On June 1, 2006, Governor Owens signed into law HB 06-1387. This is a substantial, sweeping, overhaul of Colorado’s real estate foreclosure law. Among many other things done by this law, the most significant change made is the elimination of an owner’s right to redeem property after a sale of the property. Lienholders still have the right to redeem. As a tradeoff for elimination of the right of redemption, owners are given a longer period of time to cure the default before the property actually can be sold at foreclosure sale.
A right to cure under Colorado law is the right to pay all amounts that would be owed to the lienholder, in the absence of acceleration. Typically, this means any missed payments, late charges, default interest, and any attorneys fees and costs permitted by the document that creates the debt (whether a promissory note or, more specific to our practice, the declaration) or permitted by statute.
A right to redeem under Colorado law (formerly allowed to owners and junior lienholders, and now limited only to junior lienholders), allows the holder of the right to pay the full amount owed at the foreclosure sale, plus any amounts that accrued after the sale, e.g., property taxes, property insurance, default interest, additional attorneys fees, statutorily permitted repair expenses, etc. These are generally expenses incurred by the foreclosing debt holder to secure the value of their collateral.
As with any new, significant legislation, the full import of the change won’t be seen for many years. In the mean time, we will keep you updated as we see its effect.