In Colorado, real estate brokers and attorneys use a standard contract
to buy and sell real estate that has been approved by the Colorado Real
Estate Commission. The standard contract requires that the seller complete
a property disclosure form that explains the conditions of the property
as the seller knows them to be. It is very important for the seller to
carefully read each section prior to filling out the disclosure form because
different sections have different standards of disclosure.
For example, in a residential sale, the disclosures relating to structural
conditions ask: “Do any of the following conditions now exist or
have they ever existed,” and goes on to list defects such as structural
problems, moisture and/or water problems, damage due to animals, among
other items which would be important for a potential buyer to know before
signing a contract. However, the disclosures relating to the roof ask:
“Do any of the following conditions now exist.” From the plain
language of the disclosure form it is obvious that the seller is required
to disclose any historic defect prompted in the structural condition section,
while the seller only needs to disclose the current condition of the roof.
Carefully reading the disclosure form prior to filling it out cannot be
stressed enough! For instance, although the roof section only requires
the seller to list conditions that now exist, it has subsections that
require disclosure of past issues, such as past roof leak and past damage
to roof. In this instance, if the seller knows that there was a past roof
leak or past roof damage, such historic damage is a condition that now
exists and disclosure is required. Counterintuitive, right?
If a seller fails to disclose known defects which are required to be disclosed
on the disclosure form, the seller can be held liable for breach of contract.
When filling out the disclosure form, the seller must provide accurate
information to the seller’s current actual knowledge. The seller
is not required to disclose defects which the buyer may think the seller
should have known. Likewise, the seller is not required to inspect the
property to find out what could be wrong with the property.
Since the seller only has to disclose what they actually know, all the
facts of the transaction must be carefully considered before a buyer asserts
a claim for failure to disclose defects. A seller that built and resided
in a house will likely have more knowledge of the property condition than
a seller that used the house as a rental investment. Similarly, a seller
that is a professional engineer or contractor probably will know more
about the condition of a property than a seller that has no engineering
or construction background.
Proving the seller had actual knowledge of a defect is a difficult task.
Additionally, the form real estate contract states that the property is
being sold as-is. Therefore, buyers have a difficult burden, which makes
it important to have an attorney who knows the ins and outs of failure
to disclose cases.
Since the outcome of failure to disclose cases are so dependent on strong
legal arguments it is important to have a strong attorney by your side.
The attorneys at Jorgensen, Brownell & Pepin, P.C. have many years
of experience prosecuting and defending failure to disclose cases.