Beyond the CTD: Navigating Property Tax Refunds and Reimbursements in Colorado Closings

In Colorado real estate transactions, title companies are well-versed in Certificates of Taxes Due (CTDs), delinquent liens, and redemption periods. But one area that often flies under the radar—and can create post-closing headaches—is property tax refunds and reimbursements.

The Overpayment Problem

Sometimes, sellers overpay property taxes due to:

• Early payments before a reassessment lowers the bill
• Duplicate payments by lenders and owners
• Misapplied payments across parcel boundaries

These overpayments can result in refunds issued after closing, which raises key questions:

• Who is entitled to the refund—the buyer or the seller?
• Was the overpayment disclosed in the settlement statement?
• Did the title company account for it in prorations?

Reimbursement Confusion in New Construction

New builds and recently subdivided parcels often involve estimated tax bills. When actual assessments arrive, they may differ significantly. If the buyer ends up paying more than expected, they may seek reimbursement from the seller—or vice versa.

Title companies should:

• Flag estimated tax bills in the title commitment
• Escrow for potential tax adjustments
• Include clear language in the closing documents about who bears the risk

Special District Refunds: A Hidden Trap

Colorado’s special districts (e.g., metro, water, fire) sometimes issue partial refunds due to budget surpluses or mill levy reductions. These refunds may not be tied to the county treasurer’s records and can be missed entirely unless proactively tracked.

To avoid surprises:

• Ask sellers about recent district communications
• Review special district websites for refund notices
• Document any expected reimbursements in the closing file

Why This Matters for Title Companies

Unaddressed refunds and reimbursements can lead to:

• Disputes between buyers and sellers
• Claims against title insurance
• Reputational risk for the closing agent

✅ Call to Action

Don’t let overlooked refunds derail your closing. Contact COCRS today to ensure your tax data is complete and accurate. Our Colorado experts are ready to help you navigate the nuances of property tax and protect your transactions from post-closing surprises.