- September 18, 2003
- All Issuing Offices in Colorado
- Exceptions to Taxes and Assessment in Colorado
The purpose of this Bulletin is to remind agents of their obligation to search for taxes and assessments before issuing the Policy and to standardize the exceptions currently used in Schedule B to avoid ambiguities in the Commitment and Policy with regard to taxes and assessments in Colorado.
NATURE OF THE LAW
In Colorado, all taxable property, real and personal, are listed, appraised and valued for assessments at noon on the first day of January of each year. C.R.S. §39-1-105. Typically, January 1st of each year is the date of assessment. Taxes become due and payable on the first day of January of the year following the date of assessment. Taxes become delinquent on June 16th of the year following the date of assessment.
Taxes for the current year become a perpetual lien upon all real and personal property of the taxpayer at noon on the date of assessment as provided for in Revised Statute §39-1-107:
(2) Taxes levied on real property and personal property, together with any delinquent interest, advertising costs, and fees prescribed by law with respect to any such taxes as may have become delinquent, shall be a perpetual lien thereon, and such lien shall have priority over all other liens, until such taxes, delinquent interest, advertising costs, and fees have been paid in full.
- Taxes for the year 2000 are assessed on Blackacre on January 1, 2000.
- Taxes for the year 2000 become due and payable on January 1, 2001.
- Taxes for the year 2000 become delinquent on June 16, 2001.
The date of the lien for unpaid taxes attaches to Blackacre on January 1, 2000.
The County Treasurer proceeds to collect all taxes levied upon all property upon receipt of the tax list and warrant from the County Assessor in the county where the property is located. C.R.S. §39-10-101. The taxpayer has the option to pay all amounts due in full or in two equal installments. The first installment is due on or before the first day of February. The second installment is due no later than the 15th day of June.
Remember that tax liens transfer and attach to realty on the date of assessment even though the taxes may not be due and payable by the taxpayer.
Generally, Special Assessments are imposed on real estate to pay for improvements such as streets, sewer lines, sidewalks, and drainage installments or for utilities. Special assessments are liens against the property benefited by the utility or improvement. Pay close attention to special assessment notices by cities and districts. Municipalities and Special Districts must certify unpaid charges to the Treasurer to have them collected on the tax bill. Such assessments are also a perpetual lien upon the land against which the assessment is levied from the date of filing the assessment of record in the office of the Treasurer until paid.
In some cases, the assessor fails to assess the property or assesses property without improvements then goes back and assesses the land with improvements leaving a balance owing. These "escape assessments" are also a lien upon the real estate relating back to the date of what should have been the original date of levy. This is true even if the Assessor is at fault for failing to assess or missing an assessment. Pay close attention to property that is assessed as vacant land when there is evidence of improvements. A lien for delinquent taxes or assessments is not void or avoided simply because the Assessor failed to assess it the first time.
Remember that just because an assessment is not on the record is not conclusive proof that an assessment is not a lien at the date of the Policy.
Tax rolls can be indefinite, imprecise and contain erroneous or defective legal descriptions of property. Problems can also result when land is transferred to a new owner. Make additional title requirements or list an exception in the title commitment if:
- The tax roll description is so vague and indefinite that the property cannot be properly identified.
- A portion of the property has not been assessed.
- A portion of the property has been assessed in conjunction with an adjoining property.
- A portion of the tax rolls omits the description of a portion of the land.
- A portion of the property is part of a vacated street, road or abandoned railroad right of way and a description of this portion is omitted from the tax rolls.
- There are no assessments levied against property within a benefit district.
- The property is exempt from taxation but the tax rolls do not show it as "exempt."
- The property is railroad property.
- Taxes for the property are being paid by someone other than the record owner.
- Pay attention to multiple assessments where the property has been assessed more than once.
Stewart Title Guaranty Company requires that you confirm that all taxes and assessments that are liens on the land are satisfied or are excepted to by general or specific exception in the Policy. It is a risky practice to research the tax rolls yourself or rely on verbal reports of taxes or assessment offices with regard to the existence of unpaid taxes and assessments as such research methods are unreliable. The best practice is to order a Tax Certificate from the County Treasurer to confirm the existence of all unpaid taxes and assessments certified to the Treasurer.
EXCEPTION TO TITLE
The exceptions for taxes and assessments in Schedule B of the policies need to be broad enough to cover both real and personal property taxes. Title examiners who use exception for taxes that specifically identify "real property taxes" or "taxes shown on the real property rolls" may need to change their exception.
Since property taxes are paid in arrears in Colorado and closers generally collect only for current taxes due, title examiners who uses an exception that read "taxes and assessments now a lien, not yet due and payable" or "any and all taxes and assessments, and subsequent years, a lien not yet due and payable" need to change their exception consistent with the applicable statute. Instead, the Company has approved only the following exceptions for taxes and assessments to be inserted in Schedule B of the Commitment and Policy:
"Taxes for the year 200_, and subsequent years, special assessments or charges not certified to the County Treasurer." (Note: This will appear on the Owner's Policy only).
"Taxes and assessments, for the year 200_, a lien but not yet due or payable."(Note: This should appear on the Loan Policy only).
"Payment of all taxes and assessments currently due and payable if any." (Note: This should appear on the Requirements of the Commitment Only).
PLEASE CONTACT PATTY SCHROM AT THE HELP DESK (866) 625-1882 AND SHE WILL ASSIST YOU IN MAKING THESE CHANGES TO AIM. PLEASE NOTE THAT AIM SHOULD ONLY CONTAIN THE EXCEPTIONS RELATING TO TAXES AND ASSESSMENTS AS SET FORTH ABOVE FOR INSERTION INTO SCHEDULE B OF THE COMMITMENT AND POLICY. ALL OTHER EXCEPTIONS RELATING TO TAXES AND ASSESSMENTS SHOULD BE REMOVED FROM YOUR AIM SYSTEM.
IF YOU HAVE ANY QUESTIONS REGARDING THE ISSUES RAISED BY THIS BULLETIN, PLEASE CONTACT YOUR LOCAL UNDERWRITING PERSONNEL.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.