 Summary of a Colorado Foreclosure Documents Needed to Begin Foreclosure 1. ORIGINAL RECORDED Deed of Trust 2. ORIGINAL Note 3. A copy of the RECORDED Assignments, if applicable 4. A breakdown of the Arrearages, i.e. date the delinquency started, monthly payments, monthly late charges, and any other costs that may have been paid, i.e. taxes, insurance, property inspections, etc. In Colorado, a mortgage loan secured by real property is most generally created by a Deed of Trust, which contains a power of sale in a Public Trustee for the benefit of the mortgage lender when default occurs. Each county has a public trustee who conducts foreclosure sales for all real property located in that county. Before a public trustee may conduct a sale, a court order authorizing it must be obtained. Generally, a mortgage, as opposed to a deed of trust, must be judicially foreclosed. In order to initiate a public trustee foreclosure, the original promissory note and deed of trust must be filed with the public trustee, together with a Notice of Election and Demand for Sale (which is recorded in the real estate records); a Combined Notice of Sale and Rights to Cure and Redeem (which is published in the newspaper and mailed to all parties in interest); and a list of all parties who may have any interest in the property. If the original promissory note is lost, the lender/servicer may elect to post a lost document bond and conduct a public trustee foreclosure or proceed to foreclose through a judicial action and sheriff's sale. Usually, the later is less expensive (but, more time consuming) than the lost document bond. The list of all interested parties is determined by the law firm from the names and addresses found in a foreclosure guarantee. The foreclosure guarantee is obtained by the law firm upon receipt of a request to foreclose from the lender/servicer. The foreclosure guarantee contains the chain of title from the recording of the trust deed being foreclosed to the date of completion of the foreclosure guarantee. This title work will be updated two times during the foreclosure process to assure that all required notices to interested parties have been given, in the event other documents creating interests in the property, including IRS liens, come of record. Simultaneously with the filing with the public trustee of the above documents, a proceeding is started with the appropriate court by requesting the court to enter an order authorizing the public trustee to sell the property at a public sale. The only issues to be decided by the court are whether there is a default and whether any interested person is entitled to the benefits of the Servicemembers’ Civil Relief Act. Almost without exception, no objections are raised and the court enters the requested order. The public trustee must set a sale date not less than 110 days nor more than 125 days after the recording of the Notice of Election and Demand for Sale. If the property is agricultural property, this time-frame becomes 215 to 230 days. If a sale cannot be held for any reason on this sale date, the sale date may be continued for a period or periods. The sale may not be continued beyond one year from the first scheduled sale date. At any time prior to the sale, the owner of the property, or the party liable on the note or an inferior lienholder may "cure" the default if they filed a proper Notice to Cure. Assuming the default was in the installment payments, the party must pay all delinquent amounts on the note, together with any incurred costs (including attorney fees, public trustee fees and other costs) to the Public Trustee by noon of the day before the sale. If no "cure" occurs, the sale is conducted. The sale is physically held at the office of the public trustee. The bid has to be in the public trustees office at least 48 hours prior to the scheduled sale. The bid will contain a listing of all amounts required to "pay off" the loan, together with all attorney fees and costs, and public trustee fees and costs, to reach a total due on the loan. If the lender/servicer wishes to create a deficiency, it will bid less than the total owed and the original note will be returned marked with the amount still owing. The lender/servicer may then collect the deficiency by initiating a lawsuit to collect the unpaid balance on the Note. There are no statutory prohibitions against deficiencies in Colorado. The public trustee will issue a Certificate of Purchase to the successful bidder at the sale. This Certificate of Purchase is a negotiable instrument and may be transferred by the holder. Colorado has a statutory redemption period following the sale for inferior lienholders only, not for owners or liable parties. To qualify to redeem, any inferior lienholder must file with the public trustee within eight (8) business days of the sale a proper Notice of Intent to Redeem. By the fifteenth (15) business day after the sale, the public trustee obtains from the successful bidder the amount needed to redeem and provides it to all inferior lienholders who have filed a Notice of Intent to Redeem. Between the fifteenth (15) and noon of the nineteenth (19) business day after the sale, the most senior inferior lienholder who has filed a proper Notice of Intent to Redeem may redeem by paying the amount to redeem to the public trustee. Between noon of said day 19 and noon of said day 24, the second most senior inferior lienholder who has filed a proper Notice of Intent to Redeem may redeem, but this lienholder must pay both the successful bid and the amount owed the lienholders who redeemed already. For the third, fourth, etc. lienholder, this process continues in successive five day intervals. If the foreclosure sale generated a successful bid greater than what was owed on the mortgage being foreclosed, the public trustee disburses those excess funds to inferior lienholders in the order of their priority, but only to inferior lienholders who have filed Notices of Intent to Redeem, even though they had no real intent to redeem. If excess funds remain either because inferior lienholders have not filed Notices of Intent to Redeem or money remains after paying those inferior lienholders who filed Notices of Intent to Redeem, it will be paid to the owner(s)/debtor(s). If no redemption takes place, the successful bidder/holder of the Certificate of Purchase will become the owner of the property by operation of law the day after the last redemption period expires. A confirming Public Trustee's Deed will be issued by the public trustee and recorded in the public records. If eviction is necessary, a separate action must be commenced at the expiration of the redemption periods. |
| Colorado Capital – Denver The Centennial State Non - Judicial Colorado Bar Association Foreclosure *Last postponement sale date cannot
be more than 6 months after original sale date. |
