Foreclosures In Colorado
The following information is made available by Brian L. A Wess as a public service and is issued to inform, not to advise. No person should attempt to interpret or apply any law without the assistance of an attorney. The information provided here has been gathered from multiple sources including Colorado Legal Services and the El Paso County Office of the Public Trustee. Opinions expressed in this communication are those of the authors and not those of Brian L. A. Wess or his affiliates. It is intended as general information only, and is not meant as legal advice for any specific situation. If you need legal advice, consult an attorney.
Additional information about the Colorado foreclosure process can be obtained from the Colorado Revised Statutes, Articles 37, 38, and 39.
If you need advice on this or any other legal problem, contact an attorney of your own choosing. If you cannot afford an attorney, contact Colorado Legal Services: 303-837-1321.
If your property is in or nearing foreclosure and you can contact the Colorado Foreclosure Hotline at http://www.ColoradoForeclosureHotline.org
Alternatives to Foreclosure
What is a Short Sale and will it work for you?
Renters' Rights in Property Being Foreclosed (Click Here)
Notice: Colorado's Foreclosure Laws changed effective January 1, 2008. The information provided below pertains to foreclosures with a Notice of Election and Demand AFTER 1 January 2008.
For information on foreclosures with a Notice of Election and Demand PRIOR TO 1 January 2008 Click Here
Colorado is one of the only states in the United States that uses the Public Trustee Deed of Trust System for holding the deeds on a property. The Public Trustee's are appointed by the Governor of the State of Colorado and The Office of the Public Trustee is responsible for releasing Deeds of Trust and administering foreclosure proceedings on properties within their respective jurisdictions under Colorado law. The Public Trustee is an impartial third party who holds the Deed of Trust that secures the loan on a property for both the borrower & the lender.
The Foreclosure Process After 1 January 2008
Major changes were made to the foreclosure laws by the Colorado Legislature in 2006 and 2007. Foreclosures recorded before January 1, 2008 continue under the laws that were in effect before January 1, 2008 and foreclosures recorded after January 1, 2008 fall under the new law. The intent of the new law is to provide owners and borrowers with additional time to cure the default. The new law also provides protections against persons that prey on parties in foreclosure to obtain the equity in the property or the property itself.
The holder of a lein or Deed of Trust on a property must file certain documents with the Public Trustee’s office in order to start the foreclosure process. The foreclosure begins when the Notice of Election and Demand (NED) is recorded within 10 business days after the documents are received from the foreclosing lender in the Public Trustee's office.
For non-agricultural property, the sale of property takes place 110 to 125 calendar days after the NED is recorded. For agricultural property, the sale takes place 215 to 230 days after recording.
In order to cure, payment of the amounts in arrears plus costs and expenses of the foreclosure is required by the owner. On the other hand, redemption would require payment of the amount bid at sale and often the amount bid at sale is the entire amount of the secured debt which makes redemption much more costly. The owner will no longer have the ability to redeem property after the sale.
Foreclosure sales in El Paso County are conducted each Wednesday at 10:00 a.m. on the second floor in the building of the Office of the El Paso County Public Trustee (except when Wednesday is a holiday). A listing of all foreclosures going to sale is available for viewing at the Public Trustee office or on the El Paso Public Trustee web site.
The foreclosure must be commenced with the Public Trustee in the county where the property being foreclosed is located. The documents must be submitted by a Colorado-licensed attorney representing the lender of the loan in default. The Public Trustee records the Notice of Election and Demand (NED) within ten business days after receiving the documents from the lender’s attorney. Recording of the NED starts the foreclosure process.
The Combined Notice of Sale and Right to Cure and Redeem is sent to the parties on the Initial Mailing List no more than 20 calendar days after recording of the NED. The Combined Notice must be mailed again to persons on the supplemental mailing list 45 to 60 calendar days prior to the first scheduled sale date. The Combined Notice is published for five consecutive weekly publications unless a longer period is specified in the Deed of Trust or other lien being foreclosed.
The Public Trustee sets the sale date to be not less than 110 calendar days and not more than 125 calendar days from the date of recording of the NED for residential properties. For agricultural properties, the sale date is set not less than 215 calendar days nor more than 230 calendar days.
Parties interested in bidding must be personally in attendance at the sale and bid at least $50.00 over the lender’s submitted bid. Cash or certified funds for the full amount of the bid must be tendered to the Public Trustee at the time of sale.
After the Public Trustee is assured that funds are collected, a Certificate of Purchase will be issued by the Public Trustee and recorded at the office of the El Paso County Clerk & Recorder. The original Certificate of Purchase will be retained in the Public Trustee’s office. There will be no duplicate Certificate of Purchase and the successful bidder will not receive a Certificate of Purchase from the Public Trustee office. A copy of the recorded Certificate of Purchase can be purchased at the office of the El Paso County Clerk & Recorder.
After all redemption periods have expired, a Public Trustee’s Confirmation Deed will be issued. The interest under the Certificate of Purchase is fully assignable in writing. Written Assignments of the Certificate of Purchase should be recorded prior to being provided to the Public Trustee so that an accurate Confirmation Deed may be issued.
The Right to Cure
The borrower still has a right to cure monetary defaults. A cure is payment of the sum of all amounts in which the secured debt is in default. Written notice of intent to cure must be given to the public trustee at least 15 calendar days before the date of sale. The curing party must also provide evidence of the right to cure. When the intent is received by the public trustee, the notice of intent will be provided to the foreclosing party with a request for a statement of all sums necessary to cure. The sums necessary to cure include all amounts in which the secured debt is in default (including permitted costs and expenses of the holder and holder’s attorney), plus the fees, costs and expenses of the foreclosure sale. The use of good faith estimates is authorized, so long as the cure statement states that it is a good faith estimate effective through the last day to cure as indicated on the cure statement.
The foreclosing party will file a statement of the cure amount with the public trustee. The statement must also state the period for which it is valid. A cure statement is required to be effective at least until the earlier of 10 days after the date of the cure statement or the last day to cure, and for no longer than the earlier of 30 days after the date of the cure statement or the last day to cure. The cure amount must be paid to the public trustee no later than noon the day before sale.
The sale will be automatically postponed if the foreclosing party does not provide a statement of the sums due on or before noon of the 7th calendar day before sale. The sale will also be continued if the foreclosing party receives a request for a cure statement more than 30 days before the sale but does not provide a cure statement within 10 business days after receipt of the request.
If the sale is continued for failure to provide a cure statement and a cure is subsequently made, interest is allowed at the regular rate provided in the evidence of debt for the period the sale was continued. If no cure is made, interest at the default rate is allowed for that period.
Waiver of the right to cure, or an agreement to shorten the time period to exercise a right of cure, made before the date of default under the instrument evidencing the lien being foreclosed, or under the evidence of debt secured by the lien being foreclosed, is void against public policy.
As the result of the changes in the foreclosure law, owners no longer have a right to redeem the property. Only lienors or assignees of lienors may have a right to redeem. Redemption rights are available to holders of interests that are junior in priority to the lien foreclosed. A junior lien is a Deed of Trust or other lien/encumbrance subordinate to the Deed of Trust or other lien being foreclosed. Under the new law, to protect property owners and prevent misuse of the redemption process, the junior lien must be recorded prior to the Notice of Election and Demand being issued and recorded.
In addition to a great many other requirements, the holder of the junior lien must file the intent to redeem within 8 business days after the sale. The notice of intent to redeem may be filed late if no lienor junior to their lien has redeemed; their redemption period has not expired; all redemption periods have not expired; and, the intent is accompanied by written authorization from the attorney or the certificate of purchase holder authorizing the public trustee to accept late notice.
Redemption dates are set 9 business days after the sale date. The most senior lienor may redeem 15 to 19 business days after the sale but no later than noon of the final day. Each subsequent lienor has an additional 5 business days and must redeem by noon of the final day. Redemption periods are not shortened if someone redeems early.
There can be no partial redemptions. A lienor holding a lien on less than all of, or a partial interest, in the property sold at sale must redeem the entire property, however short redemptions are allowed with the proper authorizations and paperwork.
After the end of all redemption periods, a Confirmation Deed is issued to the Certificate of Purchase holder or the last redeeming lien holder. Title vests free and clear of all liens and encumbrances subordinate or junior to the foreclosed lien.
Other Types of Foreclosures In Colorado
While most foreclosures in Colorado are conducted by the Public Trustee, not all are. Another type of foreclosure is called judicial foreclosure. In a judicial foreclosure action, you must be served with a Summons and Complaint and the papers will request that the court issue a decree allowing that party to conduct a foreclosure sale. While not common, this type of action would be initiated by a party who may have a lien on your property. In a judicial foreclosure action, you must file an Answer with the Court no later than the date listed in the Summons or the Court may enter a default judgment against you granting the request sought in the Complaint. If you are going to file an answer, you must pay a filing fee to the court or seek to have it waived if you are indigent. If you have questions about the status of this a judicial foreclosure action, please call the court where the papers were filed. In a judicial foreclosure, then the sale is conducted by the Sheriff's Office of the county where your house is located rather than the Public Trustee but the law that applies to the foreclosure process is identical.
In very rare instances and only with certain HUD loans, a borrower might receive a notice stating that a foreclosure sale will be conducted by someone from the Department of Housing and Urban Development (HUD). If so, then immediately contact the person listed on the notice for any information and seek legal assistance as different rules may apply to this type of foreclosure.
Levy by Writ of Execution
In rare instances, the holder of a lien may request that a court issue a Writ of Execution requesting that the Sheriff order the house and any personal property sold to satisfy an unpaid debt. The Sheriff cannot levy on any property that is exempt, or protected by law, from execution. Colorado law provides that certain property is protected from execution. For example, the newly increased homestead exemption in Colorado currently permits a homeowner to protect up to the value of $60,000 ($90,000, if over 60 or disabled) in property that is occupied as their primary residence.
Request for Issuance of Tax Deed
Finally, while not technically a foreclosure, another way in which a homeowner can lose their house to satisfy an unpaid debt is where a tax lien is recorded against the property for unpaid property taxes. If property taxes are not paid when due, then they go to tax lien sale in the fall of each year and the purchaser obtains a lien on the house. The homeowner has three years to redeem, or pay off, the tax lien before the purchaser is eligible to apply for a tax deed to the house and becomes the owner of the property.
Additional information about the Colorado foreclosure process can be obtained from the El Paso County Office of the Public Trustee or the Colorado Revised Statutes, Articles 37, 38, and 39 which may be obtained by contacting Bradford Publishing at 1-800-446-2831.