Unrecorded Tax Liens: The Silent Threat to Colorado Closings

In Colorado real estate, Certificates of Taxes Due (CTDs) are essential for confirming a property's tax status. But what happens when a lien exists—and it’s not recorded yet?

Title companies often rely on CTDs and public records to verify tax obligations. However, unrecorded tax liens—especially those recently sold at auction or pending treasurer updates—can pose a serious risk to clean title and post-closing peace of mind.

Where Unrecorded Liens Come From

Unrecorded tax liens typically arise from:

• Recent tax lien sales that haven’t been updated in the county system
• Special district assessments that are billed separately and not reflected on the CTD
• Treasurer processing delays, especially during peak tax seasons

These liens may not appear in standard searches or on the CTD, but they still represent enforceable claims against the property.

Why Title Companies Should Care

If a lien is sold but not yet recorded:

• The buyer may unknowingly inherit the lien
• The title insurer could face future claims
• The closing agent may be held liable for missed disclosures

Even worse, some counties don’t notify title companies when a lien is sold—leaving professionals in the dark unless they proactively investigate.

How to Spot the Risk

To protect your transactions:

• Ask sellers if they’ve received any tax lien notices
• Contact the treasurer to confirm if any liens have been sold but not yet recorded
• Review special district billing cycles to catch off-cycle assessments
• Use COCRS to verify lien status beyond the CTD

Case Example: The Missed Metro District Lien

A recent closing in Douglas County involved a property with a clean CTD—but the seller had missed a metro district payment. The district sold the lien two weeks before closing, but it hadn’t been recorded yet. The buyer discovered the lien months later when the district initiated foreclosure proceedings.