What Title Companies Need to Know

As we move through 2025, title companies operating in Colorado must stay informed about significant legislative changes affecting property taxes and tax certificates. These updates not only impact how taxes are calculated but also influence the timing and accuracy of real estate closings. Here’s a breakdown of what’s new and how it could affect your operations.

Key Legislative Changes in 2025

1. Permanent Rate Reductions and Revenue Caps

In a major bipartisan effort, Governor Jared Polis signed a comprehensive property tax relief package in late 2024. This legislation introduced permanent reductions in both residential and commercial property tax rates. While the cuts offer long-term relief, they also come with nuanced implications.

• Residential properties: The assessment rate was reduced, resulting in an average savings of about 8% compared to the previous status quo. However, due to the expiration of temporary 2024 discounts, many homeowners will still see a net increase in their 2025 tax bills.
• Commercial properties: These received a more substantial cut—up to 14%—especially benefiting non-residential properties like office buildings and retail spaces.

2. Caps on Revenue Growth

To prevent sudden spikes in tax bills due to rising property values, the new law imposes annual caps on how much local governments can increase property tax revenues:

• School districts: Limited to 6% annual growth.
• Other local entities: Capped at 5.25%.

These caps aim to stabilize tax expectations, which is crucial for escrow calculations and long-term planning.

3. Expanded Deferral and Exemption Programs

Colorado has also broadened its property tax deferral and exemption programs, which can affect lien status and tax certificate accuracy:

• Senior and Disabled Veteran Exemptions: Seniors who move in 2025 or 2026 can now temporarily reinstate their exemption at a new primary residence, provided they meet specific criteria.
• Deferral Program Expansion: Homeowners whose property taxes exceed a 4% growth cap (averaged over two years) may now defer a portion of their taxes—even if they don’t qualify under traditional senior or military criteria. This deferral becomes a lien, which must be accounted for during title searches.

Impacts on Real Estate Transactions

1. Increased Complexity in Tax Certificate Preparation

With multiple layers of exemptions, deferrals, and rate changes, title companies must be more diligent than ever in verifying the accuracy of property tax certificates. 

2. Timing and Escrow Adjustments

Because 2025 taxes are paid in 2026, and due to the expiration of temporary discounts, escrow accounts may need to be adjusted to reflect higher-than-expected tax bills. This is especially important for closings occurring in late 2025.

3. Lien Considerations

Deferred taxes under the expanded program are treated as liens. Title professionals must ensure these are disclosed and resolved appropriately during the transaction process to avoid post-closing surprises.

Final Thoughts

For title companies, staying ahead of these changes is essential to maintaining smooth closings and client trust. Regular communication with local tax authorities, updated training for staff, and proactive client education will be key strategies in 2025.