Selling a Colorado Home: What Are My Disclosure Obligations?

Before you finalize your house sale in Colorado, prospective buyers will want to know as much as possible about the property's physical condition and any problems that could affect the house's value, use, or desirability. Unlike in the past, when sellers were allowed to stay silent until asked about problems under the doctrine of "caveat emptor" (buyer beware), Colorado requires sellers to tell prospective buyers about certain conditions on the property being sold.

Failure to comply with seller disclosure laws might result in your being held liable for costs and fees associated with the nondisclosure.

Federal Disclosure Requirements

In addition to Colorado's state disclosure laws, federal law requires sellers of property built prior to 1978 to disclose the existence of lead-based paint on the property. (42 U.S.C.A. § § 4851-56.)

If your house was built before 1978, you will need to:

• supply prospective buyers with a copy of the Environmental Protection Agency's pamphlet "Protect Your Family From Lead in Your Home"
• attach to the contract (or insert in the contract) a "Lead Warning Statement" and a confirmation that you've complied with all notification requirements; and
• provide a 10-day period for the buyer to conduct a paint inspection or risk assess

Colorado's Disclosure Laws

Colorado state statutes require that sellers of residential property disclose the following to buyers:

• That the property might 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. (Colo. Rev. Stat. § 38-35.7-101.)
• If the property is part of a common interest community, the seller must use specific language to disclose certain information about the community. (Colo. Rev. Stat. § 38-35.7-102.)
• If the property has been used as a methamphetamine laboratory, seller must disclose such use unless it has been fully remediated. (Colo. Rev. Stat. § 38-35.7-103.)
• The home's source of potable (drinkable) water. (Colo. Rev. Stat. § 38-35.7-104.)
• Any proposed transportation projects (such as a light rail project) that affects or is expected to affect the property. (Colo. Rev. Stat. § 38-35.7-105.)
• If the property is a newly built single-family detached home, the seller must provide to the buyer a list of businesses in the area that offer residential solar installation services. (Colo. Rev. Stat. § 38-35.7-106.)
• Specific information regarding surface and mineral estate rights, as well as any oil and gas activity. (Colo. Rev. Stat. § 38-35.7-108.)
• If the property is located within the boundary of a metropolitan district organized on or after January 1, 2000, the seller must provide the purchaser with the official website established by the metropolitan district. (Colo. Rev. Stat. § 38-35.7-111.)
• Information about radon and the recommendation to have a radon test. The disclosure must also include any knowledge the seller has about current radon concentrations, radon tests, and radon mitigation. (Colo. Rev. Stat. § 38-35.7-112.)

Further, sellers' real estate brokers have their own disclosure obligations to buyers (such as the Square Footage Disclosure), which are not discussed in this article.

Colorado Seller Disclosure Forms

The Colorado Real Estate Commission (Commission) requires sellers who are working with real estate brokers to use pre-approved disclosure forms. Owners who are selling for-sale-by-owner can also use these forms.

Standard Seller's Property Disclosure Forms

The Commission has created standardized forms for sellers' use in making disclosures. Use of these forms is not required by statute, but it's generally recommended that all sellers use them anyway: If a seller completes these forms, they can rest assured that they've disclosed the information that is required by statute.

There are three approved seller property disclosure forms: residential, commercial, and land. A seller of a residential property should use the Seller's Property Disclosure (Residential).

Generally speaking, the standard disclosure forms ask the seller to make the state-required disclosures (listed above); provide a checklist of items for the seller to describe or comment about; and offer space for sellers to supply other information, such as the existence of boundary disputes or zoning violations.

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," nor are you required to perform any inspections of your property in advance of filling out the form. (Even so, many sellers choose to have their property inspected in advance of filling out disclosure forms, so that they can fix some of the issues and avoid surprises when the buyers do their inspections.)

Colorado sellers have a duty to update the disclosure forms when they learn any new information. Changes must be made promptly, without any delay.

If the property for sale includes more than one structure, sellers should use the Commission's Seller's Property Disclosure Supplement (Additional Structure) form to describe its condition.

Lead-Based Paint Disclosures (Sales)

Along with the federal lead-based paint disclosures discussed above, the Commission requires sellers working with brokers to provide buyers with the Colorado Lead-Based Paint Disclosure (Sales) form.

The seller must also acknowledge in writing their duties relating to lead-based paint. Sellers can use the Lead-Based Paint Obligations form to accomplish this. The form makes it clear that sellers must keep a copy of the Lead-Based Paint Disclosure for three years after the date of sale.

It is important to note that the Colorado Contract to Buy and Sell requires the Lead-Based Paint Disclosure form to be completed and fully executed prior to the time the contract is signed by all parties, including the brokers. If this does not occur, the Contract to Buy and Sell is considered void.

Green Disclosure Form

The Green Disclosure (Energy) form informs the buyer about the seller's current, actual knowledge of the energy-related features of the property. For example, the form lists options regarding sustainable materials, indoor air quality, construction type, and ENERGY STAR appliances, among other things. By filling out this form, the seller is completing one of the steps which will allow their broker to market the property as "Green" on the Multiple Listing Service ("MLS").

The form states specifically that it should be completed by the seller, not the seller's broker.

Method and Timing of Colorado Disclosures

How and when sellers must disclose information about their house to buyers depends on the subject matter being disclosed. For example, both the disclosure that the property is within a common interest community and the language regarding special taxing districts must be made within the contract for the sale of the property. The Lead-Based Paint Disclosure must be executed by the parties before entering into the purchase contract.

Regarding the timing of general disclosures of the physical condition of the property to the buyer, the contract to purchase the property will generally establish the disclosure (and inspection) window. Buyers and sellers can negotiate those dates.

Property Covered by Colorado Disclosure Rules

Is your property among the types covered by these disclosure laws? The statute doesn't provide any one definition. It does, however, define "residential real property" in two specific contexts, which are a good indication of the state's approach:

• Residential real property (for purposes of whether sellers need to disclose a meth lab) includes: manufactured homes; mobile homes; condominiums; townhomes; homes sold by the owner, a financial institution or the Federal Department of Housing and Urban Development (HUD); rental property, including an apartment; and short-term residences such as a motel or hotel. (Colo. Rev. Stat. § 38-35.7-103(5).)
• Residential real property (for purposes of whether sellers need to disclose the property's source of potable water) includes: residential land and residential improvements other than hotels and motels, and mobile homes if the mobile home is permanently affixed to a foundation. (Colo. Rev. Stat. § 38-35.7-104(3).)

The oil and gas activity disclosure requirement as well as the transportation projects disclosure requirement apply to all residential real property that is subject to the Commission's jurisdiction.

More Information on Colorado Real Estate Disclosure Laws

To obtain Colorado real estate disclosure forms, other form documents (including sales contracts) and additional information, see the Colorado Department of Regulatory Agencies Division of Real Estate's Real Estate Contracts and Forms page.