Closing and Settlement
Closing is where the transaction is finalized, funds are disbursed, and title transfers. This chapter explains Colorado's Closing Instructions, the settlement statement, and the state's use of deeds of trust and the Public Trustee. Proper handling of closing protects the parties and the licensee.
Closing Instructions and Conducting the Closing
Colorado uses a Commission-approved Closing Instructions form signed by the buyer and seller to authorize and direct the closing entity. This document specifies how the closing is to be conducted and how funds are to be disbursed. Following the instructions helps ensure that documents and money are handled correctly. Licensees should review deadlines and figures carefully before closing.
Settlement Statements and Proration
The settlement statement itemizes the debits and credits for buyer and seller, including the purchase price, loan amounts, and prorations. Prorated items such as property taxes and interest are divided based on the closing date. Accurate proration ensures each party pays only its fair share of shared expenses. Reviewing the statement helps catch errors before funds are disbursed.
Deeds of Trust and the Public Trustee
Colorado secures most loans with a deed of trust that names a trustee, commonly the county Public Trustee. If the borrower defaults, foreclosure typically proceeds nonjudicially through the Public Trustee rather than a full court action. This system distinguishes Colorado from states that rely on judicial mortgage foreclosure. Understanding it helps licensees explain how loans are secured and enforced.