4 Most Important For Sale By Owner Colorado Real Estate Forms

What Colorado real estate forms should I use?

We recommend that FSBO sellers use the Colorado Division of Real Estate forms. The Division of Real Estate's mission is to protect "the consumer through the licensing, regulation and enforcement of licensed real estate professionals." As part of that mission, they create the contracts and forms that real estate brokers are required to use. Those same commission approved contracts and forms are available to the public.

There are a number of benefits to using these template forms. There are many forms available, covering the most common real estate transactions. The Division of Real Estate forms are also widely used and understood by others in the industry. The forms are also balanced between the rights of buyer and seller.

• Free to the public
• Cover most common situations
• Protect both the buyer and the seller
• Understood by the real estate industry

However, the forms don't address every potential situation when selling a Colorado property. If your sale will have unique issues, you may want to hire a real estate attorney to help draft the documents.

What are the main FSBO real estate forms?

The Colorado Division of Real Estate has dozens of contracts and forms available. These free Colorado forms are available for download in PDF format. Which ones do you need? For FSBO sellers, the most important documents are the sales contract, disclosure documents, closing statement, and deed. Other documents available that are not discussed here include listing contracts and deeds of trust.

1. Real estate contracts - residential, land, commercial

A real estate contract is a legal document that outlines the rights and responsibilities of both parties involved in the transaction. It protects both buyers and sellers by clearly defining the terms of the sale. It helps to ensure all parties clearly understand their obligations, eliminating potential disputes or misunderstandings.

The Division of Real Estate has a total of six different sales contract templates. Here we focus on the three most widely used: the residential, land, and commercial contracts. These contracts have many things in common. For example, they all include these basic contract requirements.

• Legal description
• Water rights
• Purchase price
• Earnest money
• Dates and deadlines
• Default and remedies
• Signatures

Below, we discuss some of the differences between the contracts and when to use each one.

Contract to Buy and Sell, Residential

Use this contract when selling a home for sale by owner. The Residential purchase and sale agreement includes language for common types of fixtures to be sold with the home. For example, the contract specifies whether solar panels, security systems, and satellite systems are included in the sale.

The residential contract also has a clause for a post-occupancy agreement. A post-occupancy agreement would be used when the seller is staying in the home for a period after closing.

The residential contract also includes provisions for lead-based paint, carbon monoxide alarms, and methamphetamine disclosure.

Contract to Buy and Sell, Land

Use this contract when selling vacant land in Colorado. This purchase agreement template has additional due diligence clauses. For example, there are clauses relating to zoning and use restrictions, environmental site assessment, and ADA evaluations. The water rights section also includes a clause for conveying water and sewer taps.

Contract to Buy and Sell, Commercial

Use this contract for a commercial property transaction. Commercial here means a property with non-residential structures. An example of a commercial property would be a restaurant or office building.

Similar to the land contract, the commercial contract includes additional due diligence clauses related to zoning and use restrictions, environmental site assessment, and ADA evaluations.

The commercial contract also includes a provision for trade fixtures. Trade fixtures are personal property such as equipment or shelving installed in (or attached to) the building. Examples include shelving, kitchen equipment, and restaurant booths and bars.

2. Disclosure documents

Seller disclosures are another important document when selling a property in Colorado. Normally, the seller provides these disclosures within a few days of signing the purchase and sale agreement. The disclosures explain any potential issues to the purchaser, but they also protect you as the seller. Failing to disclose known issues with the property could result in legal liability for the seller.

Each of the contract types discussed above - commercial, land, residential - has its own sellers property disclosure document. These are available on the Colorado Division of Real Estate's website under Disclosure Documents.

The land disclosure documents covers many common issues, such as zoning and legal issues, access problems, and environmental conditions. The residential and commercial disclosure has an extensive checklist related to building condition. The checklist includes items such as structural, moisture and/or water, rook leaks, and many more

3. Closing statement

The closing statement (or settlement statement) records all of the fees and costs associated with the property sale. The Colorado closing statement may be overwhelming with over fifty line items. Not all of these line items will be required for every transaction. Still, you may want to have a title company or real estate attorney handle the closing for you.

If you're determined to complete the closing statement yourself, knowing a few basics will help. Two closing statements will be prepared - one for the buyer, one for the seller. The debit column is for costs you owe, the credit column are costs owed to you.

Many costs are divided between buyer and seller at closing. For example, the buyer and seller may split the transfer fee 50/50. Other costs are divided depending if they were pre-paid. For example, if a seller has paid property tax in advance, then there would be a credit for the seller and a debit for the buyer.

The Subtotals section shows the actual amount due from the buyer to close the transaction, and the actual amount the seller will receive. The balance due to seller is normally the purchase price minus seller closing costs. The balance due from buyer is the purchase price plus buyer closing costs.

4. Deeds

There are four types of deeds available as templates by the Division of Real Estate. The sale contract specifies which form of deed will be provided in the transfer of title section. Listed in the order below, each deed provides fewer title warranties to the buyer. Title warranties represent a guarantee that the seller has the right to transfer ownership and no other rights to the property exist.

• Warranty Deed
• Special Warranty Deed
• Bargain and Sale Deed
• Quit Claim Deed

For residential sales, the warranty deed is the most common deed used. For commercial transactions, the special warranty deed is often used. Source: Colorado Bar Association.

If you decide to prepare the deed yourself, you should be aware that under Colorado law certain rules apply for a deed to be considered valid:

1. Written document. The deed must be in writing to be effective.
2. Parties named. The deed must name the person or entity selling the property.
3. Consideration. There must be consideration in exchange for the property to be conveyed, although the consideration does not have to be money.
4. Conveyance. The deed must state the intent to transfer title.
5. Property description. The property must be described appropriately.
6. Signature. The seller (or grantor) of the property must sign the deed.
7. Delivery to and acceptance by buyer. In practice, delivery and acceptance is assumed when a deed is recorded in the county clerk's records.

Frequently asked questions

Can a buyer terminate a real estate contract in Colorado?

Yes, under certain circumstances. The purchase agreements discussed here include contingencies in which either party may be able to terminate without a penalty. For the buyer, these contingencies may include water rights, appraised value, financing, insurability, or many other conditions.

The Division of Real Estate has a Notice to Terminate form available for either a buyer or seller to use.

What is Rule F in Colorado real estate?

Commission Rule F in Colorado made it mandatory for real estate brokers to use the Colorado Real Estate Commission forms for most contracts. One of the purposes of Rule F was to protect the public by providing better uniformity of contracts in the real estate industry.

Do you need a Colorado real estate attorney to draft a form specific to your real estate transaction?

The standard forms made available by the Division of Real Estate cover most, but not every situation. It's common in complex transactions for real estate attorneys to draft custom purchase and sale agreements.

Conclusion - Colorado contracts and forms

Colorado contracts and forms are essential for FSBO sellers. They provide comprehensive templates for the most common real estate transactions that are balanced between the rights of buyers and sellers. Of course, not every for sale by owner transaction fits neatly into a template. In some cases you may choose to consult an attorney to draft or review a contract for your particular situation.

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Please consult your financial advisor, accountant, real estate attorney, or tax specialist. This article is for informational purposes and is not tax or legal advice.