“Buyer Beware” are still the best words of wisdom for everyone in any kind of home purchase transaction.
When it comes to buying a house in Colorado, the Real Estate Commission requires four types of disclosures by a seller to a buyer. These make it easier for home buyers to feel more secure when it comes time to close the deal.
When a buyer and seller enter into a Contract to Buy and Sell a home, a buyer acknowledges a seller is selling a property in an “As Is” condition, “Where Is” and “With All Faults.”. The seller has certain obligations to let the buyer know of any known defects with the property, as well as other issues.
Real estate professionals encourage their seller clients to be on the side of caution and disclose everything that might be considered an issue by a buyer. The main disclosure comes in a legal document called a Seller’s Property Disclosure.
Here are the four types of information a home seller is expected to disclose.
Material Defects
This is the biggest area of concern that buyers want to know about. Does the roof leak when it rains? Has it ever leaked? Are there cracks in the foundation? Is the plumbing, sewer, or electrical in need of service? Are there critters living in the attic or crawlspace? Was there ever a flood in the basement? Do all the appliances, heating or cooling systems work?
Basically, a “material defect” is defined as anything a seller has current actual knowledge about that would devalue the property in a buyer’s mind. And what actions has the seller done to address any.
Failure to disclose seasonal problems are problematic, like a spring downpour where water seeps through a foundation wall. This is called a latent defect – underlying or hidden. This is especially dangerous for a seller because sellers can be “on the hook” for what they disclose (or more importantly fail to disclose) for up to ten years after the sale has closed.
Environmental Issues
For homes constructed or a building permit was issued prior to January 1, 1978, does the house contain lead-based paint?
Is there asbestos?
Does the house have a high radon reading? Is there an operating mitigation system? While radon gas exists most everywhere in the U.S., Colorado seems to be more prone to it because of our mountain ranges and decaying Uranium in the rocky, clay soils.
Is the home near a dump or have underground storage tanks?
Is it in a floodplain?
Zoning and Other Issues
Is the vacant lot across the street or behind the property soon to become a gas station or fast food outlet?
Is the neighbor planning to build an addition on their house that will block the view of the mountains?
Any access problems?
Is it part of a Common Interest Community (Owner’s Association)?
Was the Property previously used as a meth lab and not remediated?
Stigmatized Issues
Most buyers would like to know if a death occurred on the property or in the house. It is not mandatory for a seller to tell a buyer of a murder or suicide. However, things like this are generally recommended to a seller to disclose.
How do most buyers discover a seller likely knew about a particular problem but did not reveal it? Neighbors! From past conversations to service vehicles spotted at the house, neighbors know a lot.
So even if the law says a buyer purchases a property in an “As Is” condition, “Where Is” and “With All Faults,” the best advice to sellers is to disclose everything you know about the property.
