Foreclosures in Colorado

In a perfect world, all mortgages and loans would be paid on time and paid off. Unfortunately, not everyone can meet the demand of their loan or keep up with home payments. That’s when the foreclosure process begins in Colorado.

The foreclosure process can be difficult for homeowners, lenders, and more, but much of the fear in foreclosures comes from not understanding the process. While every state has its own foreclosure process, we want to focus on foreclosures in Colorado including how the Colorado redemption period on foreclosures works, information about notice of election and demand in Colorado, what a public trustee is, and much more.
Foreclosures in Colorado

The Colorado Foreclosure Process

To understand how the Colorado foreclosure process operates, it’s best to understand certain terms:

  • Delinquent Payments – A loan is considered delinquent one day after its due date.

  • Defaulted Loans – A loan is considered in default when a payment is 30 days past its due date.

  • Foreclosure – The term foreclosure means the loan file has been transferred to an internal department. The department is tasked with deciding if and when the loan should be sent to attorneys to begin the foreclosure process.

  • Power of Sale – Language in a deed or trust that implies instructions for sale if the loan defaults.

  • Public Trustee – A county official that acts as an impartial agent during the foreclosure process.

For most foreclosures, the process begins with a defaulted loan or payment. After the mortgage or loan reaches default, the deed goes into non-judicial closure or judicial disclosure depending on the language in the deed. The attorney assigned to the trust or deed then files documents with the public trustee.

The public trustee is tasked with filing a notice of election and demand (more on that later) with the county clerk for publishing in a newspaper with general circulation where the property is located. The trustee must also mail notice on how to redeem the property and other documents to the listed owner of the property. The public trustee ensures transparency for the Colorado foreclosure process.

After the public trustee files their paperwork the property can go to an auction if no further action is taken or the prior owner can attempt to pay off existing debt and any extra fees to reclaim the property during the redemption period. The Colorado foreclosure process normally takes four months from default to auction.

Types of Foreclosures in Colorado

  • Non-judicial foreclosure – The most common type of mortgage foreclosure in Colorado. Non-judicial foreclosure does not require the courts but instead an election to foreclosure. In a non-judicial disclosure, a ‘power of sale’ clause, or a pre-authorized sale to pay off a loan in the event of defaulted payments, is included in the trust or deed.

  • Judicial Foreclosure– A type of mortgage or loan foreclosure which requires a court to issue a final judgment on the foreclosure. Judicial foreclosure is most often used when the deed of trust for the property doesn’t contain the power of sale language. If the court declares a foreclosure, the property is put to auction.

Colorado Redemption Period on Foreclosures

The state of Colorado has a post-sale statutory redemption period on foreclosures. The redemption period allows an owner whose property has been foreclosed on to reclaim their property 75 days after the property’s sale by paying in full the total of their unpaid loan plus interest, taxes, and any additional fees associated with the foreclosure process. If the full amount is paid within 75 days the owner can reclaim the property, but not their losses in fees.

Notice of Election and Demand in Colorado

A notice of election and demand in Colorado (NED in Colorado) is a document that:

  • Indicates a lender is the beneficiary of a deed of trust encumbering a parcel of real property.

  • Stipulates the borrower is in default on their obligation of payments.

  • Requests the public trustee begin foreclosure proceedings to satisfy the debt.

The NED exists to keep the foreclosure process transparent to the state, lenders, and property owners.

Final Notes About Colorado Foreclosures

The owner of a property in foreclosure has 15 days prior to the foreclosure auction to file an ‘intent to cure,’ wherein the owner can attempt to reclaim the property before its auction. Foreclosure sales must take place between 45 and 60 days after the election and demand for sale is sent to the county clerk’s office.

Figuring Out Foreclosures in Colorado

Judicial, non-judicial, auction, default – there’s a lot of terminology when it comes to Colorado foreclosure but with a bit of reading above you can teach yourself some basics. If you’re ever worried about a foreclosure or need questions answered about the foreclosure process, reach out to The Storck Team before. A short-sale might be the right solution to avoid foreclosure. Foreclosures can be scary, but you’re better protected when you understand the process and your options.