Even though we are witnessing a strong seller’s market, there are still many steps a seller can take prior to listing their home for sale that will increase appeal, encourage offers, and reduce the likelihood of negative issues arising both during the contract process, and after closing. This last point is key, as a seller’s liability for the home does not end at the closing table.
Underpinning Colorado real estate law is the concept of caveat emptor – let the buyer beware. As it relates to real estate, caveat emptor springs from the recognition that the buyer is at a disadvantage to the seller, in that the seller knows much more about the property than the buyer.
The onus is then placed on the buyer to perform their due diligence through physical inspections of the property and its workings, research of title and ownership, homeowners association regulations if any, and surveys of property boundaries and improvements.
While the onus to inspect is placed on the buyer, the seller cannot wash their hands of this process. The vast majority of real estate-related lawsuits spring from a seller’s failure to disclose known issues affecting the property, be they physical, zoning, or neighborhood related.
When deciding whether or not to disclose a known issue, sellers are well advised to remember that nobody was ever sued for disclosing too much information about a property. Sure, this might mean that an occasional prospective buyer walks away, but that is much easier to overcome than a date in court further, potentially years, down the line.
The law requires disclosure of any material fact relating to the property that a prospective buyer could reasonably expect to want to know. What counts as ‘reasonable’ is a matter for the courts to decide, but anytime a seller finds themselves wondering “Should I disclose. ...” the answer should invariable be “Yes!”
Disclosure should include any current issues or repairs made to the property in the past — for example a roof leak, burst pipe, electrical defect — even if said issue occurred years ago and has been fixed, with no further problems since. Disclosure should also include knowledge of any significant changes in the offing in the immediate area—a new road being built, eminent domain on a neighboring property, etc.
Sweeping such issues under the rug invariably comes back to bite. If you don’t tell the buyers of that chimney fire last winter, surely one of the neighbors will on move in day. These same requirements of disclosure also bind the seller’s agent. Realtors too are required to disclose any material fact affecting the property of which they have actual knowledge.
Fortunately, the real estate commission has provided a cast-iron means by which a seller can avoid any ongoing liability for the property after closing, in the form of the Seller’s Property Disclosure form.
This form provides the seller with the ideal opportunity to disclose to the buyer, in writing, actual knowledge of any issues, past, present, or future, that may affect the buyers quiet use and enjoyment of their new home.
Hayden Mellsop is a Realtor with Pinon Real Estate Group and a former fishing guide.