Every few years, the Division of Real Estate releases a revised Sellers Property Disclosure to be used by real estate brokers. A forms committee suggests revisions which then must be approved by the Colorado Real Estate Commission.
I wasn’t a big fan of the version which was released in 2018, but I’m a big fan of the one which is mandatory beginning on January 1, 2023. There are disclosures for each type of property. In this blog post, I’ll only talk about changes to the one for residential listings. Here’s a link to it, which you will need to download to scroll through it.
Some of the changes are subtle — for example, the seller is told to disclosure adverse materials facts instead of defects. That makes sense, since there was no definition of “defect” in the 2018 version.
Other changes are more substantive. For example, instead of just asking if the property is in an HOA, it asks for the name of the association(s) and contact information for each. If the neighborhood has cluster mailboxes, it asks for the location and number of the mailbox.
At the top of the form, it asks when the seller acquired the property, not only the year it was built as in the 2018 form. It also asks the seller to attach any reports, receipts or other documents “you believe necessary for the information you provide to be complete.” There was no such request in the prior version.
The seller is asked whether the home is subject to deed restrictions or affordable housing restrictions, and whether it is in a historic district. This is new.
Another sign of the times is that instead of asking if there is or has been tobacco smoke, it refers only to “smoking” and adds in parentheses “including in garages, unfinished space, or detached buildings.”
Under “Access and Parking,” the form asks if there are any limitations on parking or access due to size, number and type of vehicles. Instead of asking if there are “any access problems,” it asks the broader question of whether there are “access problems, issues or concerns.” Those three words are used elsewhere to expand on the question of “problems.”
In the section on “Use, zoning and legal issues,” instead of asking simply whether any additions or alterations have been made, it specifies whether they were made with a building permit and without a building permit, including “non-aesthetic alterations,” which is undefined. It also asks whether the property has been used for short-term rentals in the past year and whether there are “grandfathered conditions or uses.”
Under “Sewer,” the form asks for the name of the sewer service provider, the date of the last sewer scope, the date of the last septic use permit, inspection, and pumping — all useful information.
In the “Water” section, the form asks for the location of the water shutoff. If there’s a well, it asks the date of the last inspection and service. It asks the gallons per minute (GPM) of the well as of a specified date, and it asks the size in gallons of any cistern. Lastly, it asks whether the seller purchased any supplemental water in the last two years — an indication of the well’s adequacy.
The form asks the seller to identify the electricity, cable TV and internet service providers.
The instructor of the class I took regarding these new contracts and disclosures reminded us that the sellers property disclosure is to be accurate as of the date the home goes under contract. Therefore, if the property goes under contract after Dec. 31, 2022, this new form must be completed by the seller, but it does not need to be replaced if the listing is already pending but does not close until 2023.
That led me to adopt a new “best practice” which I’ll share here with my fellow listing agents. Instead of having the seller complete and sign the sellers property disclosure when I list the home, my practice henceforth will be to have the seller complete the document at the time of listing but to review and sign it only after going under contract with a buyer, thereby assuring that it is accurate as of the purchase contract date, as stated on the disclosure.