Title problems on HUD homes: what HUD fixes, what it does not, and the deed you actually get

A HUD home was a foreclosure before it was a HUD home. Foreclosures leave marks on title. Most are cleaned up before you ever see the listing, but a few are not, and the deed HUD signs at closing is narrower than the one a normal seller gives you. Here is what to expect.

The deed: special warranty, not general warranty

A normal Colorado seller signs a general warranty deed. That promises the title is clean going all the way back. HUD signs a special warranty deed. That only promises HUD itself did nothing to cloud the title while it owned the house. Anything from before HUD took the property is not HUD’s promise.

In practice this is why the closing agent will push you to buy an owner’s title insurance policy. It costs a few hundred dollars once, and it is the thing that actually protects you against an old lien or a bad legal description. Buy it.

What HUD clears before closing

• The foreclosed mortgage and its junior liens. The foreclosure wiped these out. The title company confirms it.
• HOA dues from HUD’s ownership period. HUD pays what it owes through closing. Older unpaid dues are usually cut off by the foreclosure, with one Colorado wrinkle covered in our HOA post.
• Property taxes through the closing date. Prorated on the settlement statement like any sale.
• Recording problems in HUD’s own chain. If the deed into HUD was never recorded correctly, HUD’s closing agent fixes it, and that is the usual reason a HUD closing slides two or three weeks.

What HUD does not fix

• Easements, plats and covenants. The utility easement across the back yard and the 1962 covenants stay. Read the title commitment’s Schedule B exceptions.
• Unpermitted work. A garage conversion with no permit is not a title problem to HUD. It is your problem after closing.
• Survey issues. HUD does not order a survey. If the fence is two feet onto the neighbor, you find out from your own improvement location certificate, if you order one.
• Squatters or holdover occupants. Rare on HUD homes because HUD keeps them vacant, but HUD does not guarantee possession beyond what the deed conveys.

A plain-English example

A buyer we worked with bid on a Commerce City HUD home. The title commitment showed a 2015 mechanic’s lien for $4,200 that had never been released. HUD’s closing agent obtained the release because the lien predated HUD but sat on the property while HUD owned it and blocked a clean conveyance. Closing moved from day 45 to day 58. HUD granted the extension at no charge because the delay was on HUD’s side. The buyer paid nothing extra and got an owner’s policy at closing.

Who closes a HUD sale in Colorado

HUD contracts with a closing agent for each region. You can use HUD’s closing agent, or ask to use your own title company. If you use your own, your bid needs to say so and you may pay the extra settlement fee. Either way HUD’s agent handles the deed.

What to do

1. Read the title commitment the week it arrives, not the week of closing.
2. Buy the owner’s title policy.
3. Ask your agent whether any delay is HUD’s, because HUD-caused delays should not cost you an extension fee. How extensions work.

Not sure which rule applies to the house you are looking at? Call or text 303-955-4220. A live person answers, and the answer is free.

Written and reviewed by

Brian Lee Burke, Colorado HUD home specialist and team leader

Licensed Colorado real estate professional since 2002 · REALTOR® · Team leader and licensed broker of the Kenna Real Estate Group at Keller Williams DTC, a HUD-registered group that regularly bids on HUD homes · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.

Last reviewed: September 8, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna Real Estate Group’s own HUD transaction files.

Contact: call or text 303-955-4220 or homes@kennarealestate.com. During office hours you reach a live local Kenna real estate professional, not a robot or a national call center. Brokerage: Kenna Real Estate Group at Keller Williams Realty DTC, LLC, 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna Real Estate Group is an independent real estate team and is not affiliated with or endorsed by HUD or any government agency; official property information comes from HUD Home Store. Equal Housing Opportunity.

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