Colorado Public Trustees’ Association HB 1387 – Concerning Real Estate Foreclosures Presented June 29, 2006 at the Summer Conference in Grand Junction,

Colorado Public Trustees’ Association

HB 1387 – Concerning Real Estate Foreclosures

Presented June 29, 2006 at the Summer Conference in Grand Junction, Colorado

HB 1387 History

2003 – The CPTA Legislative Committee discussed the possibility of reducing or removing the owner redemption and increasing the cure period. Chairman Karen Sheaffer sent a letter to the Colorado Bar Association Foreclosure Committee asking for their assistance in drafting legislation.

HB 1387 History, cont’d.

2004 – The CPTA Legislative Committee voted to prepare a rough draft to give to the Bar Committee and again ask for their assistance. Larry Castle began working with the draft along with numerous other changes to the structure of the foreclosure statutes. It was decided to wait until the following year to pursue such a massive bill.

HB 1387 History, cont’d. 2005 – After passage of the

housekeeping bill, HB 2005-1168, work began in earnest on the foreclosure rewrite. Larry began the year as the committee’s drafter and Robert Hopp later took over the duties. Rep. Michael Garcia agreed to sponsor the bill and with the help of Peg Ackerman, Debbie Wagner, and Michael Valdez, set up a series of “stakeholder” meetings.

HB 1387 History, cont’d. 2006 – After numerous negotiations

and rewrites, HB 2006-1387 was introduced in the House. Several amendments were attached before moving to the Senate. Sen. Jennifer Veiga was the Senate sponsor of the bill and there were again several amendments. The bill passed at the end of the session and was signed into law by Governor Owens.

HB 1387Effective Dates

The bulk of the bill will go into effect on July 1, 2007.

Nine sections of the bill will become effective on July 1, 2006.

New provisions will apply to any foreclosures where the NED is recorded on or after the effective date.

Provisions that take effect July 1, 2006

HB 1387: Section 2Provisions effective July 1, 2006

38-37-106. Public Trustee to act as successor in trust – additional duties. Adds language that if a deed of trust

omits the name of the county, the public trustee in the county where the property, or any portion, is located shall act as a successor public trustee, or as if the public trustee and county were named in the deed of trust.


38-37-108. Payments to public trustee. Clarifies that payments must be

drawn on banks, savings and loan associations or credit unions.


38-38-105. Court order authorizing sale mandatory. Requires that a copy of the order

authorizing sale be filed with the public trustee no later than noon, the 2nd business day before the sale.

If no response was filed pursuant to the court hearing, the order only needs to recite the date the hearing was scheduled.


38-38-112. Use of electronic documents authorized – repeal. Requires the public trustee or sheriff

to establish and uniformly apply policies concerning whether and to what extent they will accept documents or records electronically.

The repeal section changes public trustee or sheriff to “officer” pursuant to new definitions that will become effective July 1, 2007.


38-38-403. Certificates assignable. Establishes that all certificates of

redemption are also assignable. If a separate assignment is used, it

must contain at least the information required in the certificate and the name and address of the assignor and the assignee.


38-38-704. Providing information to homeowner and public – repeal. Gives the public trustee the authority to

distribute information or materials concerning foreclosures to homeowners and the general public. The information and material must be approved by the Attorney General’s office, an agency of the State or Federal government or an attorney retained the by a public trustee.

The repeal section changes public trustee to “officer” pursuant to new definitions that will become effective July 1, 2007.


39-20-103. When holder of prior lien may file action. This establishes that the State of

Colorado is to be treated as any other junior lienor if their tax lien is junior to the deed trust being foreclosed.


13-40-111. Issuance and return of summons. This helps to streamline the process

for a court foreclosure.


38-38-102.5. Notice prior to residential foreclosure.

This entire section is repealed.

HB 1387: Section 4

38-37-113. Checking account – custodial funds. This section did not take effect due to

passage of HB 1287: Concerning the investment of public funds.

HB 1287 allows public trustee to utilize overnight depository accounts, local government investment pool trust funds and eligible money market mutual funds. Becomes effective August 9, 2006.

Provisions that take effect July 1, 2007


38-37-104. Duties of public trustees – fees, expenses, and salaries – reports. The cure fee is replaced with a

withdrawal fee of $35.00. There is a new “Administrative”

withdrawal fee of $50.00. There is a new $100.00 for “restarting”

a foreclosure after a partial release is executed.

HB 1387: Section 1 (cont’d) Provisions effective July 1, 2007

38-37-104. Duties of public trustees – fees, expenses, and salaries – reports. Clarifies that all amounts paid to 3rd

parties in connection with a foreclosure are considered fees.

Changes “clerk hire” to “staff wages and any benefits provided pursuant to county personnel policy” in the reporting section.


38-37-113. Checking account – custodial funds. Adds the following accounts to the

allowable list for public trustees: ACH, Escrow, & Custodial Accounts Savings and Loan Associations

Amended from 2006 provision #4 of HB 1287, concerning investments.


38-38-100.3. Definitions. Most terms associated with

foreclosures are defined in this section.

The definitions of “agricultural property” and “qualified holder” are now included in this section.


38-38-101. Holder of evidence of debt may elect to foreclose. Only one notice of election and

demand needs to be filed. A copy of the deed of trust and/or the

assignment or indorsement may be filed with a certification from the holder or a statement from the attorney.

A combined notice of sale and rights to cure and redeem must be filed.

HB 1387: Section 7 (cont’d)Provisions effective July 1, 2007

38-38-101. Holder of evidence of debt may elect to foreclose. A supplemental mailing list must be

submitted no less that 60 calendar days prior to the 1st scheduled sale date.

Redefines what must be included in the notice of election and demand.

If there are multiple evidences of debt, the holder may elect to foreclose on just some of them if properly identified in all docs.


38-38-101. Holder of evidence of debt may elect to foreclose. Establishes procedures for

assignment or transfer of debt during a foreclosure.

Establishes procedures when a partial release is executed on a deed of trust in foreclosure.

Expands the electronic transmission of funds to include payments back to the holder or their attorney.


38-38-102. Recording notice of election and demand – record of sale. Allows the public trustee to retain

electronic copies in their records. Removes the requirement for a record

book. Records must be available in the

public trustee’s offices during their normal business hours.


38-38-103. Combined notice – publication – providing information. A combined notice must be mailed no

more than 20 calendar days after recording the NED to the parties in the initial mailing list.

A 2nd combined notice must be mailed no more than 60 calendar days nor less than 45 calendar days before the 1st scheduled sale to the parties in the supplemental mailing list (includes those in initial list).


38-38-103. Combined notice – publication – providing information. An amended mailing list may be

submitted at any time but no less than 65 calendar days prior to the date of sale and the officer must send the combined notice no less than 60 calendar days prior to the sale.


38-38-103. Combined notice – publication – providing information. If the amended mailing list is

submitted after the 1st publication, the officer shall continue the sale, mail an amended combined notice, and republish.

Defines what information must be included in the combined notice.


38-38-103. Combined notice – publication – providing information. Publication of the combined notice

must be commenced no more than 60 calendar days nor less than 45 calendar days prior to the 1st scheduled sale date. The published notices will not include the copies of the statutes.

The officer shall review all publications of the combined notice for accuracy.


38-38-104. Right to cure when default is nonpayment – right to cure for certain technical defaults. Lists those who are eligible to cure. Request for cure statement must be

sent to the holder or their attorney no less than 12 calendar days prior to the sale.

Cure statement must have at least as much detail as required for a bid.

HB 1387: Section 10 (cont’d)Provisions effective July 1, 2007 38-38-104. Right to cure when

default is nonpayment – right to cure for certain technical defaults. Cure payments will not be sent to the

holder or their attorney until a withdrawal is filed.

Cure statements must be effective for at least 10 calendar days but not more than 30 calendar days, or until the last day for a cure, whichever is first. Good faith estimates are allowed, if so indicated.

HB 1387: Section 12Provisions effective July 1, 2007 38-38-106. Bid required – form of bid.

Bids must be submitted by noon the 2nd business day prior to the sale.

Several items were added to the bid form.

Bids must be made public upon receipt by the officer.

Bids may be posted or provided rather than read.

Bids may be amended in writing or electronically by noon the day before the sale or orally at the sale.

HB 1387: Section 12 (cont’d)Provisions effective July 1, 2007 38-38-106. Bid required – form of

bid. Bid payments must be received no

later than the date and time of the sale or at some other time on the date of sale if designated in writing by the officer.

If highest bidder fails to pay, the next highest bidder who has tendered full payment shall be deemed the successful bidder at the sale.

HB 1387: Section 13Provisions effective July 1, 2007 38-38-107. Fees and costs –

definitions. The officer may decline to issue a

confirmation deed until all sums are paid.

Requires disclosure by the holder of any payment, benefit, or remuneration for services or products provided in connection with a foreclosure.

HB 1387: Section 14Provisions effective July 1, 2007 38-38-108. Date of sale.

Public trustee sales Non-Ag: 110-125 days after NED Agricultural: 215-230 days after

NED Sheriff sales

Non-Ag: No less than 110 days after recording lis pendens

Agricultural: No less than 215 days after recording lis pendens

HB 1387: Section 14 (cont’d)Provisions effective July 1, 2007 38-38-108. Date of sale.

Determination of whether a property is agricultural or not must be made no less than 10 calendar days nor more than 20 calendar days after recording the NED.

Statements, rather than certificates, are required from city clerks or assessors and do not need to be recorded.

HB 1387: Section 15Provisions effective July 1, 2007 38-38-109. Continuance of sale –

effect of bankruptcy – withdrawal of sale. If a sale is not officially held or

continued, it shall be deemed to be continued week-to-week.

Sales may be continued no more than 9 months, rather than 6 months

Sales may be continued to allow for filing of amended mailing lists.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from a public trustee for a

cure statement is received 30 calendar days or less before the sale and it is not filed by noon the 7th calendar before the sale, the sale shall be continued week-to-week until the statement is filed or the 9 months expire.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from the public trustee for a

cure statement is received more than 30 calendar days before the sale and it is not filed within 10 days after receipt, the public trustee shall assess a fine equivalent to the original sale fee to be credited to the county general fund only if the cure is made. If the statement is not cured by the noon of the 7th calendar day before the sale, it shall be continued week-to-week until the statement is filed or the 9 months expire.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If a request from a sheriff for a cure

statement is not filed by noon the 7th calendar before the last day of sale permitted, the sale shall be deemed dismissed and unless good cause can be shown, the holder or their attorney shall file a motion to dismiss with the court.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If bankruptcy is filed after all

publications are complete, the officer shall announce, post, or provide notice of that fact on the sale date. The sale will then be automatically continued from week-to-week unless requested to do otherwise.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If bankruptcy is filed before all

publications are complete, the officer shall cancel all remaining publications and on the sale date announce, post, or provide notice that the sale has been enjoined or stayed. The sale shall not be continued.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. Upon termination of the injunction or the

bankruptcy, the public trustee shall rerecord the NED and restart the foreclosure. (This is now in a separate section and may inadvertently refer to both cases where the publications were completed and where they were not.)


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If a sale was held in violation of an

automatic bankruptcy stay, the holder or their attorney shall notify the officer within within 60 days of the bankruptcy being over and the officer shall set a new sale date 24 to 49 calendar days after that notification. Republication shall be within 20 days but at least 10 days prior to the new sale date.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If a withdrawal is not filed within 45 days

after the possible sale date, the public trustee may send notice to the holder or their attorney. If no response within 30 days, the public trustee may record an “adminstrative” withdrawal. All fees and costs are due from the holder and shall accrue interest. The public trustee may withhold services until paid.


38-38-109. Continuance of sale – effect of bankruptcy – withdrawal of sale. If an “administrative” withdrawal is

recorded while the property is under a bankruptcy automatic stay, the withdrawal is void. The public trustee shall record a notice of that fact and mail a copy of the notice to all persons on the mailing list.

HB 1387: Section 16Provisions effective July 1, 2007 38-38-110. Sales by officer –

location – announcement - records. Removes the requirement to read, post

or provide notice of “the date on which the notice was issued”.

If the street address is available, the legal description is not necessary.

Removes the requirement for a foreclosure record book. Data may be entered in the records of the public trustee.

HB 1387: Section 17Provisions effective July 1, 2007 38-38-111. Treatment of excess funds.

Excess bid proceeds are first paid to the holder to the extent of any deficiency.

They are then paid to junior lienors whose liens were recorded prior to the NED, who filed a notice of intent to redeem, and whose liens have not been redeemed.

Lastly, they are paid to the owner as of the recording of the NED.

Unclaimed funds are transferred to the treasurer within 90 days.


38-38-201. Foreclosure of installments without acceleration. Some terminology and citations were

changed.


38-38-301. Holder of certificate of purchase paying charges – redemption. Allows holders of certificates of

purchase and redemption to include the same fees and costs that are allowed for the initial bid, as described in 38-38-107.

HB 1387: Section 21Provisions effective July 1, 2007 38-38-302. Redemption by lienor -

procedure. There is no owner redemption period. Liens of junior lienors must have been

recorded prior the recording of the NED.

Intents to redeem must be filed within 10 business days after the sale (except in certain defined situations).

Statements of amounts due on liens must include per diem interest.

HB 1387: Section 21 (cont’d)Provisions effective July 1, 2007 38-38-302. Redemption by lienor -

procedure. Redemption statements are due no later

than 14 business days following the sale. Amended statements must be submitted

no later than 2 business days prior to the start of each redemption period.

If not filed within 15 business days, the officer may calculate the redemption amount.

HB 1387: Section 21 (cont’d)Provisions effective July 1, 2007 38-38-302. Redemption by lienor –

procedure. Each junior lienor has five business

days to redeem, starting 15 business days after the sale for the first lienor.

Payments must be made on or before noon on the final day of the redemption period.

Short redemptions are allowable with written consent of the certificate holder who is to be paid.


procedure. The officer shall set the redemption

periods for each junior lienor on the 11th business day after the sale and they may not be shortened or altered.

The officer may accept evidence of electronic account-to-account transfers or copies of loan servicing computer screens along with receipts and invoices.


procedure. Any redemption rights granted under

federal law are separate and distinct from those granted under Colorado law.

The officer is not designated to receive redemptions under federal law.


38-38-304. Effect of redemption. Removes reference to owner

redemptions. Interest acquired through redemption

is now also subject to the rights of omitted parties.


38-38-306. Rights of other lienors to redeem. The owner may be entitled to refunds

from payments held in escrow after final judgment on a mechanics lien.

The owner’s rights to excess sale proceeds are subordinate to any beneficiaries of Deeds of Trust where the owner waived the Homestead Exemption.

HB 1387: Section 24Provisions effective July 1, 2007 38-38-401. Certificate of purchase

– issuance. The only certificate of purchase shall

be recorded no later than 5 business days after the sale and shall also include any deficiency as a result of the sale.

The recorded certificate shall be retained in the officer’s records.

HB 1387: Section 25Provisions effective July 1, 2007 38-38-402. Certificate of

redemption – issuance. The only certificate of redemption

shall be recorded no sooner than 15 business days after the sale but no later than 5 business days following receipt of the redemption payment.

The recorded certificate shall be retained in the officer’s records.

HB 1387: Section 27Provisions effective July 1, 2007 38-38-405. Certificate as prima

facie evidence. This section is moved from two other

sections and includes certificate of purchase, the certificate of redemption, and the confirmation deed, or a certified copy thereof.

HB 1387: Section 28Provisions effective July 1, 2007 38-38-501. Title vests upon

expiration of redemption periods – confirmation deed. At the end of all redemption periods or,

if none, upon the close of business 10 business days after the sale, title vests.

No less than 15 business days after the sale or, if later, the end of all redemption periods, the officer shall issue and record a confirmation deed.

HB 1387: Sections 29 & 30Provisions effective July 1, 2007 38-38-502. Form of confirmation

deed for public trustee’s sale. Adds the word, “confirmation”. Changes “notice of sale” to

“combined notice”. 38-38-503. Form of confirmation

deed for sheriff’s sale. Adds the word, “confirmation”.

HB 1387: Section 31Provisions effective July 1, 2007 38-38-506. Omitted parties –

definitions. Clarifies that the omitted parties’

interest must be of record prior to the recording of the NED or Lis Pendens, and must be junior to the lien being foreclosed.

HB 1387: Section 32Provisions effective July 1, 2007 38-38-702. Limitation of officer

liability. Consolidates all liability sections. Updates what an officer shall no have

responsibility or liability for determining Includes the accuracy of the legal

description on a full release. Adds the legal sufficiency of the

description of the property in the NED.

HB 1387: Section 32 (cont’d)Provisions effective July 1, 2007 38-38-703. No waiver of or

agreement to shorten right to cure. Clarifies that an agreement to shorten

the time to exercise the right to cure is void and against public policy.


38-35-126. Contract for deed – escrow of tax moneys – written notice. Minor terminology changes.


38-37-110. Public trustee forfeits fees for failure to meet statutory time requirements – validity of foreclosure unaffected. Changes citations and adds

“confirmation” before deed.

HB 1387: Section 38Provisions effective July 1, 2007 38-38-701. Application – use of

term “foreclosure”. Adds the provision that if a deed of

trust grants power of sale but contains no provision on the manner in which the power of sale is to be exercised, the holder may foreclose pursuant to the foreclosure statutes through the public trustee or the courts.

HB 1387: Section 40 Provisions effective July 1, 2007

38-38-303. Time of redemption by lienor. This entire section was repealed. All the provisions were moved to

either 38-38-301 or 38-38-302.

HB 1387: Section 40 (cont’d) Provisions effective July 1, 2007 38-38-404. Replacement certificate

issued in case of loss of originals. This entire section was repealed. There will no longer be an original.

One certificate will be issued, recorded, and retained by the officer.

HB 1387 – Thank you’s

Legislators Rep. Michael Garcia Sen. Jennifer Veiga

Attorneys Rich Krohn Larry Castle Robert Hopp Bob Holmes Michael Valdez

HB 1387 – More thank you’s

Ackerman & Associates Peg Ackerman Debbie Wagner

Public Trustees Roxy Huber, Co-Chair Jack Arrowsmith, Committee Testimony Legislative Committee Appointed Public Trustees Executive Board

HB 1387 – Next Steps

Forms Committee New “Combined Notice” of sale and of

rights to cure and redeem Manual Committee

July 1, 2006 provisions July 1, 2007 provisions

Executive Committee New Fee Schedule Training Opportunities

Colorado Public Trustees’ Association HB 1387 – Concerning Real Estate Foreclosures Presented June 29, 2006 at the Summer Conference in Grand Junction,

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