Colorado Closing Customs
Colorado is nominally a “table funding” state, though escrow closings are not uncommon. In a table funding closing, all documents required for closing are executed and recorded and funds are disbursed at the time of closing. The seller brings clear title, the buyer brings money, and both leave the closing table with what the other person brought to the table.
Both residential and commercial transactions are closed in conformity with the requirements of a written agreement, generally a contract between the parties to the real estate transaction, accompanied by closing instructions prepared by the attorneys or brokers representing the parties. The Colorado Real Estate Commission website has approved forms available for download and use.
A Title Commitment is prepared by the title company, listing the requirements which must be met in order for the title insurer to issue a policy, as well as the exceptions from coverage. Most transactions, and particularly commercial transactions, engage a representative of the title company (the “closer” or “escrow officer”) to collect and record the Documents of Conveyance and Documents Securing Debt prepared by the attorneys for the parties and the lender or lender’s counsel.
The following documents are typically prepared by the closer:
- Form DR-1083 for Colorado State Taxes
- Form DR-1079
- W-9 or 1099 for Federal Taxes
- Settlement Statement (or HUD-1 for residential transactions)
Water, sewer, wastewater, and association agreements
- Final Affidavit and Indemnity
- Notarized Bill of Sale
Other documents should be prepared by the client or their respective attorneys, but the closer may be asked to provide the form for which:
- Real Property Transfer Declaration TD-1000
- Conveyance Deed (closer, upon receipt of written instructions, may act as scrivener to prepare the deed)
- Deed of Trust
- Statement of Authority for a business entity
Costs and Charges
The seller typically pays for the cost of the owner’s title policy, while the buyer pays for the lender’s policy, all endorsements required by the lender, and the costs of recording, including the Transfer Tax.
Closing costs are allocated between the parties to the transaction pursuant to the terms of the contract. Residential transactions usually involve brokers, and almost all commercial transactions involve attorneys representing the parties and the lender. The costs are typically split as follows:
Typically paid by
|Owner’s Policy Endorsements
||Most contracts set forth a limited number of endorsements to be paid for by the Seller; additional endorsements are the responsibility of the Buyer
|Loan Policy and Endorsements
||Buyer or Borrower
|Real Estate Taxes
||Pro-rated, current taxes are paid by Seller (in Colorado, real estate taxes are paid in arrears)
||Buyer or Borrower
|Water, sewer, association fee
||Pro-rated, current charges paid by Seller
||Pursuant to the terms of the contract
||Buyer or Borrower
Time and Place of Closing
The buyer typically sets the day of closing.
Most residential closings involve all of the parties, their brokers and/or counsel sitting down at the closing table with the title company representative conducting the transaction.
Most commercial transactions are concluded without the parties meeting together, generally requiring the closer to coordinate receiving the documents from the parties and counsel and distributing and disbursing as necessary. Documents are prepared, signed, and held in escrow by the title company until all requirements are completed and the requisite amount of good funds have been provided to the title company to be disbursed.
Recording fees are generally $11.00 for the first page and $5 for each subsequent page of a document. For example, a 2-page document would cost $16.00 to record. Most county Clerk and Recorder offices have websites with detailed information as to their recording fees.
UCC’s may be recorded with the county Clerk and Recorder, and/or with the Secretary of State, depending on the personal property type.
Electronic recording is available, at an additional cost of $5 per document.
Post-closing escrows are commonly held by the title company pursuant to a written agreement among the parties and the title company.
The title policy is issued upon recordation of the documents and the satisfaction of all outstanding requirements.