Category Archives: General

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 mail@cherrycreektitle.com. 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

2019 UPDATE on FSBO TIPS

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: https://www.colorado.gov/pacific/dora/division-real-estate-contracts-and-forms.  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 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: 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 4.7.1.1 and 4.7.1.2: 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 https://www.colorado.gov/pacific/dora/node/95951  (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: http://portal.hud.gov/hudportal/HUD?src=/program_offices/healthy_homes/enforcement/disclosure.

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.

 

An Overview of Colorado Mechanic’s Lien Laws Part 1 of 2

By Michael Selinfreund, Esq.,

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

Agent for Commonwealth/Fidelity and First American

Mechanic’s lien laws were created for the benefit and protection of those that provide labor, materials or services in order to enhance the value or condition of another’s real property.   They are a creature of statute rather than derived from the common law.  The purpose of the mechanic’s lien law is to benefit and protect those who supply labor, materials, or services which enhance the value or condition of another’s property.   Brannan Sand & Gravel v. F.D.I.C., 928 P.2d 1337 (Colo. App. 1996), aff’d, 940 P.2d 393 (Colo. 1997).   The ability to file and foreclose a mechanic’s lien exists to prevent unjust enrichment.

The first issue to consider is whether the potential lien claimant has a right to file a lien.  C.R.S. 38-22-101 provides the right to lien for every person who furnishes or supplies laborers, machinery, tools, or equipment in the prosecution of the work, and mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part, of any building, mill, bridge, ditch, flume, aqueduct, reservoir, tunnel, fence, railroad, wagon road, tramway, or any other structure or improvement upon land, including adjacent curb, gutter, and sidewalk, and also architects, engineers, draftsmen, and artisans who have furnished designs, plans, plats, maps, specifications, drawings, estimates of cost, surveys, or superintendence, or who have rendered other professional or skilled service, or bestowed labor in whole or in part, describing or illustrating, or superintending such structure, or work done or to be done, or any part connected therewith.

The right to file such liens has been extended to architects, engineers, draftsmen and artisans who furnish designs, plans, plats, maps, specifications, drawings, estimates of cost, and surveys, but it has not been extended to attorneys providing legal work relating to the property.  See Laurence J. Rich & Assocs. V. First Interstate Mortgage Co. of Colorado., 807 P.2d 1199 (Colo. App. 1990).

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CLICK HERE TO VIEW VIDEO PRESENTATION ON LIEN PRIORITY ISSUES IN COLORADO

The second part of determining whether the claimant has a right to file such a lien involves verifying that that the time period for recording the lien statement has not passed.  C.R.S. 38-22-109 (4) provides that all such lien statements claimed for labor and work by the day or piece, but without furnishing laborers or materials therefor, must be filed for record after the last labor for which the lien claimed has been performed and at any time before the expiration of two months next after the completion of the building, structure, or other improvement.  And except as provided in subsections (10) and (11) of C.R.S. 38-22-109 which allows for the extension of time periods upon filing an appropriate notice, the lien statements of all other lien claimants must be filed for record at any time before the expiration of four months after the day on which the last labor is performed or the last laborers or materials are furnished by such lien claimant pursuant to C.R.S. 38-22-109(5).

The next step is determining the appropriate amount of the lien.  Many unpaid contractors, subcontractors and materialmen become angry and file liens for inflated amounts; however, this is a terrible strategy.   C.R.S. 38-22-128 provides that a person who files a lien for any amount greater than is due without a reasonable possibility that the amount claimed is due and with the knowledge that the amount claimed is greater than that amount then due, and that fact is shown in a proceeding under the mechanic’s lien law, forfeits all rights to the lien, and is liable to the person against whom the lien was filed in an amount equal to the costs and all attorney fees by knowingly and intentionally claiming excess amounts.

Before recording the statement of lien, C.R.S. 38-22-109(3) requires that a notice of intent to file a lien statement is served upon the owner or reputed owner of the property or the owner’s agent and the principal or prime contractor or his or her agent at least ten days before the time of filing the lien statement with the county clerk and recorder. Such notice of intent shall be served by personal service or by registered or certified mail, return receipt requested, addressed to the last known address of such persons, and an affidavit of such service or mailing at least ten days before filing of the lien statement with the county clerk and recorder shall be filed for record with said statement and shall constitute proof of such service.

So, once the aforementioned notice of intent and ten-day period has passed, the affidavit of service and lien statement may be recorded by the lien claimant in the clerk and recorder’s office of the county in which the property is located.  The lien statement shall contain the of the owner or reputed owner of such property, or in case such name is not known to him, a statement to that effect; the name of the person claiming the lien, the name of the person who furnished the laborers or materials or performed the labor for which the lien is claimed, and the name of the contractor when the lien is claimed by a subcontractor or by the assignee of a subcontractor, or, in case the name of such contractor is not known to a lien claimant, a statement to that effect; a description of the property to be charged with the lien, sufficient to identify the same; and statement of the amount due or owing such claimant.  Such statement shall be signed and sworn to by the party, or by one of the parties, claiming such lien, or by some other person in his or their behalf, to the best knowledge, information, and belief of the affiant; and the signature of any such affiant to any such verification shall be a sufficient signing of the statement.  See C.R.S. 38-22-109.

In the absence of an agreement to the contrary, once the right to a lien is established, it accrues interest at the rate of 12% per annum.  C.R.S. 38-22-101(5).

Lien forms (which include the affidavit of service) are available from many places; however, I recommend procuring them from Bradford Publishing online at Mechanic’s Lien forms from Bradford Forms or in-person at their store located at 1743 Wazee Street, Denver, CO  80202.  Bradford has an outstanding supply of all kinds of legal forms (many specific to Colorado) plus good substantive guides and books on various legal topics written by top attorneys.  This website link takes you to a page you can purchase a number of products sold by Bradford Publishing regarding Colorado mechanics liens including a guide to Colorado mechanics lien laws; mechanics lien kits and the individual forms.

In part 2 of this article, I’ll address lien waivers; the time deadline for foreclosing liens and when they expire; priority issues; bonding around mechanic’s liens; defenses; the Mechanics Lien Trust Fund Statute; and how a bankruptcy filing affects such liens.

 

An Overview of Colorado Mechanic’s Lien Law Part 2 of 2 VIEW NOW

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.

 

Homebuyers Guide to the Home Buying Process

If this is your first time buying a home, follow this comprehensive guide to the home buying process:


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Homebuyers Guide Through the Home Buying Process

First Time Home Buyer Facts

 

Buying a home for the first time can be overwhelming. Our knowledgeable professionals can answer your title and closing questions and we are committed to making the home-buying experience a satisfying one for you. To help you begin your journey, here are some answers to a few of the questions that first-time home buyers may ask as they begin their quest to purchase their slice of the American dream.

 

 

Why should I buy instead of rent?
A home is an investment. When you rent, you write your monthly check and that money is gone forever. When you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes and usually from your state taxes. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years, building equity for you.

How do I know if I am ready to buy a home?

  • Do I have a steady source of income? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
  • Do I have a good record of paying my bills? Do I have few outstanding long-term debts, like car payments?
  • Do I have money saved for a down payment? Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer “yes” to these questions, you are probably ready to buy your own home.

What is title insurance and why do I need it?
An Owner’s Policy of title insurance protects the buyer against loss for title threats undiscovered at the time of closing and provides a defense in the event of claims against the title pursuant to the terms of the policy.

How much money will I need upfront to buy a home?
In general, you need enough money to cover three expenses: the earnest money (variable), down payment, and closing costs.
In addition to the mortgage payment, what other costs do I need to consider?
Utilities, property taxes, homeowners insurance, and maintenance costs are a few of the expenses to be considered. Additionally, there may be homeowner association or condo association dues.

How are pre-qualifying and pre-approval different?
Pre-qualification is an informal way to see how much you may be able to borrow. A pre-approval is the lender’s commitment to lend to you.

Should I use a real estate agent? How do I find a good one?
A good real estate professional can guide you through the entire process and make the experience much easier. All of the details involved in home buying, particularly the financial ones, can be mind-boggling. Start by asking your family and friends if they can recommend an agent. Look for an agent who listens well and The ideal agent knows the local area well and has resources and contacts to help you in your search

 

 

FSBO Tips On Filling Out the Colorado 2016 Contract To Buy And Sell Real Estate (Residential) Form CBS1-6-15; Mandatory 1/1/16 for Licensed Agents.

By Michael Selinfreund, Esq.,

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

Agent for Commonwealth/Fidelity and First American 

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WATCH THIS 5 PART SERIES for detailed instructions on filling out your purchase contract!

 

 

This article has been updated for 2019, Click Here for details.

The goals of the 2016 contract which became mandatory on 1/1/16 were simplification and clarification.  Further, no changes by the forms committee will be made for 3 years absent a legislative mandate, court decisions or an Attorney General opinion warranting any changes.  You can obtain this form at no charge by going to the Colorado Division of Real Estate’s website:  https://www.colorado.gov/pacific/dora/division-real-estate-contracts-and-forms.

  DOWNLOAD NOW Purchase Contract for Residental Property courtesy of the Colorado Division of Real Estate

Besides the sales contract, there is a wealth of very useful forms available for free through the Division of Real Estate when you follow that link.  Examples are:  Lead-Based Paint Disclosures; Seller’s Property Disclosure; Agreement to Amend/Extend; Earnest Money Release and Form Notes and Deeds of Trust for use in transactions where the owner is carrying back financing.  You can print out any of the available forms for free and fill them out with a pen or typewriter.  Take a few minutes to familiarize yourself with what’s available.   There are many informative articles posted on the Cherry Creek Title Services, Inc.’s website written by me covering a variety of primarily real estate related topics that you may find helpful.

Writable forms are available for purchase through Bradfordpublishing.com.  Many/most licensed real estate agents have sophisticated e-contract programs that are writeable 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.

This article is for educational purposes only and is not intended as legal advice. 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 2016 Contract.  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 like the Date, Buyer’s Name, and other 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.  It seems obvious that you could just ask the Seller for this information, but make sure they verify how their name appears on their deed or title policy from when they bought it.  You can always call Cherry Creek Title Services and obtain the ownership information and legal description.

Paragraph 2.4: This is where you insert the legal description of the property.  This can be found in the Seller’s deed; Seller’s title policy; at the county assessor’s website – although it’s often in abbreviated form; and through a record title search.   You can also call Cherry Creek Title Services.

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.

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.

Paragraph 2.7:  If you are dealing with water rights being deeded, I’d highly suggest you stop reading this article and hire an attorney.  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:  In certain circumstances, the transfer of property will involve water rights transferred via stock certificates.  Once again (thankfully), this is very rare in urban residential transactions.  I’d highly recommend legal advice 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.

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; and then enough time for the title company 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 those documents available immediately.

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: The loan application process should not be delayed any longer than absolutely necessary.  It wouldn’t be unreasonable to select a date very soon after the date the contract is accepted such as 3 days after the date you insert in Item 35.

Item 12:  Check with the borrower’s lender if they have already have one, or just choose a date 6 weeks after the date in Item 11.  At the time this article is being written, it is unrealistic to expect a loan to get processed as quickly as 3-4 weeks with the implementation of TRID (complex Federal regulations) on October 1, 2015.

Item 13: 3-5 days after acceptance date (Item 35), but this will normally be n/a.

Item 14: 3 days after the date chosen in Item 13.

Item 15: This will virtually always be another “n/a”.  If it does apply, 3 days after acceptance date (Item 35) is just fine.

Item 16:  Another “n/a”.  If applicable, 3 days after the date in Item 15.

Item 17: Another “n/a”.  If applicable, 5-6 weeks after acceptance date (Item 35).  Although an appraisal, survey and even a lender’s title policy may all be unnecessary, assumption approvals still take significant time now.  People sometimes pick a date such as 6 weeks out and add language such as “or within 3 (or some other number) business days of such Loan Approval if it occurs earlier.”   This will keeps the contract from expiring and already provides for an earlier closing date if the approval process happens sooner and all parties wish to close as soon as that happens.

Item 18:   10-14 days after acceptance (Item 35).  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 – even simple ones.   With that said, there are very good free form notes and deeds of trust available through the Colorado Division of Real Estate forms.  If the Seller does more than 3 loans in a year, it triggers onerous state laws, and the magic number is 5 that triggers onerous federal laws.   Just remember 3.  If I were a Seller of property not engaged as a professional licensed lender, I’d never exceed the 3 per year limit in Colorado thereby keeping things much simpler and less regulated.

Item 19:  You can always check with the Buyer’s lender to get an idea of how quickly they can get an appraisal done, but 10-14 days after Loan Application (item 11) is likely reasonable.

Item 20: Within 3 days of the date in Item 19 is very reasonable.

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

Item 22:  Within 14 days after Loan Application (Item 11) is reasonable.

Item 23:  Within 3 days of the date in Item 22 is reasonable.

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

Item 25:  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 26: Within 3 days of the date in item 25 is reasonable.

Item 27: The Buyer should be able to make this determination within 7 days of contract acceptance.  An example of when a Buyer may object would be when a property lies in a flood plain requiring flood insurance.

Item 28: There is no reason the Seller shouldn’t be able to provide these documents immediately but easily within 5-7 days of contract acceptance if they have to procure them through the HOA’s management company.

Item 29: Within 3 days of the date in Item 28.

Item 30: Within 3 days of the date in Item 29.

Item 31: This is really solely the decision of the Buyer and Seller.  Does the Seller even want to accept a contract that is contingent on the Buyer selling their home?  Perhaps if the Buyer’s home is already under contract.  And if so, how long will the Seller want to hold their property for the Buyer waiting for the Buyer’s house to sell and close?  Once the Seller agrees to the contract being contingent on the Buyer selling their home, the Seller is now on the Buyer successfully selling their home rather than refusing such an offer and keeping control of the sale of their own property where they control the pricing, etc.  I find Sellers much more amenable to this provision when the Buyer’s house is already under contract pending closing.  That makes the date you fill in pretty easy:  Use the date the Buyer’s house is scheduled to close and consider taking back-up contracts.  It is beyond the scope of this article to discuss using a first right of refusal in this circumstances since that language is best drafted by an attorney specific to your transaction.

Item 32: If you’re picking a closing date based on how long you think it will take to process and close a new loan for the Buyer, you can count on around 5-6 weeks now since we’re post-TRID.  Before, 4 weeks was more typical.  Obviously, it’s always wise to check with the lender(s) at the time you are selling to see how long it’s taking to get a purchase money loan closed.

Item 33:  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 34:  This should be selected by the parties depending on the what they agree on in Item 33.  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 35:  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.  Many professionals advise only giving the Seller one day and even sometimes less, but I usually choose 2 days from the date of the offer.

Item 36: 5:00 p.m. is a nice time to choose for this blank.

I realize filling out the preceeding 36 items was tedious, time consuming, and not much fun. 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 now and then and even Sellers 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 typically provide their funds to close via cashier’s checks and wires.

Paragraph 4.4.2 has a box to check whether the Buyer has all funds to close at the time of signing the contract, and it also clearly provides that the Buyer is in default if good funds are not available by closing to complete the transaction.

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

Paragraph 4.5.4:  The Good Faith Estimate was in almost all circumstances eliminated and replaced by the Loan Estimate on October 3, 2015 so this reference to the Good Faith Estimate should have been updated.   Certainly the spirit of this paragraph still applies and the Loan Estimate is the new “good faith estimate” with tight tolerances.

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 from the left side of line 137 terminating at the right side of line 149 since this paragraph will not apply.  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 and is pretty obvious on how to fill out.

Paragraphs 4.7.1.1 and 4.7.1.2:  If applicable, each party to right to terminate the contract based on dissatisfaction with the private loan terms as long as done timely as provided in the contract (Item 18 of Paragraph 3).

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:  Check the box just to the right of 284 if the Seller is selecting who is going to be you title insurer in the event you ever suffer a loss.  I wouldn’t let a Seller pick my title insurer no more than I’d let them select my homeowner’s insurance company.  Rather, I’d deduct the cost of the title policy from the sales price and elect to buy it myself by Checking the box in 8.1.2.  (see paragraph below).  The other option, the Abstract, is rarely available; only as good as the malpractice coverage of the abstractor; far more prone to errors and contains no affirmative coverage.  You can close residential transactions in urban areas for decades without ever encountering an abstract.  Opting for title insurance gives broader coverage backed by the strength and regulation of a title underwriter who must retain adequate reserves to cover claims.   I’d never personally accept an Abstract in lieu of title insurance.

Paragraph 8.1.2: I’d check the box just to the right of “289” and choose Cherry Creek Title Services, Inc.  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 in addition to North American Title (top ten).  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 our rates as both our closing and title rates are very competitive, and we have a liberal re-issue rate as well.

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 ($75.00 as I write this in January of 2016).  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. You can strike it entirely or leave it in as an inapplicable provision.

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 and its sub-parts discuss the Buyer’s power to terminate the contract based upon title objections.  Since 8.4.2 provides the Buyer can terminate based on any unsatisfactory title matter in their sole subjective discretion, the date chosen in Item 5 of paragraph 3 shouldn’t be too far out in the future since until that date passes, the Buyer can easily terminate the contract.

Paragraph 8.5 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.

Paragraph 8.7: Gives everyone the wise advice to review EVERYTHING affecting the property carefully.  Building code restrictions; zoning laws; parking restrictions; registered sex offenders residing nearby; set-backs restrictions; utility availability; sufficient access; building permit availability; drainage; all matters of record and much, much more may need to be reviewed depending on the property.  Getting the advice of an experienced real estate attorney is well worth the cost since mistakes can be financially catastrophic.

Paragraphs 8.7.1 and 8.7.2 discuss oil, gas, water and mineral reservations.  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.  It is certainly worth inquiring about any such reservations and reviewing any such agreements.  When in doubt, hire an attorney specializing in real estate.  The good news is that most urban residential property benefit from public utilities: water and sewer (rather than well and septic) and zoning precludes anyone from disturbing your property seeking minerals.  If the property relies on a well and/or septic, I strongly recommend you verify the legitimacy of the well permit and have an expert inspect and analyze both the well and septic/leeching fields.

Paragraphs 8.7.3, 8.7.4 and 8.7.5 give further emphatic warnings regarding any existing oil and gas activity on or nearby the property and that the title insurance policy is not going to be the answer if you purchase without doing your homework and end up living a nightmare with constant drilling activity.

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; 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 9.1.2: Since it’s for the benefit of the Buyer and specifically their lender, I’d check the Box that the Buyer orders the ILC knowing it will be the Buyer’s lender that actually orders it.  And, I’d also check the Box for the Buyer to pay for it since again, it’s solely for the benefit of the Buyer and the Buyer’s lender.

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.

9.1.4:  Specifying that the surveyor certifies their work to the insuring title company, Buyer, Seller, etc. is a wise practice and all named in 9.1.3 are to be called out in the surveyor’s certification.  For those who haven’t seen one, it’s typically one paragraph on the face of the survey document certifying the work specifically to certain parties and signed by the surveyor.

Paragraph 10.6.1.1 and 10.6.1.2 are applicable if the property is presently subject to a lease or leases that will still exist after the Buyer acquires it.   If I were filling it out, I’d be “none” or n/a in both paragraphs

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 https://www.colorado.gov/pacific/dora/node/95951  (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 requires 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.   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 at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/healthy_homes/enforcement/disclosure.

The pamphlet, “Protect Your Family From Lead In Your Home” can be downloaded at:  http://www.epa.gov/sites/production/files/2013-09/documents/lead_in_your_home_brochure_land_color_508.pdf .

Paragraph 12.2:  I advise the Buyer or 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:  If I am the Buyer, I put in “Mutual Agreement of Buyer and Seller”.

Paragraph 13: The blank requires the deed form to be selected.  Almost all residential deals involve general warranty deeds.  Builders, and often Sellers represented by attorneys choose special warranty deeds instead.  If you choose any other type of deed such as 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.

Paragraph 13.6 allows any other title exception to be enumerated here that isn’t already described above.

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:  These fees vary.  Putting $100 in the blank if the fee is unknown would be reasonable.  Most range from zero to $100, but it all depends where the property is located.

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.  Last year’s taxes 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 2016 taxes are payable in 2017.  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 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 16.3: I highly recommending you read and understand how HOA fees and working capital are handled.  The Buyer is going to pay/reimburse the Seller for the Seller’s pre-paid HOA fees and any money held as working capital by the HOA that the Seller previously paid in.  That is often 2 months of dues.   If there are existing special assessments but the work is not yet completed, the parties here select who is responsible, Buyer or Seller.  The assessments and when they’re paid (e.g. monthly) is disclosed and the final blank is where the Seller must disclose the existence of any unpaid special assessments or other pending expenses regarding the Association.

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 “none”, 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 27.2:  this is where an alternative electronic notice may be sent other than what is enumerated.  Usually this will be “n/a”.

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.

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

8. CLOSING DAY! Checklist for a Successful Closing

VALID PHOTO IDENTIFICATION
Two forms of identification are typically required at closing, including one of the following:
— Valid U.S. Driver’s License or non-driver I.D.
— Valid Canadian or Mexican Driver’s License issued by the
Official Agency
— Current United States or Foreign Passport
Foreign Passport must have been stamped by U.S.
Immigration and Naturalized Service

CASHIER’S CHECK, TREASURER’S CHECK, OR WIRE TRANSFER
In the event you are required to bring funds to closing, we
cannot accept personal checks or cash. If you prefer to wire
your funds, contact us for bank routing instructions.
If you will be bringing a proceeds check from another
settlement, contact us to verify the acceptance of those
funds – we do not automatically accept all checks.

ALL PARTIES  SHOULD ATTEND THE CLOSING, HOWEVER,
if anyone is unable to attend closing, contact us and we will be happy to arrange a
power of attorney or closing by mail.

Mail Away Closing Tips

 

Closing on time and to accommodate all parties involved in your closing, we may have to mail out closing documents. If you are involved in a closing that requires the mailing of documents, here are some tips to avoid delays:

  • Inform your closing/settlement agent of the need to mail documents as soon as possible. This will allow them to better coordinate the document preparation and signing process.
  • Provide your closing/settlement agent with a physical address and the best phone number for each party involved in the transaction. Most overnight delivery services will not deliver to a P.O. Box.
  •  Be aware that many lenders have specific closing practices that may differ from local customs. Not all lenders allow documents to be signed in advance of the closing date, and some require that the documents be signed in the presence of an attorney or at a local settlement agent’s office.
  • Allow sufficient turnaround time for the documents to be signed. This may decrease the chances of funding delays due to errors in the signing process. In order to disburse funds on a transaction, your closing/settlement agent may require the original documents to be returned and in their possession. The minimum time required to send and receive documents is three business days.

4. Link to Colorado Division of Real Estate Forms and Disclosures

Click here for all Colorado Division of Real Estate Forms and Disclosures

5. What is Title Insurance?

As real estate is the nation’s largest market, its purchase and sale is essential to the health of the U.S. economy. However, these transactions are never without risk. That’s why title insurance has been protecting American homeowners for more than 130 years.

Overview:
When a piece of real property is financed, purchased or sold, a record of that transaction is generally filed in public archives. Likewise, other events that may affect the ownership of a property are also documented and filed. These may include liens, levies, encumbrances, etc. When a buyer purchases title insurance, the title company searches these records to find (and remedy, if possible) issues that may affect the purchaser’s ownership.

Title Search and Exam:
That’s where title insurance differs from traditional insurance models. When you purchase a policy insuring you for matters relating to your car or health, the insurance company assesses the risk of insuring you, and bases its premium on the risk being assumed. With title insurance, the insurer first works to identify the status of ownership, liens and other matters affecting title by collecting documents affecting title from the public records that are statutorily identified for the recording of real estate transactions. This process is called the search. Once the search is complete, the title insurance underwriter can then determine the insurability of the title and list exceptions from coverage and requirements to insure.

Undiscovered Risks:
Of course, even the most skilled title professionals may not find all title problems. Other risks include matters that are more difficult to identify, such as title issues resulting from filing errors, forgeries, undisclosed heirs, and other unforeseen problems. That’s one reason why your title insurance policy can play a key role in protecting your real estate investment.

Loan Policy:
When you purchase a new home or other piece of real property by securing a mortgage, you may be required by your lender to purchase a Loan Policy of title insurance. This policy insures the lender against covered title defects up to the amount of insurance. This coverage in favor of the lender lasts for the life of the loan under limited circumstances stated within the policy.

Owner’s Policy:
You will also have the option of purchasing an Owner’s Policy of title insurance, which provides insurance directly to the insured owner listed in the policy, and describes the type of real property interest owned. The insurance in both an owner’s and a Loan Policy is subject to the policy provisions, which include the covered risks, exclusions from coverage, the conditions and the exceptions to title listed on a schedule to the policy.

Premium:
You will pay a one-time premium for both the Loan Policy and the Owner’s Policy at the close of your transaction, based on the total value of your home and the amount of your loan. This is another way in which title insurance differs from other insurance models, where premiums are paid on an ongoing basis. The purchase of a home or other real estate may be the largest financial investment you ever make. Title insurance can give you added peace of mind in knowing that the title to your investment is insured.