When Real Estate Sellers Don’t Want to Disclose — and What Buyers Should Be Wary of

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Have you ever encountered a seller who doesn’t want to disclose? In many states, certain things must be disclosed. To facilitate this, states like Colorado have a Real Estate Commission- approved Seller’s Property Disclosure form. What happens when the seller chooses not to complete the disclosure form? 

In Colorado, use of the disclosure form isn’t required, but it does make it easier for sellers to ensure they’ve disclosed any required information. So be wary of sellers who trynot to disclose—especially if they ask the buyer to sign something instead of providing a disclosure form. 

Risky Disclosure Business for the Buyer

Recently, a CRES client called the CRES ClaimPrevent® Hotline, because the seller was asking the buyer to sign a “disclosure” the seller had created. The seller was an investor who didn’t want to provide a completed Colorado Real Estate Commission-approved Seller’s Property Disclosure form. Instead, the listing agent prepared something he called a “disclosure” for the buyer to sign off on. 

Instead of disclosing anything about the property, the seller wanted the buyer to acknowledge that the property was being sold as is. Even more concerning, the document was designed to waive the seller’s duty to disclose known adverse material conditions and indemnify the listing broker.  

If you were in this situation, what would you do? Our legal team had this advice:

  1. Advise your buyer client not to sign this “disclosure,” and document that you have done so.
  2. Advise your client to consult with an attorney, if the buyer is insisting on getting a property disclosure from the seller. 
  3. Advise the buyer to have as many inspections, surveys, tests, research of public records and reviews of the property as possible to their satisfaction, since the seller is unlikely to provide any disclosure. (If your client asks for referrals, make sure to protect yourself by handling the request in the right way.)
  4. Do not discourage the buyer from investigating any condition of the property.

As always, document any advice you have made in the client’s file. 

When in Doubt, Call Your CRES Legal Team 

If you have a question about disclosure forms or other disclosure issues, wouldn’t it be a relief to know you had access to legal advice? CRES clients can call the CRES ClaimPrevent® Hotline 7 days a week. You’re guaranteed to receive a response within 4 hours or the next business day. Plus all recommendations are confirmed in writing.

What kinds of documents has a client brought in that made you want legal advice? 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published February 19, 2020

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