SB23-206 and Changes to the Commission Approved Contracts

Information from DORA Division of Real Estate

On August 7, 2023, SB23-206 Concerning Information about Radon in Residential Real Property Transactions, goes into effect.  The law requires that each sales contract for a residential property contain the following, or a substantially similar, disclosure in bold faced type:

THE COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT STRONGLY RECOMMENDS THAT ALL HOME BUYERS HAVE AN INDOOR RADON TEST PERFORMED BEFORE PURCHASING RESIDENTIAL REAL PROPERTY AND RECOMMENDS HAVING THE RADON LEVELS MITIGATED IF ELEVATED RADON CONCENTRATIONS ARE FOUND. ELEVATED RADON CONCENTRATIONS CAN BE REDUCED BY A RADON MITIGATION PROFESSIONAL.

RESIDENTIAL REAL PROPERTY MAY PRESENT EXPOSURE TO DANGEROUS LEVELS OF INDOOR RADON GAS THAT MAY PLACE THE OCCUPANTS AT RISK OF DEVELOPING RADON-INDUCED LUNG CANCER. RADON, A CLASS A HUMAN CARCINOGEN, IS THE LEADING CAUSE OF LUNG CANCER IN NONSMOKERS AND THE SECOND LEADING CAUSE OF LUNG CANCER OVERALL. THE SELLER OF RESIDENTIAL REAL PROPERTY IS REQUIRED TO PROVIDE THE BUYER WITH ANY KNOWN INFORMATION ON RADON TEST RESULTS OF THE RESIDENTIAL REAL PROPERTY.

The new law also requires that the sales contract or seller’s property disclosure for residential real property contain the following disclosures:

  1. Whether a radon test or tests have been conducted on the property;
  2. The most recent records or reports pertaining to the radon concentrations within the property;
  3. A description of any radon concentrations detected or mitigation or remediation performed; and
  4. Information regarding whether a radon mitigation system has been installed in the property; and
  5. Provide an electronic or paper copy of the most recent brochure published by the Colorado Department of Public Health and Environment that provides advice about radon in residential real estate transactions.

Therefore, the Division of Real Estate is releasing four (4) of the Commission-approved forms by Monday, August 7, 2023 for use by brokers.  The forms are:

  1. Contract to Buy and Sell – Residential
  2. Contract to Buy and Sell – Income-Residential
  3. Contract to Buy and Sell – Residential (Colorado Foreclosure Protection Act)
  4. Seller’s Property Disclosure – Residential

The effective date of the bill has caused disruption in the Real Estate Commission’s standard form promulgation process and will likely cause some delays for the forms providers to make the new changes.

The new law also applies to residential lease transactions.  Before a tenant signs a lease for residential real property, the landlord must provide a document to the tenant which discloses the following:

  1. A warning statement in bold faced type that is substantially the same as:

THE COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT STRONGLY RECOMMENDS THAT ALL TENANTS HAVE AN INDOOR RADON TEST PERFORMED BEFORE LEASING RESIDENTIAL REAL PROPERTY AND RECOMMENDS HAVING THE RADON LEVELS MITIGATED IF ELEVATED RADON CONCENTRATIONS ARE FOUND. ELEVATED RADON CONCENTRATIONS CAN BE REDUCED BY A RADON MITIGATION PROFESSIONAL.

RESIDENTIAL REAL PROPERTY MAY PRESENT EXPOSURE TO DANGEROUS LEVELS OF INDOOR RADON GAS THAT MAY PLACE THE OCCUPANTS AT RISK OF DEVELOPING RADON-INDUCED LUNG CANCER. RADON, A CLASS A HUMAN CARCINOGEN, IS THE LEADING CAUSE OF LUNG CANCER IN NONSMOKERS AND THE SECOND LEADING CAUSE OF LUNG CANCER OVERALL. A LANDLORD IS REQUIRED TO PROVIDE THE TENANT WITH ANY KNOWN INFORMATION ON RADON TEST RESULTS OF THE RESIDENTIAL REAL PROPERTY.

2.  Any knowledge the landlord has of the residential real property’s radon concentrations, including the following information:
– Whether a radon test or tests have been conducted on the property;
– The most current records and reports pertaining to radon concentrations within the property;
–  A description of any radon concentrations detected or mitigation or remediation performed;
–  Information about any radon mitigation system, including a system description and documentation, if a radon mitigation system has been installed; and

3. Provide An electronic or paper copy of the most recent brochure published by the Colorado Department of Public Health and Environment that provides advice about radon in residential real estate transactions.

The law requires the tenant to acknowledge receipt of the disclosure by signing the disclosure.  If a landlord fails to make the required disclosures, or does not make a reasonable effort to mitigate the radon within 180 days after being notified by a radon mitigation professional that the air concentration of radon on four (4) picocuries per liter or more, the tenant may void the lease agreement and vacate the property (on or after January 1, 2026, this remedy will not apply to leases that are one year or less in duration).  A landlord breaches the warranty of habitability if the required disclosure is not made.

For brokers that represent landlords, the Real Estate Commission has not promulgated a form.  You may use a disclosure form that complies with 12-10-403(4)(b)(VI), C.R.S.  Due to the complexity of this law and the potential for leases to be voided if the required disclosure is not properly made, it is recommended that you use a form that is created by an attorney.  Additionally, the Colorado Bar Association has approved a Tenant Radon Disclosure for use by brokers that will be available on their website soon.