How to Read a Colorado Title Commitment Before Your Deadline Passes
Within days of signing a contract to buy Colorado real estate, the buyer usually receives a title commitment: a dense document full of recording numbers, legal descriptions, and references to other documents. It is easy to set aside. It is also where a buyer learns what the title policy will not cover. Under the standard contract, the buyer's window to object to what's in it is short.
This article explains how a title commitment is organized, what the requirements and exceptions mean, which notices Colorado law requires, and how the commitment ties into the contract's title deadlines.
What is a title commitment?
A title commitment is a title insurance company's offer to issue a title insurance policy on stated terms, once stated conditions are met. Most commitments in Colorado use the American Land Title Association (ALTA) commitment form. That form itself says the commitment is not an abstract of title, a legal opinion, or a report on the condition of title. It is an offer to insure, subject to the requirements and exceptions it lists.
That distinction matters. The title company is telling you what it will insure and what it won't. It is not telling you whether the exceptions are acceptable for your plans for the property.
The parts of a title commitment
Schedule A: the basics
Schedule A identifies the transaction: the commitment date, the type and amount of the proposed policy, the proposed insured, the estate being insured, who currently holds title, and the legal description of the land. Check it carefully. The legal description should match the property you are buying, the current owner should match the seller, and the proposed insured should match how you intend to take title.
Schedule B, Part I: requirements
Requirements are conditions that must be satisfied before the policy will be issued. They typically include paying the purchase price and premium, recording a deed from the seller, and recording the buyer's new deed of trust if there is a loan. They also commonly include releasing the seller's existing deed of trust and providing documents that show who has authority to sign for an entity, trust, or estate.
Most requirements are routine and handled by the closing company. Unusual ones, such as a lawsuit, a judgment, an old unreleased lien, or a probate issue, can take time to resolve and are worth raising early. Good news though, most attorneys can help review these issues quickly.
Schedule B, Part II: exceptions
Exceptions are the matters the policy will not cover. There are two kinds.
Standard exceptions are preprinted categories of risk that do not appear in the public records. Under the Colorado standard contract, these include rights of parties in possession, unrecorded easements, matters an accurate survey would reveal, unfiled mechanic's liens, the "gap" period between the commitment date and recording, and unpaid taxes and assessments.
Specific exceptions are recorded documents that affect the property, such as easements, plats, declarations and covenants, HOA documents, mineral reservations, and rights-of-way. Colorado's Division of Insurance generally requires each specific exception in an owner's commitment to identify the recording information of the document being excepted, or otherwise identify it in a way that makes it readily available to the consumer.
The specific exceptions are where most of the reading happens. An easement listed as an exception may allow a utility to run lines across the backyard. A recorded declaration may restrict rentals, fences, or outbuildings. A plat note may limit where you can build. The policy will not cover losses from these matters, so the question is whether you can live with them.
Extended coverage: removing standard exceptions
The standard contract lets the parties decide whether the owner's policy will include owner's extended coverage, sometimes called OEC, and who pays for it. Extended coverage can delete or insure over some or all of the standard exceptions. Title companies have their own requirements before they will do so, which often include a seller affidavit and, for survey-related exceptions, an acceptable survey or improvement location certificate.
Two Colorado-specific rules relate to these standard exceptions:
Gap coverage. Division of Insurance rules make the title insurance company responsible for matters that appear of record before recording when it, or its agent, conducts the closing in connection with issuing the owner's policy and is responsible for recording the documents. This is subject to the commitment's terms and conditions. Title companies must also give prospective insureds written notice of when this gap coverage applies.
Mechanic's lien coverage notice. For a single-family home, condo, or townhouse, the title company must notify a prospective insured in writing, when it delivers the commitment, of its general requirements for deleting the exception for unfiled mechanic's liens. The rule requires only the notice. It does not require the title company to provide mechanic's lien coverage.
Colorado notices you may see in the commitment
Colorado statutes require certain statements in commitments for residential sales. You may notice them and wonder why they are there:
Special taxing districts. The commitment must state that the property may be in a special taxing district, that a certificate of taxes due will be obtained from the county treasurer, and where information about districts can be found. The standard contract separately warns buyers that special or metropolitan districts may increase costs to residents. For newer subdivisions, this deserves real attention.
Severed mineral estates. When the title company finds recorded evidence that the mineral estate has been severed, leased, or otherwise conveyed, the commitment must say so. It must also state that a third party is substantially likely to hold some or all of the mineral interests, and that the mineral estate may include the right to enter and use the property without the surface owner's permission.
Remote notarization. The commitment must include a notice that Colorado notaries may remotely notarize real estate deeds and other documents, and that you may choose not to use remote notarization.
Commitments may also contain older covenants with discriminatory language. Colorado law allows an attorney or title company to remove recorded restrictive covenants based on race or religion that have been declared void, by recording a new instrument in connection with a transfer.
How the commitment fits the contract's deadlines
Under the Colorado Real Estate Commission's standard residential contract, the title commitment is tied to specific deadlines:
Record Title Deadline. The buyer must receive the commitment and copies of the title documents: plats, declarations, covenants, and the other documents listed as exceptions.
Record Title Objection Deadline. The buyer may object to unsatisfactory title matters. If the buyer does not object in time, the buyer accepts title as disclosed.
Off-Record Title Deadline and Off-Record Title Objection Deadline. The seller must deliver existing surveys in its possession and disclose known title matters that don't appear in the public records. The buyer may inspect the property for things like unrecorded easements or boundary discrepancies and object by this deadline.
Title Resolution Deadline. If the buyer objects and the parties don't sign a written settlement by this date, the contract terminates unless the buyer withdraws the objection in time.
Importantly, even if the title deadlines have passed, but a defect appears a Buyer will have the opportunity to object.
The seller does not have an automatic obligation to fix a matter the buyer objects to. The contract gives the parties a period to reach a written resolution and ends the contract if they don't. The standard contract also includes a separate Mineral Rights Examination Deadline for a buyer who wants to investigate mineral rights.
For more on how these deadlines are counted and what happens when they pass, see our article on contract deadlines.
Hypothetical example: A buyer's commitment lists a 1978 recorded easement described only by its recording number. The buyer pulls the document and finds it gives a neighboring parcel a 20-foot access easement across the area where the buyer planned to build a detached garage. Because the buyer found it before the Record Title Objection Deadline, the buyer can object and negotiate or, if the matter isn't resolved, let the contract terminate. If the buyer had not read the document until after closing, the easement would likely remain, and because it is a listed exception, the owner's policy would likely not cover it. What happens in an actual transaction depends on the easement's terms and the parties' negotiations.
A practical review checklist
Confirm Schedule A: the legal description, the current owner, the proposed insured, and the policy amount.
Read every requirement and ask the closing company about any that are not routine.
Pull and read every document listed as a specific exception. A summary line in the commitment is not enough.
Compare the exceptions to your plans: building, fencing, renting, dividing the lot, accessing the property, or running a business from it.
Decide whether extended coverage is worth it, and ask what the title company needs to provide it.
Note the special district and mineral notices, and look into them if they apply.
Calendar the title deadlines and object in writing, on time, if something is unacceptable.
The bottom line
A title commitment tells you what the title company will not insure, and the contract gives you a short window to act on it. The buyers who get the most out of a commitment are the ones who read the underlying documents, not just the list, and do it before the objection deadline.
This article provides general information about Colorado law and is not legal advice. Reading it does not create an attorney-client relationship with Proper Tea Law. Laws, regulations, and title insurance forms change, and each commitment and policy must be read on its own terms. For advice about your transaction, consult an attorney licensed in Colorado.