1.3 Colorado License Types and Employing Broker Supervision
Key Takeaways
- Colorado has three license levels: Broker, Associate Broker, and Employing Broker
- Brokers with less than 2 years experience hold FA (Field Active) credential and must work under close supervision
- Employing brokers are responsible for supervising all affiliated brokers and maintaining office policies
- An employing broker can supervise brokers from any location (no branch office license required)
- Independent brokers work under their own employing broker license
Colorado License Types and Supervision
Colorado has a unique license structure that differs from most other states.
License Types
Individual License Categories
| License Type | Description | Supervision |
|---|---|---|
| Broker | Entry-level license | By employing broker |
| Associate Broker | Experienced broker choosing to work under another | By employing broker |
| Employing Broker | Supervises other brokers | Self-supervised |
| Independent Broker | Works alone under own license | Self-supervised |
Broker (Entry-Level)
A broker is Colorado's entry-level license. Brokers:
- Must work under an employing broker
- Cannot operate independently
- Cannot supervise other licensees
- Receive compensation only through their employing broker
FA Credential (Field Active - Less Than 2 Years)
Critical for Exam: Brokers with less than 2 years of active experience hold the "FA" credential, sometimes called "Associate Broker" status:
| FA Broker Requirement | Detail |
|---|---|
| Experience | Less than 2 years active licensure |
| Supervision | Enhanced supervision required |
| Transactions | Should review all contracts with employing broker |
| Independence | Limited until 2-year threshold met |
Note: After 2 years of active experience, the broker transitions out of FA status but still works under an employing broker.
Employing Broker
An employing broker supervises other licensees:
- Must have additional experience and qualifications
- Responsible for all supervised broker activities
- Maintains office policies and procedures
- Handles trust accounts
- Bears liability for supervised broker conduct
Independent Broker
An independent broker operates their own business:
- Licensed as an employing broker
- Does not supervise others
- Conducts business independently
- Still subject to Division oversight
Employing Broker Responsibilities
Employing brokers have significant supervisory obligations:
Required Supervision
| Responsibility | Description |
|---|---|
| Oversight | Supervise all brokerage activities |
| Training | Ensure brokers are competent |
| Review | Review contracts and documents |
| Policies | Maintain written office policies |
| Trust Accounts | Manage all trust account activities |
| Advertising | Approve all advertising |
| Records | Maintain records per Rule F |
Written Office Policies
Every employing broker must maintain written policies covering:
- Supervision procedures
- Transaction review processes
- Trust fund handling
- Advertising approval
- Dispute resolution
- Brokerage relationships
Liability
The employing broker is vicariously liable for:
- Acts of supervised brokers within scope of license
- Trust account violations
- Disclosure failures
- Contract errors
Exam Tip: "If the broker does it wrong, the employing broker also gets in trouble" - employing brokers cannot escape liability by claiming ignorance.
License Activation and Transfer
Activating a License
New brokers must:
- Pass exam
- Apply for license
- Obtain E&O insurance
- Affiliate with an employing broker
- License is activated
Transferring Between Employing Brokers
When a broker changes employing brokers:
| Step | Action |
|---|---|
| 1 | Notify current employing broker in writing |
| 2 | Current employing broker releases broker |
| 3 | New employing broker submits transfer |
| 4 | Division processes transfer |
| 5 | Broker cannot practice during gap |
Note: License becomes inactive if not affiliated with an employing broker.
What does the "FA" credential indicate for a Colorado broker?
Who is responsible for managing trust accounts in a Colorado brokerage?