Property Disclosures
Sellers and licensees have duties to disclose material facts about a property's condition and known hazards. This chapter covers federal disclosure requirements and general principles of material fact disclosure. Colorado also requires a Seller's Property Disclosure form, reinforcing these obligations.
Material Facts and the Duty to Disclose
A material fact is information that could affect a reasonable buyer's decision or the property's value. Licensees must disclose known material defects even when representing the seller, because honesty overrides loyalty. Failing to disclose known problems can lead to liability for misrepresentation or fraud. Latent defects, which are hidden and not readily observable, are especially important to disclose.
Federal and Environmental Disclosures
For most housing built before 1978, the federal lead-based paint law requires a disclosure form, the EPA pamphlet, and a ten-day inspection opportunity. Other environmental concerns may include radon, asbestos, mold, and underground storage tanks. Some hazards trigger state disclosure requirements as well. Providing accurate environmental information helps buyers assess risk and protects the seller and licensee.