Colorado Title Insurance for Tax Liens: Ensuring Clear Title When Buying or Resolving Tax-Encumbered Properties
- Jerad Larkin
- 2 days ago
- 4 min read
Buying a property with unpaid taxes? Title insurance keeps you protected.
When a property owner fails to pay property taxes in Colorado, the county can place a tax lien on the property. These liens take priority over most other debts - even mortgages - and can eventually lead to a tax lien sale or tax deed transfer if not paid. Whether you’re buying a property at a tax sale, clearing back taxes, or refinancing a home with old liens, Colorado title insurance for tax liens ensures your ownership is clean, marketable, and legally protected.
In this guide, you’ll learn how tax liens work, how they affect title, and how Jerad Larkin and Chicago Title Colorado help buyers, investors, and lenders navigate these complex transactions safely.
What Is a Tax Lien?
A tax lien is a legal claim placed by the county when property taxes go unpaid. It gives the government the right to collect the debt by selling the lien certificate to investors or, ultimately, the property itself.
There are two main stages of tax enforcement in Colorado:
Tax Lien Sale:
The county sells the unpaid taxes to an investor, who receives a tax lien certificate.
The property owner can still redeem the property by paying back the taxes (plus interest).
Tax Deed Issuance:
If the owner doesn’t redeem the property within the redemption period (typically 3 years), the lienholder can apply for a tax deed, taking ownership of the property.
Each stage creates potential complications for ownership, lending, and title insurance coverage.
How Tax Liens Affect Title
A recorded tax lien clouds title and prevents clean transfer until it’s resolved. Even small unpaid taxes can lead to major issues.
Common title challenges with tax liens:
Active tax liens not yet redeemed.
Expired redemption rights still showing in records.
Tax deed transfers missing proper documentation.
Unreleased or duplicate liens from prior years.
Conflicts between tax lien buyers and mortgage lenders.
Without title insurance, you could buy a property that’s still legally tied to an unpaid lien or a prior owner’s claim.
How Title Insurance Protects Against Tax Lien Risks
When you purchase title insurance in Colorado, your title company verifies that all property taxes and liens are paid and released before closing.
Title insurance coverage includes:
Confirmation of property tax status through county verification.
Lien clearance for unpaid taxes or overlapping claims.
Legal defense if a prior lienholder challenges ownership.
Financial reimbursement if an undiscovered lien causes loss.
Protection for lenders and buyers during tax deed transfers.
In short, title insurance guarantees that you’re purchasing (or refinancing) a property free from past tax encumbrances.
Example: Unreleased Tax Lien in Adams County
An investor purchased a property at auction in Thornton. The previous owner had several unpaid tax years, and one lien release was missing from the county’s digital record. Chicago Title Colorado worked with the county treasurer to obtain proper releases and recorded a clear title policy for the investor. This ensured the new owner could resell or refinance without legal risk. Without title insurance, the investor could have faced months of delays - or worse, a claim from the prior lienholder.
Buying a Property After a Tax Sale
Purchasing a property with tax lien history requires special care. Before issuing a title policy, Chicago Title Colorado confirms that:
The tax deed process was completed correctly.
All redemption periods have expired.
Any prior owners or lienholders were properly notified.
Court confirmations are on record if required by the county.
Once verified, title insurance provides peace of mind that your ownership is legally enforceable and free from prior tax liability.
Why Lenders Require Title Insurance on Tax-Related Transactions
Lenders are particularly cautious about properties with tax lien histories because tax liens take priority over mortgages. This means the government or lienholder could foreclose before the bank does. Chicago Title Colorado ensures that all liens are cleared and that the lender’s mortgage will hold first position on the title - making the property safe to finance or refinance.
Key Title Endorsements for Tax Lien Properties
Some transactions require special endorsements to cover unique tax-related risks. Common ones include:
ALTA 32 – Construction Loan Pending Disbursement: Protects against mechanic’s liens filed after closing.
ALTA 35 – Minerals and Tax Liens: Covers issues related to mineral severance and unpaid taxes.
Custom Endorsements for tax deed transactions verifying redemption compliance.
Your title officer can recommend endorsements tailored to your county and transaction type.
Frequently Asked Questions
Can you get title insurance on a tax deed property?
Yes, but only after the redemption period has expired and all legal procedures are verified. Some title companies require judicial confirmation before issuing coverage.
Does title insurance cover unpaid property taxes?
Yes - for taxes owed before closing that were missed in the title search. Taxes due after closing are the owner’s responsibility.
Can I refinance a property with an outstanding tax lien?
Not until the lien is released or paid in full. Title insurance ensures this clearance before closing.
Real-World Example: Overlapping Liens in El Paso County
A buyer acquired a foreclosed property in Colorado Springs that previously went through a tax sale. Two separate tax certificates were issued for different years, and one hadn’t been redeemed. Chicago Title Colorado discovered the issue during the title search, worked with the county to reconcile the tax record, and cleared both liens. The buyer closed with full title protection and lender approval.
Final Thoughts
Tax liens can complicate even the simplest real estate deals - but they don’t have to. Colorado title insurance for tax liens ensures every unpaid tax, expired certificate, and release is properly handled before closing, giving you full confidence in your ownership. Before buying, selling, or refinancing any property with tax history, partner with Jerad Larkin and Chicago Title Colorado to protect your investment and avoid costly surprises.
Questions? Contact:
Jerad Larkin – Chicago Title Colorado
📞 303.630.9430
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