Colorado Foreclosure Process & Timeline

Foreclosure rules in Colorado are shaped by the title theory of property ownership. This states that the property is owned by the lending agent until the mortgage contract is completed in full. The trust deed confers ownership to the lender until the debt is paid. When a foreclosure occurs in Colorado, it is typically completed within 60 to 70 days, unless the borrower chooses to fight the foreclosure.

Foreclosure Methods

Colorado gives the lending agent two ways to foreclose on property. The judicial method requires the lender to file a lawsuit against the borrower for the defaulted amount. The court will usually allow the borrower a specified amount of time to make the necessary payments. If this deadline is not met, then the court will order the home to be sold at auction to the highest bidder. A nonjudicial foreclosure allows the lender to foreclose, without a court order, by adding a power of sale clause to the mortgage contract. This clause gives the lender the authority to foreclose on a property once the loan has defaulted.

Power of Sale

The power of sale clause usually contains the procedures that must be followed in order to complete the foreclosure process. If this information is not in the clause, then the statutes of the state of Colorado become effective. The lending agent begins the process by filing paperwork with the county in which the home is located. Once this is accomplished, the notice must also be placed in a local newspaper for at least five successive weeks. During this time, the county will mail a copy of the foreclosure information. This must be done within 10 days after the notice is published in the newspaper. The sale must occur within 45 and 60 days after the paperwork is filed with the county.

Deficiency

Once the sale is completed, the lending agent has the right to file a deficiency suit against the borrower. A deficiency occurs when the home sells for less than the balance due on the loan. The lender can use a deficiency suit to force the borrower to pay the difference.

Right of Redemption

The borrower can still retain the property after the sale is completed. This can be accomplished by paying the entire balance of the loan, plus any costs associated with the foreclosure process. The borrower has 75 days from the close of the auction to exercise this right of redemption.