CP-46 Commission Position Explained
CP-46 Commission Position on Broker Disclosure of Adverse Material Facts
We asked the law firm of Frascona, Joiner, Goodman and Greenstein for an interpretation of the disclosure obligations imposed by the new Colorado Real Estate Commission position statement 46.
Excerpts of the response from Jordan May and Jon Goodman
Why was CP - 46 published?
♦ The Colorado Division of Real Estate sees a substantial number of complaints against real estate brokers resulting from a broker's failure to disclose adverse material facts. The CREC published CP 46 to assist brokers in determining the types of issues that require disclosure and to whom such issues should be disclosed.
What are the implications of CP - 46?
♦ While leaving certain matters open for interpretation, CP 46 attempts to provide guidance to brokers on the type and extent to which certain property-related issues need to be disclosed by way of offering examples of facts and circumstances that should or should not be disclosed in a Colorado real estate transaction.
♦ CP 46 offers certain limited examples of what matters may be considered adverse material facts requiring disclosure. Such examples include issues related to a property's physical condition and the legal title to the property.
♦ CP 46 does make clear that the Commission expects brokers to refrain from advising clients about clients' disclosure duties which may be different from those disclosure obligations imposed on brokers. It may be appropriate for a broker to advise their client to contact a lawyer to obtain advice regarding such client's disclosure obligations.
♦ CP 46 also endeavors to describe certain facts and circumstances not requiring disclosure, including facts or suspicions which may psychologically impact or stigmatize a property pursuant to C.R.S. § 38-35.5-101.
What should Brokers do following CP- 46?
♦ As each transaction is unique, Brokers are encouraged to evaluate their disclosure obligations on a case by case basis. When a broker is in doubt about disclosure obligations in a certain circumstances, such broker could consult his or her employing broker and, if necessary, an attorney.
