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Law Offices of Ronald W. Rutz
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October 19, 2005: Buyer Beware

Q: Several realtors have asked me to write again about haunted houses. So in the "spirit" of the season, here is an updated column.

A: Oh my gosh. Is this house haunted? As a buyer or seller "what are you gonna do?" Before I answer your question directly, letÕs spend a few moments strolling down real estate disclosure lane.

Not too long age the rule was buyer beware. It was up to the buyer to inspect the premises and make appropriate inquiries. As time went on, "known defects" were required to be revealed by the seller. Thus, usually the issues in dispute were about what was known and whether the defect was something that warranted disclosure.

The law continued to evolve to require the seller to make a reasonable inspection and disclose anything that might "materially affect the sales price." The issues of what that sellerÕs duty might include and whether the item was that significant bounced around, often ending up in Court for the judicial system to decide on a case by case basis.

A while back the Colorado Real Estate Commission developed a SellerÕs Property Disclosure Statement that comprehensively lists various physical, structural, environmental, and miscellaneous items, totaling 94-plus areas with additional blank spaces to add any other "problems" that could have a material affect on the property. (I bet you did not realize how many important items there are in your house.) And as time marched on, things such as asbestos and environmental contamination were added as regular matters of concern.

So we find ourselves in 1991 and at the Colorado legislature. (Yes, we finally will start discussing ghosts.) Many social, emotional, and political cross currents were swirling around during that time, catching the real estate industry right smack in the middle. So what happened? Laws were passed, of course, that covered many areas and that have also been applied to paranormal phenomenon.

One example-- in order not to taint property and thus affect its value, by statute, circumstances that could psychologically impact or stigmatize property need not be disclosed. Examples given to explain the intent of the law and to illustrate what did not have to be disclosed included that a former occupant was HIV positive or had AIDS, or that the dwelling was the site of a homicide, suicide, or felony. Thus there is no legal duty to disclose such occurrences. References in the statute about ghosts or other paranormal events are absent, although from several sources I have been told such matters were discussed.

Thus, in the absence of specific language in the statute including ghosts as an example of covered occurrences that need not be disclosed, and apparently with no Colorado Supreme Court cases to guide us, there is nothing that concretely directs us to a definite yes or no.

But according to the Colorado Real Estate Commission, paranormal events do not have to be disclosed because such matters could psychologically impact or stigmatize real estate.

So whose advice are you going to follow? Let your real estate agent or broker be your guide but do not be surprised if you are told that it is "against the law" to insist that ghostly encounters should be (or should have been) listed on the disclosure statement. But if there should be an explicit requirement in the future, as is the case in some states, the next question would be what triggers the disclosureŃtemperature changes, sounds or smells at night, orbs of light, sightings, or a full blown Amityville experience?

But it also is intriguing to imagine that sometime in the future, a cleansing or an exorcism might be part of the real estate sales contract conditions along with the termite inspection, the traditional buyerÕs inspection, and who knows, maybe even a Feng Shui evaluation.

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