A Colorado real estate licensee is assisting a seller who wants to use a general warranty deed for a residential transaction. Which of the following statements about general warranty deeds in Colorado is NOT accurate?
Correct Answer
C) A general warranty deed automatically clears all existing liens and encumbrances on the property upon recording
A general warranty deed does NOT automatically clear existing liens or encumbrances upon recording. The deed's warranty covenants create personal obligations on the grantor to defend the grantee's title and compensate for losses — but they do not extinguish or remove existing encumbrances. Liens, easements, and other encumbrances remain attached to the property regardless of the type of deed used in the transfer. To clear encumbrances, separate legal action (such as a lien release, payoff, or quiet title action) is required. This is a common misconception that the exam specifically tests.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Community property is a system where property acquired during a marriage is owned equally by both spouses.
A freehold estate represents ownership of real property with an indefinite duration.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
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