Colorado Seller’s Property Disclosure Form—Disclosure Requirements
Most contracts for Colorado home purchases use the standard form provided and approved by the Colorado Department of Regulatory Agencies (“DORA”) – Division of Real Estate. The standard forms include the “Seller’s Property Disclosure” form that is intended to detail all past and present issues with the home. There are several important considerations that all sellers, buyers and their agents should know about the Seller’s Property Disclosure form. Confusion about the contents of this form often leads to subsequent litigation either because the seller did not appreciate the full extent of their obligations or the buyer believed that the seller’s obligations were greater than they really are.
The 2018 Seller’s Property Disclosure form has been revised to address many of the past issues that have arisen in seller disclosure lawsuits. The form makes clear that the seller is only responsible for “seller’s current actual knowledge” and is not responsible for facts that the seller “should have known” based on “common knowledge” or “constructive knowledge.” This distinction is critical because it suggests that the seller cannot be responsible for non-disclosure if the seller did not actually know about the problem – no matter how obvious the defect should be to an ordinary person. For example, even if the home wreaks of mold, the seller may not be responsible unless the buyer can prove that the seller actually knew about the mold. This rule is particularly problematic when the seller did not live in the home because the seller may have very little actual knowledge.
Knowledge of Known or Repaired Issues and Defects
While the Seller’s Property Disclosure form protects the seller in many ways, it also places a duty on the seller to be transparent with respect to known defects. The most common mistake that sellers make is to assume that they have no obligation to disclose previous problems that were repaired and “fixed.” The 2018 Seller’s Property Disclosure form makes this absolutely clear by stating in bold, capital letters: “if you know of any of the following problems EVER EXISTING check the ‘yes’ column.” This means that even if the issue was repaired, the seller must still disclose the problem. There is a common sense explanation for this requirement because buyers are entitled to assess whether the repair was adequate and to investigate it further. This is especially true if the issue is latent or concealed. Without disclosure of a past issue and the repair, the buyer will have no way to assess its effect on the home. This requirement exists for almost every category of disclosure, including past legal, zoning, or environmental issues. For example, if the home was raided in the past by the police due to an illegal marijuana operation, the seller must disclose this even if the problem no longer exists.
To learn more about the claims arising from a failure to disclose during the purchase and sale of real estate, take a look at Legal Claims Arising From a Seller’s Failure to Disclose.