The Colorado Real Estate Recovery Fund Act
| Publication year | 1977 |
| Pages | 1506 |
| Citation | Vol. 6 No. 9 Pg. 1506 |
1977, September, Pg. 1506. The Colorado Real Estate Recovery Fund Act
Nothing in the practice of law is more frustrating than to obtain a judgment for your client only to discover that the judgment is unenforceable as the judgment debtor is either insolvent or has departed for places unknown. In at least one limited, but important area of the law, this problem has been alleviated to a large extent through the enactment of the Colorado Real Estate Recovery Fund Act (Act).(fn1) The Act established a Recovery Fund (Fund) in the office of the Colorado State Treasurer effective January 1, 1972,(fn2) which is a frequently overlooked, but potential source of recovery for clients who have suffered at the hands of negligent or dishonest real estate brokers and salesmen.
While the Fund comes into play primarily after a judgment has been obtained against a broker or salesman, there are a number of steps which the attorney must take during the pendency of the case to insure that his client will have the opportunity to collect from the Fund after obtaining a judgment. This article will outline the steps which should be taken, both prior and subsequent to obtaining a judgment, when it is contemplated that the judgment could potentially be paid out of the Fund.
Recovery can only be obtained from the Fund in the event one secures a final judgment against a real estate broker or salesman, licensed by the Colorado Real Estate Commission (Commission), on the grounds of "negligence, fraud, willful misrepresentation, deceit, or conversion of trust funds."(fn3) In addition, the act complained of must have occurred when the broker or salesman was licensed and when he performed an act on or after January 1, 1972, for which a license is required.(fn4)
It should be noted that negligence did not become a ground for recovery from the Fund until July 16, 1975, and due to the fact that this additional ground for recovery constitutes a substantive amendment to the Act, the amendment may not be applied retroactively.(fn5) One Colorado District Court has taken this position and held that a judgment based on the negligence of a real estate broker, which occurred after January 1, 1972, but prior to July 16, 1975, may not be paid out of the Fund.(fn6)
In regard to the prerequisite that the broker or salesman perform an act for which a license is required, the Colorado Court of Appeals, in the only appellate
If the facts of your client's case meet the criteria set forth above, then to represent your client effectively, you should be cognizant of the provisions of the Act and take care to fulfill the prerequisites to recovery from the Fund.
Regardless of any other applicable statute of limitations for fraud, negligence, etc., your client will be barred from recovering his judgment from the Fund unless the suit in which the judgment results is commenced within one year after the cause of action accrues.(fn8)
In addition to commencing the action within the specified time period, written notice of the commencement of the action must be given to the Commission(fn9) and, in this author's opinion, should be given...
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