Every two years, Colorado Assessors must appraise all real estate in the state. Selling prices of sold properties, taken from deeds, are used extensively in the appraisal process.
Because of circumstances surrounding a sale (a conveyance between family members, for example), some selling prices may not be indicative of a property's true value. The Real Property Transfer Declaration helps the Assessor's Office identify these properties. Appraisers typically adjust sales prices when unusual circumstances exist, or disqualify (ignore) these sales altogether.
According to Colorado Statute (C.R.S. §39-14-102), all conveyance documents subject to the documentary fee presented for recordation must be accompanied by a the Real Property Transfer Declaration that has been completed and signed by either the grantor or the grantee. Quit claim deeds with nominal consideration are excluded.
Transfer declarations are confidential documents and may made available for inspection only to the grantee specified in the conveyance document, to the grantor if they completed the declaration, to the Assessor staff and Colorado Property Tax Administrator or employees of that office.
Process and penalties if not filed
If this declaration does not accompany the conveyance document at the time it is presented for recordation, the county clerk will promptly record the conveyance document and then notify the county assessor that the declaration did not accompany the conveyance document. The county assessor will then send written notice to the grantee that he must provide the declaration to the county assessor within 30 days of the date the notice was mailed.
If the grantee fails to provide the declaration within 30 days of the date the notice was mailed, the county assessor may impose a penalty of twenty-five dollars or a penalty equal to twenty-five one-thousandths of one percent of the sale price pursuant to the conveyance document, whichever is greater.
In each subsequent year in which the grantee fails to file the declaration, the assessor may impose the specified penalties. State statute specifies that any unpaid penalties will be included in the statement sent to the grantee for property taxes levied against the real property.
The Real Property Transfer Declaration Completion Guide can assist sellers and buyers in determining how to best complete the declaration, and the complete Guide is available from your closer or sales representative.
1. Address or legal description of the property sold: This information links the sale to the assessor’s records and identifies the property’s location.
2. Type of property purchased: This information allows the assessor to use one form for all uses of property and to identify the type of property purchased.
3. Date of closing: The date the property is transferred from the seller to the buyer.
4. Total sale price: The total sale price is the most essential item of information concerning the sale, and its accuracy must be carefully scrutinized. The total sale price will sometimes differ from the recorded documentary fee. Adjustments to the sale price, often necessary before a sale can be used, are more accurate when the true price has been identified.
5. Was any personal property included in the transaction? If personal property, as listed on the Real Property Transfer Declaration, was included in the sale price, the value of the personal property must be subtracted from the sale price to determine the sale price of the real property transferred.
6. Did the total sale price include a trade or exchange? Transactions involving trades of additional items or property should be excluded from the assessor’s data bank of sales information whenever possible, particularly when the value of the traded property is substantial or cannot be reliably established. However, a trade under the IRS Code Section 1031 would be included in the analysis and therefore needs to be identified on the Real Property Transfer Declaration.
7. Was 100% interest in the real property purchased? It is crucial to identify whether the sale is a fee simple transaction (100% interest). If it's not, the sale price cannot be considered representative of the total market value of the property.
8. Is this transaction among related parties? It is important to know whether the buyer and seller are related individuals or corporate affiliates because such sales often do not reflect market value.
9. Check any of the following that apply to the condition of the improvements at the time of purchase. When determining market value, the condition of the property at the time of the sale is very important. If one or more of the items are checked, further analysis is necessary in order to establish the condition at the time of sale.
Questions 10 through 13 are finance questions. When financing reflects prevailing market practices and interest rates, which is ordinarily the case with third-party financing, sales prices would not require adjustments. However, adjustments or disqualifications may be considered if the type of financing is determined to be atypical or non-market.
Questions 14 through 16 are for purchases of property other than residential.
17. Signature: This is for validation by the person completing the form.
18. Address and telephone number: This is the telephone number and address to which all future correspondence regarding the property is to be sent. This is helpful when the property sold is not the physical address of the owner of record. The telephone number is used only to contact the person completing the form for additional clarification.
Personal property generally includes items like these: Free-standing, removable appliances, like refrigerators, range ovens, microwave ovens, humidifier/air purifiers, washers and dryers; carpet and pad; rugs; window coverings; unattached minor structures (dog houses, removable storage sheds and bins); vehicles; entertainment system (audio and video components, television, non-built-in speakers); portable/removable hot tub; satellite dish; pool table; kennel and/or temporary fencing; water cooler; furniture; rugs; wall air conditioner; exercise equipment; and individual art pieces.
Real property generally includes items like these: Built-in appliances, like cabinet refrigerator, built-in microwave, Jenn Air grill/cooktop; wall oven/double oven; furnace humidifier/air purifier; trash compactor, and garbage disposal; attic fan; ceiling fans; flooring: tile floors, hardwood floors, vinyl floors; central air conditioning; skylights and windows; intercom and security systems; garage door opener; furnaces and water heaters; water softener; barns and outbuildings; wet bar; hot tub; decking; landscaping; fixtures; drywall and paint; siding and brick interior; roof coverings; fireplace and inserts; and central vacuum cleaning system.