Escrow & Title
In Colorado, a 'title exception' in a title insurance policy is:
AA. A covered risk under the policy
BB. A specific matter excluded from the policy's coverage, such as an easement or covenant listed on Schedule B-II✓ Correct
CC. An additional endorsement adding coverage
DD. An error in the property description
Explanation
Title exceptions (Schedule B-II in a Colorado title commitment/policy) are specific items excluded from coverage — typically because they are already known and accepted encumbrances (easements, CC&Rs, mineral reservations, HOA covenants). The buyer accepts these known exceptions as part of taking title.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
EasementA non-possessory right to use another person's land for a specific purpose.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
Abstract of TitleA condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.
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