
  - Change of Law: Re-zoning that impacts the property's ability to be sold can terminate the agency agreement.

Listing Agreement: Agreement between the seller and broker for marketing and selling the property, establishing the agency relationship from the seller's side.
Buyer Agency Agreement: Agreement where the buyer hires an agent to represent their interests in purchasing a property.
- Notably, the contract is with the brokerage firm, not the individual agent.

Principles in Agency:
- Principal: The client (buyer or seller).
- Brokerage Company: The entity that contracts with the client.
- Legal Liability: Understanding who is liable in various circumstances is crucial for real estate agents.

Personal Services Agreements: Termination upon the death of one party.
Non-Personal Agreements: Purchase contracts remain valid even if one party dies.

Death: Terminates agency agreements (listing agreements and buyer agency agreements).
Mental Incompetence: Legally recognized instances of insanity can terminate agreements.
Bankruptcy: A party declaring bankruptcy may terminate the agreement.
Change of Law: Legal changes affecting the subject property (e.g., zoning laws) can lead to contract termination.

Overview: Significant law reforming agency relationships in real estate in Colorado.

Elimination of Subagency: Previously all brokers were assumed to represent the seller. Now, the act states that agents can represent buyers.
Definition of Buyer Agency: A formalized relationship for agents to represent buyers directly.
Vicarious Liability: The act relieves the principal of liability for acts of transaction brokers, who do not represent either party.
Establishment of Standards: Creating uniform standards for real estate transactions and commissions.
In-House Deals: Guidelines for transactions where both buyer and seller are represented by the same brokerage.
Client Representation Options: Clients can choose their representation type (buyer’s agent vs. transaction broker).
Required Disclosures: Real estate brokers must disclose their relationship status and obligations to clients clearly, dictating whether they represent the buyer, seller, or act as a transaction broker.