Director's Corner
Psychologically Impacted Property
Embedded Files
COVID-19 Updates for Licensees and Consumers
Within the past week, we have seen a spike in the number of inquiries and complaints about properties that have been the scene of a crime, or are perceived to be crime scenes. We have been fielding questions about what real estate brokers should or should not be disclosing, and in some instances, what an appraiser can share with someone who is neither the client nor the intended user of an appraisal.
C.R.S. §38-35.5-101. Circumstances psychologically impacting real property - no duty for broker or salesperson to disclose states:
C.R.S. §38-35.5-101. Circumstances psychologically impacting real property - no duty for broker or salesperson to disclose states:
(1) Facts or suspicions regarding circumstances occurring on a parcel of property which could psychologically impact or stigmatize such property are not material facts subject to a disclosure requirement in a real estate transaction. Such facts or suspicions include, but are not limited to, the following:
(a) That an occupant of real property is, or was at any time suspected to be, infected or has been infected with human immunodeficiency virus (HIV) or diagnosed with acquired immune deficiency syndrome (AIDS), or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place; or
(b) That the property was the site of a homicide or other felony or of a suicide.
(2) No cause of action shall arise against a real estate broker or salesperson for failing to disclose such circumstance occurring on the property which might psychologically impact or stigmatize such property.
Real Estate Brokers
Real Estate Brokers
Based on the law, if a real estate broker lists a property for sale where a triple homicide has occurred or is suspected to have occurred, the listing broker has no duty to disclose the homicides. If the listing broker does disclose that the property was the scene of a triple homicide, and the broker was not given the seller’s written consent to do so, the Real Estate Commission may find the listing broker to have violated his or her brokerage relationship to the seller.
If the broker is strictly representing the buyer in a transaction and becomes aware that the property was the scene of a homicide, felony or suicide, and the broker discloses that to the buyer, there aren’t any prohibitions in the practice act that would keep the buyer’s broker from making these types of disclosures. As indicated in subsection 2 of the law above, a buyer’s broker that does not disclose a stigma to the property would not be subject to a cause of action either. However, HIV or AIDS disclosure are protected under federal fair housing law and may not be disclosed without permission just like any other fair housing protected classification. The listing and buyer brokers may both disclose protected classification with the written consent of the seller.
Real Estate Appraisers
Real Estate Appraisers
For the appraisers that are engaged to appraise psychologically impacted or stigmatized properties, the Ethics Rule of the Uniform Standards of Professional Appraisal Practice (“USPAP”) comes into play. The Conduct Section prohibits, among other things, an appraiser from performing an assignment with bias; communicating results with the intent to mislead or defraud; and communicating report or assignment results that are misleading or fraudulent. The Confidentiality Section requires, but is not limited to:
An appraiser must not disclose: (1) confidential information; or (2) assignment results to anyone other than:
The client;
Parties specifically authorized by the client;
State appraiser regulatory agencies;
Third parties as may be authorized by due process of the law; or
A duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.
If market support exists to demonstrate that the value of a psychologically impacted property is less than market value or that the reasonable exposure time will be longer, the Board of Real Estate Appraisers would expect to see the support and analysis in the appraiser’s work file. The Board of Real Estate Appraisers would also expect to see a summary in the appraisal report of the results of such analysis, the value opinion and conclusion(s) in compliance with USPAP Standard Rule 2. As indicated by the Confidentiality Section of the Ethics Rule, who the appraiser can share this information with is very limited and appraisers need to be very careful to not violate confidentiality.
Director Marcia Waters
Director Marcia Waters
About the Director
About the Director
Marcia Waters has been with the Colorado Division of Real Estate since August 2005. Marcia started with the Division as a Criminal Investigator for the Real Estate Commission and was promoted to Chief Investigator in 2006. In 2007, she was promoted to the position of Investigations and Compliance Director. In that capacity, she managed the investigatory and settlement programs for the Division. On October 15, 2010, she was promoted to the position of Division Director. The Division of Real Estate licenses and regulates approximately 50,000 real estate professionals. Ms. Waters serves as the administrator for the Real Estate Commission, the Board of Real Estate Appraisers, the Board of Mortgage Loan Originators, the Community Association Manager Program and the HOA Information and Resource Center. Ms. Waters manages the Division’s $6.5 million budget, oversees a staff of approximately 57 full-time employees, and establishes the direction of Division programs based on market and industry trends.
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