A new Colorado law takes effect August 2026 requiring written compensation agreements with brokers—and it may affect your business more than you think.
Most Colorado auto service owners don't realize that a provision buried in HB1426 could reshape how they work with real estate brokers—or hire them. The law requires any broker to have a signed, written compensation agreement in place before performing any brokerage activities. That simple-sounding rule carries real teeth.
Section 87 of HB1426 amends Colorado Revised Statutes 12-10-403(2) to mandate that brokers disclose compensation terms in a written agreement before they start work. This applies to any small business acting as a broker or hiring one. The requirement is straightforward: no written agreement, no brokerage activity.
The law takes effect at 12:01 a.m. on August 12, 2026, subject to a referendum petition. That gives businesses roughly 18 months to prepare.
If your auto service operation has ever bought or sold property, leased a location, or worked with a broker on a real estate transaction, this affects you. Here's the practical impact:
For brokers you hire: Any broker working on your behalf must have a signed compensation agreement before they lift a finger. If they don't, you could face disputes over fees, and the broker may lose the right to claim compensation entirely. That means you could end up in a costly disagreement about who owes what.
For your own licensing: If your business holds a broker license or acts as a broker in any capacity, failing to get a written agreement exposes you to licensing liability and consumer-protection violations. The state can take action against your license, and you could lose the ability to collect fees for work performed.
For transaction costs: Unclear or missing compensation agreements can void compensation claims, which means disputes take longer to resolve and may end up in court. That drives up costs for everyone involved in the transaction.
If you regularly work with brokers, audit your current agreements. Do you have signed, written compensation disclosures on file? If you're hiring a broker for a property transaction, insist on a written agreement before they start. If you hold a broker license yourself, review your standard agreement templates and make sure they comply with the new requirement.
The August 12, 2026 effective date is firm, but the law is subject to a referendum petition. Keep an eye on state legislative updates in case that changes, though the provision is now law unless overturned by voters.
This is one of those rules that seems obvious in hindsight but catches businesses off guard when disputes arise. Getting ahead of it now—before August 2026—protects your revenue, your licensing, and your transactions.
Source: HB1426, Section 87, amending 12-10-403(2), Page 58; Department of Law Legislative Report.