LOCAL REAL ESTATE PRACTICES IN DENVER, COLORADO

RESIDENTIAL CONTRACT TO BUY AND SELL REAL ESTATE:

The purchase contract used in Colorado was prepared by the Colorado Real Estate Commission. Realtors® are licensed to complete the form on your behalf.

Note: Sellers and/or Buyers are not required to retain the services of an attorney when entering into a real estate transaction in Colorado.

 

EARNEST MONEY DEPOSIT:

An earnest money deposit represents your sincerity in the attempt to purchase a property. At the time you write a contract on the home you want to buy, you will be expected to include a deposit of approximately three to four percent of the purchase price. By state law, your check will be held in an escrow account until the closing.  The deposit will be applied to your closing and becomes a part of your down payment.

 

CONTINGENCIES:

The following contingency clauses are usually included in the Purchase and Sale Agreement:

* Obtaining loan approval

* Sale and closing of buyer's present home

* Structural and/or component inspections

* Radon inspection

* The property appraising for at least the purchase price

* Review of title documents including covenants, rules, and regulations of the subdivision when they exist.


KEY MORTGAGE INSTRUMENTS:          

The instrument showing your promise to repay the new loan amount is called the PROMISSORY NOTE, while the security instrument for the debt is called the DEED OF TRUST.  The Deed of Trust is recorded in the county records to establish the lender's lien against the property until your note is paid in full.

 

SOURCES OF FINANCING:

Buyers in Colorado customarily obtain financing from:

* Savings and Loan Associations

* Mortgage Brokers - Banks

* Credit Unions

* Owner financing is usually in the form of a second mortgage or, in some rare cases, an assumption of the seller's present loan wherein the seller may continue to be liable for the note until it is paid in full.                                                  

SPECIAL LENDER FEES:

In addition to the interest rate discount points, loan origination fees, and closing fees, lenders charge other fees to borrowers in conjunction with closing the loan. These fees will vary depending upon market conditions. They are also different between lenders.  Also see OBTAINING LOWEST INTEREST RATES POSSIBLE.

  

CLOSING:

The closing is normally conducted by the Title Insurance Company who acts as the closing agent for the listing real estate broker. The selling real estate broker also attends the closing to assist the buyer in reviewing all closing documents and provides additional explanation of the documents whenever you need more information. In the state of Colorado, buyers must bring "good funds" to the closing. This means that the closing funds must be wire-transferred into the title company's escrow account prior to the closing or, the buyers need to bring a certified check or a cashier's check to the closing. Personal checks cannot be accepted.

 

CLOSER DUTIES:                                
Initiates, prepares, orders, coordinates, and explains the following: Title Examination Mortgage Insurance (if applicable) Deed Preparation Title Insurance (if applicable) Disbursement of Funds Closing Settlement Statement (Computation) Recording Pertinent Documents

 

FIXTURES:
Normally included in the Purchase and Sale Agreement: All Window Coverings Wall to Wall Carpeting Air Conditioning Equipment Venetian Blinds Lighting Fixtures Awnings Window Shades Mantels Heating System Storm Windows/Doors

TV Antennas, Trees, Shrubs, Plants Hot Water Heater Garage Door Openers Kitchen Ranges & Ovens Plumbing Fixtures Garbage Disposals Solar Panels & System Chandeliers and, generally, anything that is permanently attached Hot Tubs & Spas Burglar systems and water softeners are often leased by homeowners and are not always included with the home.

PERSONAL PROPERTY:                                                

A separate bill of sale is issued, at time of delivery of deed, for any free-standing personal property that you request is included with the home.                                                

 

PRORATIONS:
Customary prorations are computed as of the date of closing include: Fuel Rents Taxes Water Charges Sewer Use Homeowners Dues (when a homeowners association exists)

 

PROPERTY INSURANCE UPON SELLER VACATING:

The seller's homeowners policy remains in effect until closing. If vacant, the following items are generally covered:

* Vandalism

* Wind and Hail Damage

*  Fire Damage                                          

TRANSFER OF TITLE:

Property ownership in Colorado is conveyed by:

* General Warranty Deed - private party homeowner

*  Special Warranty Deed - Foreclosures or corporation sale

*  Corporate Warranty Deed - sale by a corporation

*  Personal Representative Deed - estate sale

* Other types of deeds may also be used. Check with us for more specific information.






TIME FROM AGREEMENT TO CLOSING:

The average time interval from the contract acceptance of the Purchase and Sale Agreement by both parties to closing (Transfer of Title) is 30-60 days.

 

TITLE INSURANCE:

When property is being sold or refinanced, the lender and the buyer need a preliminary title commitment that will indicate exactly what recorded liens and encumbrances and recorded easements are currently in effect on the property. The title commitment will also indicate the vested owner of record and any restrictions on the use of the subject property. Title insurance is required to also furnish the lender with a lender's policy (mortgagee's policy) showing the lender as a lien holder on the property. A $70 to $90 charge will be incurred by you as part of your closing costs to pay for the mortgagee's title insurance policy. When the closing of the property is final, the title company will record the necessary documents and issue a title insurance policy to you and your lender. This title policy insures that you have clear title to the property.

 

PROPERTY INSPECTIONS AND/OR ENGINEER'S REPORT:

If you are purchasing either a new home or a resale property, you should always hire a professional inspector to complete a structural and/or engineer's inspection on your home. This visual inspection will determine the condition of the structure, foundation, and mechanical systems of the home. The cost of this service generally runs from $350 to $400 depending on the size of the home and the type of inspections requested. Most inspections include: Appliances Basements Water or Plumbing Lines Garages Electrical Roofs Heating and Ventilation Attics Bath and Kitchen Fixtures General Maintenance and Crawl Spaces Mechanical Condition of the Home

 

HOME WARRANTY SERVICES:           

Buyers or sellers may purchase a home warranty policy that will protect against any repairs or replacement of certain appliances, heating, plumbing, and electrical items. As with most insurance companies, the coverage can vary and you may want to consult with a warranty services company to determine exactly what is 

 

covered and the cost of the policy. A typical one-year policy will cost about $350 to $475. There is normally a $50 + deductible per claim.  Also see HOME WARRANTIES - DO YOU NEED ONE?

TAKING TITLE TO REAL PROPERTY:             

The three most customary ways of owning real estate in Colorado are

a) in severalty,

b) as tenants in common, or

c) as joint tenants.

1. Tenancy in Severalty: Ownership of property vested in one person alone rather than held jointly with another; also called several tenancy of sole tenancy.

 

2. Tenancy in Common: A tenancy in common is a holding of an estate in land by two or more persons who need hold only by the unity of possession. As distinct from a joint tenancy, the tenants of a tenancy in common need not have the same proportionate share and subject to the rights of possession of the other tenants.

 

3. Joint Tenancy: In a joint tenancy, all the co-owners are equally entitled to the use, enjoyment, control, and possession. The most distinguishing characteristic of the joint tenancy is the right of survivorship. The right of survivorship which accompanies a joint tenancy ownership does eliminate some of the legal complications of probate in the event of the death of one of the parties. However, inheritance taxes are assessable and evidence of the death must be placed on record. Disadvantages of joint tenancy may arise if marital difficulties occur, or if one of the parties has obligations or responsibilities (children) resulting from a previous marriage. The financial and tax situation of the parties may also dictate that a tenancy in common ownership is best.

 

Realtors® cannot recommend how you should take title to your home. It is strongly recommended that an attorney be consulted for a specific recommendation of how you should take title.
                        When it comes to YOUR real estate needs, why accept less than extraordinary assistance?