It seems like over the last several years, we've seen significant changes to the Colorado Contract to Buy and Sell Real Estate each year. The 2013 Colorado Real Estate Commission (CREC) approved Contract is no exception. Among the many changes, I would like to focus this discussion on one important change in some detail. Section 8.2 of the Residential contract addresses the Seller's obligation to disclose issues of "Off-Record Title" to buyers.
Ideally, these are matters pertinent to the property being sold that are not of public record. This might include surveys, boundary disputes, fences in the wrong place or other encroachments, apparent easements or parties in possession (adverse claimants)with possible claims of adverse possession or easement by prescription, all kinds of liens including tax liens not yet recorded or liens for governmental improvements not yet installed, recent work to the property with or without lien wavers, unrecorded easements, unrecorded leases, water rights, written notices affecting the property, shared access or driveway encroachments, unrecorded surface use agreements, rights of first refusal, options, contracts for deed, unpaid bills for labor, materials or fixtures, unpaid taxes which could become a lien, unrecorded mineral agreements or deeds, unpaid municipal utilities, open permits, or perhaps other unrecorded matters affecting the property. Other matters might include past radon test results, engineering or other studies, and past inspection reports, financials, etc.
It would seem to be in keeping with the spirit of laws like the Colorado Consumer Protection Act and other consumer protection laws to disclose these matters to a buyer. When the Off-Record matters clause was first introduced, it was often taken lightly if not ignored. The myriad of things it could cover was not well understood.
The 2013 Colorado Contract to Buy and Sell now states "Unless disclosed in writing, Seller represents and warrants that there are no off-record matters." This may put a layer of significant responsibility on the seller to keep good records of such matters, not take them lightly, and definitely not conceal them from a buyer.
To make matters somewhat confusing, the CREC approved contract also has separate Sections 10.6 and 10.7 referencing the disclosure of "Due Diligence Documents". Confusion might come in trying to differentiate between the two, what disclosure requirements should be met when the buyer has not asked for the form in due diligence, as well as the fact that their is no comprehensive list as to what these categories might or might not entail.
Fortunately, Section 20 states that buyer and Seller acknowledge that the respective broker has advised that this contract has important legal consequences and has recommended the examination of title and consultation with legal and tax or other counsel before signing this contract.
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