Colorado Foreclosure Law
The Colorado State Foreclosure Law dictates that lenders may avail of the Judicial and Non-Judicial Foreclosure processes to foreclose deeds of trusts or mortgages in default. The typical time of process last about 60 days and the deeds of trust and mortgages are the security instruments used. Deficiency Judgments and the Right of Redemption may be used.
Judicial Foreclosure is used when no power of sale exists in the security instruments. Petitioners must file a lawsuit in order to obtain a court order to foreclose. It has been a general practice that when the court declares a foreclosure, the property will be auctioned off and will subsequently be awarded to the highest bidder. When this type of process is used, the lenders may petition for a deficiency judgment, and under certain circumstances, the borrower will have a maximum of one year to redeem the property.
On the other hand, Non-Judicial Foreclosure is used when a power of sale clause is expressed in the security instruments. “Power of Sale” is the process wherein the borrower agrees to sell the property in dispute to settle the remaining balance from a loan in case of default. Its most obvious difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property as it is already stated in the security instruments. The lender or their duly designated representative, commonly referred to as the “trustee,” may execute the “power of sale”.
Colorado Power of Sale Foreclosure Guideline
The Colorado foreclosure process differs from other states because here, the governor appoints a “Public Trustee” for each county within the state. The trustee must be impartial in handling a power of sale foreclosure. The non-judicial foreclosure should be carried out as follows:
- The lender, through an attorney, must file the required documents with the Office of Public Trustee of the property’s county. The Trustee would then file a Notice of Election and Demand with the county clerk and recorder of the county. Once recorded, the notice must be published in a county newspaper of the property’s locale for 5 consecutive weeks.
- The Trustee must mail, within 10 days of the first publication of the notice, a copy of the notice, as published, to the borrower and any party of record, at the last known recorded address. The Trustee must also mail a notice to the borrower on how to redeem the property, at least 21 days before the foreclosure sale.
- The borrower may stop the foreclosure proceedings by filing an “Intent to Cure” with the Office of the Public Trustee at least 15 days before the foreclosure sale and pay the needed amount to bring the loan current on or before noon prior to the day of the sale.
- The foreclosure sale must take place between 45 – 60 days after the recording of the notice with the county clerk and recorder. The Trustee may hold the sale at the courthouse entrance, unless otherwise specified in the deed of trust.
The lender may file a deficiency suit and the borrower will be given up to 75 days after the sale to redeem the property by paying the property’s acquisition amount, plus interest.
Colorado Foreclosure Help - Denver Regional Office - Dept. of Housing and Urban Development
1670 Broadway
Denver, Colorado 80202-4801
Phone: (303) 672-5440
Fax: (303) 672-5004
TTY: (303) 672-5022
Jurisdiction: State of Colorado
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