Law on Foreclosures in Colorado

State law determines whether the process for a foreclosure is judicial -- in court by lawsuit -- or nonjudicial. About half of all states require a judicial proceeding. About 20 states, including Colorado, allow the lender to choose which process to use. Judicial foreclosures are not common.

Nonjudicial Process

In the nonjudicial process in Colorado, which is the process most lenders use because it is quicker and cheaper, the lender first sends a Notice of Election and Demand to the public trustee for the county in which the property is located. The trustee records the notice with the county recorder's office within 10 days, publishes the notice at least once a week for five consecutive weeks and mails a copy to the borrower at least 20 days after the first publication. Before a sale is permitted, what is known as a Rule 120 hearing must take place in court, in which a judge must find that lender has a right to foreclose and sell the property. If the borrower does not contest he is in default no hearing is held and the judge issues the order.

Judicial Process

In the judicial process, the lender files a lawsuit against the borrower and records a lis pendens -- notice of pending lawsuit -- with the county recorder. The lender serves the borrower with the complaint, which allows for the borrower to respond within a limited time frame. If the borrower responds, the court sets a hearing, issuing a judgment after both parties have had an opportunity to make their cases. If the borrower fails to respond, a more expedited ruling is issued. If the court issues a judgment in the lender's favor, the property is approved for sale.

Redemption

A redemption period is a period of time after a foreclosure sale during which the borrower can buy back or "redeem" his house by paying the new owner, usually the lender, the price paid at auction plus certain other costs that may include foreclosure costs and closing costs. A number of states have redemption periods. Colorado does not. However, up to eight days after the sale junior lien holders may redeem the property by filing an intent to redeem with the public trustee's office.

Deficiency Judgments

A deficiency judgment is a court judgment against the borrower for the difference between the proceeds of the foreclosure sale and the unpaid loan. Most states permit lenders to file for deficiency judgments. A few states limit the circumstances under which a lender may do this. Colorado does not. A lender may go after a borrower's other assets through this process.

References

• RealtyTrac: Foreclosure Laws and Procedures by State
• RealtyTrac: Colorado Foreclosure Laws
• Foreclosure.com: How Are Trust Deeds or Mortgage Liens Treated in Colorado?
• Connecticut General Assembly; Comparison of State Laws on Mortgage Deficiencies and Redemption Periods; James Orlando; July 2010
• Frascona, Joiner, Goodman and Greenstein, P.C.; Colorado Foreclosure Process and Time Frames; Oliver Frascona