Key Aspects of the Colorado Real Estate Contract

The process of buying a property can be bittersweet—while the prospect of owning a new home is thrilling, the risks of making the purchase can be overwhelming. That is where real estate contracts come in handy. 

Real estate purchase agreements are fairly similar everywhere in the U.S., but you should always pay attention to the specifics that apply in your state. That is why most real estate transactions in the Centennial State require contracts that the Colorado Real Estate Commission approves.

This article will provide all the information you need before signing the Colorado real estate contract. 

What Is a Real Estate Contract?

Real estate contracts are legal documents that define the terms and conditions of a real estate transaction between the seller and buyer of said property.

The purpose of a real estate contract is to outline the expectations and protect both parties in the process.

There are three types of a real estate contract:

• Lease agreement
• Real estate assignment contract
• Purchase agreement

Types of Colorado Real Estate Contracts

The following table displays real estate contracts that the Division of Real Estate in Colorado approves:

You can check out the complete lists of real estate forms and documents on the Division of Real Estate website.

Colorado Residential Purchase and Sale Agreement

Even though there are a lot of contracts under the real estate umbrella, we refer to residential purchase and sale agreements when talking about buying and selling property in Colorado.

The Colorado purchase agreement is a contract that outlines the terms of a property transaction between its seller and buyer. The purpose of a purchase agreement is to:

• Protect the buyer—Signing a purchase agreement enables the buyer to terminate the contract without losing money
• Define the seller’s obligations—Once they sign the contract, the seller is obligated to sell the property unless the buyer agrees to terminate the contract
• Minimize potential risks—When buying and selling property, the party that is at most risk is the buyer. That is why the state of Colorado created a strong residential purchase and sale agreement that focuses heavily on the buyer’s protection

What Are Required Disclosures in a Colorado Purchase and Sale Agreements?

When signing a Colorado real estate contract, the State requires the seller to provide a disclosure statement to notify the buyer about the condition of the property and its previous issues.

Disclosures that the seller must include are:

• Lead-based paint disclosure—The U.S. Consumer Product Safety Commission requires sellers in Colorado to provide the lead-based paint disclosure to potential buyers
• Methamphetamines disclosure—The seller must allow the buyer to conduct testing on the real estate to make sure it was never used as a methamphetamine laboratory
• Sellers residential property disclosure—The disclosure form that incorporates every state-required disclosure, including those that relate to:
• Taxing districts
• Common interest community
• Methamphetamine lab
• Potable water
• Transportation projects
• Oil and gas activity

If the property contains or is equipped with energy-related technologies, the seller must also include the green disclosure form.

What Does a Colorado Real Estate Contract Include?

The state-approved purchase and sale agreement is 18 pages long and covers the following terms:

1. Price
2. Duration
3. Riders or addenda
4. Contingencies
5. Disclosures
6. Earnest money
7. Considerations
8. Closing costs
9. Both parties’ signatures

There are Colorado real estate contract templates online, but it is best to use the official form from the Division of Real Estate website.

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