Bill Summary for Bill Number SB10-093

Date: 03/16/2010

Final
BILL SUMMARY for SB10-093

HOUSE COMMITTEE ON LOCAL GOVERNMENT

Votes: View-->	Action Taken:
Moved amendment L.006 (Attachment B). The motion Moved to postpone Senate Bill 10-093 indefinitely. Moved to refer Senate Bill 10-093 to the Committee	FAIL PASS FAIL

02:18 PM -- Senate Bill 10-093

Representative DelGrosso, prime sponsor, presented Senate Bill 10-093, concerning the orderly resolution of claims in foreclosures involving junior liens. Representative DelGrosso explained that the reengrossed bill clarifies the rights, requirements, and priority of lien redemption on foreclosed homes. According to the bill, the holder of a certificate of purchase (COP) of property at a public trustee's sale or sheriff's sale is entitled to pay off junior lien holders during the redemption period for the amount of the lien plus allowable fees and costs. Representative DelGrosso addressed questions from the committee members and explained that the bill requires a junior lien holder to accept payment from a COP holder and to release the lien. Under the bill, junior lien holders would be required to accompany their notice of intent to redeem with a true statement of the amount due on their lien. The holder of the COP is allowed to avoid redemption by a junior lien holder by recording the lien release. Further, the bill clarifies the right of litigants to claim damages for misstatements of the amount due on a lien or of the lien holder's entitlement to use the redemption process.

02:27 PM

Representative DelGrosso explained that under current law, the successful bidder at a foreclosure sale receives a COP, which entitles a confirmation deed upon the expiration of all redemption periods unless the property is redeemed by a junior lien holder. However, in some situations, a junior lien is purchased by someone who refuses to accept payment from the COP holder and then exercises the statutory right to redemption afforded to lien holders who have not been paid. He indicated that if potential bidders are aware of the lien purchase, they may be discouraged from bidding on the COP, which could depress the sale prices of foreclosed homes.

02:30 PM

Molly Foley-Healy and Jonah Hunt, Hindman Sanchez, P.C., representing the Community Associations Institute, testified against the bill and talked about the process of foreclosure within a homeowners association (HOA) according to the provisions of the Colorado Common Interest Ownership Act (CCIOA). Ms. Foley-Healy described a number of issues with the reengrossed version of the bill, discussed how an HOA would become a junior lien holder when a foreclosed property is sold, and explained why HOAs assign their lien rights to investors in order to collect a larger portion of the lien rights.

02:44 PM

Jonah Hunt, Hindman Sanchez, P.C., testified against the reengrossed bill, explained that the bill would not protect homeowners and the lien rights of an HOA, and may not result in more junior liens being paid off.

02:48 PM

Mr. Hunt and Ms. Foley-Healey responded to questions from the committee about junior lien holders and COPs. Conversation ensued concerning the lien redemption process.

02:50 PM

Carol Snyder, public trustee, representing the Colorado Public Trustees Association, testified against the bill, discussed the increasing interest in the redemption rights of HOA liens, and explained current provisions in law concerning lien sales and COPs processed by public trustees. Trustee Snyder addressed questions from the committee concerning provisions in the reengrossed version of the bill that would allow litigation between public trustees, COP holders, and junior lien holders. Committee discussion ensued.

03:08 PM

Bob Hothem, representing himself, testified in support of the bill and explained that the reengrossed bill provides needed clarification regarding COP holders and HOA liens. Mr. Hothem discussed the current lien auction process and explained that allowing liens to be paid out by the COP holder would be more cost effective. Mr. Hothem addressed questions from the committee concerning how junior liens are paid by investors.

03:18 PM

Christopher Conant and Robert Hatch, representing Hatch Jacobs, LLC, testified in support of the bill and discussed problems in the lien process since legislative changes in 2008. Mr. Hatch explained the current problems of multiple auctions with third-party investors who are acquiring junior liens. He explained that the bill would provide needed protection for COP holders from junior lien holders who refuse payment for the junior lien in an attempt to acquire the foreclosed property.

03:28 PM

Christopher Conant, representing Hatch Jacobs, LLC, testified in support of the bill, explained that the bill clarifies that lien holders must accept a payment of debt, and distributed a handout to the committee concerning resent court cases between COP holders and junior lien holders (Attachment A). Mr. Conant explained that the bill will prevent the private auctions for junior liens and require all investors to participate in an open public trustee auction. Mr. Conant addressed questions from the committee concerning the requirement in the bill that junior lien holders accept payment from COP holders.

03:34 PM

Representative DelGrosso discussed prepared amendment L.006 (Attachment B) and entered closing comments on the bill.


BILL:	SB10-093
TIME:	03:38:06 PM
MOVED:	Liston
MOTION:	Moved amendment L.006 (Attachment B). The motion failed on a 5-6 roll call vote.
SECONDED:	Bradford
		VOTE
	Acree	Yes
	Apuan	Yes
	Bradford	Yes
	Liston	Yes
	Massey	No
	McKinley	No
	Priola	Yes
	Schafer S.	No
	Vigil	No
	Soper	No
	Peniston	No

Not Final YES: 5 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB10-093
TIME:	03:39:24 PM
MOVED:	Liston
MOTION:	Moved to refer Senate Bill 10-093 to the Committee of the Whole. The motion failed on a 2-9 roll call vote.
SECONDED:	Bradford
		VOTE
	Acree	No
	Apuan	No
	Bradford	Yes
	Liston	Yes
	Massey	No
	McKinley	No
	Priola	No
	Schafer S.	No
	Vigil	No
	Soper	No
	Peniston	No

Not Final YES: 2 NO: 9 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB10-093
TIME:	03:44:05 PM
MOVED:	Schafer S.
MOTION:	Moved to postpone Senate Bill 10-093 indefinitely. The motion passed on a 10-1 roll call vote.
SECONDED:	Bradford
		VOTE
	Acree	No
	Apuan	Yes
	Bradford	Yes
	Liston	Yes
	Massey	Yes
	McKinley	Yes
	Priola	Yes
	Schafer S.	Yes
	Vigil	Yes
	Soper	Yes
	Peniston	Yes

Final YES: 10 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

03:45 PM

The committee adjourned.