Selling a Colorado Home: What Are My Disclosure Obligations?

Before you finalize your house sale in Colorado, a prospective buyer 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 now requires sellers to actually 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

Before we get to Colorado's state disclosure laws, you should realize that every home buyer across the U.S. needs to comply with any applicable federal law. The main one likely to affect you 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 you house was built back then, 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."

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. Ann. § 38-35.7-101 (2020).)
• 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. Ann. § 38-35.7-102 (2020).)
• If the property has been used as a methamphetamine laboratory, seller must disclose such use unless it has been fully remediated. (Colo. Rev. Stat. Ann. § 38-35.7-103 (2020).)
• The home's source of potable (drinkable) water. (Colo. Rev. Stat. Ann. § 38-35.7-104 (2020).)
• Any proposed transportation projects (such as a light rail project) that affects or is expected to affect the property. (Colo. Rev. Stat. Ann. § 38-35.7-105 (2020).)
• Specific information regarding surface and mineral estate rights, as well as any oil and gas activity. (Colo. Rev. Stat. Ann. § 38-35.7-108 (2020).)

Further, sellers' brokers have certain obligations to buyers, which are not discussed in this article.

Other Colorado Seller Disclosure Forms

Now let's turn to the forms that the Colorado Real Estate Commission (Commission) requires sellers who are working with real estate brokers to use. 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 mandated by statute, but 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 main standard disclosure form is entitled "Seller's Property Disclosure." There are three forms of "Seller's Property Disclosure": residential, commercial, and land. A seller of a residential property should use the Seller's Property Disclosure (Residential).

Generally speaking, these standard Seller's Property Disclosure forms ask the seller to make the state-required disclosures (listed above), provides a checklist of items for seller to describe the condition of or comment on, such as appliances, systems (electrical, heating, plumbing, roof, structure, and the like), and has 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 commission any inspections of your property in advance of filling out the form. Nevertheless, 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.

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 Real Estate Commission (Commission)'s Lead-Based Paint Disclosure (Sales) form.

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 his or her 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. 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. Ann. § 38-35.7-103(5) (2020).).
• 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. Ann. § 38-35.7-104(3) (2020).)

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 Contracts and Forms page. Also be sure to consult with a local real estate attorney if you have questions related to your disclosure requirements and other legal aspects of your home sale.