Current (April 2009) Legal Requirements for Environmental Full 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 Act of 1980 (CERCLA), there is no financial limit to an owner's obligation for the cleanup of hazardous wastes found on his or her property. The liability extends to those responsible for the contamination, and to anyone who somehow becomes responsible for the cleanup, such as a new owner;

The USEPA definition of a CERCLA contamination 'facility' is broadly defined to included 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 area used to define the site, and any other location to which contamination from that area has come to be located".

1. Residential:

General Warranty Deed - The grantor makes five (5) basic promises or Covenants that warrant 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 interest

intended 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 able

to occupy and enjoy the premises without interference from anyone else with a lawful claim to the property, and will indemnify the grantee should any third party establish a 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 be specific, 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 is needed 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 rightful claim against it.C.R.S. 38-30-113(2)

According to Colorado statute, "Covenants of seizin, peaceful possession, freedom from 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 all subsequent 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 United States Congressional incorporeal right) right of access to contaminated property despite 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]. EPA and 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 a hazardous substance or pollutant or contaminant." Hence, if CERCLA contamination has migrated under or upon a property via ground water, an unrecorded easement impacts the property.

In the Lobato v. Taylor Case No. 00SC 527, April 28, 2003, 32 Colo. Law. 231 (June 2003) the majority decision concluded that contrary to the usual practice in the legal community that generally only documents in the chain of title must be searched to determine relevant interests in real property, more is required when it appears that outside interests may affect title. In such instances, an individual has a duty to investigate these other interests, and is charged with knowledge of the facts to which the investigation would have led.

Colorado approved Real Estate forms including the "Contract to Buy and Sell Real Estate" require disclosure of all "unrecorded easements";

A developer, seller, or contractor may be liable for damages for fraud or negligent misrepresentation when it makes incorrect statements regarding the nature or quality of construction, soil conditions, the status of title, or the performance to be expected of a building. Such fraud or misrepresentation, if committed before the execution of a contract, may allow the contract and any limitations of liability within its terms to be set aside.

Pursuant to Colorado 12-61-405 the Real estate Commission may impose fines, issue letters of admonition, refuse, revoke or suspend a subdivision developer's registration should the developer:(b) Has misrepresented or concealed any material fact from a purchaser of any

interest 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 to

transfer 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 2nd 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 a contractor'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 the condition. Kinsman et al. V. Unocal Corp., No. S118561, 2005 WL 3454653 (Cal. Dec. 19, 2005)

Restatement 2nd 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…inclusive of any environmental hazards affecting the property". (See: The Denver Realtor, January 2007)

12-61-804. Single agent engaged by seller or landlord.

(1) A broker engaged by a seller or landlord to act as a seller's agent or a landlord's agent is 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 transaction which are actually known by the broker;(V) Advising the seller or landlord to obtain expert advice as to material matters about which the broker knows but the specifics of which are beyond the expertise of such broker;

12-61-805. Single agent engaged by buyer or tenant.

(1) A broker engaged by a buyer or tenant to act as a buyer's or tenant's agent shall be a limited 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, and fidelity, 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 transaction which are actually known by the broker;(V) Advising the buyer or tenant to obtain expert advice as to material matters about which the broker knows but the specifics of which are beyond the expertise of such broker;

12-61-807. Transaction-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 not limited to:

(II) Advising the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction-broker knows but the specifics of which are beyond the expertise of such broker;(VI) Disclosing to all prospective buyers or tenants any adverse material facts actually known by the broker including but not limited to adverse material facts pertaining to the title, the physical condition of the property, any defects in the property, and any environmental hazards affecting the property required by law to be disclosed;(VII) Disclosing to any prospective seller or landlord all adverse material facts actually known by the broker….

"A violation of disclosure requirements by a real estate broker may be investigated by the Colorado Real Estate Commission under C.R.S. 12-61-113(1).

Although the Colorado Real Estate Commission does not have authority over ethics or failure to disclose stigmatized property, the Commission will investigate violations of the Colorado Consumer Protection Act (CCPA).  The Colorado Consumer Protection Act has been applied to subdivision developers Hall v. Walter, 969 P.2d 224 (Colo 1998). Failure to disclose contamination as a material defect is a violation of the CCPA.  If a member of the public is awarded money from the Colorado Real Estate Commission Recovery Fund because of actions of a broker, that broker's license is automatically revoked."

The Uniform Commercial Code, which applies to the sale of "goods", imposes implied warranties upon the seller of goods, including the requirement that the goods be merchantable, and that they be fit for the purpose for which they were intended C.R.S. 4-2-314. A warranty of fitness for a particular purpose is created when the buyer is relying upon the seller's skill or judgement to select or furnish suitable goods. C.R.S. 4-2-315.

ARTICLE 6.5 SOIL AND HAZARD ANALYSES OF RESIDENTIAL CONSTRUCTION : 6-6.5-101 requires disclosure of all (material) construction conditions.

Residential "All Appropriate Inquiry" obligation for Landowner Liability Protection

Title 42 U.S.C. > CHAPTER 103 > SUBCHAPTER I > § 9601. Definitions(35)(B) Reason to know (v) Site inspection and title search. — In the case of property for residential use or other similar use purchased by a nongovernmental or noncommercial entity, a facility inspection and title search that reveal no basis for further investigation shall be considered to satisfy the requirements of this subparagraph.

    

HOUSE BILL 08-1356  BY REPRESENTATIVE(S) Merrifield, Kefalas, Soper, Weissmann, Benefield, Carroll M., Casso, Fischer, Green, Judd, Kerr A., Labuda, Levy, Madden, McGihon, Middleton, Peniston, Pommer, Primavera, Riesberg, Todd, Borodkin, Carroll T., and Curry;also SENATOR(S) Tupa and Boyd, Bacon, Gordon, Groff, Hagedorn, Keller, Morse, Romer, Williams, and Windels.

AN ACT CONCERNING LANDLORD AND TENANT RELATIONS. Be it enacted by the General Assembly of the State of Colorado:   SECTION 1.  13-40-111 (1), Colorado Revised Statutes, is amended to read:   13-40-111.  Issuance and return of summons. (1)  Upon filing the complaint as provided in section 13-40-110, the clerk of the court or the attorney for the plaintiff shall issue a summons. The summons shall command the defendant to appear before the court at a place named in such summons and at a time and on a day which shall be not less than five business days nor more than ten calendar days from the day of issuing the same to answer the complaint of plaintiff. The summons shall also contain a statement addressed to the defendant stating: "If you fail to file with the court, at or before the time for appearance specified in the summons, an answer to the complaint setting forth the grounds upon which you base your claim for possession and denying or admitting all of the material allegations of the complaint, judgment by default may be taken against you for the possession of the property described in the complaint, for the rent, if any, due or to become due, for present and future damages and costs, and for any other relief to which the plaintiff is entitled. IF YOU ARE CLAIMING THAT THE LANDLORD'S FAILURE TO REPAIR THE RESIDENTIAL PREMISES IS A DEFENSE TO THE LANDLORD'S ALLEGATION OF NONPAYMENT OF RENT, THE COURT WILL REQUIRE YOU TO PAY INTO THE REGISTRY OF THE COURT, AT THE TIME OF FILING YOUR ANSWER, THE RENT DUE LESS ANY EXPENSES YOU HAVE INCURRED BASED UPON THE LANDLORD'S FAILURE TO REPAIR THE RESIDENTIAL PREMISES."   SECTION 2.  13-40-123, Colorado Revised Statutes, is amended to read:   13-40-123.  Damages. The prevailing party in any action brought under the provisions of this article is entitled to recover damages, reasonable attorney fees, and costs of suit; EXCEPT THAT A RESIDENTIAL LANDLORD OR TENANT WHO IS A PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER REASONABLE ATTORNEY FEES UNLESS THE RESIDENTIAL RENTAL AGREEMENT BETWEEN THE PARTIES CONTAINS A PROVISION FOR EITHER PARTY TO OBTAIN ATTORNEY FEES. Nothing in this section shall be construed to permit the entry of judgments in any single proceeding in excess of the jurisdictional limit of said court. 

  SECTION 3.  Article 12 of title 38, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: 

PART 5OBLIGATION TO MAINTAIN RESIDENTIAL PREMISES -

UNLAWFUL REMOVAL   38-12-501.  Legislative declaration - matter of statewide concern - purposes and policies. (1)  THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES THAT THE PROVISIONS OF THIS PART 5 ARE A MATTER OF STATEWIDE CONCERN. ANY LOCAL GOVERNMENT ORDINANCE, RESOLUTION, OR OTHER REGULATION THAT IS IN CONFLICT WITH THIS PART 5 SHALL BE UNENFORCEABLE.   (2)  THE UNDERLYING PURPOSES AND POLICIES OF THIS PART 5 ARE TO:   (a)  SIMPLIFY, CLARIFY, MODERNIZE, AND REVISE THE LAW GOVERNING THE RENTAL OF DWELLING UNITS AND THE RIGHTS AND OBLIGATIONS OF LANDLORDS AND TENANTS;   (b)  ENCOURAGE LANDLORDS AND TENANTS TO MAINTAIN AND IMPROVE THE QUALITY OF HOUSING; AND

   (c)  MAKE UNIFORM THE LAW WITH RESPECT TO THE SUBJECT OF THIS PART 5 THROUGHOUT COLORADO.   38-12-502.  Definitions. AS USED IN THIS PART 5, UNLESS THE CONTEXT OTHERWISE REQUIRES:   (1)  "COMMON AREAS" MEANS THE FACILITIES AND APPURTENANCES TO A RESIDENTIAL PREMISES, INCLUDING THE GROUNDS, AREAS, AND FACILITIES HELD OUT FOR THE USE OF TENANTS GENERALLY OR WHOSE USE IS PROMISED TO A TENANT.   (2)  "DWELLING UNIT" MEANS A STRUCTURE OR THE PART OF A STRUCTURE THAT IS USED AS A HOME, RESIDENCE, OR SLEEPING PLACE BY A TENANT.   (3)  "LANDLORD" MEANS THE OWNER, MANAGER, LESSOR, OR SUBLESSOR OF A RESIDENTIAL PREMISES.   (4)  "RENTAL AGREEMENT" MEANS THE AGREEMENT, WRITTEN OR ORAL, EMBODYING THE TERMS AND CONDITIONS CONCERNING THE USE AND OCCUPANCY OF A RESIDENTIAL PREMISES.   (5)  "RESIDENTIAL PREMISES" MEANS A DWELLING UNIT, THE STRUCTURE OF WHICH THE UNIT IS A PART, AND THE COMMON AREAS. 

  (6)  "TENANT" MEANS A PERSON ENTITLED UNDER A RENTAL AGREEMENT TO OCCUPY A DWELLING UNIT TO THE EXCLUSION OF OTHERS.   38-12-503.  Warranty of habitability. (1)  IN EVERY RENTAL AGREEMENT, THE LANDLORD IS DEEMED TO WARRANT THAT THE RESIDENTIAL PREMISES IS FIT FOR HUMAN HABITATION.   (2)   A LANDLORD BREACHES THE WARRANTY OF HABITABILITY SET FORTH IN SUBSECTION (1) OF THIS SECTION IF:   (a)  A RESIDENTIAL PREMISES IS UNINHABITABLE AS DESCRIBED IN SECTION 38-12-505 OR OTHERWISE UNFIT FOR HUMAN HABITATION; AND

   (b)  THE RESIDENTIAL PREMISES IS IN A CONDITION THAT IS MATERIALLY DANGEROUS OR HAZARDOUS TO THE TENANT'S LIFE, HEALTH, OR SAFETY; AND

   (c)  THE LANDLORD HAS RECEIVED WRITTEN NOTICE OF THE CONDITION DESCRIBED IN PARAGRAPHS (a) AND (b) OF THIS SUBSECTION (2) AND FAILED TO CURE THE PROBLEM WITHIN A REASONABLE TIME.   (3)  WHEN ANY CONDITION DESCRIBED IN SUBSECTION (2) OF THIS SECTION IS CAUSED BY THE MISCONDUCT OF THE TENANT, A MEMBER OF THE TENANT'S HOUSEHOLD, A GUEST OR INVITEE OF THE TENANT, OR A PERSON UNDER THE TENANT'S DIRECTION OR CONTROL, THE CONDITION SHALL NOT CONSTITUTE A BREACH OF THE WARRANTY OF HABITABILITY. IT SHALL NOT BE MISCONDUCT BY A VICTIM OF DOMESTIC VIOLENCE OR DOMESTIC ABUSE UNDER THIS SUBSECTION (3) IF THE CONDITION IS THE RESULT OF DOMESTIC VIOLENCE OR DOMESTIC ABUSE AND THE LANDLORD HAS BEEN GIVEN WRITTEN NOTICE AND EVIDENCE OF DOMESTIC VIOLENCE OR DOMESTIC ABUSE AS DESCRIBED IN SECTION 38-12-402 (2) (a).   (4)  IN RESPONSE TO THE NOTICE SENT PURSUANT TO PARAGRAPH (c) OF SUBSECTION (2) OF THIS SECTION, A LANDLORD MAY, IN THE LANDLORD'S DISCRETION, MOVE A TENANT TO A COMPARABLE UNIT AFTER PAYING THE REASONABLE COSTS, ACTUALLY INCURRED, INCIDENT TO THE MOVE.   (5)  EXCEPT AS SET FORTH IN THIS PART 5, ANY AGREEMENT WAIVING OR MODIFYING THE WARRANTY OF HABITABILITY SHALL BE VOID AS CONTRARY TO PUBLIC POLICY.   (6)  NOTHING IN THIS PART 5 SHALL:   (a)  PREVENT A LANDLORD FROM TERMINATING A RENTAL AGREEMENT AS A RESULT OF A CASUALTY OR CATASTROPHE TO THE DWELLING UNIT WITHOUT FURTHER LIABILITY TO THE LANDLORD OR TENANT; OR

 

  (b)  PRECLUDE A LANDLORD FROM INITIATING AN ACTION FOR NONPAYMENT OF RENT, BREACH OF THE RENTAL AGREEMENT, VIOLATION OF SECTION 38-12-504, OR AS PROVIDED FOR UNDER ARTICLE 40 OF TITLE 13, C.R.S.   38-12-504.  Tenant's maintenance of premises. (1)  IN ADDITION TO ANY DUTIES IMPOSED UPON A TENANT BY A RENTAL AGREEMENT, EVERY TENANT OF A RESIDENTIAL PREMISES HAS A DUTY TO USE THAT PORTION OF THE PREMISES WITHIN THE TENANT'S CONTROL IN A REASONABLY CLEAN AND SAFE MANNER. A TENANT FAILS TO MAINTAIN THE PREMISES IN A REASONABLY CLEAN AND SAFE MANNER WHEN THE TENANT SUBSTANTIALLY FAILS TO:   (a)  COMPLY WITH OBLIGATIONS IMPOSED UPON TENANTS BY APPLICABLE PROVISIONS OF BUILDING, HEALTH, AND HOUSING CODES MATERIALLY AFFECTING HEALTH AND SAFETY;   (b)  KEEP THE DWELLING UNIT REASONABLY CLEAN, SAFE, AND SANITARY AS PERMITTED BY THE CONDITIONS OF THE UNIT;   (c)  DISPOSE OF ASHES, GARBAGE, RUBBISH, AND OTHER WASTE FROM THE DWELLING UNIT IN A CLEAN, SAFE, SANITARY, AND LEGALLY COMPLIANT MANNER;   (d)  USE IN A REASONABLE MANNER ALL ELECTRICAL, PLUMBING, SANITARY, HEATING, VENTILATING, AIR-CONDITIONING, ELEVATORS, AND OTHER FACILITIES AND APPLIANCES IN THE DWELLING UNIT;   (e)  CONDUCT HIMSELF OR HERSELF AND REQUIRE OTHER PERSONS IN THE RESIDENTIAL PREMISES WITHIN THE TENANT'S CONTROL TO CONDUCT THEMSELVES IN A MANNER THAT DOES NOT DISTURB THEIR NEIGHBORS' PEACEFUL ENJOYMENT OF THE NEIGHBORS' DWELLING UNIT; OR

   (f)  PROMPTLY NOTIFY THE LANDLORD IF THE RESIDENTIAL PREMISES IS UNINHABITABLE AS DEFINED IN SECTION 38-12-505 OR IF THERE IS A CONDITION THAT COULD RESULT IN THE PREMISES BECOMING UNINHABITABLE IF NOT REMEDIED.   (2)  IN ADDITION TO THE DUTIES SET FORTH IN SUBSECTION (1) OF THIS SECTION, A TENANT SHALL NOT KNOWINGLY, INTENTIONALLY, DELIBERATELY, OR NEGLIGENTLY DESTROY, DEFACE, DAMAGE, IMPAIR, OR REMOVE ANY PART OF THE RESIDENTIAL PREMISES OR KNOWINGLY PERMIT ANY PERSON WITHIN HIS OR HER CONTROL TO DO SO.   (3)  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO AUTHORIZE A MODIFICATION OF A LANDLORD'S OBLIGATIONS UNDER THE WARRANTY OF HABITABILITY. 

  38-12-505. Uninhabitable residential premises. (1)  A RESIDENTIAL PREMISES IS DEEMED UNINHABITABLE IF IT SUBSTANTIALLY LACKS ANY OF THE FOLLOWING CHARACTERISTICS:   (a)  WATERPROOFING AND WEATHER PROTECTION OF ROOF AND EXTERIOR WALLS MAINTAINED IN GOOD WORKING ORDER, INCLUDING UNBROKEN WINDOWS AND DOORS;   (b)  PLUMBING OR GAS FACILITIES THAT CONFORMED TO APPLICABLE LAW IN EFFECT AT THE TIME OF INSTALLATION AND THAT ARE MAINTAINED IN GOOD WORKING ORDER;   (c)  RUNNING WATER AND REASONABLE AMOUNTS OF HOT WATER AT ALL TIMES FURNISHED TO APPROPRIATE FIXTURES AND CONNECTED TO A SEWAGE DISPOSAL SYSTEM APPROVED UNDER APPLICABLE LAW;   (d)  FUNCTIONING HEATING FACILITIES THAT CONFORMED TO APPLICABLE LAW AT THE TIME OF INSTALLATION AND THAT ARE MAINTAINED IN GOOD WORKING ORDER;   (e)  ELECTRICAL LIGHTING, WITH WIRING AND ELECTRICAL EQUIPMENT THAT CONFORMED TO APPLICABLE LAW AT THE TIME OF INSTALLATION, MAINTAINED IN GOOD WORKING ORDER;   (f)  COMMON AREAS AND AREAS UNDER THE CONTROL OF THE LANDLORD THAT ARE KEPT REASONABLY CLEAN, SANITARY, AND FREE FROM ALL ACCUMULATIONS OF DEBRIS, FILTH, RUBBISH, AND GARBAGE AND THAT HAVE APPROPRIATE EXTERMINATION IN RESPONSE TO THE INFESTATION OF RODENTS OR VERMIN;   (g)  APPROPRIATE EXTERMINATION IN RESPONSE TO THE INFESTATION OF RODENTS OR VERMIN THROUGHOUT A RESIDENTIAL PREMISES;   (h)  AN ADEQUATE NUMBER OF APPROPRIATE EXTERIOR RECEPTACLES FOR GARBAGE AND RUBBISH, IN GOOD REPAIR;   (i)  FLOORS, STAIRWAYS, AND RAILINGS MAINTAINED IN GOOD REPAIR;   (j)  LOCKS ON ALL EXTERIOR DOORS AND LOCKS OR SECURITY DEVICES ON WINDOWS DESIGNED TO BE OPENED THAT ARE MAINTAINED IN GOOD WORKING ORDER; OR

   (k)  COMPLIANCE WITH ALL APPLICABLE BUILDING, HOUSING, AND HEALTH CODES, WHICH, IF VIOLATED, WOULD CONSTITUTE A CONDITION THAT IS DANGEROUS OR HAZARDOUS TO A TENANT'S LIFE, HEALTH, OR SAFETY.   (2)  NO DEFICIENCY IN THE COMMON AREA SHALL RENDER A RESIDENTIAL PREMISES UNINHABITABLE AS SET FORTH IN SUBSECTION (1) OF THIS SECTION, UNLESS IT MATERIALLY AND SUBSTANTIALLY LIMITS THE TENANT'S USE OF HIS OR HER DWELLING UNIT.

   (3)  UNLESS OTHERWISE STATED IN SECTION 38-12-506, PRIOR TO BEING LEASED TO A TENANT, A RESIDENTIAL PREMISES MUST COMPLY WITH THE REQUIREMENTS SET FORTH IN SECTION 38-12-503 (1), (2) (a), AND (2) (b).   38-12-506.  Opt-out. (1)  IF A DWELLING UNIT IS CONTAINED WITHIN A MOBILE HOME PARK, AS DEFINED IN SECTION 38-12-201.5 (3), OR IF THERE ARE FOUR OR FEWER DWELLING UNITS SHARING COMMON WALLS OR LOCATED ON THE SAME PARCEL, AS DEFINED IN SECTION 30-28-302 (5), C.R.S., ALL OF WHICH HAVE THE SAME OWNER, OR IF THE DWELLING UNIT IS A SINGLE-FAMILY RESIDENTIAL PREMISES:   (a)  A GOOD FAITH RENTAL AGREEMENT MAY REQUIRE A TENANT TO ASSUME THE OBLIGATION FOR ONE OR MORE OF THE CHARACTERISTICS CONTAINED IN SECTION 38-12-505 (1) (f), (1) (g), AND (1) (h), AS LONG AS THE REQUIREMENT IS NOT INCONSISTENT WITH ANY OBLIGATIONS IMPOSED UPON A LANDLORD BY A GOVERNMENTAL ENTITY FOR THE RECEIPT OF A SUBSIDY FOR THE RESIDENTIAL PREMISES; AND

   (b)  FOR ANY DWELLING UNIT FOR WHICH A LANDLORD DOES NOT RECEIVE A SUBSIDY FROM ANY GOVERNMENTAL SOURCE, A LANDLORD AND TENANT MAY AGREE IN WRITING THAT THE TENANT IS TO PERFORM SPECIFIC REPAIRS, MAINTENANCE TASKS, ALTERATIONS, AND REMODELING, BUT ONLY IF:   (I)  THE AGREEMENT OF THE PARTIES IS ENTERED INTO IN GOOD FAITH AND IS SET FORTH IN A SEPARATE WRITING SIGNED BY THE PARTIES AND SUPPORTED BY ADEQUATE CONSIDERATION;   (II)  THE WORK IS NOT NECESSARY TO CURE A FAILURE TO COMPLY WITH SECTION 38-12-505 (3); AND

   (III)  SUCH AGREEMENT DOES NOT AFFECT THE OBLIGATION OF THE LANDLORD TO OTHER TENANTS' RESIDENTIAL PREMISES.   (2)  FOR A SINGLE-FAMILY RESIDENTIAL PREMISES FOR WHICH A LANDLORD DOES NOT RECEIVE A SUBSIDY FROM ANY GOVERNMENTAL SOURCE, A LANDLORD AND TENANT MAY AGREE IN WRITING THAT THE TENANT IS TO PERFORM SPECIFIC REPAIRS, MAINTENANCE TASKS, ALTERATIONS, AND REMODELING NECESSARY TO CURE A FAILURE TO COMPLY WITH SECTION 38-12-505 (3), BUT ONLY IF:   (a)  THE AGREEMENT OF THE LANDLORD AND TENANT IS ENTERED INTO IN GOOD FAITH AND IS SET FORTH IN A WRITING THAT IS SEPARATE FROM THE RENTAL AGREEMENT, SIGNED BY THE PARTIES, AND SUPPORTED BY ADEQUATE CONSIDERATION; AND

   (b)  THE TENANT HAS THE REQUISITE SKILLS TO PERFORM THE WORK REQUIRED TO CURE A FAILURE TO COMPLY WITH SECTION 38-12-505 (3). 

  (3)  TO THE EXTENT THAT PERFORMANCE BY A TENANT RELATES TO A CHARACTERISTIC SET FORTH IN SECTION 38-12-505 (1), THE TENANT SHALL ASSUME THE OBLIGATION FOR SUCH CHARACTERISTIC.   (4)  IF CONSISTENT WITH THIS SECTION A TENANT ASSUMES AN OBLIGATION FOR A CHARACTERISTIC SET FORTH IN SECTION 38-12-505 (1), THE LACK OF SUCH CHARACTERISTIC SHALL NOT MAKE A RESIDENTIAL PREMISES UNINHABITABLE.   38-12-507.  Breach of warranty of habitability - tenant's remedies. (1)  IF THERE IS A BREACH OF THE WARRANTY OF HABITABILITY AS SET FORTH IN SECTION 38-12-503 (2), THE FOLLOWING PROVISIONS SHALL APPLY:   (a)  UPON NO LESS THAN TEN AND NO MORE THAN THIRTY DAYS WRITTEN NOTICE TO THE LANDLORD SPECIFYING THE CONDITION ALLEGED TO BREACH OF THE WARRANTY OF HABITABILITY AND GIVING THE LANDLORD FIVE BUSINESS DAYS FROM THE RECEIPT OF THE WRITTEN NOTICE TO REMEDY THE BREACH, A TENANT MAY TERMINATE THE RENTAL AGREEMENT BY SURRENDERING POSSESSION OF THE DWELLING UNIT. IF THE BREACH IS REMEDIABLE BY REPAIRS, THE PAYMENT OF DAMAGES, OR OTHERWISE AND THE LANDLORD ADEQUATELY REMEDIES THE BREACH WITHIN FIVE BUSINESS DAYS OF RECEIPT OF THE NOTICE, THE RENTAL AGREEMENT SHALL NOT TERMINATE BY REASON OF THE BREACH.   (b)  A TENANT MAY OBTAIN INJUNCTIVE RELIEF FOR BREACH OF THE WARRANTY OF HABITABILITY IN ANY COURT OF COMPETENT JURISDICTION. IN ANY PROCEEDING FOR INJUNCTIVE RELIEF, THE COURT SHALL DETERMINE ACTUAL DAMAGES FOR A BREACH OF THE WARRANTY AT THE TIME THE COURT ORDERS THE INJUNCTIVE RELIEF. A LANDLORD SHALL NOT BE SUBJECT TO ANY COURT ORDER FOR INJUNCTIVE RELIEF IF THE LANDLORD TENDERS THE ACTUAL DAMAGES TO THE COURT WITHIN TWO BUSINESS DAYS OF THE ORDER. UPON APPLICATION BY THE TENANT, THE COURT SHALL IMMEDIATELY RELEASE TO THE TENANT THE DAMAGES PAID BY THE LANDLORD. IF THE TENANT VACATES THE LEASED PREMISES, THE LANDLORD SHALL NOT BE PERMITTED TO RENT THE PREMISES AGAIN UNTIL SUCH TIME AS THE UNIT WOULD BE IN COMPLIANCE WITH THE WARRANTY OF HABITABILITY SET FORTH IN SECTION 38-12-503 (1).   (c)  IN AN ACTION FOR POSSESSION BASED UPON NONPAYMENT OF RENT IN WHICH THE TENANT ASSERTS A DEFENSE TO POSSESSION BASED UPON THE LANDLORD'S ALLEGED BREACH OF THE WARRANTY OF HABITABILITY, UPON THE FILING OF THE TENANT'S ANSWER THE COURT SHALL ORDER THE TENANT TO PAY INTO THE REGISTRY OF THE COURT ALL OR PART OF THE RENT ACCRUED AFTER DUE CONSIDERATION OF EXPENSES ALREADY INCURRED BY THE TENANT BASED UPON THE LANDLORD'S BREACH OF THE WARRANTY OF HABITABILITY.   (d)  WHETHER ASSERTED AS A CLAIM OR COUNTERCLAIM, A TENANT MAY RECOVER DAMAGES DIRECTLY ARISING FROM A BREACH OF THE WARRANTY OF HABITABILITY, WHICH MAY INCLUDE, BUT ARE NOT LIMITED TO, ANY REDUCTION IN THE FAIR

RENTAL VALUE OF THE DWELLING UNIT, IN ANY COURT OF COMPETENT JURISDICTION.   (2)  IF A RENTAL AGREEMENT CONTAINS A PROVISION FOR EITHER PARTY IN AN ACTION RELATED TO THE RENTAL AGREEMENT TO OBTAIN ATTORNEY FEES AND COSTS, THEN THE PREVAILING PARTY IN ANY ACTION BROUGHT UNDER THIS PART 5 SHALL BE ENTITLED TO RECOVER REASONABLE ATTORNEY FEES AND COSTS.   38-12-508.  Landlord's defenses to a claim of breach of warranty - limitations on claiming a breach. (1)  IT SHALL BE A DEFENSE TO A TENANT'S CLAIM OF BREACH OF THE WARRANTY OF HABITABILITY THAT THE TENANT'S ACTIONS OR INACTIONS PREVENTED THE LANDLORD FROM CURING THE CONDITION UNDERLYING THE BREACH OF THE WARRANTY OF HABITABILITY.   (2)  ONLY PARTIES TO THE RENTAL AGREEMENT OR OTHER ADULT RESIDENTS LISTED ON THE RENTAL AGREEMENT WHO ARE ALSO LAWFULLY RESIDING IN THE DWELLING UNIT MAY ASSERT A CLAIM FOR A BREACH OF THE WARRANTY OF HABITABILITY.   (3)  A TENANT MAY NOT ASSERT A CLAIM FOR INJUNCTIVE RELIEF BASED UPON THE LANDLORD'S BREACH OF THE WARRANTY OF HABITABILITY OF A RESIDENTIAL PREMISES UNLESS THE TENANT HAS GIVEN NOTICE TO A LOCAL GOVERNMENT WITHIN THE BOUNDARIES OF WHICH THE RESIDENTIAL PREMISES IS LOCATED OF THE CONDITION UNDERLYING THE BREACH THAT IS MATERIALLY DANGEROUS OR HAZARDOUS TO THE TENANT'S LIFE, HEALTH, OR SAFETY.   (4)  A TENANT MAY NOT ASSERT A BREACH OF THE WARRANTY OF HABITABILITY AS A DEFENSE TO A LANDLORD'S ACTION FOR POSSESSION BASED UPON A NONMONETARY VIOLATION OF THE RENTAL AGREEMENT OR FOR AN ACTION FOR POSSESSION BASED UPON A NOTICE TO QUIT OR VACATE.   (5)  IF THE CONDITION ALLEGED TO BREACH THE WARRANTY OF HABITABILITY IS THE RESULT OF THE ACTION OR INACTION OF A TENANT IN ANOTHER DWELLING UNIT OR ANOTHER THIRD PARTY NOT UNDER THE DIRECTION AND CONTROL OF THE LANDLORD AND THE LANDLORD HAS TAKEN REASONABLE, NECESSARY, AND TIMELY STEPS TO ABATE THE CONDITION, BUT IS UNABLE TO ABATE THE CONDITION DUE TO CIRCUMSTANCES BEYOND THE LANDLORD'S REASONABLE CONTROL, THE TENANT'S ONLY REMEDY SHALL BE TERMINATION OF THE RENTAL AGREEMENT CONSISTENT WITH SECTION 38-12-507 (1) (a).   (6)  FOR PUBLIC HOUSING AUTHORITIES AND OTHER HOUSING PROVIDERS RECEIVING FEDERAL FINANCIAL ASSISTANCE DIRECTLY FROM THE FEDERAL GOVERNMENT, NO PROVISION OF THIS PART 5 IN DIRECT CONFLICT WITH ANY FEDERAL LAW OR REGULATION SHALL BE ENFORCEABLE AGAINST SUCH HOUSING PROVIDER.   38-12-509.  Prohibition on retaliation. (1)  A LANDLORD SHALL NOT RETALIATE AGAINST A TENANT FOR ALLEGING A BREACH OF THE WARRANTY OF HABITABILITY BY

DISCRIMINATORILY INCREASING RENT OR DECREASING SERVICES OR BY BRINGING OR THREATENING TO BRING AN ACTION FOR POSSESSION IN RESPONSE TO THE TENANT HAVING MADE A GOOD FAITH COMPLAINT TO THE LANDLORD OR TO A GOVERNMENTAL AGENCY ALLEGING A BREACH OF THE WARRANTY OF HABITABILITY.   (2)  A LANDLORD SHALL NOT BE LIABLE FOR RETALIATION UNDER THIS SECTION, UNLESS A TENANT PROVES THAT A LANDLORD BREACHED THE WARRANTY OF HABITABILITY.   (3)  REGARDLESS OF WHEN AN ACTION FOR POSSESSION OF THE PREMISES WHERE THE LANDLORD IS SEEKING TO TERMINATE THE TENANCY FOR VIOLATION OF THE TERMS OF THE RENTAL AGREEMENT IS BROUGHT, THERE SHALL BE A REBUTTABLE PRESUMPTION IN FAVOR OF THE LANDLORD THAT HIS OR HER DECISION TO TERMINATE IS NOT RETALIATORY. THE PRESUMPTION CREATED BY THIS SUBSECTION (3) CANNOT BE REBUTTED BY EVIDENCE OF THE TIMING ALONE OF THE LANDLORD'S INITIATION OF THE ACTION.   (4)  IF THE LANDLORD HAS A RIGHT TO INCREASE RENT, TO DECREASE SERVICE, OR TO TERMINATE THE TENANT'S TENANCY AT THE END OF ANY TERM OF THE RENTAL AGREEMENT AND THE LANDLORD EXERCISES ANY OF THESE RIGHTS, THERE SHALL BE A REBUTTABLE PRESUMPTION THAT THE LANDLORD'S EXERCISE OF ANY OF THESE RIGHTS WAS NOT RETALIATORY. THE PRESUMPTION OF THIS SUBSECTION (4) CANNOT BE REBUTTED BY EVIDENCE OF THE TIMING ALONE OF THE LANDLORD'S EXERCISE OF ANY OF THESE RIGHTS.   38-12-510.  Unlawful removal or exclusion. IT SHALL BE UNLAWFUL FOR A LANDLORD TO REMOVE OR EXCLUDE A TENANT FROM A DWELLING UNIT WITHOUT RESORTING TO COURT PROCESS, UNLESS THE REMOVAL OR EXCLUSION IS CONSISTENT WITH THE PROVISIONS OF ARTICLE 18.5 OF TITLE 25, C.R.S., AND THE RULES PROMULGATED BY THE STATE BOARD OF HEALTH FOR THE CLEANUP OF AN ILLEGAL DRUG LABORATORY OR IS WITH THE MUTUAL CONSENT OF THE LANDLORD AND TENANT OR UNLESS THE DWELLING UNIT HAS BEEN ABANDONED BY THE TENANT AS EVIDENCED BY THE RETURN OF KEYS, THE SUBSTANTIAL REMOVAL OF THE TENANT'S PERSONAL PROPERTY, NOTICE BY THE TENANT, OR THE EXTENDED ABSENCE OF THE TENANT WHILE RENT REMAINS UNPAID, ANY OF WHICH WOULD CAUSE A REASONABLE PERSON TO BELIEVE THE TENANT HAD PERMANENTLY SURRENDERED POSSESSION OF THE DWELLING UNIT. SUCH UNLAWFUL REMOVAL OR EXCLUSION INCLUDES THE WILLFUL TERMINATION OF UTILITIES OR THE WILLFUL REMOVAL OF DOORS, WINDOWS, OR LOCKS TO THE PREMISES OTHER THAN AS REQUIRED FOR REPAIR OR MAINTENANCE. IF THE LANDLORD WILLFULLY AND UNLAWFULLY REMOVES THE TENANT FROM THE PREMISES OR WILLFULLY AND UNLAWFULLY CAUSES THE TERMINATION OF HEAT, RUNNING WATER, HOT WATER, ELECTRIC, GAS, OR OTHER ESSENTIAL SERVICES, THE TENANT MAY SEEK ANY REMEDY AVAILABLE UNDER THE LAW, INCLUDING THIS PART 5.   38-12-511.  Application. (1)  UNLESS CREATED TO AVOID ITS APPLICATION, THIS PART 5 SHALL NOT APPLY TO ANY OF THE FOLLOWING ARRANGEMENTS:

   (a)  RESIDENCE AT A PUBLIC OR PRIVATE INSTITUTION, IF SUCH RESIDENCE IS INCIDENTAL TO DETENTION OR THE PROVISION OF MEDICAL, GERIATRIC, EDUCATION, COUNSELING, RELIGIOUS, OR SIMILAR SERVICE;   (b)  OCCUPANCY UNDER A CONTRACT OF SALE OF A DWELLING UNIT OR THE PROPERTY OF WHICH IT IS A PART, IF THE OCCUPANT IS THE PURCHASER, SELLER, OR A PERSON WHO SUCCEEDS TO HIS OR HER INTEREST;   (c)  OCCUPANCY BY A MEMBER OF A FRATERNAL OR SOCIAL ORGANIZATION IN THE PORTION OF A STRUCTURE OPERATED FOR THE BENEFIT OF THE ORGANIZATION;   (d)  TRANSIENT OCCUPANCY IN A HOTEL OR MOTEL THAT LASTS LESS THAN THIRTY DAYS;   (e)  OCCUPANCY BY AN EMPLOYEE OR INDEPENDENT CONTRACTOR WHOSE RIGHT TO OCCUPANCY IS CONDITIONAL UPON PERFORMANCE OF SERVICES FOR AN EMPLOYER OR CONTRACTOR;   (f)  OCCUPANCY BY AN OWNER OF A CONDOMINIUM UNIT OR A HOLDER OF A PROPRIETARY LEASE IN A COOPERATIVE;   (g)  OCCUPANCY IN A STRUCTURE THAT IS LOCATED WITHIN AN UNINCORPORATED AREA OF A COUNTY, DOES NOT RECEIVE WATER, HEAT, AND SEWER SERVICES FROM A PUBLIC ENTITY, AND IS RENTED FOR RECREATIONAL PURPOSES, SUCH AS A HUNTING CABIN, YURT, HUT, OR OTHER SIMILAR STRUCTURE;   (h)  OCCUPANCY UNDER RENTAL AGREEMENT COVERING A RESIDENTIAL PREMISES USED BY THE OCCUPANT PRIMARILY FOR AGRICULTURAL PURPOSES; OR

   (i)  ANY RELATIONSHIP BETWEEN THE OWNER OF A MOBILE HOME PARK AND THE OWNER OF A MOBILE HOME SITUATED IN THE PARK.   (2)  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO LIMIT REMEDIES AVAILABLE ELSEWHERE IN LAW FOR A TENANT TO SEEK TO MAINTAIN SAFE AND SANITARY HOUSING.   SECTION 4.  Effective date - applicability. (1)  This act shall take effect September 1, 2008.   (2)  However, if a referendum petition is filed against this act or an item, section, or part of this act during the 90-day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution, then the act, item, section, or part, shall not take effect unless approved by the people at a biennial regular general election and shall take effect on the date

specified in subsection (1) or on the date of the official declaration of the vote thereon by proclamation of the governor, whichever is later.   (3)  This act shall apply to rental agreements entered into or extended or renewed on or after the effective date of this act. Approved: June 2, 2008 Effective: September 1, 2008

2. Secondary Mortgage Market - Residential:

FANNIE MAE & FREDDIE MAC require its mortgage lenders to conduct "Quantitative disclosure(s)" to include a sensitivity analysis of expected loss in net fair value of assets and liabilities from immediate decline in property values of five percent…." (loss of collateral value);

The Asset Conservation, Lender Liability, and Deposit Insurance Act of 1996 does not protect the lender against state common law (tort) claims, such as for (groundwater) continuing trespass or nuisance.

Mortgagee Letters: 99-18 published June 28, 1999 with attachments concerning the Comprehensive 99-

Valuation Package (CVP);29 published September 10, 1999 regarding the VC form;99-32 published November 12, 1999 addressing the CVP;99-35 published November 24, 1999 addressing the Appraiser Roster;00-30 published August 7, 2000 concerning sanctions;2003-09 published June 20, 2003 addressing Appraiser qualifications;2003-18 published October 16, 2003 updating Form HUD-92564-VC and Form

HUD-92564-HS;2004-04 published January 22, 2004 revising Form HUD-92564-CN.2005-34 published September 26, 2005 HUD No. 05-132

FHA Handbook update completed July 1999: HB4150.2 CHG.1.

See: FDIC letter dated October 27, 2003 entitled: "Independent Appraisal and Evaluation Functions"

Colorado House Bill 06-1323 effective July 1, 2006, SECTION 2. 18-4-401, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read: 18-4-401. Theft. (9) (a) IF A PERSON IS CONVICTED OF OR PLEADS GUILTY OR NOLO CONTENDERE TO THEFT BY DECEPTION

AND THE UNDERLYING FACTUAL BASIS OF THE CASE INVOLVES THE MORTGAGE LENDING PROCESS, A MINIMUM FINE OF THE AMOUNT OF PECUNIARY HARM RESULTING FROM THE THEFT SHALL BE MANDATORY, IN ADDITION TO ANY OTHER PENALTY THE COURT MAY IMPOSE. (b) A COURT SHALL NOT ACCEPT A PLEA OF GUILTY OR NOLO CONTENDERE TO ANOTHER OFFENSE FROM A PERSON CHARGED WITH A VIOLATION OF THIS SECTION THAT INVOLVES THE MORTGAGE LENDING PROCESS UNLESS THE PLEA AGREEMENT CONTAINS AN ORDER OF RESTITUTION IN ACCORDANCE WITH PART 6 OF ARTICLE 1.3 OF THIS TITLE THAT COMPENSATES THE VICTIM FOR ANY COSTS TO THE VICTIM CAUSED BY THE OFFENSE. (c) THE DISTRICT ATTORNEYS AND THE ATTORNEY GENERAL HAVE CONCURRENT JURISDICTION TO INVESTIGATE AND PROSECUTE A VIOLATION OF THIS SECTION THAT INVOLVES MAKING FALSE STATEMENTS OR FILING OR FACILITATING THE USE OF A DOCUMENT KNOWN TO CONTAIN A FALSE STATEMENT OR MATERIAL OMISSION RELIED UPON BY ANOTHER PERSON IN THE MORTGAGE LENDING PROCESS. (d) DOCUMENTS INVOLVED IN THE MORTGAGE LENDING PROCESS INCLUDE, BUT ARE NOT LIMITED TO, UNIFORM RESIDENTIAL LOAN APPLICATIONS OR OTHER LOAN APPLICATIONS; APPRAISAL REPORTS; HUD-1 SETTLEMENT STATEMENTS; SUPPORTING PERSONAL DOCUMENTATION FOR LOAN APPLICATIONS SUCH AS W-2 FORMS, VERIFICATIONS OF INCOME AND EMPLOYMENT, BANK STATEMENTS, TAX RETURNS, AND PAYROLL STUBS; AND ANY REQUIRED DISCLOSURES. e) FOR THE PURPOSES OF THIS SUBSECTION (9):(I) "MORTGAGE LENDING PROCESS" MEANS THE PROCESS THROUGH WHICH A PERSON SEEKS OR OBTAINS A RESIDENTIAL MORTGAGE LOAN, INCLUDING, WITHOUT LIMITATION, SOLICITATION, APPLICATION, OR ORIGINATION; NEGOTIATION OF TERMS; THIRD-PARTY PROVIDER SERVICES; UNDERWRITING; SIGNING AND CLOSING; FUNDING OF THE LOAN; AND PERFECTING AND RELEASING THE MORTGAGE. (II) "RESIDENTIAL MORTGAGE LOAN" MEANS A LOAN OR AGREEMENT TO EXTEND CREDIT, MADE TO A PERSON AND SECURED BY A MORTGAGE OR LIEN ON RESIDENTIAL REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE REFINANCING OR RENEWAL OF A LOAN SECURED BY RESIDENTIAL REAL PROPERTY. (III) "RESIDENTIAL REAL PROPERTY" MEANS REAL PROPERTY USED AS A RESIDENCE AND CONTAINING NO MORE THAN FOUR FAMILIES HOUSED SEPARATELY. SECTION 3. Part 1 of article 21 of title 13, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 13-21-125. Civil actions for theft in the mortgage lending process. A PERSON WHO SUFFERS DAMAGES AS A RESULT OF A VIOLATION OF SECTION 18-4-401, C.R.S., IN THE MORTGAGE LENDING PROCESS, AS DEFINED BY SECTION 18-4-401 (9) (e) (I), C.R.S., SHALL HAVE A PRIVATE CIVIL RIGHT OF ACTION AGAINST THE PERPETRATOR, REGARDLESS OF WHETHER THE PERPETRATOR WAS CONVICTED OF THE CRIME. A CLAIM ARISING UNDER THIS SECTION SHALL NOT BE ASSERTED AGAINST A BONA FIDE

PURCHASER OF A MORTGAGE CONTRACT. SECTION 4. Article 76 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 24-76-103. Federal grants - mortgage lending process. THE DIVISION OF REAL ESTATE AND ANY STATE AGENCY INVOLVED IN THE PROSECUTION OF OR PUBLIC EDUCATION ABOUT MORTGAGE FRAUD AND THEFT IN THE MORTGAGE LENDING PROCESS MAY ACCEPT ON BEHALF OF THE STATE GRANTS OF FEDERAL FUNDS FOR THE PURPOSE OF LOWERING THE INCIDENTS OF MORTGAGE FRAUD IN COLORADO. THE STATE AGENCY, WITH THE APPROVAL OF THE GOVERNOR, SHALL HAVE THE POWER TO DIRECT THE DISPOSITION OF A FEDERAL GRANT CONSISTENT WITH THE TERMS AND CONDITIONS OF THE GRANT SO LONG AS THE TERMS AND CONDITIONS DO NOT CONFLICT WITH STATE LAW.

CHAPTER 164 - HOUSE BILL 07-1338

AN ACT Concerning the elimination of certain restrictions on legal rights available to residential property owners with respect to construction defect actions, and, in connection therewith, enacting the "Homeowner Protection Act of 2007".

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1. Short title. This act shall be known and may be cited as the "Homeowner Protection Act of 2007".

SECTION 2. 13-20-806, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read:13-20-806. Limitation of damages. (7) (a) In order to preserve Colorado residential property owners' legal rights and remedies, in any civil action or arbitration proceeding described in section 13-20-802.5 (1), any express waiver of, or limitation on, the legal rights, remedies, or damages provided by the "Construction Defect Action Reform Act", this part 8, or provided by the "Colorado Consumer Protection Act", article 1 of title 6, C.R.S., as described in this section, or on the ability to enforce such legal rights, remedies, or damages within the time provided by applicable statutes of limitation or repose, are void as against public policy.(b) A waiver, limitation, or release contained in a written settlement of claims, and any recorded notice of such settlement, between a residential property owner and a construction professional after such a claim has accrued shall not be rendered void by this subsection (7).(c) This subsection (7) applies only to the legal rights, remedies, or damages of claimants asserting claims arising out of residential property and shall not apply to sales or donations of property or services by a bona fide charitable organization that is in compliance with the registration and reporting requirements of article 16 of title 6, C.R.S.(d) Notwithstanding any provision of this subsection (7) to the contrary, this subsection (7) shall apply only to actions that are governed by the provisions of this part 8, also known as the "Construction Defect Action Reform Act", and shall not be deemed to alter or amend the limitations on damages contained in this part 8, including the limitations on treble damages and attorney fees set forth in this section.(e) Nothing contained in this section shall be deemed to render void any requirement to participate in mediation prior to filing a suit or arbitration proceeding.

SECTION 3. 13-20-807, Colorado Revised Statutes, is amended to read:13-20-807. Express warranty - not affected. The provisions of this part 8 are not intended to abrogate or limit the provisions of any express warranty or the obligations of the provider of such warranty. The provisions of this part 8 shall apply to those circumstances where an action is filed asserting one or more claims for relief including a claim for breach of warranty; except that in any such action, section 13-20-806

(7) shall not apply to breach of express warranty claims except to the extent that provisions of the express warranty purport to waive or limit claims for relief other than the breach of express warranty claim. The provisions of this part 8 shall not be deemed to require a claimant who is the beneficiary of an express warranty to comply with the notice provisions of section 13-20-803.5 to request ordinary warranty service in accordance with the terms of such warranty. A claimant who requires warranty service shall comply with the provisions of such warranty.

SECTION 4. Effective date - applicability. This act shall take effect upon passage and shall apply to actions filed on or after said date.

SECTION 5. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.

Approved: April 20, 2007

HB 07-1322, Measure to Prevent Mortgage Fraud: Mortgage brokers and others involved in real estate transactions must act for the benefit of the borrower, including making reasonable inquiries (Signed 6/1/07);

SB 07-216, Mortgage Loan Acts Practices: Requires brokers to act in good faith and deal fairly with mortgagors (Signed 6/1/07).

3. Commercial:

The ASTM Standard Practice for Environmental Site Assessments, originally approved E 1527-93 and current revision E 1527-05, is to identify "recognized environmental conditions" of any hazardous substance "into structures on the property or into the ground, groundwater or surface water of the property";

The "Small Business Liability Protection Act of 2002" provides liability protection to prospective purchasers who perform "all appropriate inquiry" prior to purchasing a property (Federal Register #52542 dated August 26, 2004);

Securities Exchange Commission Regulation S-K Item 5 mandates disclosure of all environmental proceedings, which are material to the business or financial condition of the registrant.

The "Consumer Fraud Act" : Title 15, Chapter 87, Section 6101-6108 specifically prohibits any "plan, program or campaign ( involving terms deemed false, deceptive or misleading) which is conducted to induce purchases of… anything of value, by use of one telephone and involves more than one interstate telephone call."

Housing and Community Development Act of 1968[Public Law 90-448; 82 Stat. 590; 15 U.S.C. 1701 et seq.]

TITLE XIV -- INTERSTATE LAND SALES -- SHORT TITLE Sec. 1401. This title may be cited as the 'Interstate Land Sales Full Disclosure Act.' (15 U.S.C. 1701 note)

The date of enactment was August 1, 1968.

REQUIREMENTS RELATING to the SALE or LEASE of LOTS Sec. 1404.

(a) It shall be unlawful for any developer or agent, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce, or of the mails --

(1) with respect to the sale or lease of any lot not exempt under section 1403

(C) to sell or lease any lot where any part of the statement of record or the property report contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein pursuant to sections 1405 through 1408 of this title or any regulations thereunder; (2) (C) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a purchaser; (3) (e) If a contract or agreement is revoked pursuant to subsection (b), (c), or (d), if the purchaser or lessee tenders to the seller or lessor (or successor thereof) an instrument conveying his or her rights and interests in the lot, and if the rights and interests and the lot are in a condition which is substantially similar to the condition in which they were conveyed or purported to be conveyed to the purchaser or lessee, such purchaser or lessee shall be entitled to all money paid by him or her under such contract or agreement. (15 U.S.C. 1703)

REGISTRATION of SUBDIVISIONS Sec. 1405.

INFORMATION REQUIRED in STATEMENT of RECORD Sec. 1406. The statement of record shall contain the information and be

accompanied by the documents specified hereinafter in this section -- (3) a statement of the condition of the title to the land comprising the subdivision, including all encumbrances and deed restrictions and convenants applicable thereto;(6) in the case of any subdivision or portion thereof against which there exists a blanket encumbrance, a statement of the consequences for an individual purchaser of a failure, by the person or persons bound, to fulfill obligations under the instrument or instruments creating such encumbrance and the steps, if any, taken to protect the purchaser in such eventuality; (8) copies of the deed or other instrument establishing title to the subdivision in the developer or other person and copies of any instrument creating a lien or encumbrance upon the title of developer or other person or copies of the opinion or opinions of counsel in respect to the title to the subdivision in the developer or other person or copies of the title insurance policy guaranteeing such title;(10) copies of instruments creating easements or other restrictions

CIVIL LIABILITIES Sec.1410.

(a) A purchaser or lessee may bring an action at law or in equity against a developer or agent if the sale or lease was made in violation of section 1404(a). In a suit authorized by this subsection, the court may order damages, specific performance, or such other relief as the court deems fair, just, and equitable. In determining such relief the court may take into account, but not be limited to, the following factors: the contract price of the lot or leasehold; the amount the purchaser or lessee actually paid; the cost of any improvements to the lot; the fair market value of the lot or leasehold at the time relief is determined; and the fair market value of the lot or leasehold at the time such lot was purchased or leased.

(b) A purchaser or lessee may bring an action at law or in equity against the seller or lessor (or successor thereof) to enforce any right under subsection (b), (c), (d), or (e) of section 1404. (c) The amount recoverable in a suit authorized by this section may include, in addition to matters specified in subsections (a) and (b), interest, court costs, and reasonable amounts for attorneys' fees, independent appraisers' fees, and travel to and from the lot. (d) Every person who becomes liable to make any payment under this section may recover contribution as in cases of contract from any person who, if sued separately, would have been liable to make the same payment. (15 U.S.C. 1709)

PENALTIES Sec. 1418. Any person who willfully violates any of the provisions of this title, or the rules and regulations prescribed pursuant thereto, or any person who willfully, in a

statement of record filed under, or in a property report issued pursuant to, this title, makes any untrue statement of a material fact or omits to state any material fact

required to be stated therein, shall upon conviction be fined not more than $10,000 or imprisoned not more than 5 years, or both. (15 U.S.C. 1717)

Public Company Accounting Board; auditing standard No.3

"Specialists play a vital role in audit engagements. For example, appraisers, actuaries, and environmental consultant's provide valuable data concerning asset values, calculation assumptions and loss reserves. The auditor relies on the work of the appraiser in obtaining the fair market value of commercial property available for sale, then the auditor must ensure the appraisal report is adequately documented. We support the continued separation of audit services as outlined in the Sarbanes-Oxley Act of 2002."

4. Real Property APPRAISALS:

Colorado licensed Real Estate Appraisers must certify to HUD (both FANNIE MAE and FREDDIE MAC) for "Readily Observable" adverse environmental conditions that would make the property more or less valuable;

"The primary role of appraisals in the loan underwriting process is to provide evidence that the collateral value of the property is sufficient to avoid losses on loans if the borrower is unable to pay the loan. If a borrower defaults and the lender subsequently forecloses on the loan, the lender can file an insurance claim with HUD for nearly all of its losses, including the unpaid balance of the loan. After the claim is paid, the lender

transfers the title of the home to HUD, which is responsible for managing and selling the property. {GAO Report: November 2004 - "Single Family Housing, HUD's Risk-Based Oversight of Appraiser's Could Be Enhanced" Pg. 4-5}.See: HUD Notice 79-33 dated September 10, 1979.

A mortgagee and an appraiser must ensure that an appraisal and related documentation satisfy FHA appraisal requirements and both bare responsibility for the quality of the appraisal in satisfying such requirements. The appraiser is required to identify any readily observable deficiencies impairing the safety, sanitation, structural soundness, and continued marketability of the property.

A Direct Endorsement Mortgagee (and any of its loan correspondent lenders) that submits, or causes to be submitted, an appraisal or related documentation that does not satisfy FHA requirements is subject to administrative sanction by the Mortgagee Review Board pursuant to 24 CFR part 25 and part 30. [Federal Register: July 20, 2004 (Volume 69, Number 138)] [Page 43503-43509]. The rule applies to both sponsor lenders, who underwrite loans, and loan correspondents, who originate loans on behalf of sponsor lenders {GAO: pg.20}.

FHA Appraisal-Related Forms:Form HUD-92564-HS, October 2003Form HUD-92564-VC, October 2003Form HUD-92564-CN, January 2004

SB 07-85, Protects Consumer Real Estate Transactions: Prohibits brokers from trying to influence the judgement of a real estate appraiser through coercion, intimidation or compensation.

Title I : Fraud Enforcement and Recovery Act of 2009 (FERA) – (Sec. 2) Amends the federal criminal code to include within the definition of “financial institution” a mortgage lending business or any person or entity that makes, in whole or in part, a federally related mortgage loan. Defines “mortgage lending business” as an organization that finances or refinances any debt secured by an interest in real estate, including private mortgage companies and their subsidiaries, and whose activities affect interstate or foreign commerce. Applies the prohibition against defrauding the federal government to fraudulent activities involving the “Troubled Assets relief Program (TARP) or a federal economic stimulus, recovery, or rescue plan. (Sec 3) Authorizes appropriations to the Attorney General for FY2010-FY2011 for investigations, prosecutions, and civil proceedings involving federal assistance programs and financial institutions. (Sec 4) Amends the False Claims Act to: (1) expand liability under such Act for making false or fraudulent claims to the federal government; and (2) apply liability under such Act for presenting a false or fraudulent claim for payment or approval. Requires persons who violate such Act to reimburse the federal government for the costs of a civil action to recove penalties or damages.