August 23, 2019

Colorado Court of Appeals: Real Estate Transaction-Broker’s Duties are Statutory and Cannot Be Contracted Away

The Colorado Court of Appeals issued its opinion in Colorado Real Estate Commission v. Vizzi on Thursday, March 7, 2019.

Administrative Law—Real Estate License—Transaction-Broker—Mandatory Duties—Federal Antitrust Law—Due Process—Sanctions.

Vizzi entered into contracts in 2013 and 2014 with three clients to provide unbundled real estate brokerage services in exchange for a flat fee. In one instance, he contracted only to list the client’s property on the Multiple Listing Services (MLS) list. In two other instances, he contracted only to provide a yard sign, a lock box, and centralized showing services, and to list the properties on the MLS. An anonymous informant notified the Colorado Real Estate Commission (Commission) of Vizzi’s practices and the Commission charged Vizzi with failing to fulfill his statutory duties under C.R.S. § 12-61-807(2). An administrative law judge (ALJ) found that Vizzi was required to provide his clients all of the services listed C.R.S. § 12-61-807(2) and failed to do so in the transactions at issue. The Commission adopted the ALJ’s findings of fact and conclusions of law and modified the discipline imposed on Vizzi to include public censure.

On appeal, Vizzi maintained that he was permitted by statute to contract out of many of the duties imposed on transaction-brokers under C.R.S. § 12-61-807(2) and the contracts in question successfully accomplished that goal. A transaction-broker’s statutory duties are mandatory and cannot be contracted away. Here, the record supports the ALJ’s findings that Vizzi intended not to act as a transaction-broker and manifested that intent by inserting language into the contracts disclaiming the duties of such a broker, and Vizzi violated C.R.S. §§ 12-61-113(1)(k), 12-61-113(1)(n), and 12-61-803(1).

Vizzi also argued that the Commission’s policy prohibiting the provision of limited real estate services violates federal antitrust law. The Commission’s discipline of defendant for failing to perform his statutory duties fell within the Commission’s statutory authority and is properly considered state sovereign action. Therefore, it did not violate federal antitrust laws.

Vizzi next maintained that the ALJ violated his due process rights by denying his motion to compel disclosure of the identity of the anonymous complainant. Vizzi did not show how the complainant’s identity was relevant to his ability to defend against the Commission’s charges. Therefore, the Commission did not err in upholding the ALJ’s denial of Vizzi’s motion to compel disclosure of the anonymous complainant.

Vizzi further contended that the Commission exceeded its statutory authority and thus violated his due process rights when it imposed public censure after the ALJ had imposed only a fine and continuing education. Alternatively, Vizzi argued the decision to impose public censure was arbitrary and capricious. Vizzi violated his statutory duties multiple times after the Commission’s December 2010 position statement put him on notice that the listing contracts he prepared in 2013 and 2014 were improper. And the public censure penalty was sought in the initial charge against Vizzi. Therefore, the Commission acted within its statutory authority by imposing a sanction beyond that imposed by the ALJ, and the Commission’s sanction bore some relation to Vizzi’s misconduct and to the needs of the public.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

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