If you’re planning to buy a home in Denver, it’s a good idea to learn more about the Colorado state laws that may affect the homebuying process. Here’s a summary of important Colorado homebuying laws.
Home seller and buyer laws
Home sellers in the Denver metro area must comply with Colorado residential property sale disclosure laws. For example, sellers have to disclose any structural damage, moisture problems and damage from insects, rodents and weather events.
Sellers also must disclose whether a home sits in a special taxing district or within a homeowners association (HOA), whether the property has ever been used as a methamphetamine lab and not remediated to state standards and whether any proposed transportation projects could affect the home. For more details, check these Colorado seller disclosure forms.
There’s also a separate “ Colorado green disclosure form” to inform the buyer about air quality, energy-efficient features, such as low-flow toilets, and sustainable materials, such as reclaimed flooring.
Colorado is considered a non-judicial foreclosure state because a lender is not required to file a lawsuit in order to foreclose. Most foreclosures in Colorado are non-judicial foreclosures. However, foreclosures in Colorado may also be handled through the courts. In a non-judicial foreclosure, the lender must file a demand-for-sale notice with the public trustee in the county where the home is located. The public trustee then sends the homeowner a notice that includes the time and date of the sale and their rights. The homeowner should also get a notice of hearing from the lender’s attorney. The homeowner may file a response objecting to the foreclosure no later than seven days before the hearing.
The laws on dividing property after a divorce can affect the homebuying process for a married couple. Colorado is an equitable distribution state, which means property is divided “equitably” but not necessarily equally based on a number of factors. Colorado is not a community property state in which marital property must be divided by a 50/50 split.
Colorado is an escrow state, which means that title companies, brokers and attorneys may all handle home closings. It is therefore not necessary to hire an attorney to represent you at the closing, although you may do so if you wish.
Denver homebuyers, like all buyers across Colorado, must pay a recording fee to cover the cost of recording the home sale into the public record. This fee is $.01 for every $100 of the home purchase price. For example, a buyer who paid the $451,000 median price for a single-family home in the Denver metro area would pay a fee of $45.
There is no statewide real estate transfer tax in Colorado, but some local municipalities do charge transfer taxes. Denver and some other Colorado cities do not charge transfer taxes due to Colorado’s Taxpayer Bill of Rights (TABOR), a constitutional amendment passed by voters in 1992 that prohibits certain kinds of new taxes. Your mortgage lender must properly disclose the exact amount of transfer taxes due when you buy the home.
Qualifying residents of Denver are eligible for a property tax exemption offered by the state of Colorado. The exemption applies to eligible citizens age 65 or older, as well as surviving spouses of senior citizens and disabled veterans who have owned and lived in their home as a primary residence for at least 10 years. This program exempts from property taxation 50% of the first $200,000 in actual property value. Residents who have questions about the program may contact the Denver Assessor’s Office.
Colorado collects a median property tax of $1,437 per year for a home valued at $237,800, according to Tax-Rates.org. In Denver County, the median is slightly lower at $1,305 per year. However, homeowners in other parts of the Denver metro area may pay significantly more in property tax. For example, Douglas County has the highest median property tax in the Denver metro region, at $2,590 per year. Boulder County has the second highest, at $2,014 per year.
Conforming loan limits
Conforming loan limits are the maximum amounts that can be borrowed in order for a mortgage loan to be acquired and insured by government-sponsored enterprises Fannie Mae and Freddie Mac. Each year, the Federal Housing Finance Agency (FHFA) sets conforming loan limits. In most of the U.S., the conforming loan limit for a one-unit property is $484,350. This is also the limit for most Colorado counties outside of the Denver area. Conforming loan limits are higher in more expensive areas, including the Denver metro.
The conforming loan limits for all counties in the Denver metro area, except for Boulder County, are: $561,200 for a one-unit home, $718,450 for a two-unit home, $868,400 for a three-unit home and $1,079,250 for a four-unit home. The conforming loan limits for Boulder County are higher at $626,750 for a one-unit home, $802,350 for a two-unit home, $969,850 for a three-unit home and $1,205,300 for a four-unit home.