While transferring a real estate title in Colorado is a relatively straightforward procedure, you must decide what type of deed to use, and that is a crucial decision.
For any type of real estate title transfer, you’ll need to fill out the appropriate forms and have all parties sign in front of a notary. The new owner is responsible for filling out a Real Property Transfer Declaration form and recording the deed at both the recorder’s and county clerk’s offices.
Understanding Deeds in Colorado
Colorado recognizes four primary types of deeds. While these deeds all transfer real estate titles, some offer more protection for the “grantee,” or new owner of record. These four main deed types consist of:
- General warranty deed – This deed offers the grantee protection, or a warranty, against title issues. It contains various covenants, including one guaranteeing there are no encumbrances, such as liens. The “quiet enjoyment” covenant guarantees against the new owner’s dispossession or eviction from the property.
- Special warranty deed – This deed is similar to a general warranty deed, with one important distinction: It does not protect the title from claims made before the “grantor” or current owner took possession. From the buyer’s perspective, a general warranty deed is a much better option.
- Bargain and sale deed– While most types of deeds conveying real property qualify as “bargain and sale” documents, true bargain and sale deeds contain a covenant stating that the grantor has not in any way harmed the title.
- Quitclaim deed – While one of the simplest deed forms to fill out, a quitclaim deed does not protect the new owner from any issues with the title. The owner is literally “quitting” his or her claim to the property, and transferring it to the grantee. There is no warranty whatsoever with a quitclaim deed.
Beneficiary Deeds
If you want to leave property to a beneficiary after your death and avoid the probate process, a beneficiary deed will fill the bill. Under a beneficiary deed, the title passes only upon the property owner’s death, and the deed must include language stating “transfer on death” or “convey on death.” During your lifetime, the beneficiary has no right to the property, and you continue to have full authority over it. At the time of your death, the beneficiary receives the property with any mortgages, liens, contracts and other encumbrances intact. Before creating a beneficiary deed, it is wise to consult an estate planning attorney.
There are other methods of leaving property to beneficiaries and avoiding probate, such as a revocable living trust. There are ways to plan your estate so that you heirs may receive the property but not have to deal with certain encumbrances. Rather than the beneficiary take on the mortgage, etc., such payment falls to the estate.
Intestacy
Someone who dies intestate dies without leaving a will. That means their property is divided according to Colorado’s laws of intestate succession, based on marital and kinship ties. If you die without a will, you are indirectly transferring applicable real estate title to those particular family members – whether that was your intention or not. If you don’t have a will, have a lawyer draw one up as soon as possible to ensure your assets go to your intended beneficiaries.
Involuntary Alienation
The legal term “involuntary alienation” means transferring a title with no consent from the owner. How does that happen? Generally, it occurs in foreclosures, tax or other lien sales. Less often, involuntary alienation occurs in cases of adverse possession. Under Colorado law, if someone openly possesses a piece of real estate for at least 18 years, with the owner having nothing to do with the property in that time, the individual “in possession” of the property may file for adverse possession. Needless to say, the owner of the record should seek legal counsel.
Contact an Attorney
Your house or other real estate property may constitute your most valuable assets. Using an incorrect method to transfer a real estate title can result in tax, estate, and legal issues. Even if the title transfer method is not “incorrect” per se, it may not prove the best choice for your situation.
Make sure you contact an experienced real estate attorney will advise you on the best way of transferring a real estate title based on your individual circumstances.