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Colorado Real Estate Broker License: Free Study Course

Title commitments, title insurance, recording, wire fraud

Real Estate Closings · 3 study hours

Bottom line: A title commitment is the title company's promise-with-conditions to insure; the contract decides who pays for each policy, recording follows Colorado's race-notice statute, and wire fraud is prevented by calling a known number before any money moves.

Bottom line: the title company checks that the seller can really transfer the property, insures the buyer and lender against hidden problems, and then records the new deed. The buyer's wire money is the favorite target of scammers, so a few simple habits protect everyone.

The title commitment

Title means ownership. A title commitment is a written offer from a title company: "If these things happen, we will issue a policy." It has three main parts:

  • Schedule A: the facts. It names the proposed insured (buyer, and the lender if there is a loan), who now holds title, the legal description of the property, the policy amounts, and what kind of estate is insured (normally fee simple, full ownership).
  • Schedule B-1, the requirements: a to-do list that must be finished before the policy is issued. Examples: pay off the seller's old loan, record a release of the old deed of trust, get the right signatures, deliver an owner's affidavit.
  • Schedule B-2, the exceptions: matters the policy will not cover: easements (rights of others to use part of the land), restrictive covenants, mineral rights, taxes not yet due, and old liens. Readers should check each exception; the buyer can object during the Title Review section of the contract (lesson c2-08).

Schedule names can differ by company, so describe them by purpose, as above.

Owner's policy and lender's policy

An owner's policy insures the buyer's ownership for as long as the buyer or heirs hold it, for the policy amount (usually the price). A lender's policy insures the lender's lien up to the loan amount, and its coverage shrinks as the loan is paid down. If the buyer finances, the lender requires its own policy. Issuing both at once is a simultaneous issue and is often cheaper than two separate policies.

Who pays? The contract decides. The Colorado form contract has a section that states who pays for the owner's policy and what coverage is ordered, and the parties can change it. Practice varies by area. Teach clients to read that section, not to rely on "what is customary." Lender's policies are usually the buyer's cost because the buyer's loan requires it, but again, the contract and loan terms control.

Standard vs extended coverage

Standard coverage is the base policy. It still lists "standard exceptions" for things not found in the public record: unrecorded easements, parties in possession (someone living there with rights), unrecorded mechanic's liens (claims by builders for unpaid work), and survey matters. Extended coverage removes some or all of those exceptions. It costs more, and the company may need a seller's affidavit, a survey, or an inspection first. Extended coverage protects the buyer more but is not a promise against every defect; exceptions listed in Schedule B-2 remain.

Recording

Recording means filing the deed and deed of trust with the county clerk and recorder so the world has notice. Colorado is a race-notice state. The statute says an unrecorded instrument is not valid against anyone with rights in the property who records first, except between the parties and against those who had notice (C.R.S. 38-35-109(1)). In plain words: you win if you buy without knowing of an earlier deal and you record first.

Other rules in that section: a deed dated after January 1, 1977 must include the grantee's address, or the clerk will not record it (38-35-109(2)). Anyone who records a document knowing it is forged or groundless is liable to the owner for at least $1,000 or actual damages, whichever is greater, plus attorney fees (38-35-109(3)). Recording a deed also triggers the documentary fee (C.R.S. 39-13-102).

Releasing old deeds of trust

A deed of trust is the Colorado security document for a loan; the property secures the loan. When the seller pays off a loan, the lien must be released by a recorded release. The title company orders the payoff statement, pays the lender at closing, and makes sure the release is recorded. Missing releases are a classic title problem, so the commitment lists them as a requirement.

Wire fraud prevention

Criminals break into email, copy a real message, and send "new" wiring instructions. Money wired to the wrong account is often gone. Steps:

  1. Never rely on emailed wiring instructions. Call the title company at a phone number you found yourself (its website or earlier paperwork), not the number in the email.
  2. Confirm the account number and routing number out loud.
  3. Warn buyers at contract time, in writing, that wires are the main fraud target. The Colorado contract set includes a wire fraud advisory (lesson c2-12).
  4. Do not send sensitive information over plain email; use secure links.
  5. Be suspicious of urgent or changed instructions.
  6. If a wire goes wrong, call the bank immediately and report it.

A broker must not disburse funds until they are received and available for immediate withdrawal (Rule 6.19.E), and a broker keeping transaction files must follow Rule 6.20.

Example with real numbers

A $400,000 Boulder County purchase. The contract says the seller pays the owner's policy, $1,600. The buyer's loan is $320,000 and the lender's policy (issued at the same time) adds $900. Recording a deed and deed of trust costs $130 in fees. The documentary fee is 4,000 hundreds x $0.01 = $40, split $20 each.

  • Seller's title cost: $1,600 (owner's policy) + $20 (half the doc fee) = $1,620.
  • Buyer's title cost: $900 (lender's policy) + $130 (recording) + $20 (half the doc fee) = $1,050.
  • Total: 1,620 + 1,050 = $2,670.

If the contract instead said the buyer pays the owner's policy, the buyer's cost would be 1,050 + 1,600 = 2,650, and the seller's would fall to $20. The contract, not habit, moves the money.

Scenario: the seller signs a deed to Alex on June 1; Alex does not record. On June 5 the seller secretly signs a deed to Blake, who has no notice of Alex's deed and records June 6. Under race-notice, Blake's recorded interest wins over Alex's unrecorded one (38-35-109(1)). Alex's remedy lies against the seller. This is why buyers record promptly.

Law cited

Key terms

Title
Legal ownership of property.
Title commitment
The title company's written promise to issue a policy if listed conditions are met.
Schedule A
The part of a commitment that states the insured, current owner, legal description, and policy amount.
Requirements
The to-do list that must be satisfied before the policy is issued, such as payoffs and releases.
Exceptions
Matters the policy will not cover, like easements and covenants.
Owner's policy
Insurance for the buyer's ownership, lasting as long as the buyer or heirs hold title.
Lender's policy
Insurance for the lender's lien, up to the loan amount.
Standard coverage
The base policy, with standard exceptions for unrecorded or off-record matters.
Extended coverage
Policy that removes some standard exceptions; costs more and may need a survey or affidavit.
Recording
Filing a deed or deed of trust with the county clerk and recorder to give public notice.
Race-notice
A recording rule: the buyer without notice who records first wins (C.R.S. 38-35-109(1)).
Deed of trust
Colorado's loan security document; property secures the loan.
Release
A recorded document that clears a paid-off deed of trust.
Wire fraud
Scam where criminals trick a buyer into wiring closing money to the wrong account.

Flashcards

What are the three main parts of a title commitment?

Schedule A (facts), requirements (to-do list), exceptions (what is not covered).

Who pays for the owner's policy?

The contract decides.

Owner's vs lender's policy?

Owner's insures the buyer's ownership; lender's insures the lender's lien up to the loan amount.

What does extended coverage do?

Removes some standard exceptions; costs more and may need a survey or affidavit.

Colorado recording statute type?

Race-notice (C.R.S. 38-35-109(1)).

What must every deed after 1/1/1977 include to be recorded?

The grantee's address (38-35-109(2)).

Penalty for recording a forged or groundless document?

At least $1,000 or actual damages, whichever is greater, plus attorney fees (38-35-109(3)).

Best step against wire fraud?

Call a phone number you already trust to confirm wiring instructions.

What clears a paid-off deed of trust?

A recorded release.

When may a broker disburse funds?

Only once funds are received and available for immediate withdrawal (Rule 6.19.E).

Quiz: 10 questions

Tap an answer. It shows right or wrong and opens the reason. Your score is saved in this browser and counts in the study app.

  1. Which describes what Schedule A of a title commitment contains?

    1. A The list of exceptions to coverage
    2. B The to-do list to be completed before the policy issues
    3. C The buyer's loan terms
    4. D The proposed insured, the current owner, the legal description, and the policy amount
    Show answer and why

    Answer: D. The proposed insured, the current owner, the legal description, and the policy amount

    Schedule A is the facts page. Exceptions and requirements are separate parts, and loan terms belong to the lender's loan documents.

    General title insurance practice

  2. A commitment lists 'record a release of the seller's old deed of trust.' Where would that appear?

    1. A In the exceptions
    2. B In the requirements
    3. C In Schedule A as the insured
    4. D In the recording fee table
    Show answer and why

    Answer: B. In the requirements

    It is a task that must be done before the policy can be issued, so it is a requirement.

    General title insurance practice

  3. What is an 'exception' in a title commitment?

    1. A A matter the policy will not cover
    2. B A condition that must be met before closing
    3. C A discount for paying cash
    4. D A refund when the loan is paid off
    Show answer and why

    Answer: A. A matter the policy will not cover

    Exceptions are excluded matters like easements. A condition to be met is a requirement.

    General title insurance practice

  4. Who customarily pays for the owner's title policy in a Colorado sale?

    1. A Always the seller
    2. B Always the buyer
    3. C Whoever the contract says pays
    4. D The listing broker
    Show answer and why

    Answer: C. Whoever the contract says pays

    Practice varies and the parties can change it, so the contract decides. Saying 'always' for either side ignores the contract.

    C.R.S. 12-10-217(1)(j); Rule 6.19

  5. How does extended coverage differ from standard coverage?

    1. A It removes some standard exceptions and usually costs more
    2. B It insures the lender instead of the buyer
    3. C It adds a warranty on the roof
    4. D It lasts only until closing
    Show answer and why

    Answer: A. It removes some standard exceptions and usually costs more

    Extended coverage narrows the standard exceptions. It is still an owner's-style policy with listed exceptions, and it is not a repair warranty.

    General title insurance practice

  6. Colorado law is described as 'race-notice.' Seller deeds to Alex on June 1 (not recorded) and to Blake on June 5. Blake has no notice and records June 6. Who prevails against third parties?

    1. A Alex, because Alex was first in time
    2. B Whoever pays more
    3. C Blake, who had no notice and recorded
    4. D Neither; the deeds cancel out
    Show answer and why

    Answer: C. Blake, who had no notice and recorded

    The statute protects the person who first records and has no notice of the earlier unrecorded deed. Being first in time does not help if Alex did not record.

    C.R.S. 38-35-109(1)

  7. What is true of the owner's policy and the lender's policy?

    1. A They always cost the same
    2. B The owner's insures the buyer's ownership; the lender's insures the lender's lien up to the loan amount
    3. C The lender's policy protects the seller
    4. D Both end at closing
    Show answer and why

    Answer: B. The owner's insures the buyer's ownership; the lender's insures the lender's lien up to the loan amount

    They protect different people, and the lender's policy shrinks with the loan balance. The seller is not an insured under either.

    General title insurance practice

  8. What is the best wire fraud protection step for a buyer?

    1. A Reply to the email to confirm instructions
    2. B Wire a small test amount first only
    3. C Send the funds the night before
    4. D Call the title company at a phone number you found independently to verify the wiring instructions
    Show answer and why

    Answer: D. Call the title company at a phone number you found independently to verify the wiring instructions

    A known phone number defeats a hijacked email. Replying to the same email talks to the scammer.

    4 CCR 725-1 Rule 6.19.E (funds must be good before disbursement)

  9. A deed dated 2026 lacks the grantee's address. What happens at the recorder?

    1. A The clerk will not record it and returns it
    2. B It is recorded but invalid
    3. C The county adds the address
    4. D It is recorded only on payment of an extra fee
    Show answer and why

    Answer: A. The clerk will not record it and returns it

    A deed lacking the required grantee address is returned. Accepting it by mistake does not make the deed invalid, but the clerk should not accept it.

    C.R.S. 38-35-109(2)

  10. $400,000 sale. Contract: seller pays the owner's policy ($1,600); buyer pays the lender's policy ($900). What does the buyer pay for title insurance?

    1. A $1,600
    2. B $2,500
    3. C $900
    4. D $700
    Show answer and why

    Answer: C. $900

    The buyer pays only the lender's policy: $900. The $1,600 is the seller's; $2,500 is the total of both.

    General title insurance practice; contract

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