How to Take Title in Colorado
When you buy a home or investment property in Colorado, "taking title" simply means choosing how your name or business name is legally recorded on the deed.
Think of it as choosing the legal rules for your ownership. It dictates three massive things: who has control today, who can sign for a loan, and what happens to the property if an owner passes away.
For a standard real estate closing in Colorado, buyers choose from three foundational options. Here is the breakdown of how they work, why they matter, and what could go wrong.
1. Sole Ownership (Tenant in Severalty)
What it means: One single legal person owns 100% of the property. The word "severalty" sounds like "several," but it actually means your ownership interest is severed (cut off) from everyone else. This applies to a single individual, or a single entity like an LLC, a Corporation, or a Trust.
Note: Vesting into an entity is straightforward on a free-and-clear purchase, but moving title into an LLC or trust when an existing mortgage is in place is a transfer that raises questions about the due-on-sale clause.Why it matters: You have absolute freedom. You do not need anyone else’s permission, signature, or blessing to sell, lease, or mortgage the property.
What could go wrong: If you own the property as an individual and pass away, the property gets locked up in a lengthy, expensive court process called probate before it can be passed on to your heirs or beneficiaries.
2. Tenancy in Common
What it means: Two or more people or businesses own the property together. Crucially, ownership shares do not have to be equal. For example, one person can own 70% because they put up the down payment, while the other owns 30%.
Why it matters: This is Colorado’s automatic legal default. If a deed lists multiple buyers but does not explicitly state how they want to hold title, Colorado law legally forces them into a Tenancy in Common. It is a highly flexible option for business partners, friends, and fractional investments.
What could go wrong: There is no right of survivorship. If your co-owner passes away, their percentage does not go to you. It goes to their heirs or whoever is named in their will. You could suddenly find yourself owning a piece of real estate with your late partner's estranged relative.
3. Joint Tenancy
What it means: Two or more people own the property together as a single unit with equal shares. This is the go-to option for married couples and close families who want seamless inheritance. In Colorado, the deed must explicitly use specific legal phrases like "as joint tenants" or "with right of survivorship" to activate this.
Why it matters: The Right of Survivorship. If one owner passes away, their share instantly and automatically transfers to the surviving owner or owners. It completely bypasses the nightmare, cost, and delays of probate court.
What could go wrong: You are financially tied at the hip. If your joint tenant gets into severe debt, faces a lawsuit, or files for bankruptcy, a creditor can place a legal lien against the property, putting your real estate asset at major risk due to someone else's mistakes.
Quick Reference Summary
The Goal | The Best Fit | Why? |
|---|---|---|
Buying alone/protecting an asset via an LLC | Sole Ownership | Total control, zero interference. |
Buying with a business partner or friend | Tenancy in Common | Protects your specific financial stake; shares can be unequal. |
Buying with a spouse or partner | Joint Tenancy | Bypasses court entirely if one partner passes away. |
Did You Know? Two Colorado Title "Gotchas"
Colorado does NOT recognize "Tenancy by the Entirety": Some states offer a special, extra-protected title option strictly for married couples. Colorado does not. Married couples here must actively choose between Joint Tenancy or Tenancy in Common.
Colorado is NOT a Community Property State: Unlike neighboring states like Texas or California, Colorado does not automatically view all property acquired during a marriage as 50/50 community property on a deed. How you choose to vest your title at closing matters immensely.
Closing a subject-to? Book a call and we will walk the file before you commit to a structure. Or send your contract any time to [email protected].
This article is general information, not legal advice. Title insurance availability, underwriting standards and state law vary, and outcomes depend on the specific facts of a transaction. Consult a qualified attorney in the relevant state before acting. Creative Title is a licensed title and settlement services provider in Colorado and Tennessee.
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