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New Colorado Contract to Buy and Sell Real Estate for 2019

This article is intended for educational purposes only and not as legal advice.

The Colorado Contract to Buy and Sell Real Estate which is mandatory for use by licensed real estate agents is typically modified every two years; however, if there is a change in the law through a statute, regulation or case, the contract is immediately modified to comport with the change in the law.  On March 7, 2019, House Bill 19-1098 was signed and passed which affects paragraph 13 of the contract.  Hence, the new contract that became mandatory 1/1/19 has been modified and is available for use now and mandatory 7/1/19.  There are new closing instructions for use by licensed agents also mandatory 7/1/19.

House Bill 19-1098 deals with deeds to real property and amends C.R.S. 38-30-113 regarding deeds.  In a nutshell, HB 19-1098 implies specific warranties in certain deeds without the necessity of enumerating them individually and implies many exceptions previously enumerated.  For instance, the words “warrants the title” in a warranty deed automatically now includes specific warranties that previously were typically individually listed.  Further, certain exceptions such as the current and future year’s property taxes; anything that would have been disclosed by an improvement survey plat and all matters of record in the county where the property resides are now all automatically included as exceptions to the deed merely by inserting the words “subject to statutory exceptions” (defined at §38-30-113(5)(a), C.R.S.) in the transfer of title paragraph.

In fact, title companies now are not allowed to insert anything other than “subject to statutory exceptions” in the exception paragraph of deeds they prepare unless the title company is instructed in writing by both the grantor and the grantee or their authorized agent.

HB-19-1098 affects just one provision of the Colorado real estate contract mandatory for use by licensees: paragraph 13, Transfer of Title.  This paragraph has been shortened significantly now that “subject to statutory exceptions” language is referenced in lieu of many previously listed deed exceptions.  It’s much shorter now and basically just requires the buyer to select the deed type.  A redacted version of the new paragraph 13 and discussion of this new contract change necessitated by HB 19-1098 can be found at    A link to the new contract and a redline version showing what was changed can be found near the bottom of the page.

Visit to view numerous articles I’ve written primarily on real estate legal topics (most specific to Colorado) and many are available in video form by visiting the Cherry Creek Title Services YouTube channel.


Selling Your Home “For Sale by Owner”

Cherry Creek Title Services logo in black and whiteCherry Creek Title has specialized in “For Sale by Owner” transactions for over 20 years. We have a well experienced staff including 2 staff attorneys to lend their expertise for you during every step of your closing so you can feel content with your choice to sell your home without a real estate agent. We also offer many articles containing helpful tips and resources specifically for “FSBO” transactions.

We make it a point to know our clients and customers, and our flexible approach is designed to meet each individual’s needs to the best of our ability. Clients value our common sense approach to underwriting and our dedication to accommodating everyone’s closing needs, including out-of-office and after-hours signings. we build lifelong relationships with our clients and look forward to assisting you in your next transaction.

Selling you home for sale by owner can be overwhelming! You can find may helpful tips to assist you in selling your home by owner at our page titled  FSBO Tips and Resources.

Preparing your Residential Contract to Buy and Sell Real Estate is the first step on your way to the closing table.  You can download for free the purchase contract and other relevant forms  here:  Colorado Division of Real Estate Contracts and Forms.

Need help drafting your purchase contract? Check out this comprehensive step-by-step guide to draft your purchase contract written by our  in-house attorney and President of Cherry Creek Title Services, Inc.,  Michael Selinfreund titled Updated for 2019! Tips on Drafting the Colorado Contract to buy and Sell Real Estate.

at any time you have any questions, concerns or just want to know general information about your transaction, one of our staff members will be happy to assist you.  You can visit our office anytime between 9:00 am and 5:00 pm Monday thru Friday located at 3600 South Yosemite Street, Suite 510, Denver, Colorado 80237.  You can call any one of our knowledgeable staff members at 303.333.9737 or email Once you have completed your purchase contract, we will review it free of charge to insure it has been correctly executed.

The most frequently asked question is “How much are your closing costs?” Many title companies charge a premium to close your transaction and make cumbersome and costly requirements such as attorney opinion letters for you contract simply because you have no real estate agent involved. Cherry Creek Title will provide you with both competitive pricing and VIP service. We charge the same low closing fee for your FSBO sale as we do for a real estate agent – assisted transaction. We do not offer a bundled purchase closing fee – we will only charge you for the services provided to you. Below is a list of our most commonly charged closing fees. Designation of which party pays the closing costs can be negotiated in the purchase contract. for general closing costs go to our page titled Basic Rates

You can request a more comprehensive quote on title insurance and fees by filing out the form located at the bottom of our FSBO page.

You can feel confident selling your home “For Sale by Owner” when you use Cherry Creek Title Sevices, ryour “FSBO” specialist!


FSBO Tips On Filling Out the Colorado 2019 Contract To Buy And Sell Real Estate (Residential) Form CBS 1-6-18; Mandatory 1/1/19 for Licensed Agents.


By Michael Selinfreund, Esq.,

President/General Counsel of Cherry Creek Title Services, Inc.,

Agent for Commonwealth/Fidelity & First American

Please note this is a revised article written in 2016


The new Colorado residential real estate contract, which is mandatory for use by licensees as of January 1, 2019, contains some subtle language revisions for purposes of clarification as well as several new provisions and modifications.  Some of these changes are as a result in changes in federal and state laws since the previous contract it replaced.

DOWNLOAD NOW (Writable): 2019 Purchase Contract for Residential Property courtesy of the Colorado Division of Real Estate

The Colorado Division of Real estate replaced many of the mandatory forms for licensees effective January 1, 2019 including:

  •  Agreement to Amend/Extend
  • Contract to Buy and Sell Real Estate (Residential)Contract to Buy and Sell Real estate (Income-Residential)
  • Contract to Buy and Sell Real Estate (Land)
  • Contract to Buy and Sell Real Estate (Commercial)
  • Contract to Buy and Sell Real Estate (Foreclosure)
  • Counter proposal
  • Estoppel Statement
  • Notice to Terminate
  • Residential Addendum to Contract to Buy and Sell Real Estate
  • Square Footage Disclosure (Residential)
  • Licensee Buy-Out Addendum to Contract to Buy & Sell Real Estate – Repealed January 1, 2019

This article shall cover just the Contract to Buy and Sell Real Estate (Residential).  All of these and many other useful forms can all be downloaded at no cost from the Colorado Division of Real Estate’s website:  On May 10, 2019, the Colorado Real Estate Commission changed paragraph 13 to comply with HB19-1098 regarding deeds conveying real estate.  The revised form is mandatory for real estate licensees July 1, 2019.  This modest change to the Contract to Buy and Sell Real Estate with the new section 13 incorporates language that if title is conveyed by a warranty deed, it will be conveyed “subject to statutory exceptions” which are defined in §38-30-113(5)(a), C.R.S.  This change to the form does not affect this article regarding tips on preparing the contract.

Thankfully, the Contract to Buy and Sell Real Estate (Residential) is now writable (simply download to your computer and then open it). Just click on the document; download it and open it in Adobe (free version works fine) to enable you to fill it out directly on the document. Many/most licensed real estate agents have sophisticated e-contract programs that are writable and allow for e-signatures. If you’re selling your home with the assistance of a licensee, they’ll likely have access to an efficient system for the contract preparation, delivery and execution.

I would be remiss to begin by not first strongly urging you to seek competent legal counsel in the preparation of the contract and the ramifications of its many provisions.  This article is not intended as a substitute for hiring an attorney nor is it intended to be a comprehensive analysis of the Colorado Residential Contract to Buy and Sell Real Estate. Rather, this article is intended to provide a general overview in filling out the contract and should not be relied upon in lieu of the advice of a competent attorney.  I’m not going to waste your time giving advice or tips on obvious blanks or paragraphs containing blanks or boxes where it’s obvious how to fill them out.

As you fill out the form Contract, you’ll find that there will likely be many provisions that are inapplicable. Some are ideal for just putting n/a in the blank, and some should be interlineated (line through the language). In cases where you line through provisions, I recommend leaving the language you lined through still visible. So, you could draw a diagonal line through a paragraph to strike it yet leaving the language still viewable. Similarly, you can just draw a line through the middle of every sentence you wish to strike since that will also leave the language you’re striking as visible. Leaving the language visible that you are striking may assist in resolving any ambiguities that may arise by completing deleting or redacting through such provisions.

Let’s Begin.

Paragraph 2.1 gives three options regarding how the buyer is taking title. Most often, one of the first two is selected. If there is only one buyer, no selection needs to be made since it will be held in Severalty automatically. If there is more than one buyer, joint tenancy gives survivorship rights to the other joint tenant or tenants. It is the election made by virtually all married people as their interest in the property goes to the surviving spouse automatically when they die and does so outside of probate.   By electing to own as Tenants in Common, each owner’s interest passes according to their wills or intestate succession in the event no will exists. A classic example is two unrelated people investing in a rental property and owning as tenants in common thereby intending their interest to pass to their heirs rather than the surviving tenant in common.

Paragraph 2.3: The seller’s name can be easily ascertained by going to the website of the assessor for the county in which the property resides. Depending on the county, you’ll see other valuable and interesting information there such as the legal description, tax information, valuation, sales history and the present owner plus more depending on the county. You can also go to; type in the property address and see Zillow’s estimated value (Zestimate), photos and even comparable property sales.  You can always call Cherry Creek Title Services and obtain the ownership information and legal description. If you err in how you list the owner’s name or legal description, the title examiner at Cherry Creek Title will provide the correct information in the title commitment.

Paragraph 2.4: This is where you insert the legal description of the property. This can be found at the county assessor site; in the seller’s deed; in the seller’s title policy; and through a record title search.

Paragraph 2.5.3: After “except”, it should typically read “no exceptions”. This paragraph is dealing exclusively with personal property such as a refrigerator, and most buyers want the assurance that there are no liens against such personal property.

Paragraph 2.5.4: This is where you insert all other personal property items included with the sale. Being exhaustive and perhaps redundant is preferable to having a dispute later over whether specific personal property items were to be included. Examples to include here are appliances included with the sale that aren’t built in such as the refrigerator, washer and dryer. When in doubt, just list it to be safe.

Paragraph 2.5.5: The parking and storage facilities, if applicable, are both identified and disclosure is made whether they are Use Only or Ownership. These are tough questions for the buyer filling out the contract. Is the parking and storage part of the deed or are they limited common elements giving the owner of the property the exclusive right to use? The first place to start is to ask the seller who may or may not know. A review of their deed and the documents governing the common elements such as the condominium map, if applicable, and the declaration may be necessary to ascertain whether the parking and storage is owned by the Seller or not. When preparing the contract, this is when the management company can be very helpful as they likely know. There is always time after the contract preparation to verify these facts.

Paragraph 2.6: Exclusions should include items that would otherwise be considered as included such as  a light fixture which the seller is keeping, but it is also wise to list the unattached personal property such as the refrigerator, washer and dryer to avoid any misunderstandings.

Paragraph 2.7.1: If you are dealing with water rights being deeded, I’d highly suggest you hire an attorney versed in water law and let them determine the type of deed you should use.  They likely will recommend a bargain and sale or quit claim deed if you’re the seller.  This comes up rarely in a typical residential transaction. Water law is complex and beyond the scope of this article.   However, this will virtually never come up in an urban residential transaction so you will likely be putting “n/a” in this blank.

Paragraph 2.7.2: Same advice as above. If water rights are being conveyed, likely both parties will have attorneys involved, and the selection of the deed for water rights is better negotiated by experts.  Thankfully in the overwhelming majority of urban residential transactions, just put “n/a”.

Paragraph 2.7.3: If water is provided by a well, although seeking legal advice is again a wise path, at least visit the Colorado Division of Water Resources to review and verify the legitimacy of the permit. That’s the time to vigilantly look into any limitations, time frames, etc. regarding the well permit. Well issues can be complex, and obviously having water to the property is essential. The permit number can be obtained from the Seller and/or the Colorado Division of Water Resources. If you’re relying on a well for your water supply, I’d certainly advise employing an expert to inspect the well to ensure it will meet your needs.

Paragraph 2.7.4: Sometimes water rights will be transferred via stock certificates. Once again (thankfully), this is very rare in urban residential transactions. I’d highly recommend legal advice from an attorney with water law expertise in any situation involving the transfer of water rights.

Paragraph 3:

Item 1: If the earnest money isn’t being paid concurrently with the contract, insert the date it will be paid here. It should be within 24-48 hours.

Item 2: I recommend choosing a date 7-10 days after the contract acceptance date to give the parties time to select the title company; get them the contract, earnest money, payoff information, and any HOA information if applicable. Plus, the title company needs time to do the title search and prepare and distribute the title commitment and related documents.

Item 3: I recommend choosing a date 3-5 days after the date selected in Item 2.

Item 4: I recommend using the same date as item 2.

Item 5: I recommend using the same date as item 3.

Item 6: I recommend using a date 3-5 days after the date selected for Item 3.

Item 7: First rights of refusal are rare in Colorado. I’d fill this out as n/a. If it applies, the seller can counter and also provide the deadline since there’s no point putting in a deadline shorter than what is actually provided in the language of the first right of refusal if one exists. For example, all the existing owners in a complex may have 30 days to match the terms of your contract and usurp you as the Buyer. So in that situation, you’d want to pick a date more like 40 days out to give the seller/association/management company time to comply with the terms of any existing first right of refusal which of course begins with notification to all parties possessing any such right, and that likely won’t happen overnight.

Item 8: I’d choose a date 5-7 days after contract acceptance.  That’s plenty of time for the seller to get a full set of association documents from the property management company or association. An organized seller will have all of those documents on-hand at the time they market their home. If not, they should be able to procure them all from the management company within that 5-7 day time period.

Item 9: I’d choose a date 3-5 days after the date in Item 8.

Item 10: I’d choose a date no more than 3 days after contract acceptance. The seller should be ready to hand that to you along with the signed contract so same day as contract acceptance is not unreasonable at all. Again, the Seller’s Disclosure Form is available for free from the Colorado Division of Real Estate website.

Item 11: Within 3 days of contract acceptance. The seller should have this available immediately.

Item 12:  Within 3 days of contract acceptance.

Item 13: Within 3-5 days of contract acceptance.

Item 14: 3-5 days after acceptance date if applicable or n/a.

Item 15: 3-5 days after acceptance date.

Item 16: This will virtually always be “n/a”. If it does apply, 3-5 days after acceptance date.

Item 17: This will virtually always be Another “n/a”. If applicable, 3 days after the date in Item 16.

Item 18: Likely n/a; however, if applicable, 4 weeks after acceptance date. Although an appraisal, survey and even a lender’s title policy may all be unnecessary, assumption approvals can still take significant time.

Item 19:  10-14 days after acceptance. If the seller is carrying back financing, read my article on the Cherry Creek Title Services, Inc. website entitled “Private Mortgages Post-TRID and Specific to Colorado.”  It is best to involve an attorney to at least draft the loan documents even if the seller has done 3 or fewer loans in the last 12 months. I’m not a fan of laymen drafting loan documents and especially since 2008. Both Colorado and Federal laws impose strict restrictions on owner carries. Always consult an attorney knowledgeable regarding owner carry loans post Dodd-Frank and in compliance with all Federal and Colorado laws.

Item 20:  Within two weeks of contract acceptance.

Item 21: Within 3 days of the date in Item 20 is reasonable.

Item 22: Within 3 days of the date in Item 21 is reasonable.

Item 23: Within 10-14 days of contract acceptance.

Item 24: Within 3 days of the date in Item 23 is reasonable.

Item 25: Within 3 days of the date in item 24 is reasonable.

Item 26: As with all the recommended dates for appraisal, survey or inspection deadlines, knowing how long these professionals will take to complete their tasks is obviously advantageous in filling out all of these dates. I am choosing dates that work in the majority of circumstances and certainly can be countered by the Seller or amended later. With that said, I’d expect the inspector to complete the inspection within 7 days of contract acceptance and provide the report within 2 days of completing the inspection at the most. So, choosing 10 days from contract acceptance for the inspection deadline would be reasonable.

Item 27: Within 3 days of the date in item 26 is reasonable.

Item 28: Within 3 days of the date in item 27 is reasonable.

Item 29: Within 5-7 days of contract acceptance.

Item 30: Within 5-7 days of contract acceptance.

Item 31: Within 3 days of the date in item 30 is reasonable.

Item 32: Within 3-5 days of the date in item 31 is reasonable.

Item 33: Entirely up to how long the seller is willing to wait for the buyer’s home to sell.

Item 34: Within 3 days of the date in item 11.

Item 35: Obviously negotiable. Typically, 4-6 weeks from contract acceptance.

Item 36: When I purchase, I like possession on the “date of delivery of deed”. I do a pre-closing walk through the day of the closing so I see what I’m actually getting, and I provide for such a walk-through to take place in the Additional Provisions paragraph (paragraph 30). Many times the seller needs something like “3 days after delivery of deed” to move out. They want to make sure the house actually closes before moving. However, many a buyer has been disappointed with the condition/cleanliness of homes delivered after the seller has received their money, and although it rarely happens, some sellers actually do not vacate timely and must be evicted.

Item 37: Entirely up to the parties. If possession is on the date of delivery of deed, I’m going to choose a time that’s an hour after the closing time.

Item 38: I usually preferred to not pressure people while not giving them so much time they can go use your offer as leverage with other potential Buyers. 1-2 days is common.

Item 39: 5:00 p.m. is a nice time to choose for this blank.

I realize filling out the preceeding 39 items was tedious, time consuming, and not much fun. Especially if you took the time to look at each paragraph referred to by the items. The good news is the contract moves much quicker from here forward.

Paragraph 4.1: These 2 columns will balance when completed correctly. Assumptions are extremely rare since they all basically require the Buyer to qualify since almost every loan has a due on sale clause enabling the existing lender to preclude assumptions without lender approval. There is rarely Private Financing that isn’t seller financing. This is due to the many state and federal laws that do apply to non-seller private lenders making such loans virtually unavailable unless the property is for investment purposes. Even parents cannot provide their own children with financing without complying with complex Colorado laws. See my article entitled “Private Mortgages Post-TRID and Specific to Colorado” on the Cherry Creek Title website.

Paragraph 4.2: Before I filled this blank in, I’d verify with the lender if buyer Credit/seller concessions are allowed with the buyer’s intended loan and the limits to such concessions.

Paragraph 4.3: It will typically be in the form of a “personal check” although we see wires more and more often these days. Some sellers are willing to accept earnest money promissory notes although they usually only do so if they come due within 24 hours of contract acceptance. See Paragraph 4.3.1.  In the “held by” blank, insert the name of the title company you select. Cherry Creek Title Services, Inc. holds all such funds at no charge in a federally insured escrow account.

Paragraph 4.4.1: paraphrases the Colorado good funds law. Virtually all lender funds arrive via wire, and Buyers most often provide their funds to close via wires as many title companies will not accept anything but wires. However, the cashier’s check is still used and accepted at many title companies. If you use Cherry Creek Title Services and wish to use a cashier’s check, call to find out the procedure.

Paragraph 4.5.3: If the buyer is getting a new loan, the type of loan is checked here.

Paragraph 4.6: Assumptions are rare, but if one exists, the blanks are all self-evident and the answers obtainable from the lender holding the loan to be assumed. Like any paragraph that is inapplicable, you’ll normally just be drawing a diagonal line through that paragraph or interlineate each line. That still leaves the inapplicable language readable making it the preferred method of deleting inapplicable provisions since being able to read what was deleted can resolve a possible future ambiguity as discussed in the beginning of this article

Paragraph 4.7.1 applies when the seller is carrying back financing. Since I highly recommend utilizing a competent attorney to prepare any loan documents on behalf of the seller, I’d recommend they advise you on how to complete this paragraph.

Paragraphs and If applicable, each party has the right to terminate the contract based on dissatisfaction with the private loan terms as long it is done timely as provided in the contract.

Paragraph 6.4: Check the box who is paying for the appraisal. This is almost always paid for by the buyer, not the seller

Paragraph 8.1.1: I wouldn’t personally check this box.

Paragraph 8.1.2: I’d check this box electing to choose my own title insurance company, and of course I’d choose Cherry Creek Title Services. I wouldn’t let a seller pick my title insurer no more than I’d let them select my homeowner’s insurance. By reducing the offer price by the cost of the title policy, the seller is effectively paying for it via the price reduction, but the buyer is selecting who handles the closing and who is issuing the title policy of which they are the insured, not the seller. You wouldn’t let the car dealer pick your auto insurance, so why would you let the Seller or their agent pick out your title insurance? Title underwriters vary in strength, size, reserves and ratings. It does matter who issues your policy if you ever have a claim. At the time of writing this article, Cherry Creek Title is an authorized agent of the top two underwriters in the world, Fidelity (Commonwealth) and First American. We have been successfully helping “For Sale By Owner” sellers for decades and welcome their deals. The fees are absolutely no different than deals originated from real estate agents and no attorney opinion letter is required. Shop around and compare rates for closing fees and the cost of the owner and lender (if applicable) policies. Ask about whether a re-issue rate is available.

Paragraph 8.1.3: I’d check “Will”. I always obtain OEC for myself and recommend it for my clients. It covers many items that actually do result in claims and is inexpensive. In that paragraph you also select who will pay for OEC.

Paragraph 8.1.4: These documents are of public record and this paragraph is primarily definitional. All such documents are provided by Cherry Creek Title at no cost as long as they are of public record, which they virtually always are.

Paragraph 8.1.5: Copies of Title Documents: These are the documents referred to in 8.1.4, and Cherry Creek Title provides them at no cost.

Paragraph 8.1.6: This will virtually never apply. Abstracts are extremely rare. I would interlineate through the line so there is no ambiguity and all parties are aware the seller has no abstract to provide the buyer.

Paragraph 8.2 is self-explanatory. It summarizes the buyers right to review all title documents, commitments, endorsements, etc. and what happens when they aren’t provided timely and discusses termination and how the lack of the Buyer providing notice of termination is effectively an acceptance of the condition of the title.

Paragraph 8.3: This paragraph deals with off record items (not recorded so not discoverable by the title company). Sometimes parties enter into contracts during development or prior to construction knowing certain easement and other agreements will be recorded at the time of delivery of deed. Like 8.2, it provides that failing to object is effectively acceptance of any such items.

Paragraph 8.4 has been a mandatory disclosure in all capital letters for many years and many iterations of the Colorado licensed real estate agent mandated contract. It is a warning to the buyer to inquire whether the property they’re buying resides in a Special Taxing District. These Special Taxing Districts are vehicles used by the developer to finance such things as the cost of grading the land and the costs of building/installing streets, curb and gutter, utilities, drainage, and other improvements to the land. Sometimes there are off-site improvements as well.   If you’re an early buyer in an area subject to such Special Taxes and the development fails to sell well, you could be paying extremely high taxes since there won’t be enough other owners to share the costs. I think it’s highly risky to buy in a new community subject to a Special Taxing District. I wouldn’t.

Paragraph 8.6: Rights of First Refusal are rare. Some had racist origins/motivations. Many years ago, some communities reserved rights of first refusal to the other property owners in the community to match the terms of any contract and thereby keep out people they didn’t want to live there. They are rarely if ever created anymore, and when they do exist, it is important to comply with the terms of such first rights of refusal. It typically involves notification of all the affected parties with a time deadline to match the contract. Thankfully, first rights of refusal are very rare these days.

Paragraphs 8.7.1 through 8.7.5 discuss oil, gas, water and minerals. In platted urban property, zoning isn’t going to allow someone with mineral rights to your home to construct an oil well. However, that may be the case in rural, industrial and some other residential property settings. And, horizontal drilling techniques have adversely impacted homeowners.

Paragraph 8.8: This advises all parties to consult an attorney. The need for an attorney increases with the complexity of the transaction; existence of title issues; oil and gas issues; owner carry financing; the existence of a special improvement district and many other possible circumstances.

Paragraph 9.1: In a typical residential transaction involving a new loan, the lender will require an ILC (Improvement Location Certificate). An ILC is a very basic “survey-like” document that shows the property boundaries and the location of the improvements, easements, and any encroachments.  Suffice it to say that in a residential deal with the Buyer getting a new loan, you’ll be checking the ILC box.

Paragraph 9.1.1 and 9.1.2: Since it’s for the benefit of the buyer and specifically their lender, I’d check the boxes where the buyer orders the ILC and pays for it.

Paragraph 9.1.3 has a blank which may be n/a or to add other parties to whom are entitled to a copy of the ILC, survey etc. Examples are the buyer’s lender or attorney.

Paragraph 10.7 is where you’d insert the address of a property that the contract was conditioned upon its sale. So, if the Buyer was only obligated to purchase if successful in selling a property first, here’s where you’d list it.

Paragraph 10.8 is important.  I prefer that the Seller readily has their Property Disclosure  (Colorado Real Estate Broker Mandatory Contracts and Forms/disclosure documents/ Sellers disclosure document (residential) available to the Buyer so the Buyer can check the box they’ve received a copy.  Same advice for any Source of Water Addendum and the Well Disclosure when applicable.

Paragraph 10.10.1 and 10.10.2 require the seller to provide the buyer with a completed Lead-Based Paint Disclosure if the property being sold had its building permit issued prior to January 1, 1978 and gives the Buyer the right to conduct a risk assessment if appropriate.  The Disclosure form is available at the Colorado Division of Real Estate website. The applicable federal law, Lead Disclosure Rule and compliance requirements can be found on the internet through HUD and the EPA.  The applicable federal law, Lead Disclosure Rule and compliance requirements can be found at:

To find out more information on by the EPA “Protect Your Family From Lead In Your Home”, Click Here.

Paragraph 12.2: I advise whoever prepares the contract to concurrently prepare the closing instructions which are also available through the Colorado Division of Real Estate website.

Paragraph 12.3: “Mutual Agreement of Buyer and Seller” is very common.

Paragraph 13: This blank requires the deed form to be selected. Almost all residential deals involve general warranty deeds. Virtually all commercial deals, builders, and often Sellers represented by attorneys choose special warranty deeds. If you choose any other type of deed such as a bargain and sale or a quit claim deed, you’ll very likely run into issues with the title company being hesitant or unwilling to insure anything less than a warranty deed, and the Buyer may not accept anything less than a general warranty deed since that is the ubiquitous deed for residential conveyances.

Paragraph 15.2: These blanks are obvious. Most common is One Half by each party.

Paragraph 15.3: These blanks are obvious as well. Most common is the Buyer paying these charges since they are for the Buyer’s benefit.

Paragraph 15.4: Many are misguided and believe this always applies to the very small doc fee charge by the assessor (1 penny per hundred dollars as of this writing). But, many resort towns like Vail and even Glendale imposes a local transfer tax on the sale of property. These taxes can be substantial so being aware of their existence and amount is crucial. Once known, the parties can choose how they’re paid. Sharing this expense equally between Buyer and Seller is very common.

Paragraph 15.5: The Buyer usually pays the Private Transfer Fee. A common example is the HOA transfer fee that basically every association charges (a few hundred dollars) to transfer their ownership records from the previous owner to the new one.

Paragraph 15.6: This needs to be investigated by the seller and buyer but rarely applies.

Paragraph 15.7: Sales and Use Tax is rare in a typical residential sale transaction thereby triggering the None box virtually every time. An accountant should be consulted if a transaction involves sales and use tax. I’d check the None box, and if there was a counter that disclosed such a tax existed, I’d get the advice of an accountant and require the Seller to pay any such Sales and Use taxes.

Paragraph 16.1: Taxes:  For a typical transaction involving either vacant land or the sale of property with an improvement (e.g. house) that’s been there at least two years including any additions, alterations, modifications of any kind, I’d select the most recent mill levy and assessment. If the sale involves new construction or recent improvements were made to the property, I’d contact the county assessor to discuss the property. Here’s why: Typically, choosing the most recent mill levy and assessed value results in a fair proration and happy parties. Using last year’s taxes for proration purposes almost always ensures the new Buyer will not be given the seller’s fair share for the preceding year since taxes typically increase every year. Taxes are payable in arrears so 2018 taxes are payable in 2019. If you close late in the year, the amount becomes more significant. For instance, say you close at the end of November, and the seller gives the buyer a credit of 11 months of taxes based on the previous year to cover their part of the bill for the current tax year that won’t be due until the following year. Since residential tax settlements are virtually always final settlement, when the tax bill comes and the buyer sees they didn’t get the seller’s fair share of the 11 months they owned the property, they have no recourse. Using the most recent mill levy and assessed value is better since it will always be at least as current if not more so than the previous year’s taxes. There are special circumstances where it is worth making a more thorough inquiry regarding the taxes. See my article on the Cherry Creek Title website entitled “When Pro-Rating Property Taxes Using the Most Recent Mill Levy and Assessed Value is a Mistake & Important Contract Tip Regarding New Home Purchases. It discusses circumstances such as new construction and recent improvements made where it may be advisable to check the “other” box and choose a different solution to pro-rating property taxes.

Paragraph 16.2: The rent paragraph is obviously only applicable if the property comes with tenants. If so, the buyer and seller can mutually agree whether rents are based on rents received or using the accrual method. Typically, the buyer will want it based on rents received, and the seller would like to use the accrual method thereby getting credit for expected rents before they’ve actually been received.

Paragraph 16.4: This is a catch-all paragraph for anything being pro-rated besides water, sewer, propane or interest on a loan being assumed. It’s usually going to be “nothing else”, but there may be a storm sewer or other pro-ration item that may apply here.

Paragraph 16.5: All settlements of taxes, rents, security deposits, HOA fees and other Association related fees; water, sewer, assumption interest and anything else disclosed will be the Final Settlement of such pro-rations.  If the property taxes end up being higher than expected months later when the county assesses the property for a higher amount and/or increases the mill levy, the new buyer cannot return to the seller and demand additional amounts if the seller ended up paying less than the seller’s proportional share of the previous year that the seller owned the property. The contractually agreed method to prorate taxes in a Residential transaction is Final Settlement.

Paragraph 17: This paragraph addresses possession. Most residential transactions do not involve buyer’s taking the property subject to existing tenancies, but some do. That is addressed here. What is also addressed is establishing a daily rental owed by the seller for failing to deliver the property to the buyer at the promised possession date and time. Obviously this amount is negotiable and also typically varies with the value of the property. The daily rent for failing to deliver payment on a million-dollar home might be double the rent for a property selling for ½ that amount.  In this paragraph the buyer represents whether or not the buyer intends to occupy the property as the buyer’s principal residence. Additionally, there is a box that can be checked if the seller is going to rent the property back from the buyer in which case the parties agree to execute a Post-Closing Occupancy Agreement. There is a Post- Closing Occupancy Agreement available through the Colorado Division of Real Estate website.

Paragraph 21.1.1: If the Specific Performance box is checked, and the buyer defaults, the seller has the ability to not only retain the buyer’s earnest money, but may also sue to compel the buyer to perform. Most/all buyers would prefer this box is not checked so if they default, the damages are limited to forfeiture of the earnest money deposit. When the box is not checked, Paragraph 21.1.2 will apply which limits the seller’s remedy to retaining the earnest money in the event the Buyer defaults.

Paragraph 30: This is where terms unique to the transaction may be inserted. Attorneys, buyers and sellers have much more leeway here than licensed agents. Licensed agents are severely restricted in their ability to craft custom contract language.

Paragraph 31: Attachments that are part of the Contract such as Addenda.

Paragraph 31.1.1: This provides that a copy of the Post-Closing Occupancy, if applicable, is attached. And again, there is a Post-Closing Occupancy Agreement available through the Colorado Division of Real Estate website.

The remainder of the Contract including the signature portion is all self-explanatory and won’t be addressed in this article. If no licensed agents are involved, I would interlineate (draw lines through) everything after line 881.

This article is intended for educational purposes only and not as legal advice.


New Credit Protection Laws Including Other Tips to Avoid Being a Victim of Fraud

By Michael Selinfreund, President / General Counsel of Counsel of Cherry Creek Title Services, Inc.
This article is intended for educational purposes only and not as legal advice. You can view dozens of articles and educational videos of mine at, and the videos are also available on the Cherry Creek Title Services’ YouTube channel.

A credit freeze is a very effective and free tool to avoid being a victim of identity fraud.  It costs nothing; lasts for seven years, and you can release it temporarily or even just for the benefit of one prospective creditor. And, you don’t need to have been a prior victim of credit fraud and provide a police report to qualify for a freeze. You will need to add the freeze separately to the three major credit bureaus: Equifax, Transunion and Experian, and you must also release each freeze separately should the need arise. You’ll do so with a PIN you’ll receive. Parents and Guardians will be able to freeze the credit of a child under 16. To establish credit freezes with the 3 main bureaus, just go to the respective websites of Equifax, Transunion and Experian. Alternatively, you can call and write them as well. As of September 21, 2018, new federal legislation, the Economic Growth, Regulatory Relief and Consumer Protection Act, goes into effect requiring all three credit bureaus to freeze and unfreeze their credit reports free of charge. This legislation comes about after last fall’s breach at Equifax whereby the credit of 150 million Americans was compromised. The new law further requires each credit bureau to set up a credit freeze webpage and act on online and over the phone requests within one business day. If the request is received by mail, they will have three business days to freeze the credit report. If you unfreeze your credit online or by phone, the freeze must be lifted in an hour.

Another option is to put a fraud alert on your credit report by contacting any one of the three main bureaus. They have to share the fraud alert with the other two. Fraud alerts have always been free and lasted for 90 days; however, as of September 21, 2018, they will last one year (seven if you’ve been an actual victim of identify theft). And then of course, you can put another one for the subsequent year indefinitely. In the event any fraudster attempts to open new credit or extend existing credit in your name, a call is made to the phone number you provide when placing the freeze by one of the bureaus and many difficult questions off your credit file going back many years will be asked to confirm your identity. I prefer the fraud alert to the credit freeze. It’s easier to place it with 1 bureau forced to share it with all 3 rather than all 3 separately as the freeze requires. It doesn’t have to be unfrozen (and then frozen again at all 3 bureaus) when you need to allow a creditor or even a utility company, potential employer, licensing agency etc. to pull your credit. I’ve used the fraud alert for many years without a single fraudster attempting to commit identity fraud against me despite being the victim of several breaches besides the Equifax breach.

For your credit card and bank accounts, set-up your profile so you get text messages and/or emails every time a charge is placed on your account or an item or ACH is processing through your bank account. This way you’ll know immediately if your bank account or credit card has been compromised and can contact the bank and/or credit card company to freeze the account from any further fraud. You aren’t responsible for fraudulent charges, but it’s a lot easier to have just 1 or 2 that you instantly stop than wait until the end of a billing cycle and discover dozens of fraudulent charges. I log in to my bank, securities and credit card accounts daily to review the activity in addition to receiving alerts. By catching any fraud early, you minimize the number of fraudulent charges plus you’re giving the bank and/or credit card company/merchant services company immediate notice to stop any further fraud.

I recommend using soft or hard tokens for any of your financial accounts that offer them. A hard token is a small physical device that generates a random number which changes continually. Most change every 30-60 seconds. To access your brokerage account, bank account, etc., you must enter the number on the token in addition to your password. A soft token is a code sent to you via text message or through an app that you enter along with your password. Soft tokens appear to be the future. Tokens make it extremely difficult for a fraudster to gain access to your financial accounts. Get in the habit of looking daily at all of your financial accounts online. I recommend buying an inexpensive extra computer like a Chromebook that you never use for email nor to surf any sites on the internet other than just your known financial account sites. Malware typically infects your computer via email attachments and malicious websites. By having a separate “clean” computer that is NEVER used for email nor for searching the web, you eliminate the opportunity for malware to invade your computer and steal your financial information.

Regarding your personal checking account, use a computer-based program like Quicken and reconcile your bank account daily. It only takes a few minutes, and that will enable you to see any fraudulent checks or fraudulent ACH debits as they occur so you can take immediate action with your bank if any are fraudulent. FDIC covers you on your personal account. Buy secure checks for personal or business accounts that cannot be washed. I use Safechecks based in California, but other companies such as Intuit sell secure checks. Pay as many bills as possible through your credit card and via ACH payments minimizing your check activity.  For those that still hand write their checks, besides using secure checks, fill them out with a Uniball 207 pen.

A business account doesn’t have FDIC coverage so you should add positive pay or payee positive pay to your business accounts. It allows you to inform the bank manually or via an upload of an .xls or .csv file of the checks you write so that any items that you haven’t pre-authorized become exception items. You then have a certain amount of time to reject them from being paid or even set up your account so all exceptions automatically are returned unpaid. I don’t recommend the latter as exceptions are created for innocent reasons such as MICR line reading errors or forgetting to enter the item in positive pay, and it’s nice to still approve those items rather than having them automatically returned.  Your bank will tell you how long you have to approve or reject any exceptions if you go the route.  It will be by a certain time the following day after the item is presented to your account.  I prefer the option whereby items are paid by default unless I object. I review all exceptions very early every morning and act accordingly. On your business account, you’ll want to add ACH filters or blocks; wire blocks (at least an international one if you send wires), dual authentification; a soft or hard token to send and verify wires; and clean computers, as discussed above, dedicated solely to wires and financial matters that you lock up when not in use. Sit down with your banker at least once a year to discuss your account security features and new products and procedures your bank offers to keep your money secure. Lock up your checks and your financial computers since fraudsters often garner their information from people working on office cleaning crews. They switch keyboards so they can monitor keystrokes to procure your passwords; access your USB ports to install malware, steal checks, etc.

If you have an entity such as a corporation or LLC in Colorado (and many other states), for no cost, you can secure your entity by procuring password-only access from the Secretary of State. If your entity is based in another state, make sure it either already requires a password or see if you can add one. The password makes it far more difficult for a fraudster to file any documents regarding your entity. Business identity fraud exists, and that’s why the state offers the ability to secure your entity.

Cross-cut shred anything financial or with your name, social, account numbers etc. I read about fraud activity regularly, and much of it still originates with the theft of information procured from your trash or from your outgoing mail containing checks. They either wash the stolen checks or print up new checks in your name with the MICR line information (routing and account number) they steal off your check. So, again, try to set up as many payees as possible to accept credit card payments or ACH payment in lieu of writing checks. For the checks you mail, only send your mail through a secure mailbox. Most neighborhoods have mail stations with locked outgoing mailboxes as do most office buildings. If you have to, go to the post office.

On your non-secure computers, add an anti-malware program such as Malware Bytes and an anti-virus software program such as AVG. Image your computer once a month on a portable drive. I image mine weekly using Acronium. I back-up daily to the cloud, another computer and also to a portable drive. I run windows defender in windows 10. I back up my QuickBooks and Quicken files plus key spread sheets on a thumb drive daily. Open no email attachments unless you’re positive you know where it originated, and I recommend never answering your phone if you don’t know the caller. People still get duped all the time into providing confidential information or even making payments by fraudsters posing as the IRS or one of your financial accounts. The IRS and your bank will never call you seeking such information or payments. And always assume anything you’re asked to click on inside an email is a malicious link with the intent of corrupting your computer. I make sure I’m expecting the attachment and the sender is exactly who I expect it to be by carefully inspecting the sender line and often calling the sender on a known number to verify they sent it. I also often open attachments first on my phone to confirm their authenticity since I don’t keep anything confidential on my phone and such malware is not typically written to corrupt your mobile device. Besides, I won’t open anything until I’m 99.9% sure it’s legitimate even on my phone.

Regarding email accounts, for all your email activity that contains any confidential or non-public information, do not use a public email account such as Gmail.  I pay $55.00 per month for 10 email accounts hosted by a secure email server that filters out spam emails and emails containing malicious content. I send my personal email through Comcast and use Gmail accounts for those I don’t wish to have my primary personal email information.

Finally, if you find yourself sending a wire, absolutely assume you’ve been given fraudulent wiring instructions and go from there. Contact the receiving party directly on a confirmed legitimate phone number or go visit them and confirm the accuracy of the wiring instructions. Never trust any email you receive attempting to modify those instructions regardless of how authentic it appears. Immediately go back through the steps above and confirm everything with the receiving party after ensuring you really are communicating with the receiving party and not a fraudster. The amount of buyer funds to close real estate transactions that are being hijacked by fraudsters tricking the sender of the wire with phony emails is epidemic. In the alternative, shop for a title company that will accept a cashier’s check as many still do especially given the current risks associated with wires being irretrievably stolen.

I recommend storing your password and account information on a password protected spreadsheet, and of course, make them complex and change them regularly.

Fraudsters are continuing to come up with new ways to steal your money. Be extremely alert every time you’re sending money through any means, and make sure you have all possible protections added to your bank and credit accounts.

Visit to view numerous articles I’ve written primarily on Colorado real estate legal topics and many are available in video form at the Cherry Creek Title Services YouTube channel.

Don’t Be Spoofed!

You have read the warnings: “Don’t wire funds in response to an email without using call-back procedures!” Always call the party who appears to have sent the email for confirmation using a “safe” or know phone number. What happens if you receive a phone call from your intended funds recipient, asking that you wire funds? You check the number on your caller ID and see that it matches the know number you have.

Are you good to wire funds? NO!

Fraudsters and thieves are utilizing prepaid “burner” phones and applications that will “spoof” the caller ID of any phone number the caller chooses-even valid phone numbers of known businesses.

This fraud scheme is rampant – our industry is not the only target. These spoofing apps advertise themselves as a tool to “prank your friends” but  are used by criminals posing as entities such as taxing authorities or bank personnel in order to defraud companies and consumers into sending money or providing confidential information.

How does this affect the title insurance companies? Fraudsters have learned that responsible escrow officers have begun using call back procedures to validate and verify emails regarding wiring of funds. They are using spoof caller ID in order to circumvent security procedures.

DON’T GET SPOOFED! An incoming phone call never takes the place of an outgoing confirmatory call before wiring funds.


Reprinted with permission of the American Land Title Association.
First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.
AMD: 05/2017


Tips to Protect Your Information During Your Real Estate Transaction


Real Estate Transactions are a Prime Target for Fraudsters!

When you buy a home you will be required to submit personal information to your lender and/or escrow agent. At Cherry Creek Title Services, we go above and beyond the industry standards to secure your personal information during and after your transaction. Here are some important tips to remember:

Always carefully examine the email address from which you receive updates on your transaction from your escrow officer to ensure it is correct. If an email seems suspicious, contact your escrow officer immediately.

Call your escrow officer  immediately if you receive an email requesting to change the wiring instructions for your transactions. DO NOT use the contact information provided in the email.
Carefully review your personal information on your transaction paperwork to ensure it is correct.Communicate or confirm any changes to the transaction with your escrow officer over the phone or in person.

Do not provide information about yourself or your transaction to any unknown or unnecessary parties.

Contact your escrow officer  if you suspect your email address is being improperly used or if you do not receive funds in a timely fashion.

Reprinted with permission of the American Land Title Association.
First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.
AMD: 05/2017


Tips to Identify Valid and Suspicious Emails

click on envelopeThe most common signs of suspicious signs to look for before opening your emails and clicking on any link are:

  • Incorrect Grammar/Spelling/Text Body

Many phishing email contain misspellings. Some of
these messages have been poorly translated from other languages. Additionally, you will want to pay attention if the time or date appears in the message body of an email. If the email contains the date format of DD/MM/YY, 24-hour time or coordinated universal time (UTC,) it’s likely that the email’s point of origin generated outside of the United States.



  • Suspicious Attachments

High-risk attachments file types include: .exe, .scr, .zip,
.com and .bat. Spam filters will generally do a good job of quarantining those formats. Most companies commonly send and receive .zip, .doc, .docx, .xls, .xlsx, .ppt, .pptx and .pdf. However, a malicious sender can implant devious code in those formats as well. Once the attachment is opened, the computer is already compromised. Take caution if you have sent an email that has an attachment and the sender is questionable. You will want to verify the legitimacy of the email first. Next, you will want to examine the context of why the attachment is being sent.

  • Email Format/Absence of Logos/Plain Text Email

Most legitimate messages will be written with HTML. It should be a mix of text and images. A poorly constructed phishing email may show an absence of images. This includes the lack of the company’s logo. If the body of
an email is only an image as text, it’s possible that it is illegitimate. Outlook blocks showing images by default.
If the email is all plain text and looks different than what you’re used to seeing from a frequent sender, you may want to contact the sender directly in a new email or phone call.


  • Links in the Email

A common practice is to avoid blindly clicking on links
in an emails. Outlook allows you to hover over a link before clicking on it. If the link in the body of the email is different than what Outlook hovered preview reports, it
is not legitimate. Even if it seems legitimate, open a new browser window and type the URL directly into the address bar. If you’ve clicked on a link, a phishing website will look identical to the original. However, your system may already be compromised. If you’re work email is connected to your phone, you will want to take extra precaution.

  • Urgent Request for Personal Information

One tactic that is commonly used by hackers is to alert you that you must provide and/or update your personal information about an account (e.g., Social Security number, bank account details, account password). Phishers will use this tactic to drive urgency for someone to click on a malicious URL or download an attachment aiming to infect the user’s computer or steal their information.


  • Use Work Email for Work Purposes Only

Employees should avoid using their work email address for personal signups. These include social media websites or customer loyalty/ reward programs





Reprinted with permission of the American Land Title Association.
First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.
AMD: 05/2017


Judicial Foreclosure in Colorado

By Michael Selinfreund, Esq.,

President/General Counsel of Cherry Creek Title Services, Inc.,

Agent for Commonwealth/Fidelity & First American

The majority of foreclosures in Colorado involve deeds of trust foreclosed through the Public Trustee. Colorado’s Public Trustee system is unique to Colorado. Any mortgage can be judicially foreclosed, and many have no other option. This article shall discuss the basics of judicial foreclosures in Colorado.

Actions to foreclose mortgages or deeds of trust through the court system in Colorado require they occur in District Court in the county where the property lies under C.R.C.P. 105. Sometimes there are tactical reasons why attorneys choose judicial foreclosure rather than foreclosure through the public trustee such as the ability to combine the foreclosure remedy with other claims against the defendant or perhaps to resolve other issues such as the enforceability, amount and/or the priority of liens affecting the property title. Sometimes the property straddles more than one county. And although less often than in the past, sometimes the deed of trust and or note has an incurable defect that the Public Trustee refuses to allow a correction affidavit or scrivener’s affidavit to fix inconsistencies between the note and deed of trust or other typographical errors thereby forcing the lender to foreclose judicially. In many ways, judicial foreclosures often end up unfair to the defaulting borrower due to the expense and delay which just runs up the default interest higher than what would exist if a PT foreclosure was allowed. Nonetheless, judicial foreclosures are necessary for many reasons and are the only path to foreclose involuntary liens such as mechanics liens, tax liens, HOA liens and such since no deed of trust exists giving the Public Trustee the power of sale and authority to foreclose involuntary liens. See C.R.S. 38-33.3-316(d)(11) and C.R.S. 38-22-113.

Judicial foreclosures take longer and cost more than Public Trustee foreclosures, and predictably occur far less often. Sometimes it’s filed as an action merely regarding the subject property (in rem), and sometimes there is the need to involve other people as defendants to resolve issues or because they have personal liability (in personam). It’s procedure regarding notification of the defaulting parties and others with recorded interests in the property are very similar to PT foreclosures as are the rules regarding commencement, notice, cure, redemption, etc. A Litigation Guarantee or Foreclosure Certificate is obtained by a title company at the time the action is commenced.

The lender is seeking an Order of Judgment and a Decree to Foreclose. Once that is obtained, the foreclosure procedure is handled by the Sheriff very similar to how the PT handles PT deed of trust foreclosures. Once concluded, the Sheriff initially issues a Certificate of Purchase which is assignable. At the end of all the redemption periods, the Sheriff will issue a Confirmation Deed, a form of Bargain and Sale Deed, just as the PT does after a PT foreclosure.

This article purposely omitted many complexities and provisions that impact Judicial Foreclosures such as notice requirements, cure, redemption, omitted parties; the possibility the defaulting party is in the military; bankruptcy issues, water rights and many other complex issues. Such issues would require a very lengthy discussion and are best handled by attorneys experienced in these matters. This article was merely intended to provide the reader with a basic understanding of judicial foreclosures in Colorado. I cannot imagine not using a skillful attorney experienced in judicial foreclosures should the need ever arise. Besides some of the possible complexities already mentioned, issues involving the Fair Debt Collections Practices Act; the determination of personal and real property and other complex issues often arise. Further, it’s an actual District Court case, and not merely an administrative procedure. So, a strong knowledge of litigation and procedural rules is required besides the intricate knowledge necessary to successfully handle a judicial foreclosure.

This article is intended for educational purposes and not as legal advice

It is always advisable to seek the advice of a licensed attorney regarding the issues discussed in this article. Judicial foreclosures are complex matters that require skillful attorneys experienced in handling them.

Protecting Your Funds From Wire Fraud During Real Estate Transactions

By Michael Selinfreund, Esq.,

President/General Counsel of Cherry Creek Title Services, Inc., Agent for Commonwealth/Fidelity and First American

Recently, the number of incidents of wire theft in real estate transactions has risen dramatically. Wires of buyer’s funds to close and seller’s proceeds are being hijacked all the time.

Here’s a typical scenario. The fraudsters hack into the real estate agent’s email and monitor the agent’s emails watching pending transactions.  Occasionally, they hack into the title company’s emails; however, it’s less common since it’s far easier to identify real estate agents that use public emails rather than private domain email accounts; lack sufficient firewalls; and are easier targets of malware than title companies.   However, title companies also fall victim to these scams. All it takes is the fraudster posing as the real estate agent and instructing the closer to change the wiring information for the seller or the closer opening an attachment with malware.

Sometimes the fraudster steals the buyer’s funds to close by hijacking the wire intended for the title company. The fraudster sends an email to the buyer (often that appears to originate from the title company) modifying the routing and account information for the buyer’s wire to the fraudster’s account. Since the fraudster knows when the transaction is closing by monitoring the email account they hacked, they know when to send such an email.  Many prefer to target the seller’s proceeds and wait until after the closing and then re-direct the seller proceeds immediately after the closing by posing as either the seller or the real estate agent for the seller.

These emails look legitimate since they either spoof the email address of the sender (looks like it came from a legitimate address) or they send t


he email from an account that is virtually identical to the sender’s by adding one character to the legitimate sender’s email and it goes unnoticed. That’s very easy to do when the sender uses public email accounts. That’s a common way title companies get duped. The closer receives an email from the fraudster that looks virtually identical to that of the agent, and instructs the agent to change the wiring instructions for the seller’s proceeds.  Some fraudsters go as far as sending a fake email from the intended recipient’s bank acknowledging receipt of the wire and that it was being credited to the defrauded party’s account. This gives the title company and defrauded party a false sense of security, and the goal is to delay them a day or two to confirm whether the wire was properly received. This gives the fraudster additional time to withdraw the stolen funds or wire them to another account from which they’re withdrawn before the funds can be frozen where they were initially diverted.

So, if you’re the buyer, here’s how to protect yourself. One way is to fund your deal with a cashier’s check instead of a wire.  If the title company has a wire only policy, tell them your concern about wire theft and offer to scan and send a copy of your cashier’s check in advance so the title company can call the issuing bank to verify its authenticity. That along with telling them you’ll close elsewhere if they will only accept a wire will likely change their position. If you cannot move the closing or choose to proceed and fund with a wire, make sure you call the title company closer at a phone number you independently verify belongs to them, and verify the wiring instructions directly with the closer. Many title commitments contain the wiring information where you send your funds necessary to close so be very wary if the closer gives you different information than what’s in the commitment.  No matter what emails or correspondence you receive ever attempting to modify that wiring information, you need to absolutely presume it’s an attempt to defraud you and divert your money to a criminal.  You’ll of course at a minimum want to call a phone number you procure independently (not off a potential fraudulent correspondence) and speak to the closer. I’ve never once seen the wiring instructions change in the middle of a transaction that wasn’t fraudulent so you need to be on high alert.

Protecting yourself as the seller from your proceeds wire being hijacked also requires a little diligence. You’ll want to insist that the title company signs a written document at the closing that confirms the correct wiring information for you and provides that the wiring information cannot be changed under any circumstances. Or you could choose to add a sentence that they can only be changed if the seller (you) returns to the title company; speaks directly to the closer that knows what you look like; you prove your identity again; and you sign a modified written document changing the wire destination. I’d prepare that document myself; send it in advance to the title company closer insisting that it be signed at the closing so it comes as no surprise, and if they refused to sign it, I’d go elsewhere. You have every right to make the party handling your money follow your strict instructions regarding the wiring instructions.

I also recommend notifying the title company prior to the closing that you want your wire sent immediately following the closing while you are still present, or make the title company get you a cashier’s check. Aggressive attorneys virtually 100% of the time successfully make the title company initiate the seller proceeds wire right after the closing, and the attorney waits in the lobby until a wire confirmation is received that the bank sends virtually immediately after a wire is sent. A thorough attorney verifies on the confirmation that it went to the proper account and takes a copy with them. A common issue that arises with getting a cashier’s check in lieu of a wire is that your bank may put a hold on it. If you’re turning around and purchasing another property or need immediate access to your funds for any reason, a cashier’s check might not work for you.

The sad reality is that once wires are stolen, they are rarely recovered. It’s a devastating loss to the victims, and their recourse at that point is to sue the real estate agent and/or title company for negligence.   Not only is litigation extremely expensive, you are forced to incur that cost right after losing a huge amount of money. And, getting a judgment means nothing unless you can collect. The parties responsible may lack the money to pay the judgment or may file for bankruptcy protection.  It’s far wiser to take appropriate precautions so you are never a victim of wire theft.

*This article is intended for educational purposes only and not as legal advice*

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