![]() Accordingly, real estate brokers must disclose those facts they actually know, that a reasonable person would ascribe actual significance to and are contrary to the interests of a party in a real estate transaction. The Commission believes that disclosure of known adverse material facts is an important requirement that brokers must undertake in order to protect Colorado buyers and sellers. Because a broker must actually know the adverse material fact, a broker does not violate Commission rules if he or she did not know the adverse material fact but only should have known the fact. ![]() ![]() For example, if a property owner knows that the foundation is crumbling but never tells his broker, the broker has no duty to disclose that fact because the broker has no knowledge. Examples of adverse material facts include building or zoning violations, water damage to the flooring of property caused by marijuana plants, structural damage to a home caused by insect infestations or expansive soils or any type of lien filed against the property.īrokers need only disclose known adverse material facts.Ī broker need only disclose facts of which the broker has actual knowledge. “adverse”) to the interest of one of the parties, then the broker must disclose it to all the parties.Īn “adverse material fact” includes but is not limited to a fact that affects the structural integrity of the real property, presents a documented health risk to occupants of the property including environmental hazards and facts that have a material effect on title or occupancy of the property. If that material information is contrary (i.e. A broker must consider how that material information affects each of the parties in the transaction, not just the individual party they are representing. Next, brokers should consider whether that material information is adverse to a party’s interest in the transaction. Examples of material facts include facts affecting title, facts affecting the physical condition of the property and environmental hazards affecting the property. Factual information is material when a reasonable person would have ascribed actual significance to the information. In order to answer these types of questions, brokers first should consider whether the information is material. Brokers may have difficulty in ascertaining whether to disclose such facts. For example, a broker may become aware that the roof of the property was recently repaired, or that the property was hit by lightning several times, or that one of the owners of the home for sale is a smoker. Brokers should refrain from advising clients about clients’ disclosure duties, which may be different.ĭuring the course of a real estate transaction, a broker for either side of the transaction may become aware of certain information pertaining to the property. While clients have certain disclosure obligations, they are not addressed in this Position Statement. In all real estate transactions, brokers are obligated to disclose known adverse material facts to all of the parties involved in the transaction. Review the position statement for more information.ĬP-46 Commission Position on Broker Disclosure of Adverse Material Factsīrokers must disclose known adverse material facts. ![]() The statement clarifies what is a material fact, the definition of a "known" material fact, and what situations may psychologically impact or stigmatize property that should not be disclosed. The following position statement has been approved by the CREC and is in effect.
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