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Colorado requirements for Full Disclosure of real estate contamination

Colorado requirements for Full Disclosure of real estate contamination

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Published by yelenick
Summary of Colorado's disclosure requirements for surface and groundwater contamination affecting real estate transactions.
Summary of Colorado's disclosure requirements for surface and groundwater contamination affecting real estate transactions.

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Published by: yelenick on Jun 15, 2009
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06/14/2009

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Current (April 2009) Legal Requirements for EnvironmentalFull Disclosure
By: John Yelenick 
 
©
Some of the current legal issues addressing "Full Disclosure" between the Seller,Purchaser and their respective agents include:
Under the Comprehensive Environmental Response, Compensation, and Liability Actof 1980 (CERCLA), there is no financial limit to an owner's obligation for thecleanup of hazardous wastes found on his or her property.
The liability extends tothose responsible for the contamination, and to anyone who somehow becomesresponsible for the cleanup, such as a new owner;
The USEPA definition of a CERCLA contamination 'facility' is broadly defined toincluded any area where a hazardous substance release has "come to be located"(CERCLA section 101(9)) the "site" consists of all contaminated areas within the areaused to define the site,
and any other location to which contamination from thatarea has come to be located".1. Residential:
General Warranty Deed 
- The grantor makes five (5) basic promises or 
Covenants
thatwarrant against defects in title that arose either before or during the grantor's period of ownership:
1)
The covenant of 
seizen.
The grantor promises that they have the rightful interestintended to be conveyed, and the lawful right to convey that interest;
2)
The covenant of 
quite enjoyment.
The grantor promises that the grantee will be ableto occupy and enjoy the premises without interference from anyone else with a lawfulclaim to the property, and will indemnify the grantee should any third party establisha superior claim;3) The covenant against
encumbrances.
The grantor promises that the property is freefrom any unspecified encumbrances such as an "unrecorded easement" (there may bespecific, disclosed, encumbrances cited in the Deed such as an easement);
4)
The covenant of 
further assurance.
This promise makes the grantor responsible for any further act necessary to make sure title is clear. If any further instrument or act isneeded to perfect title, grantor promises to provide it at grantor's expense;
5)
The covenant of 
warranty forever.
The grantor promises to be responsible and will bear the expense of defending the title, at any future time, if anyone asserts a rightfulclaim against it.C.R.S. 38-30-113(2)According to Colorado statute, "Covenants of seizin, peaceful possession, freedomfrom encumbrances, and warranty contained in any conveyance of real estate, or of any interest therein, shall rum with the premises, and inure to the benefit of allsubsequent purchasers and encumbrancers."C.R.S. 38-30-121
 
On September 25, 2000, the US Supreme Court affirmed that pursuant to CERCLA,the federal government has a (
unrecorded easement by implication : a UnitedStates Congressional incorporeal right
) right of access to contaminated propertydespite a landowner's opposition to such access {New Orleans v. US, 99-1805}[Note:Chapter 103:CERCLA, (Title) 42 U.S.C. 9604(e) paragraphs (1) and (3)(B)(C)accords EPA a statutory right of access to potentially contaminated property]. EPAand its representatives may enter property, at reasonable times, if EPA determines that"there is a reasonable basis to believe there may be a release or threat of release of ahazardous substance or pollutant or contaminant." Hence, if CERCLA contaminationhas migrated under or upon a property via ground water, an unrecorded easementimpacts the property.
In the
 Lobato v. Taylor 
Case No. 00SC 527, April 28, 2003, 32 Colo. Law. 231 (June2003) the majority decision concluded that contrary to the usual practice in the legalcommunity that generally only documents in the chain of title must be searched todetermine relevant interests in real property, more is required when it appears thatoutside interests may affect title. In such instances, an individual has a duty toinvestigate these other interests, and is charged with knowledge of the facts to whichthe investigation would have led.
Colorado approved Real Estate forms including the "Contract to Buy and Sell RealEstate" require disclosure of all "
unrecorded easements
";
A developer, seller, or contractor may be liable for damages for fraud or negligentmisrepresentation when it makes incorrect statements regarding the nature or qualityof construction, soil conditions, the status of title, or the performance to be expectedof a building. Such fraud or misrepresentation, if committed before the execution of acontract, may allow the contract and any limitations of liability within its terms to beset aside.
Pursuant to Colorado 12-61-405 the Real estate Commission may impose fines, issueletters of admonition, refuse, revoke or suspend a subdivision developer's registrationshould the developer:
(b)
Has misrepresented or concealed any material fact from a purchaser of anyinterest in subdivision;(j)Commits any act that constitutes a violation of the "Colorado Consumer Protection Act", article 1 of title 6, C.R.S.;
(m)
Has failed to disclose encumbrances to prospective purchasers or has failed totransfer clear title at the time of sale, if the parties agreed that such transfer would be made at that time.
Tort Claims for Improper Disclosure - Restatement 2
nd
of Torts Sec. 529:A representation stating the truth as far as it goes but which the maker knows or  believes to be materially misleading because of his failure to state additional or qualifying matters is a fraudulent misrepresentation. A premises owner is liable for acontractor's injuries, only when the owner fails to warn about a hidden hazardous
 
condition. Those conditions include a landowner that knew, or should have known,of a latent, pre-existing hazardous condition and failed to warn the contractor of thecondition.
 Kinsman et al. V. Unocal Corp.,
No. S118561, 2005 WL 3454653 (Cal.Dec. 19, 2005)
Restatement 2
nd
of Torts Sec. 551: Liability for NonDisclosure.
Colorado real estate law 12-61-804(3)(a)
requires "disclosure
to any prospective buyer or tenant all adverse material facts actually known by such broker…
inclusiveof any environmental hazards affecting the property".
(See:
The Denver Realtor, January 2007 
)
(1) A broker engaged by a seller or landlord to act as a seller's agent or a landlord's agentis a limited agent with the following duties and obligations:(b) To
exercise reasonable skill and care
for the seller or landlord;(c) To promote the interests of the seller or landlord with the utmost good faith, loyalty,and fidelity, including, but not limited to:(III) Disclosing to the seller or landlord adverse material facts actually known by the broker;(IV) Counseling the seller or landlord as to any material benefits or risks of a transactionwhich are actually known by the broker;(V) Advising the seller or landlord to obtain expert advice as to material matters aboutwhich the broker knows but the specifics of which are beyond the expertise of such broker;
(1) A broker engaged by a buyer or tenant to act as a buyer's or tenant's agent shall be alimited agent with the following duties and obligations:(b) To
exercise reasonable skill and care
for the buyer or tenant;(c) To promote the interests of the buyer or tenant with the utmost good faith, loyalty, andfidelity, including, but not limited to:(III) Disclosing to the buyer or tenant adverse material facts actually known by the broker;(IV) Counseling the buyer or tenant as to any material benefits or risks of a transactionwhich are actually known by the broker;(V) Advising the buyer or tenant to obtain expert advice as to material matters aboutwhich the broker knows but the specifics of which are beyond the expertise of such broker;
(2) A transaction-broker shall have the following obligations and responsibilities:(b) To
exercise reasonable skill and care
as a transaction-broker, including, but notlimited to:

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