Foreclosure Process Prior to Sale

A Public Trustee foreclosure is one of the options generally available to a lender when a borrower has defaulted on a loan that is secured by a Deed of Trust encumbering real property. To commence a Public Trustee foreclosure, the foreclosing lender or the lender’s attorney files the documentation required by Colorado Revised Statute § 38-38-101, in the office of the Public Trustee of the county where the property encumbered by the Deed of Trust is located.

• After the Public Trustee receives the required documents and fees, the Public Trustee records a Notice of Election and Demand with the County Clerk and Recorder. The initial foreclosure sale date is set for a date between 45 and 60 days after the date the Notice of Election and Demand is recorded. A Notice of Public Trustee Sale is published in a general circulation newspaper in the county where the Property is located for five consecutive weeks (or longer if required by the Deed of Trust). A Notice of Cure and Redemption Rights is also mailed, along with copies of certain foreclosure statutes, to persons specified by statute based on a list of those persons provided to the Public Trustee by the foreclosing lender or its attorney. A copy of the published Notice of Public Trustee Sale is mailed to everyone on the mailing list.
• Before the Public Trustee foreclosure sale, if the default that the foreclosure is based on consists only of nonpayment of sums due under the Deed of Trust or the debt it secures, the owner of the property, or any person liable on the debt secured by the deed of trust being foreclosed, or any guarantor of that debt, has the opportunity to cure the default on which the foreclosure is based. In addition, if the Deed of Trust was recorded after October 1, 1990, then junior lienors, lessees, vendees, or the holder of an easement or a Certificate of Purchase holder on the property based on a recorded instrument also may cure the default.

In order to cure, a person must file a Notice of Intent to Cure with the Public Trustee's office at least 15 days prior to the foreclosure sale date with the document(s) evidencing the person’s right to cure attached to the Notice. If a Notice of Intent to Cure is filed, the Public Trustee will request cure figures from the foreclosing lender, and the sum required to cure must be paid to the Public Trustee by noon of the day before the foreclosure sale.

Often, a property will not go to sale on the originally scheduled sale date. This may happen for several reasons such as the following:

The foreclosing lender’s attorney did not provide cure figures or the written foreclosure sale bid to the Public Trustee in the required time frame; The property owner has filed bankruptcy and the foreclosure process is stopped; such a foreclosure is said to be “stayed by bankruptcy” and the Public Trustee cannot proceed with foreclosure until the bankruptcy stay is removed; or The foreclosing lender requests that the sale be extended.

The foreclosing lender or its attorney can continue the sale one or more times for a total of up to six months from the initial sale date, plus any time the sale is stayed by bankruptcy or court injunction. If the foreclosure sale is not held within the required time period, the foreclosure must be withdrawn. The Public Trustee must receive the written request to continue the sale before commencement of the sale.

Foreclosure Sale Process

The foreclosing lender must submit a written bid to the Public Trustee no later than noon on the day before the scheduled sale date. If a bid is not received when due, the sale is continued for at least a week. Bids are available after 2:00 p.m. the day before the scheduled sale date.

Except for the bid of a foreclosing lender up to the total sum secured by the deed of trust being foreclosed, bid funds must be delivered to the office of the Public Trustee by noon the day of sale. An original Certificate of Purchase is issued to the highest bidder who has timely delivered bid funds to the Public Trustee, and a duplicate is recorded with the Clerk and Recorder. The Certificate of Purchase is assignable.

After the Foreclosure Sale

The owner of the foreclosed property or anyone liable after the foreclosure sale for any amount by which the foreclosing lender’s bid was less than the total sum secured by the deed of trust being foreclosed (called a deficiency) has 75 days after the sale date to redeem the property, unless the property is agricultural, in which case the redemption period is six months. Agricultural property for this purpose means that none of the property being foreclosed is: all or part of a platted subdivision; located within an incorporated city or town; or assessed by the assessor of the county in which the Property is located as other than agricultural land.

An owner intending to redeem his or her property must file with the Public Trustee an Owners Intent to Redeem. The Notice of Owners Intent to Redeem must be filed with the Public Trustee at least 15 days prior to the end of the owner's redemption period. The Public Trustee will then obtain redemption figures from the Certificate of Purchase holder. If the holder does not timely provide those figures, the Public Trustee will calculate the redemption amount. An owner must pay the redemption amount to the Public Trustee by the close of business on the final day of the owner’s redemption period. The Public Trustee cannot extend the owner’s redemption period or accept late redemption payments.

If an owner redemption occurs, the foreclosure sale is annulled, and the owner retains title to the property subject to all liens which would have existed if the sale had not occurred, except for the Deed of Trust that was foreclosed upon which is discharged by the foreclosure sale.

If no owner redemption occurs, certain lienors with liens with priority junior to the deed of trust foreclosed (generally those liens recorded after the foreclosed trust deed) have the right to redeem. In order to redeem, a junior lienor must have a mortgage, Deed of Trust, a lien created or recognized by State or Federal statute, or a judgment from a court of competent jurisdiction. In any case the lien must be evidenced by an instrument recorded at least 15 days prior to the end of the owner redemption period.

Junior lienors must file a Notice of Intent to Redeem with the office of the Pubic Trustee. There is a fee of $50.00 for each intent filed. All junior lienor Notices of Intent to Redeem must be filed no later than 15 days before the end of the owner's redemption and must have attached to them copies of the recorded instrument(s) evidencing the lien with recording evidence affixed by the county clerk and recorder’s office and an affidavit signed by the junior lienor or the lienor’s attorney setting forth the amount required to redeem that lienor’s lien. If more than three consensual liens (liens granted voluntarily by the property owner) encumbering the foreclosed property are recorded after the recording of the Notice of Election and Demand that commenced the foreclosure, only the holders of the three most senior of such consensual liens who have filed timely and proper Notices of Intent to Redeem have a right to redeem.

Junior lienors are entitled to redeem in the order of seniority as shown by the County Clerk and Recorder’s records based on the recording of the instruments evidencing their liens. The first (most senior in priority based on the recorded documents) junior lien holder has 10 days to redeem the property after the owner redemption period ends, and each subsequent junior lien holder then has five additional days to redeem the property.

If a federal tax (IRS) lien or other federal government agency lien (such as an SBA deed of trust) is a junior lien against the property, the federal agency may redeem under either the Colorado law procedures described above or under federal law. If the federal agency files a Notice of Intent to Redeem as a junior lienor under Colorado law, they will be allowed the same redemption rights, and be required to meet the same redemption requirements and time limits, as other junior lienors; whether or not the agency files a Notice of Intent to Redeem will not affect the right of the agency to redeem under federal law.

An original Certificate of Redemption is issued to the each lienor redeeming (which must be surrendered for the lien to be paid upon a subsequent redemption) and a duplicate is recorded at the clerk and recorder’s office. The Certificate of Redemption is fully assignable. A $30.00 Certificate of Redemption fee, plus recording fees, is added to the redemption amount.

A Public Trustee Deed is issued to the holder of the Certificate of Purchase if there is no owner redemption and no junior lienor. If one or more junior lienor redemptions occur, the Public Trustee Deed is issued to the last redeeming junior lienor after the expiration of all redemption periods. There is a $30.00 fee for a Public Trustee Deed, plus recording costs.

Form of Payments to the Public Trustee

All payments to the Public Trustee must be made by cash, wire transfer or certain guaranteed types of checks such as certified or cashier checks – personal checks are not accepted. See C.R.S. § 38-37-108.

Recording Fees

The fee for recording documents in the office of the county Clerk and Recorder is $6.00 for the first page and $5.00 for each additional page for letter or legal size documents.

Additional Information

Additional information about the foreclosure process can be obtained from Articles 37, 38 and 39 of Title 38 of the Colorado Revised Statutes (C.R.S. § 38-37-101 to 113, § 38-38-101 to 701, § 36-38-101 to 209) which may be found at www.leg.state.co.us.