First Regular Session
Sixty-second General Assembly
LLS NO. 99-0674.01 Debbie Haskins SENATE BILL 99-167
STATE OF COLORADO
BY SENATOR Perlmutter;
also REPRESENTATIVE Smith.
BUSINESS AFFAIRS & LABOR
A BILL FOR AN ACT
101 CONCERNING FORECLOSURE SALES BY PUBLIC TRUSTEES.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Allows a public trustee, in cases where the original evidence of
debt for a foreclosure proceeding cannot be produced, to accept a
certification and indemnification in which an officer of the financial
institution demanding the sale certifies that the institution is the legal
holder of the evidence of debt and indemnifies the public trustee against
damages from the obligor if the certification proves to be false. States
that the public trustee is not liable for a certification that proves to be
false.
Directs the public trustee, prior to any foreclosure sale and upon
request of the owner of an evidence of debt secured by the deed of trust
being foreclosed, to add omitted parties to the mailing list and postpone
the original sale to allow the owner of the evidence of debt to republish
a notice of sale. Requires the public trustee to mail a copy of the
republished notice of sale to the required mailing list of interested parties.
Clarifies that a foreclosure sale may be scheduled upon notice to
the public trustee of the granting of relief from the automatic stay
provisions of title 11 of the federal bankruptcy code.
Allows a lienor whose lien is recorded after the filing of the notice
of election and demand for foreclosure to redeem, but requires a deposit
with the public trustee of an amount equal to $100 multiplied by the total
number of days the redemption period is extended due to the lien.
Specifies that if the lienor fails to redeem, the amounts deposited shall be
paid over in full to the last redeeming party.
Specifies a procedure for termination of an interest of an omitted
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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party who is a judgment lien creditor or a party with a lien other than
through a deed of trust or a mortgage recorded prior to the recording of
the notice of election and demand for foreclosure. Specifies the contents
of the notice to the omitted party, including that the omitted party has the
opportunity to acquire such holder's certificate of purchase or title for a
specified price.
1 Be it enacted by the General Assembly of the State of Colorado:
2 SECTION 1. 38-38-101 (1), (7), and (9), Colorado Revised
3 Statutes, are amended to read:
4 38-38-101. Owner of evidence of debt may elect to foreclose -
5 notice - record of sale - withdrawal. (1) Whenever the owner of an
6 evidence of debt which is secured by a deed of trust containing a power
7 of sale declares a violation of any of the covenants of such deed of trust
8 and elects to advertise all or a portion of the property therein described
9 for sale, such owner shall file with the public trustee of the county
10 wherein such property is located:
11 (a) Two notices of election and demand for sale, which shall be
12 originally executed by the owner of the evidence of debt which is secured
13 by such deed of trust or the agent or attorney for such owner;
14 (b) (I) The original evidence of debt, such as a note or bond;
15 EXCEPT THAT, IN THE EVENT THE ORIGINAL EVIDENCE OF DEBT CANNOT BE
16 PRODUCED, THE PUBLIC TRUSTEE SHALL ACCEPT, IN LIEU THEREOF, ONE OF
17 THE FOLLOWING:
18 (A) A CERTIFICATION AND INDEMNIFICATION WHICH HAS BEEN
19 EXECUTED BY A PRESIDENT OR A VICE PRESIDENT OF, OR BY ANOTHER
20 OFFICER AUTHORIZED BY THE BOARD OF DIRECTORS OF, A BANK, AS
21 DEFINED IN SECTION 11-1-102 (2), C.R.S., AN INDUSTRIAL BANK, AS
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1 PROVIDED FOR IN ARTICLE 22 OF TITLE 11, C.R.S., A SAVINGS AND LOAN
2 ASSOCIATION APPROVED TO OPERATE UNDER ARTICLES 40 TO 46 OF TITLE
3 11, C.R.S., A FEDERAL HOUSING ADMINISTRATION APPROVED MORTGAGEE,
4 OR A FEDERALLY CHARTERED CREDIT UNION OPERATING IN COLORADO OR
5 A STATE-CHARTERED CREDIT UNION, AS DEFINED IN SECTION 11-30-101,
6 C.R.S., OR WHICH HAS BEEN DULY AUTHORIZED BY ANY AGENCY OF THE
7 FEDERAL GOVERNMENT OR BY ANY FEDERALLY CREATED CORPORATION
8 WHICH ORIGINATES, GUARANTEES, OR PURCHASES LOANS, CERTIFYING
9 THAT SUCH INSTITUTION IS THE LEGAL HOLDER OF THE EVIDENCE OF DEBT
10 AND INDEMNIFYING THE PUBLIC TRUSTEE AGAINST DAMAGES AND CLAIMS
11 OF THE OBLIGOR UNDER SUCH EVIDENCE OF DEBT, IN THE EVENT THE
12 CERTIFICATION OF SUCH INSTITUTION SHALL BE PROVED TO BE FALSE; or
13 in lieu thereof,
14 (B) A corporate surety bond issued by a company authorized to
15 issue such bonds in the state of Colorado in one and one-half times the
16 face amount of such original evidence of debt.
17 (II) THE PUBLIC TRUSTEE SHALL HAVE NO LIABILITY FOR ANY
18 CERTIFICATION FILED PURSUANT TO THIS PARAGRAPH (b) THAT PROVES TO
19 BE FALSE.
20 (c) The original deed of trust securing such evidence of debt or a
21 copy thereof certified as true and correct by the county clerk and recorder
22 of the county where such deed of trust was recorded;
23 (d) A certificate executed by the owner of the evidence of debt
24 secured by such deed of trust, or the agent or attorney for such owner,
25 which states to the best of the knowledge of the person executing such
26 certificate the name and address of the current owner of the property
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1 described in the notice of election and demand for sale;
2 (e) An affidavit executed by the owner of the evidence of debt
3 secured by such deed of trust, or the agent or attorney for such owner,
4 which states the outstanding principal balance due and owing upon the
5 evidence of debt secured by such deed of trust; and
6 (f) A list specifying the names and addresses to which all notices
7 required by this article shall be mailed, which may be amended or
8 supplemented in writing prior to the dates required for the mailing of such
9 notices OR AS PROVIDED FOR IN PARAGRAPH (c) OF SUBSECTION (7) OF THIS
10 SECTION.
11 (7) (a) The public trustee, within ten days after the date of the first
12 publication of the notice of sale, shall mail a copy of such notice as it
13 appeared in a newspaper of general circulation to the grantor at the
14 address given in the deed of trust, and the public trustee shall also mail a
15 like notice to each person who appears to have acquired a record interest
16 in the property described in such notice of sale subsequent to the
17 recording of such deed of trust, whether by deed, mortgage, judgment, or
18 any other instrument of record, and, if the foreclosing party has a lien
19 with priority over the lessee or lessees who have unrecorded possessory
20 interests in the property being foreclosed and desires to terminate such
21 possessory interests with the foreclosure, as evidenced by the inclusion
22 of the names of the lessee or lessees or the occupant or occupants in the
23 list supplied the public trustee pursuant to subsection (1) of this section,
24 the public trustee shall also mail such a notice to the lessee or lessees of
25 the premises as provided in section 38-38-305 (1.5). Such notice shall be
26 mailed to such person at the address given in the recorded instrument, or,
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1 if such notice is being sent to the lessee or lessees of the premises, such
2 notice shall be mailed as provided in section 38-38-305 (1.5). Postage
3 costs under this section shall be part of foreclosure costs. If such
4 recorded instrument does not give such address or if only the county and
5 state are given as the address of such person, it will not be necessary to
6 mail any notice to such person. It is not necessary to mail a copy of said
7 printed notice to any person whose interest does not appear of record at
8 the time said notice of election and demand for sale is recorded.
9 (b) At the request of the owner of an evidence of debt which is
10 secured by the deed of trust being foreclosed, the public trustee shall
11 correct any errors in the published notice of sale and shall postpone the
12 original sale to a future date so as to permit a corrected notice of sale to
13 be published in accordance with subsection (6) of this section, which
14 future date may be subsequent to the expiration of the sixty-day period
15 prescribed by section 38-38-108 (1), if necessary, but in no event later
16 than thirty days after the fifth publication of the corrected notice of sale.
17 The public trustee shall mail a copy of the corrected notice of sale as it
18 appears in a newspaper of general circulation within ten days of the first
19 correct publication in the same manner as set forth in paragraph (a) of this
20 subsection (7). On the originally scheduled sale date as stated in the
21 incorrect publication of the notice of sale, the public trustee shall make
22 an oral announcement of the date and time of said postponed sale.
23 (c) PRIOR TO ANY SALE, AT THE REQUEST OF THE HOLDER OF AN
24 EVIDENCE OF DEBT WHICH IS SECURED BY THE DEED OF TRUST BEING
25 FORECLOSED, THE PUBLIC TRUSTEE SHALL ADD OMITTED PARTIES TO THE
26 MAILING LIST PROVIDED TO THE PUBLIC TRUSTEE AND SHALL POSTPONE
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1 THE ORIGINAL SALE TO A FUTURE DATE SO AS TO PERMIT THE HOLDER OF
2 THE EVIDENCE OF DEBT TO REPUBLISH A NOTICE OF SALE IN ACCORDANCE
3 WITH SUBSECTION (6) OF THIS SECTION. SUCH FUTURE DATE MAY BE
4 SUBSEQUENT TO THE EXPIRATION OF THE SIXTY-DAY PERIOD PRESCRIBED
5 BY SECTION 38-38-108 (1), IF NECESSARY, BUT IN NO EVENT SHALL IT BE
6 LATER THAN THIRTY DAYS AFTER THE FIFTH PUBLICATION OF THE
7 REPUBLISHED NOTICE OF SALE. THE PUBLIC TRUSTEE SHALL MAIL A COPY
8 OF THE REPUBLISHED NOTICE OF SALE AS IT APPEARS IN A NEWSPAPER OF
9 GENERAL CIRCULATION WITHIN TEN DAYS AFTER THE FIRST REPUBLICATION
10 DATE IN THE SAME MANNER AS SET FORTH IN PARAGRAPH (a) OF THIS
11 SUBSECTION (7). ON THE ORIGINALLY SCHEDULED SALE DATE AS STATED
12 IN THE FIRST PUBLICATION OF THE NOTICE OF SALE, THE PUBLIC TRUSTEE
13 SHALL MAKE AN ORAL ANNOUNCEMENT OF THE DATE AND TIME OF SAID
14 POSTPONED SALE.
15 (9) All notices which the public trustee is required by law to mail
16 pursuant to this article shall be mailed to the names and addresses set
17 forth on the list, as amended or supplemented, required by paragraph (f)
18 of subsection (1) of this section OR AS PERMITTED BY PARAGRAPH (c) OF
19 SUBSECTION (7) OF THIS SECTION. The public trustee shall have no
20 liability for any errors or omissions in the names and addresses set forth
21 on said list, as amended or supplemented.
22 SECTION 2. 38-38-109 (4), Colorado Revised Statutes, is
23 amended to read:
24 38-38-109. Continuance of sale. (4) (a) In the event that a
25 foreclosure sale is held in violation of the automatic stay provisions of
26 Title 11 of the federal bankruptcy code of 1978, as amended, and an order
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1 is subsequently entered by a bankruptcy court of competent jurisdiction
2 dismissing the bankruptcy case OR AN ORDER GRANTING THE HOLDER OF
3 THE EVIDENCE OF DEBT RELIEF FROM THE AUTOMATIC STAY, the original
4 evidence of debt, such as a note or bond, and the deed of trust, mortgage,
5 or other lien shall immediately be deemed reinstated. Such reinstatement
6 shall be confirmed by endorsement of the public trustee or sheriff,
7 although the failure to so endorse shall not affect the validity of the
8 reinstatement. Immediately upon reinstatement, the power of sale
9 provided therein, if any, shall be deemed revived. The endorsement shall
10 be in substantially the following form:
11 The undersigned, as (Public Trustee) (Sheriff) for
12 the , county of , state of Colorado, by this endorsement,
13 hereby confirms the reinstatement of this (evidence of debt)
14 (deed of trust) (mortgage) (lien) in accordance with the
15 requirements of section 38-38-109 (4) (a), Colorado Revised Statutes.
16 Date:
17 Signature
18 (Public Trustee) (Sheriff)
19 For the ,
20 County of ,
21 State of Colorado.
22 (b) (I) If the owner of the original evidence of debt and deed of
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1 trust, mortgage, or other lien reinstated pursuant to paragraph (a) of this
2 subsection (4) notifies the public trustee or sheriff in writing of the
3 dismissal of the bankruptcy case OR AN ORDER GRANTING THE HOLDER OF
4 THE EVIDENCE OF DEBT RELIEF FROM THE AUTOMATIC STAY within sixty
5 days of the date on which the foreclosed property is no longer subject to
6 such automatic stay, the public trustee or sheriff shall set a new
7 foreclosure sale date at least twenty-four days but not more than
8 thirty-nine days after the date on which the official receives such notice.
9 Within ten days of receiving such notice:
10 (A) The public trustee or sheriff shall mail a notice of the
11 rescheduled foreclosure sale to each person who was entitled to notice of
12 the original foreclosure sale; and
13 (B) The public trustee or sheriff shall advertise such sale one time
14 only in a newspaper of general circulation in the county in which the
15 property is located.
16 (II) All expenses of such notice and advertising shall be part of the
17 foreclosure costs.
18 SECTION 3. 38-38-303 (2), Colorado Revised Statutes, is
19 amended to read:
20 38-38-303. Time of redemption by lienor. (2) No lienor is
21 entitled to redeem unless his OR HER lien appears by instruments duly
22 recorded or filed as permitted by law and unless, within the redemption
23 period provided for in section 38-38-302, he OR SHE files a notice with the
24 public trustee or sheriff making the sale attaching a true and correct copy
25 of such recorded instruments evidencing his OR HER lien with evidence of
26 recording affixed by the county clerk and recorder's office and advising
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1 of his OR HER intention to redeem. No lienor shall be entitled to redeem
2 under this section unless his OR HER lien appears by an instrument so
3 recorded or filed prior to the expiration of the period of redemption
4 provided for in section 38-38-302 TO THE DATE OF THE RECORDING OF THE
5 NOTICE OF ELECTION AND DEMAND WHICH COMMENCED THE FORECLOSURE
6 ACTION AS PROVIDED FOR IN SECTION 38-38-101, UNLESS SUCH REDEEMING
7 LIENOR, WHOSE LIEN APPEARS OF RECORD AFTER THE FILING OF THE NOTICE
8 OF ELECTION AND DEMAND, DEPOSITS WITH THE PUBLIC TRUSTEE AN
9 AMOUNT EQUAL TO ONE HUNDRED DOLLARS MULTIPLIED BY THE TOTAL
10 NUMBER OF DAYS THE REDEMPTION PERIOD SHALL BE EXTENDED DUE TO
11 SUCH LIEN. THE REDEEMING LIENOR SHALL MAKE SUCH DEPOSIT IN THE
12 FORM REQUIRED BY SECTION 38-37-108 AT THE TIME OF THE FILING OF
13 SUCH LIENOR'S NOTICE OF INTENT TO REDEEM. IF SUCH LIENOR FAILS TO
14 REDEEM, THE AMOUNTS DEPOSITED SHALL BE PAID OVER IN FULL TO THE
15 LAST REDEEMING PARTY.
16 SECTION 4. 38-38-506, Colorado Revised Statutes, is amended
17 BY THE ADDITION OF A NEW SUBSECTION to read:
18 38-38-506. Omitted parties. (5) (a) IF THE OMITTED PARTY IS A
19 JUDGMENT LIEN CREDITOR OR OTHER PARTY HAVING A LIEN OTHER THAN
20 THROUGH A DEED OF TRUST OR MORTGAGE RECORDED PRIOR TO THE
21 RECORDING OF THE NOTICE OF ELECTION AND DEMAND, SUCH OMITTED
22 PARTY'S INTEREST IN THE PROPERTY MAY BE TERMINATED IF THE HOLDER
23 OF THE CERTIFICATE OF PURCHASE:
24 (I) RECORDS THE OMITTED LIENOR NOTICE IN THE REAL PROPERTY
25 RECORDS IN WHICH THE PROPERTY BEING FORECLOSED UPON IS LOCATED;
26 AND
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1 (II) WITHIN TEN DAYS THEREAFTER, SENDS BY REGISTERED OR
2 CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID TO THE
3 OMITTED PARTY AT THE ADDRESS SPECIFIED ON THE RECORDED DOCUMENT
4 GIVING RISE TO THE OMITTED PARTY'S LIEN INTEREST A COPY OF AN
5 OMITTED LIENOR NOTICE CONTAINING THE INFORMATION SPECIFIED IN
6 PARAGRAPH (b) OF THIS SUBSECTION (5).
7 (b) THE OMITTED LIENOR NOTICE SENT TO THE OMITTED PARTY
8 SHALL SET FORTH THAT SUCH OMITTED PARTY WAS OMITTED FROM THE
9 MAILING LIST PROVIDED TO THE PUBLIC TRUSTEE AND SHALL NOTIFY THE
10 OMITTED PARTY THAT THE OMITTED PARTY SHALL HAVE THE OPPORTUNITY
11 TO ACQUIRE SUCH HOLDER'S CERTIFICATE OF PURCHASE OR TITLE TO THE
12 PROPERTY IN THE EVENT ALL PERIODS OF REDEMPTION HAVE EXPIRED FOR
13 AN AMOUNT EQUAL TO THE HOLDER'S BID, PLUS SUCH AMOUNTS AS THE
14 HOLDER OF THE CERTIFICATE OF PURCHASE WOULD BE ENTITLED TO CLAIM
15 UNDER SECTION 38-38-301, FOR A PERIOD OF THIRTY DAYS AFTER THE
16 DATE OF THE RECORDING OF SUCH NOTICE. THE OMITTED LIENOR NOTICE
17 SHALL CONTAIN THE PUBLIC TRUSTEE SALE NUMBER AND THE SAME
18 INFORMATION AS REQUIRED BY SECTION 38-38-101.
19 SECTION 5. Safety clause. The general assembly hereby finds,
20 determines, and declares that this act is necessary for the immediate
21 preservation of the public peace, health, and safety.
Amendment added to SB167 on Thursday 1/28/1999
Amend printed bill, page 9, strike lines 4 through 14 and substitute
the following:
"FORECLOSURE SALE OF THE PROPERTY.".
Page 10, strike lines 14 and 15 and substitute the following:
"UNDER SECTION 38-38-301, UPON THE EXPIRATION OF THE OWNER'S
REDEMPTION PERIOD OR THIRTY DAYS AFTER THE DATE OF THE RECORDING
OF SUCH NOTICE, WHICHEVER IS LATER. THE OMITTED LIENOR NOTICE".