Expert: Jay Denit - 4/2/2008

Question
My wife and I are buying a second house for rental investment in Colorado.

It will be a cash in full purchase.

The house is a REO property about fifty years old. (Thornton)

The seller has received a signed contract and earnest money from my wife and me.

We are told that the seller has excepted the contract, supposedly signed the contract but we haven' received a signed contract yet.

The date and time listed for the buyers to receive a signed contract has passed.

The contract also says that the seller will furnish a "special deed" as opposed to a warranty deed.

My question is

Will we have the same title guarantee coverage as the buyer with a Special Deed as we would have with a Warranty Deed?

And isn't it true that we have no contract until a signed contract is delivered to us and that we shouldn't pay for inspections etc. until we have a signed contract in hand?

Thank You for your expertise."

Answer
Hi Jim,

1) No, a Special Warranty deed does not provide the same coverage as a General Warranty deed.  A quick synopsis is that a special warranty deed says that while the bank has owned the property (a finite time period), no new liens have been issued.  A general warranty deed says that you are being assured that you being passed title to the property free and clear of any liens or encumbrances period.  Don't be scared by it, there isn't a single lender in the state that will pass title via general warranty deed.

2) You are correct-- until the signed contract has been delivered to you , you don't technically have a executed contract.  Definitely don't pay for any inspections etc. until you have that back from the seller.  In Colorado real estate, there are no such things as verbal contracts.

Best of luck!