1 A borrower's right to reacquire property lost due to a foreclosure.
2 A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
Colorado foreclosure law details
Lenders in the state of Colorado may foreclose on deeds of trusts or mortgages in default using either a non-judicial or judicial foreclosure process.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property. This type of process is generally used when no power of sale is present in the mortgage or deed of trust. A power of sale is a clause found in a deed of trust or mortgage that authorizes the sale or transfer of land as outlined by the terms of that clause.
Non-Judicial Foreclosure
If a power of sale clause exists in the deed of trust or mortgage document, a non-judicial process of foreclosure is used. This allows the lender to sell the property and pay off the balance of the loan in the event the homeowner defaults. The power to sell may be completed by the lender or their representative in situations where a power of sale exists. The procedure for this type of foreclosure process is explained in the "Power of Sale Foreclosure Procedure" listed below.
Power of Sale Foreclosure Procedure
If the deed of trust or mortgage has a power of sale clause and it details the time, place and terms of sale, then the outlined procedure must be followed. However, if the power of sale clause, does not clarify the time, place and terms of sale, then a foreclosure sale must be handled in the following manner:
- The trustee must record a notice of sale in the office of the recorder of the county where the property is located. The lender's or trustee's notice of default and intention to sell shall be mailed within thirty (30) days of the recording of the notice by certified mail to the borrower. Also receiving notice of the sale is the borrower or anyone whom the lender has on record as receiving such notices, and anyone who has filed a Request for that specifically described the lender and the recording information.
- The trustee must mail, by certified mail, a copy of the notice of sale to each of the people who are parties to the trust deed, excluding themselves, within five (5) days after the notice is recorded. The notice of default and intention to sell must be advertised in a newspaper in the county where the property is located once a week for four (4) successive weeks, with the last notice being published not less than ten (10) days prior to the date of the sale.
- The notice of default and intention to sell must contain specific language. In noticeable type, the following warning must appear in the default notice: "YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT TAKE IMMEDIATE ACTION". Other information included: the time, date, and place of sale, the names of the parties to the mortgage or deed of trust, a legal description of the trust property and, if applicable, the street address of the property, the book and page numbers where the mortgage or deed of trust is recorded or the recorder's document number, the default for which foreclosure is made, and the lender's or trustee's intention to sell the property to satisfy the obligation.
- Anyone may bid at the public auction sale. The highest bidder is the winner. The lender, or their trustee acting upon their behalf, may bid. The winning bidder may choose to either pay the bid price at the time of sale or is allowed to pay it within ten (10) days after the sale. The lender may bid on credit by canceling out what it is owed on the loan, including unpaid taxes, insurance, costs or sale and maintenance. However, if the lender chooses to bid any amount higher than that, the bid must be for cash.
- The trustee may postpone the sale for up to seven (7) days past the original date by giving public notice at the place and date last appointed for sale. A sale postponed for more than seven (7) days requires that the entire notice procedure including the sixty (60) day waiting period be performed again.
The profits from the sale first go to pay for the expenses of the foreclosure sale. Any remaining amount will be applied to the obligations secured by the trust deed that was foreclosed and then to junior lien holders in order of their priority. If there are any remaining funds, they are given to the original borrower. The successful bidder receives the trustee's deed.
The borrower is not entitled to a right of redemption under a power of sale foreclosure proceeding.
The lender is allowed to sue the borrower for any deficiency within twelve (12) months of a power of sale clause foreclosure. The lender may sue for (1) the difference between the foreclosure sale price and the balance due on the loan, or (2) the balance due on the loan minus the fair market value of the property, whichever is less.