Disclosures in a real estate transaction
I was talking to someone the other day and we were discussing disclosures. I know it sounds boring but I’m a real estate broker in the Denver Foothills It’s what we do! It was an interesting topic because there are multiple parties that need to disclose different things. Yes even the real estate broker has things they need to disclose. Disclosures are extremely important and should not be taken lightly. It can end up costing you an awful lot of money.
The particular thing we were discussing was a brokers obligation to disclose the relationship he had with a buyer he brought to his seller. I Colorado we do not have dual agency. You can only be a transaction broker. So you pretty much need to give people information but not advice. Especially anything pertaining to motive or what the seller will take as their lowest price. As a broker we need to be concerned with the optics of a transaction. Even if it is something simple. For example there is a brokerage firm that also owns a title company. No big deal unless they either force you to use that company or they don’t disclose to you that they are affiliated. A broker also must disclose they are a broker in a transaction they are part of on the sell or buy side. In other words if they are buying or selling for themselves.
Other disclosures you need to think about are for the sellers. They have the most responsibility for the most amount of disclosure. They need to do a lead based paint disclosure (before 1978). They also need to disclose any and all defects of the home that they are aware of. They must tell you if the foundation is cracked or if the roof ever leaked, even if it was fixed. There is an actual property disclosure form that need to be filled out and given to buyers.
For buyers there really aren’t many disclosure issues. The one big one would be if you are unable to perform financially. If your lender tells you that something has come up and there may be a problem with your loan you need to tell the sellers right away.