When selling your home, you are obligated by law to disclose certain information about your property. Colorado has a written Sellers Property Disclosure form that provides spaces for sellers to complete the form with space to add any additional information. We always tell our clients that best practice is to disclose, disclose and disclose! You are far safer disclosing something you don’t think even matters than withholding it.
1. The Basics
Most states require sellers to disclose basic facts about their home in standardized disclosure forms when listing it for sale. Nearly all the questions are in yes/no format but Colorado’s provides a check box for Yes if applicable and then a space to write any necessary notes pertaining to the subject. The questions and forms address material facts, major defects, federal disclosures and special disclosures. All forms vary by state and require different information. To view a standard Colorado Seller’s Property Disclosure, click here for the 2018 version.
2. Material Facts
You’ll hear your agent refer to material facts when listing or buying. Put simply, a material facts include anything that may influence a buyer’s decision to purchase the home. These include the age of the property, it’s condition, known problems and defects. These disclosures require you to address known defects and things that are reasonably apparent. This is to ensure that you are not knowingly hiding a major defect of the home such as a cracked sewer line.
3. Major Defects
All major defects must be disclosed. For example, if your home’s electrical is not up to code (and you are aware of this), this would need to be disclosed. Repairs you have completed, as well as upgrades and improvements, should also be listed. Remember, it’s better to over disclose than under disclose so if you are selling your home and know about it, write it down!
4. Federal Disclosures
Every state will have its own laws regarding disclosures, so forms will vary depending on where you live. Federal disclosures are those that are required by federal law. A federal disclosure, such as Lead Based Paint, is required for all transactions in which the home was built before 1/1/1978.
5. Special Disclosures
Special disclosures might be required in certain states or areas within a state. Sometimes this is part of the residential disclosure form and other times it is a separate document. Special disclosures are those that address conditions that could affect the home or property. An example of this would be a home that’s located in a flood zone or a home along a fault line.
6. Items Not Required
The seller does not have disclose why they are moving from the property, personal circumstances or anything outside of the condition and any known material defects. In fact, in Colorado, you don’t have to disclose if there was a homicide, felony or suicide. This type of knowledge is considered stigmatizing the property and “the Colorado legislature expressly declares that facts or suspicions regarding circumstances that could psychologically impact or stigmatize property are not material facts subject to disclosure.” To read more about this concept, check out this CRES Article. Some people are not bothered by the fact that a murder was committed in a home while others could never sleep soundly at night so at our firm, we recommend doing as much due diligence on searching the property and speaking with the neighbors. There’s no surefire way to know everything that happened in the house but the hope is that between all of the property disclosures provided by the seller and the power of the internet, you can at least get a good picture of the home’s history.