The New Foreclosure Laws and the Right to Cure and Redeem

 After posting the attached entry, the legislature has extended the date the remaining provisions become effective.  They now become effective on January 1, 2008.

We are currently experiencing the biggest changes in Colorado foreclosure law in over 15 years. Although some of the provisions became active on July 1, 2006, many of the provisions become effective on January 1, 2008. Most importantly, the rights to cure and redeem will substantially change this year.  

Under the old law, the Public Trustee Sale was to be scheduled no less than forty-five or more than sixty days after the recording of the election and demand. The owner could “cure” if notice of intent to cure was filed fifteen days prior to the sale date. Under the new law, the owner can still cure if notice to cure is filed fifteen days before the sale. However, under the new law the sale must be scheduled no less than 110 days nor more than 125 days after the recording to the election and demand.   Thus, the owner has a longer cure period under the new law.

Although the act gives the owners more time to cure, it takes away their redemption right after the sale. The purpose of the act is to protect the owner without prolonging the process. However, this affects a homeowners association’s right to redeem. Specifically, under the new act, assuming the association’s lien is second in priority, the association has ten days after the sale to file its intent to redeem.   Furthermore it must redeem fifteen to twenty days after the date of the sale. This means the association, and its attorney, must act fast if it wishes to redeem. 

Before the sale even occurs, the association must advise its attorney if it has any interest in possibly redeeming. Then, once the sale is complete, the association and the attorney need to quickly determine if the final sales price justifies redemption and file the notice within ten days. The association must submit cash or certified the funds to redeem the property within the next five to ten days. 

Sweeping foreclosure laws in a time of record foreclosures requires diligence by both the association and its legal representation. Communication is key during this time of transition. To make an informed decision as to whether to redeem or not, the association should alert our office immediately upon receiving any notice of foreclosure.

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