When you're selling a piece of real estate property, you will be exposing yourself to a certain amount of legal risk. Most lawsuits relating to real estate, however, stem from the seller's failure to disclose specific facts and information relating to the property. As such, any party who plans to sell a property should take steps to ensure that he or she has fully disclosed all relevant facts and information to prevent a lawsuit later on down the road.
In Colorado, you must disclose any latent defects relating to the property that you are aware of. Latent defects aren't visible, and wouldn't be seen with a casual inspection, but the seller is aware of them. An example of a latent defect would be a basement that fills with water every time it rains too hard. Things like this you definitely need to disclose to any potential buyer to avoid liability.
Just to be extra safe, you should consider overdoing your disclosures; however, you may also want to discuss with your real estate lawyer what things you are exempt from disclosing. Here are, for example, a few things that you don't have to disclose in Colorado:
- That the previous occupant may have had HIV/AIDS.
- That a felony, murder or suicide happened on the property.
- Facts that could "psychologically" affect the property, like the suspicion that it is haunted.
Even if a situation like the examples above applies to your property, you may want to discuss with your lawyer about whether you should disclose it or not. An experienced Colorado real estate lawyer will be invaluable in helping you disclose the right information about your property before a sale.
Source: Colorado Home Realty, "Full discosure minimizes legal risk," Mike Cooke, accessed Aug. 24, 2017