Rehabber · Grand Junction, CO · Member since 2013 · 11 posts · 4 votes
A little known regulation in Colorado requires the County Public Trustee to escrow property taxes for all ILC sales and in addition, requires notice to the County Tax Assessor of all ILC transfers. Failure to do so nullifies the ILC and can result in ALL monies returned to the ILC buyer. How are you Colorado investors dealing with this? Thanks in advance for an replies...
Rehabber · Grand Junction, CO · Member since 2013 · 11 posts · 4 votes
13y
Was hoping for some help...here's the Colorado statute:
TITLE 38 PROPERTY – REAL AND PERSONAL REAL PROPERTY
Conveyancing and Evidence of Title
ARTICLE 35 Conveyancing and Recording
PART 1 GENERAL PROVISIONS
38-35-126. Contract for deed – escrow of tax moneys – written notice.
Real Estate Attorney · Aurora, CO · Member since 2009 · 21 posts · 21 votes
13y
We literally comply with the law and name the County Public Trustee as escrow agent in the contract. However, the buyer does NOT actually make payments to the PT if there's an escrow in the underlying loan. The buyer makes payments for taxes to the seller, who makes payments on his loan to the lender, who then pays the taxes. I've spoken to almost every PT in the Denver, Boulder, and Colorado Springs metro areas and none of them want to collect the taxes. They agree with me that the statute did not envision a wrap, and they are fine with it. You do have to file the notices with the Treasurer and Assessor.
As for the penalty, it does not happen. I was in court with one person who wanted to cancel his contract because my client didn't know about the statute. The judge said, "Fine you can cancel the contract, but you don't get to live there for free". Then he allowed my client to counterclaim for reasonable rental value of the property, which ended up being the same as the payments the buyer had made on the contract. It was a wash.