Form CBS 1-6-21
(Mandatory 1/22 for Licensed Agents).

The Colorado Division of Real estate replaced many of the mandatory forms for licensees effective January/2022.  You can view all the changes, and here is a list of the redlined forms they make available:

Updated 2022 Commission approved contracts and forms redlined for educational purposes.

• Contract to Buy and Sell Real Estate (Residential)
• Contract to Buy and Sell Real Estate (Residential) (Colorado Foreclosure Protection Act)
• Contract to Buy and Sell Real Estate (Income – Residential)
• Contract to Buy and Sell Real Estate (Commercial)
• Contract to Buy and Sell Real Estate (Land)
• Lead-Based Paint Obligations (Seller)
• Lead-Based Paint Obligations (Landlord)
• Lead-Based Paint Obligations (Rentals)
• Lead-Based Paint Disclosure (Sales)
• Agreement to Amend/Extend Contract
• Counterproposal
• Earnest Money Release (With Mutual Release)
• Extension or Termination of Contract
• Notice to Terminate – Redlined
• Residential Addendum to Contract to Buy and Sell Real Estate
• Seller Association Authorization

And, of course the forms in non-Redline form on that same page at the Division of Real Estate site along with all the other mandatory forms licensees must use.  It is there you can click on the sales contract tab and select the Contract to Buy and Sell Real Estate (Residential) which this article discusses.

This article shall cover just the Contract to Buy and Sell Rel 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 as discussed above.  This article and all the others are solely educational and not intended as legal advice.  After all, we’ve never met and I don’t have any idea about your particular circumstances.  I don’t practice for third parties anymore, and I only did after a signed retainer agreement and monetary retainer.  So, I’m not your lawyer nor providing free legal advice.  I wrote this article purely for educational purposes.

Besides the sales contract, there is a wealth of very useful forms available for free through the Division of Real Estate when you follow the link.  Take a few minutes to familiarize yourself with what’s available.   There are many informative articles and videos posted on the Cherry Creek Title Services, Inc.’s website that I’ve done covering a variety of primarily real estate related topics that you may find helpful.

Many/most licensed real estate agents have sophisticated e-contract programs that are writeable and allow for e-signatures.  I find those systems very convenient.  If you’re selling your home yourself with the assistance of a licensee perhaps representing the buyer, they’ll likely have access to an efficient system for the contract preparation, delivery and execution.  However, it isn’t necessary.  Using the commission forms; preparing them with Adobe or printing them out and filling them out with a typewriter or by hand works just as well.  So does signing with a pen instead of electronically.

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.

Finally, this may the first time you’ve used this form and do not care about the recent changes implemented January/2022, you may not care about reviewing the Redlined version and just get started with the current form.  As you’ll see, this article focuses on how blanks are typically filled out unless they’re self-explanatory.  It’s not an exhaustive discussion of the contract or it would be twice as long.  I didn’t want to make this article longer than necessary, and those of you that I’m guessing are the minority and want to see the recent changes can easily see them without me pointing them out as they’re pointed out in the red-lined copy at the Division of Real Estate site.

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. However, I’d be remiss not mentioning that in certain circumstances, holding as tenants in common for married people presents tax and other estate advantages.  An estate attorney can advise you on that far better than I can.  I’ve only seen that personally with high wealth estates.  Otherwise, I see husbands and wives holding as joint tenants.

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 Zillow.com; 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:  Removed in new contract.  The remainder of this paragraph doesn’t require you to fill out any blanks, but it now discusses encumbered and leased personal property as well as clarifying personal property being conveyed by Bill of Sale.

Paragraph 2.5.6:  Gives you a place to describe the included parking.

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 or if a well, septic or leaching field are part of the transaction.

Paragraph 2.7.6:  Seems very self-explanatory to me.

Paragraph 3:

I’ve excluded any discussion for filling out the dates as those are personal to every buyer and seller and very easy to figure out without my input.

Paragraph 4:

Like paragraph 3, I think filling out the columns regarding the financial terms is very easy and self explanatory.  They should balance at the bottom. There are few other blanks in any of the paragraph 4 provisions, and they’re self-explanatory if they even apply to your transaction.

Paragraph 6.2 is filled out with the purchase price if the buyer is procuring an FHA loan. And again, the appraisal virtually always paid by the buyer since that who is getting a loan for part of the purchase price, if applicable.

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.  Check with the Division of Insurance and verify Cherry Creek Title Services has an A+ BBB rating; a 5 star Google rating with dozens of reviews; and zero complaints since its inception in 1997 as I write this.  That’s who will be holding the earnest money and preparing all the closing documents so it does matter which title company you select.

Paragraph 8.5.  Usually the seller pays for the tax certificate which is very inexpensive and typically provided to the buyer with the title commitment.

Paragraph 9.       A typical purchase money mortgage lender will arrange for an ILC.  The other types of surveys defined in the Colorado Statutes or an ALTA survey typically do not come up in a residential transaction unless the property is being subdivided, developed or has an issue with the location of questionable easement or utilities.  In that event, I’d recommend getting legal advice.

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 self-explanatory.

Paragraph 13: This blank requires the deed form to be selected.  Almost all residential deals previously defaulted to 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 (general or special), and the Buyer may not accept anything less than a general warranty deed.  It’s in the seller’s best interest to try and use a special warranty deed over a general warranty deed as then they aren’t warrantying the title prior to when they acquired their interest.  However, I’ve sold all my houses confidently signing a general warranty deed as I received one when I bought it along with a title policy that not only insures me, but because I received via general warranty deed, it allows the title company insuring me to go back through the chain and bring in every party in the chain, and their title company, who conveyed by general warranty deed until any parties who conveyed any other way and those before them.  That’s typically almost everyone in the chain as general warranty deeds in residential deals are ubiquitous.

Paragraph 15:  Self explanatory, and typically sellers pay for providing the status letter and any HOA documents.

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 2021 axes are payable in 2022.  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 as the assessed value and/or mill levy increased, 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 17 is self-explanatory.

Paragraph 20 is important to understand.  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.

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 just as the paragraphs without blanks were not discussed.  If no licensed agents are involved, I would interlineate (draw lines through) everything after it says “End of Contract”.

Please be aware that although I didn’t address virtually all of the paragraphs that have no box for you to complete, those are important provisions that should be read and understood by all parties.  If you want to change any of them or write in items in the Additional Provisions paragraph, I would hire an attorney to do that for you and not try to do that yourself.

Visit www.cherrycreektitle.com 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.

The post Tips On Drafting the Colorado Contract To Buy And Sell Real Estate (Residential) appeared first on Cherry Creek Title Services, Inc..

The post New Remote Online Notarization Law for Real Estate Transactions in CO appeared first on Cherry Creek Title Services, Inc..

According to the U.S. Department of Homeland Security and the city of Denver,

Title and Settlement are Considered an ‘Essential Business’.

*Cherry Creek Title Services, Inc. will remain OPEN for business*

• Conference rooms are disinfected before and after each closing.
• Refinance closings are primarily conducted at the borrower’s residence. Closer can remain outside of residence if necessary.
• Social distancing will be respected while conducting business in-office.
• The majority of CCTS employees are working remotely.

• A Bill which would enable Remote Online Notarization (RON)
• nationwide is currently being pushed through congress. This would allow the borrower in many circumstances to close alone in their residence without the physical presence of the closer/notary public who would instead be on a webcam.

The post Cherry Creek Title is an Essential Business appeared first on Cherry Creek Title Services, Inc..

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 firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.

AMD: 05/2017

CHERRY CREEK TITLE SERVICES IS AN INDEPENDENT POLICY-ISSUING AGENT OF FIRST AMERICAN TITLE INSURANCE COMPANY

The post Tips to Protect Your Information During Your Real Estate Transaction appeared first on Cherry Creek Title Services, Inc..

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 the 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*

Visit our YouTube Channel for helpful tips and educational videos!

The post Protecting Your Funds From Wire Fraud During Real Estate Transactions appeared first on Cherry Creek Title Services, Inc..

Wire Fraud is Real – learn how to prevent wire fraud happening to you by watching this video presentation by First American Title

The post Protect Your Money From Wire Fraud When Buying a Home appeared first on Cherry Creek Title Services, Inc..

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 the 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*

The post Protecting Your Purchase Funds and Sale Proceeds from Wire Fraud in Real Estate Transactions appeared first on Cherry Creek Title Services, Inc..

When providing title insurance on a property where there is a Beneficiary’s Deed involved, there is now a waiting period of 4 months after the date of the death of the grantor of a Beneficiary Deed is because the real property is subject to claims.  There would be no coverage under the owner’s policy for these types of claims and since we will not have issued a new owner’s policy, these claims are matters for the estate to address.

A waiver of  the four month period may be granted if the underwriter is provided a letter from the Colorado Department of Health Care Policy and Financing indicating that the Department does not have a claim nor will be asserting a claim.

“Beneficiary Deed” –  C.R.S. § 15-15-401 et seq.

During the 2004 legislative session, the Colorado Legislature enacted House Bill No.04- 1048, also known as the “Beneficiary Deed” legislation. The new law establishes Part Four to Article 15 of Title 15 of the Colorado Revised Statute to include Section 15-15- 401 through 15-15-415. The legislation, which becomes effective August 4, 2004, also includes minor revision to existing Sections 15-11-706, 15-15-101 and 38-30-113.5 so they are consistent with terms of the new law. The new law is accessible on the internet at: Colorado Revised House Bill 04-1048

The purpose of the new law is to provide a mechanism for a non-probate transfer of real property that enables an owner of real property to convey by deed an interest in real property to a grantee that will become effective upon the death of the owner. The new law, in part, reads as follows:

“Vesting of ownership in Grantee-Beneficiary. (1) Title to the interest in real property transferred by a beneficiary deed shall vest in the designated Grantee-

.Beneficiary only on the death of the owner. (2) a Grantee-Beneficiary of  a beneficiary deed takes title to the owner’s interest in the real property conveyed by the beneficiary deed at the death of the owner subject to all conveyances, encumbrances, assignments, contracts mortgages, liens and other interests affecting title to the property, whether created before or after the recording of the beneficiary deed…  [C.R.S. § 15-15-407]

During the lifetime of the owner(s), the Grantee-Beneficiary shall have no right, title, or interest in or to the property and the owner(s) shall retain the full power and authority with respect to the property without the joinder, signature, consent, or agreement of, or notice to, the Grantee-Beneficiary for any purpose.

The new law provides that the form of the Beneficiary Deed should contain the words “conveys on death” or “transfers on death”, or otherwise indicates the transfer is to be effective on the death of the owner(s). A beneficiary deed in substantially the form attached to this bulletin as Exhibit “A” may be used. [C.R.S. 15-15-404]

The new law provides that a Grantee-Beneficiary interest may be terminated by the owner(s) with an instrument that revokes the beneficiary deed prior to the death of the owner or the execution and recording of a new beneficiary deed prior to the death of the owner(s). The joinder, signature, consent, or agreement of, or notice to, either the original Grantee-Beneficiary or the new Grantee-Beneficiary is not required for the change or revocation to be effective.

As to a revocation instrument, the statute provides that a form of “Revocation of Beneficiary Deed”, substantially in the form as set forth in Exhibit “B”, may be used. [C.R.S. 15-15-405].

For title insurance purposes, a conveyance or a transfer by an owner to a third party purchaser for value will be, viewed as a revocation of a Beneficiary Deed. [C.R.S. 15-15- 407]

The most recently executed beneficiary deed or revocation of all beneficiary deeds or revocations that have been recorded prior to the owner’s death shall control, regardless of the order of recording.  [C.R.S. 15-15-405 (3)]

Other incidents of the new law include but are not limited to the following:

• Multiple Owners: Grantors that hold the property as joint tenants (a person who owns an interest in real property as a joint tenant with right of survivorship).  The “Beneficiary Deed” does not take effect until the death of the last surviving owner /grantor.

• The “Beneficiary Deed” is only valid if the last surviving owner is one of the parties that executed the deed. For example, if A and B own the property as joint tenants and only A executes the beneficiary deed, the deed is invalid and the grantee takes nothing if B is the sole surviving owner of the property.

• Multiple Grantees: One or more persons or entities capable of holding title to real property may be designated as Grantee-Beneficiaries in the “Beneficiary Deed” to receive an interest in the real property upon the death of the owner.

• Successor in interest to the grantee: A “Successor Grantee-Beneficiary” is a person, persons, or entity designated in a “Beneficiary Deed” to receive an interest in the real property if the primary “Grantee-Beneficiary” does not survive the owner(s).

• Termination of the beneficial interest:

1. The beneficial interest may be terminated by the owner(s) during their lifetime by recording an instrument revoking the “Beneficiary Deed”. (Please See Exhibit “B”
2. The beneficial interest may be terminated by the owner(s) during their lifetime by recording a new “Beneficiary Deed” to another Grantee­ Beneficiary.
3. The beneficial interest may be terminated, for purposes of title insurance by the owner(s) during their lifetime by a conveyance or a transfer by an owner to a third party purchaser for
4. The “Grantee-Beneficiary” may disclaim or refuse to accept the real property upon the death of the original owner(s)/grantors.

• Purchaser from grantee-beneficiary protected. [C.R.S. 15-15-410)

Subject to prior rights or interests of others in the land before the owner died, a bona-fide purchaser for value or a bona-fide lender for value in its dealings with a Grantee-Beneficiary shall take title free of the rights of an interested person in the deceased owner’s estate and shall not incur personal liability to the estate or to any interested person. [C.R.S.15-15-407(2))

Any recorded instrument evidencing a transfer to a purchaser from, or lender to, a Grantee-Beneficiary on which a state documentary fee is noted under the provisions of C.R.S. 39-13-103, shall be prima facie evidence that the transfer was made for value. [C.R.S. 15-15-410(2) (Note: any such sale or loan by the grantee-beneficiary does not relieve the grantee-beneficiary from obligations to other creditors and claimants under the estate of the decedent owner.)

•  Rights of creditors and others [C.R.S. 15-15-407)

If other assets of the estate of the deceased owner are insufficient to pay all claims against the estate, then a transfer of real property resulting from a beneficiary designation is not effective against the estate of the deceased owner to the extent needed to pay all claims against the estate. A proceeding to assert liability against a Grantee-Beneficiary may be initiated under the provisions  of CRS 15-15-409.

Further, under the provisions of Section 15-15-403 the interest of the grantee-beneficiary shall be subject to any claims of the Department of Health Care Policy and Financing as a “countable resource” for recovery of medical assistance payments pursuant to section 25.5-4-301 or 25.5-4-302 and may be enforced in accordance with Section 15-15-409. [C.R.S. 15-15-407]

Rights of Creditors provided under C.R.S. 15-15-407 do not affect the protection provided by Section 15-15-410 to bona-fide purchasers or lenders for value, with respect to claims of the personal representative or estate of a deceased owner against a Grantee-Beneficiary.

Rules of Title Practice 

Sale of property: If a “Beneficiary Deed” appears in the chain of title, the deed should be shown as an exception in Schedule B of the commitment. The exception should read substantially as follows:

The interest of [state name of grantee(s)] created by “Beneficiary Deed” from [state name of grantor(s)/owner(s)] recorded            , 20_, under Reception Number                     Official Records under.the provisions of§§ 15-15-401, Et Seq., Colorado Revised Statutes.

An exception for rights under a beneficiary deed, may be eliminated from Schedule B of a policy, by the recording of a transfer by all the original owner(s)/grantor(s) to a third party purchaser for value or the recording of a “Revocation of Beneficiary Deed” by the original owner(s)/grantor(s).

If a transfer by the original owners(s)/grantors under the “Beneficiary Deed” appears in the chain of title to the real property, assure the following is confirmed:

1. That it has been executed by all the original owner(s)/grantor(s) that executed the original Beneficiary Deed”.
2. If the transfer under the “Beneficiary Deed” has been executed by less than all the original owner(s)/grantor(s), the termination of the beneficial interest will not be effective until such time as there is a transfer executed and recorded by the last surviving owner who also executed the original “Beneficiary Deed”.
3. Refinances and other loans: If the transaction is for a loan only, the exception for the beneficiary deed may be shown in Schedule B, Part II, or an appropriate endorsement may be issued to the lender (Such as a modified Form 110.2 Endorsement).

Elimination of a beneficiary deed as an exception. You may rely on:

• A properly executed and recorded transfer to another third party purchaser by all the original owner(s)/grantors under the original “Beneficiary Deed”.
• The recording of an instrument revoking the “Beneficiary Deed” by all the original owner(s)/grantor(s) under the original “Beneficiary Deed”. (See Exhibit “B”.)

You are required to run the general index (GI) to determine whether a” Beneficiary Deed” may have been posted to the GI. There exists the possibility that the plant may post the “Beneficiary Deed” interest to the GI, especially if the “Beneficiary Deed” was recorded without a legal.

You may rely on a “Beneficiary Deed” to pass title to the named Grantee-Beneficiary if:

1. The record does not disclose a transfer by the original owner(s)/grantor(s) to another Grantee- Beneficiary and the owner(s)/grantor(s) have passed away.
2. The record does not disclose a “Revocation of Beneficiary Deed” signed and recorded by original owner(s)/grantor(s) in their lifetime.

If multiple owners/grantors appeared on the “Beneficiary Deed”, you must determine that the all the original owners/grantors including the last surviving member of the original owners/grantors that signed the “Beneficiary Deed”, have passed.

Evidence of the death of the original owner(s)/grantor(s) is For purposes of title insurance, evidence of the death of the original owner(s)/grantors may be evidenced by the recording of a certified copy of death certificate attached to an affidavit of death (similar to an affidavit of death of joint tenant). [C.R.S. 15-15-413]

You may rely on a “Beneficiary Deed” to pass title to and insure the named Grantee-Beneficiary if:

• The matters described in “a.” through “d.” of paragraph “6.” herein above have been completed or
• An exception in Schedule B of the commitment and policy is included for:

Any claim of the Department of Health Care Policy and Financing for Recovery of Medical Assistance Payments Pursuant to Section 26-4-403 or 26-4-403 .3 by reason of the death of the decedent named below who was a former owner/grantor of said land under “Beneficiary Deed” recorded——-

Decedent:                                  _

An exception in Schedule B of the commitment and policy is included for: The lien of any Colorado Estate Tax (C.R.S. 39-23.5-101 et. Seq.) by reason of the death of the decedent named below who was a former owner of the land. Decedent [state name of decedent owner(s)].

An exception in Schedule B of the commitment and policy is included for: The lien of any Federal Estate Tax (Title 26 USCA- I.R.C. 2037) by reason of the death of the decedent named below who was a former owner of the land. Decedent [state name of decedent owner(s)].

You may rely on a “Beneficiary Deed” to pass title to and insure a bona-fide purchaser or lender of the named grantee-beneficiary if:

• The matters described in “a.” through “d.” of paragraph “6.” herein above have been completed or
• A requirement in Schedule B Section I of the commitment is included for:

the release, satisfaction, or evidence of non-applicability of: The lien of any Colorado Estate Tax (C.R.S. 39-23.5-101 et. Seq.) by reason of the death of the decedent named below who was a former owner of the land. Decedent [state name of decedent owner(s)].

• A requirement in Schedule B Section I of the commitment is included for the release, satisfaction, or evidence of non-applicability of: The lien of any Federal Estate Tax (Title 26 USCA- I.R.C. 2037) by reason of the death of the decedent named below who was a former owner of the land. Decedent [state name of decedent owner(s)].

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When people typically think of co-tenancy agreements, they think of them in the context of leasehold interests.  The lack of co-tenancy agreements in many ownership scenarios leads to unnecessary disputes and costs.  This article addresses the benefits of having a co-tenancy agreement when two or more unmarried parties take title to real property.  These same issues can be addressed in a well drafted LLC Operating Agreement so owning via an LLC is another sensible way to hold title and address these same issues.  Of course, partnerships, corporations, limited partnerships and other artificial entities with their related governing documents can also be used in lieu of an LLC.  One big advantage of holding title via an LLC or other artificial entity is eliminating the individual liens (e.g. judgment, taxes) of an owner attaching to the property.  But, this discussion will be limited to people taking title in their individual names as tenants in common since that is often the case.

There are many scenarios in which non-married people acquire real property.  Besides unmarried couples, many people acquire real property with others for purposes of joint occupancy, vacation homes and as investment/rental property.  Merely taking title in the deed as tenants in common fails to address many possibilities that may arise.  The use of a co-tenancy agreement can avoid disputes by addressing possible future issues.

Let’s look at two common scenarios.  In the first one, two friends decide to buy a rental or investment property together.  They’re intent is for their interest in the property to pass to their heirs and not to their co-owner/friend so they take title as tenants in common.  Getting the loan was only possible in their individual names, and forming an LLC just for one property seemed like a lot of hassle and expense to the parties.  Besides the LLC formation and maintenance related expenses, the property would have to be deeded into the LLC; a statement of authority prepared and recorded; and a 107.9 additional named insured title endorsement should be acquired to assure the LLC is covered by the owners title policy issued in their individual names.  Both friends have excellent credit and are not concerned with liens attaching to the property attributable to the other owner.  With not a very long list of issues to address, the friends opt for leaving title in their individual names and entering into a co-tenancy agreement.

Here are some sensible issues to address in the co-tenancy agreement: the right or lack thereof of the owners to occupy the property; rules regarding when and which portions of the property the owners may occupy, if allowed; the logistics of how any partner can trigger a sale of the property; preclusions against any owner from securing their interest voluntarily or involuntarily; how the repair and maintenance costs will be paid (ongoing retention of reserves or assessments as things arise); the rights of any owner covering any shortfalls by one owner against another for failure to make their share of any mortgage payments, taxes, insurance, maintenance or other property expenses; any rules regarding loaning or sub-letting the property; and the agreement should discuss what happens upon the death, bankruptcy or divorce of one of the owners.  This list is not exhaustive as every situation is unique.

In scenario two, two or more friends acquire a vacation home for personal use.  Perhaps it will be in a rental pool for a portion of the year.   Besides addressing the same issues described above, additional provisions regarding an agreed schedule of rights to occupancy/use; time periods the property will be in a rental pool, if any; and the ability to loan to friends or family can all addressed in the co-tenancy agreement.

Of course, many of the times that one co-tenant wants to sell, the only practical solution is to sell the entire property.  Provisions can be added to the co-tenancy agreement granting a first right of refusal to buy out the interest of the owner wishing to sell and then providing for the entire property to be sold in the event the first right of refusal is not exercised.  Let’s face it, if 2 people each own 50% of a vacation home; one wants out; and the other doesn’t, agreeing in advance to sell the property in such circumstances can avoid arguments and preserve friendships.

Finally, I can’t end without sharing a bit of case law. While tenants in common generally have the common law right to possess, use, and enjoy the entire property, they can contract otherwise. See Keith v. El-Kareh, 729 P.2d 377, 378, 380 (Colo.App. 1986) (involving contract between tenants in common giving one co-owner exclusive possession of the property and responsibility for upkeep and repairs). Indeed, the “general rules [of tenancies-in-common] will not control where there is a contrary agreement.” Butler ex rel. Butler v. Rafferty, 792 N.E.2d 1055, 1058 (N.Y. 2003) (alteration in original) (quoting 13 Warren’s Weed, New York Real Property, Tenancy in Common § 3.01[1]); see also Keith, 729 P.2d at 380; Cleveland Tr. Co. v. Hart, 131 N.E.2d 841, 842 (Ohio Ct. App. 1955) (“During the existence of the lease their rights as tenants in common were suspended, and the unity and right of possession had become severed, and, for the time being, abrogated, by their signing of the contract.”); Niles v. Carlson’s Estate, 75 A. 266, 267 (Vt. 1910) (“These parties, though tenants in common, were at liberty to make such special contracts regarding their joint property as they pleased. And such contracts, when made, would bind them to the same extent and be enforceable in the same manner as similar contracts between strangers.”).

This article and video presentation are intended for educational purposes only and not as legal advice.  To view more educational videos like on real estate and other related subjects visit the Cherry Creek Title Services Channel on You Tube.

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Colorado state law requires certain disclosure requirements in a residential sale which include at a minimum, the following:

The post FSBO Tips! Requirements for The Sellers Residential Property Disclosure appeared first on Cherry Creek Title Services, Inc..