Colorado state statutes require that sellers of residential property disclose the following to the buyer:
- That the property may be in a special taxing district, and where the buyer can go to find out whether the property is, in fact, within such a district (Colorado Revised Statutes Annotated “C.R.S.A.” § 38-35.7-101).
- If true, that the property is part of a common interest community, which the buyer will be obligated to become a member of and pay assessments to (C.R.S.A § 38-35.7-102).
- If true, that the property has been used as a methamphetamine laboratory, unless it has been fully remediated (C.R.S.A. § 38-35.7-103(3)).
- The home’s source of potable (drinkable) water (C.R.S.A. § 38-35.7-104).
- Any proposed transportation projects (such as a light rail project) that may affect the property (C.R.S.A. § 38-35.7-105), and
- As of January 1, 2016, the surface and mineral estate rights, as well as any oil and gas activity (C.R.S.A. § 38-35.7-108).
Fortunately, the Commission has created standardized forms for sellers’ use in making disclosures. By completing them a seller will ensure that they have disclosed the relevant information that is required by statute, regardless of the manner in which it is disclosed.
The purpose of these disclosure forms is for the seller to inform buyers of known conditions on the property. If you are selling a home, you are required to disclose only facts actually known to you. In other words, you are not required to disclose facts about the property that you “should have known”.
Sellers are obligated to disclose latent property defects to buyers. A latent defect is one that is not obvious on inspection. A broken window is not a latent defect — you can see it. On the other hand, a window that leaks water every time it rains is an example of a latent defect.
Sellers are only obligated to disclose latent defects when they have actual knowledge of such defects. For example, a roof may be leaking into the attic, but the leak is not bad enough to have caused water stains on the ceiling or walls inside the house. It is a latent defect, but the seller would not disclose it because he has no actual knowledge of the leak.
In our experience, the disclosure process is handled very poorly. We do not think that sellers are adequately informed about the extent of their disclosure obligations and the disclosure process is not given the time and attention it deserves. In addition, there can be legitimate questions about exactly what constitutes a latent defect. As stated above, defects may also be present in a property without the seller’s knowledge. For all these reasons, you always need to obtain a good and thorough pre-purchase inspection.
Sellers and agents are responsible for making accurate representations about their properties. For example, when a seller or seller’s agent reports square footage or home owner association amenities, they have to use reasonable care to make sure that such information is correct.
Because mistakes can easily be made, we strongly urge you to independently verify any facts that are crucial to your buying decision. A good example might be school assignments. If having your kids attend a particular school is critical to your buying decision, you should call the school district and verify that the desired school is the one the kids will actually attend – and that the assigned schools are not changing in the next year!