The Colorado Seller's Property Disclosure
Providing the buyer of Colorado Real Estate with a Seller's Property Disclosure is a common part of Colorado residential real estate transactions. The disclosure contains important disclaimers, which provide added incentives to make sure the disclosure is part of the transaction.
Actual KnowledgeThe Seller' s Property Disclosure should be completed in order to provide information that is correct only as to the Seller's "actual knowledge." Within the section entitled 'Advisory to Buyer,' this is defined as knowledge as of the date of signature of the form and is limited to facts actually known by the seller and does not include what seller 'should have known.' This is important in defining liability for representations (or lack of same) which may arise after the transaction is complete. As the seller, or the seller's broker, any contractual language that prevents future liability (or the unwinding of the deal) is an important aspect of the transaction. While the standard language in Colorado's Residential Real Estate Sale Agreement (see Section 10.2) often contains "as is" language, the additional protections afforded the seller in the Seller's disclosure are legally helpful.
Section 6 of the Advisory to BuyerWithin the Seller's Property Disclosure, there is flush language following the disclosure itself that is titled, "Advisory to Buyer." Section 6 contains an acknowledgement that Buyer understands that the "Seller is not warranting that the property is fit for Buyer's intended purposes" and that there is no continuing, on-going warranty as to structural items or fixtures. While helpful, the Seller (or broker) should consider making this warranty disclaimer more prominent (ALL CAPS in Bold, for example) and more full in order to properly disclaim both the warranty of merchantability and fitness for a particular purpose. This is because other parts of Colorado law (i.e., the Colorado Uniform Commercial Code) often require that warranty disclaimers be as prominent as possible so there is no misunderstanding between the parties.
ConclusionProviding the Seller's Property Disclosure is an optional part of a residential real estate transaction. However, because of the legal value of the disclosure, a well-advised Seller should almost always include it as part of the transaction.