Deciding How Thoroughly to Inspect the Property
Personal representatives and successor trustees are a very different kind of seller than any other form of real estate seller in Colorado. This is because personal representatives and successor trustees often do not have the same level of knowledge about the house they are selling that a normal seller does. In fact, many personal representatives and successor trustees have never set foot in the house they are going to sell. It’s often the case that the personal representative or successor trustee lives outside of Colorado, while the decedent died a resident of Colorado, leaving real estate in this state.
The Colorado Real Estate Commission-approved forms used to sell a home usually call for the seller to make extensive disclosures about the state of the property to the buyer through the use of a Seller’s Property Disclosure Form (“SPD”). Most people assume, incorrectly, that filling out a SPD form is mandatory for the seller. It is not.
What if the seller doesn’t really know the condition of the property? Should the personal representative or successor trustee inspect the home himself? Should he hire a home inspector to prepare a report informing him about the state of the residence? Should personal representative or successor trustee make any disclosures at all? These are all vital questions to be answered when preparing to list a probate property. With disclosure issues being one of the most litigated topics in residential real estate transactions, getting the correct answer to these questions is vital to protecting the personal representative or successor trustee from being sued for nondisclosure of a material defect after the transaction closes.
A knowledgeable probate real estate broker can help advise you at this juncture of the selling process. Although most sellers think there is a law requiring the seller to provide an SPD in a residential transaction, this is not the case. There is no legal requirement to provide an SPD. There is, however, an obligation to advise the proposed buyer of any material defect in the house that the seller actually knows of. If you already know of a material defect in the house, you can’t choose to not disclose it.
There is no duty to disclose how the decedent died in his or her residence. This is an issue which could psychologically impact or stigmatize real property, and which the Colorado legislature has determined does not need to be disclosed to a potential buyer. (See C.R.S. §38-35.5-101)
If the personal representative or successor trustee chooses not to inspect the residence or provide an SPD, he needs to be protected from the buyer forcing information onto him that will then need to be disclosed to subsequent buyers, even if he doesn’t know if it’s correct. If a potential buyer conducts her own inspection and sends a copy of the inspection report to the personal representative, that information will most likely have to be disclosed to any future buyer, regardless if the personal representative believes it to be correct. Appropriate language in the purchase contract can be negotiated by a probate real estate agent that allows for the buyer to inspect the property and offer a price adjustment based upon their own findings, but not send the report to the personal representative. This is vital protection a probate seller needs to discuss with his broker at the outset of representation.
