Foreclosures For Sale Updated On: 03/17/10
Colorado Foreclosure Laws
Colorado Foreclosure Laws
Colorado chiefly functions as a title theory state wherein the title of a property stays as security till the payment of the said loan takes place in full. Foreclosure, in this theory, is non-judicial. A deed of trust is a document that keeps the title secured.
In Colorado, mortgages can also act as liens on property and to pursue judicial foreclosure through courts.
The provision of a power of sale within a deed of trust hastens the foreclosure procedure and is therefore the primary method used to foreclose fast.
A non-judicial foreclosure is the primary method followed to foreclose on a property in Colorado. In this method, no court action is needed, but an election to foreclose is needed. To foreclose on the property to satisfy the loan that has been defaulted on, a trustee can make use of the power of sale clause which is generally included in the trust deed at the initial signing stage. The trustee, in Colorado, functions through the Office of Public Trustee and is a part of the local government. The public trustee works as the lender’s representative to bring about the sale, which is generally a public auction.
This being a non-judicial recourse, very strict requirements for notices, and the inclusion of the power of sale clause in the mortgage is essential to follow this manner of foreclosure.
A Notice of Election and Demand with the Public Trustee must be filed by the lender before initializing the foreclosure process. This needs to take place in the County where the property is situated. This notice must be recorded at the office of the recorder by the Public Trustee, earlier than ten business days from the day the notice is filed.
The notice’s copy then has to be published in a general circulation newspaper in the county where the property is, for a period of five successive weeks, at least once every week. The notice should be mailed to the borrower who has defaulted not later than twenty days of the first publication. Recording of the notice of sale needs to be done with the recorder in the area where the property is situated.
The notice of sale must have information in regards to the time and place of the sale, the date, the default’s description, the election to sell by the lender and information recorded from the deed of trust. If the owner of the property files a notice for intent to cure with the Public Trustee a minimum of fifteen days prior to the foreclosure sale and if the loan in question is made current at least by the noon of the day before the scheduled sale day, foreclosure proceedings can be terminated.
After the Notice of Election and Demand is filed, the foreclosure sale needs to take place within the next 45 to 60 days. A process referred to as the Rule 120 hearing needs to take place before the date of the auction sale to establish if the file of the foreclosure is legally adequate. If the borrower who has defaulted fails to respond when a notice of the hearing is given, the hearing can be cancelled.
Lenders in Colorado can also opt for a judicial foreclosure which takes place through a court, and it is the court that pronounces the final ruling on the foreclosure. The lender has to seek judicial foreclosure if the power of sale clause is missing from the deed of trust. The property then sells as part of a sale that has been publically notified. A complaint, along with a lis penden, needs to be filed in court. A lis penden is a legal document that is used to provide a notice to the public about the property that is going to be foreclosed upon.
The paperwork is generally referred to as a deed of trust, and in cases of commercial transactions, a security agreement. The security agreement is, at times, merged with the mortgage document. A mortgage can also be filed to authenticate the loan in question and its repayment terms, which find a mention in the note.
It generally takes about 60 to 70 days to bring into effect a non-judicial foreclosure that hasn’t been contested; this does depend on the time required by various notices. If the action is contested in the court by the borrower, if delays are sought, if the sale is sought to be postponed or if the borrower files for bankruptcy, the process can be stalled.
A statutory right for redemption exists in Colorado. A period of 75 days is given to the borrower to take care of the unpaid loan, unpaid taxes and the costs, so that the property can be reclaimed. Intent to redeem must be filed by the borrower at least 15 days before the redemption period is over. The property owner then, within a period of eight days, receives a payoff number for redeeming. This gives the owner of the property time to organize the payoff amount.
If a foreclosure property sells for lesser than the amount that is remaining on the loan, a deficiency judgment can be obtained by the lender. The owner of the property can present proof that the bid placed by the lender is lesser than a good faith estimate on the property’s value, and if this is successful then a deficiency judgment can be avoided.
Foreclosures in Colorado are governed by laws that are part of Title 38 Colorado Revised Statutes (Property Real and Personal) and Article 37 (Office of Public Trustee), Article 38 (Foreclosure Sales), Article 39 (Mortgages, Deeds of Trust.
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