The majority of Colorado foreclosures are completed through the state’s unique public trustee system, which is different from all other states. If you're a homeowner facing foreclosure in Colorado, you probably have many questions about what this means for you. For example: How does the Colorado public trustee foreclosure process work? How much notice will you get before the foreclosure sale takes place? Does Colorado allow you catch up on the past-due amounts to stop the foreclosure? Can the foreclosing party get a deficiency judgment after a Colorado foreclosure?
To get answers to these questions and more, keep reading. Below you’ll find a summary of some of the key features of Colorado’s foreclosure laws along with citations to the statutes so you can read the laws yourself.
Colorado's main foreclosure laws are summarized below.
Colorado uses a process that's different than other states when it comes to nonjudicial foreclosures. In Colorado, a county public trustee administers the foreclosure. In other states, a private trustee handles the nonjudicial process. Also, a Colorado nonjudicial foreclosure has some minimal court involvement.
A court’s involvement in a Colorado nonjudicial foreclosure is confined to when the attorney representing the foreclosing party files a motion under Rule 120 of the Colorado Rules of Civil Procedure asking a court for an order authorizing the foreclosure sale by the public trustee. The court sets a hearing—called a Rule 120 hearing—which is a limited inquiry into certain issues, like whether the borrower is in default or in the military and subject to protections under the Servicemembers Civil Relief Act.
In a Colorado nonjudicial foreclosure, the borrower will receive several notices. These notices are explained in more detail below, along with some additional information about the foreclosure process.
Preforeclosure notice. In Colorado, in most cases, at least 30 days before filing the Notice of Election and Demand (see below) and at least thirty days after default, the foreclosing party must mail the borrower a notice containing the phone number for the state foreclosure hotline and a direct phone number for the foreclosing party’s loss mitigation department. (Colo. Rev. Stat. § 38-38-102.5).
Notice of Election and Demand. To start the foreclosure, the foreclosing party’s attorney submits the foreclosure documents, including a Notice of Election and Demand (NED), to the public trustee. (Colo. Rev. Stat. § 38-38-101). The public trustee records the NED with the county clerk and recorder. (Colo. Rev. Stat. § 38-38-102).
The public trustee sets the sale date to take place not less than 110 calendar days and not more than 125 calendar days from the recording date of the NED. (If the property is agricultural, this time frame becomes 215 to 230 days.) (Colo. Rev. Stat. § 38-38-108).
Combined Notice of Sale and Right to Cure and Redeem. The public trustee mails a combined notice of sale and right to cure and redeem (which includes the date and place of sale, among other things) to the borrower at two separate times. (Colo. Rev. Stat. § 38-38-103).
The public trustee also publishes the notice in a newspaper. (Colo. Rev. Stat. § 38-38-103).
Notice of Rule 120 hearing. Notice of the Rule 120 hearing must be mailed to the borrower and posted on the property not less than 14 days prior to the response deadline. If the borrower doesn’t respond to the notice to dispute the foreclosing party’s right to sell the home (on grounds within the scope of the hearing), the court will cancel the hearing and authorize the sale. (Colo. R. Civ. P. 120., Colo. Rev. Stat. § 38-38-105).
“Reinstating” is when you catch up on the missed payments, plus fees and costs, in order to stop a foreclosure.
In Colorado, the borrower can cure the default and reinstate the loan prior to the sale. To do this, the borrower must file a notice of intent to cure with the trustee no later than 15 calendar days prior to the sale date and then pay the total amount due to the public trustee before noon on the day before the sale. (If the figures in the cure statement have expired, but the last possible time to cure the default has not expired, you may request updated cure figures, though the request must received at least 15 calendar days prior to the sale date.) (Colo. Rev. Stat. § 38-38-104).
In some states, the foreclosed homeowner may redeem the home within a certain period of time after the foreclosure. In Colorado, though, foreclosed homeowners don't get the right to redeem the home following the foreclosure. Only lienholders may redeem after the sale. (Colo. Rev. Stat. § 38-38-302).
When the borrower's total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment, called a “deficiency judgment,” against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
Colorado does not have an anti-deficiency law. The foreclosing party can obtain a deficiency judgment after a nonjudicial foreclosure by filing a separate lawsuit within six years. (Colo. Rev. Stat § 4-3-118). But if the lender does not bid the fair market value of the home at the foreclosure sale, the former homeowner may raise this as a defense in the deficiency action. (Colo. Rev. Stat § 38-38-106).
After a Colorado foreclosure, the purchaser must make a demand for possession. If the borrower does not vacate (leave), the purchaser can initiate an eviction lawsuit.
The citations to Colorado foreclosure statutes are: Colorado Revised Statutes Sections 38-38-100.3 through 38-38-114. You can find a link to the Colorado Revised Statutes on the Colorado General Assembly’s website.
Statutes change, so checking them is always a good idea. (If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.) How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you’re facing a foreclosure.
If you have questions about the foreclosure process in Colorado or want to learn about potential defenses to a foreclosure, consider talking to a foreclosure lawyer. It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation (foreclosure avoidance) options.