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Wednesday, August 9, 2017

What’s a ‘Material Fact’ That Must Be Disclosed by Seller and Listing Agent?

At last week’s meeting of the Colorado Real Estate Commission (CREC), there was lengthy discussion about what constitutes a “material fact” that should be disclosed by the seller and his broker. State law requires the disclosure of material facts, but does not adequately define what’s “material.’

Would you, as a buyer, consider it a material fact that the next door neighbor is a registered sex offender? Or that the house was a meth lab but was mitigated to state standards? Surely many people would, but state law exempts sellers and their brokers from disclosing both of those facts.

Other facts that you might consider material, however, are neither specifically stated nor exempted from disclosure under state law or CREC rule.
No action was taken by the Commission, but the topic will be on the October agenda.
Is it “material” that the neighbor has a rock band that practices regularly?
Is it “material” that the seller suffered from an undiagnosed allergy living in their house, suggesting an indoor air quality problem?
For that matter, why, you might ask, is the seller selling? When I’m representing a buyer, I like to ask the listing broker why the seller is selling. The broker isn’t required to answer, and that question isn’t asked on any disclosure form, but wouldn’t that be useful information, if only to put to rest any fears about a “bad” reason for selling?

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