Understanding power of sale in Colorado foreclosures
It’s important to fully understand the power of sale clause if your state allows non-judicial foreclosures, whether you are a home owner facing foreclosure or a real estate investor seeking to invest in foreclosures. Understanding the system and how it applies to you is key to making the best of a bad situation.
The foreclosure laws varies from state to state, and the home owner or prospective foreclosure investor must perform some due diligence to get the most leverage in negotiating favorable terms. CO foreclosures, for instance, can be either judicial foreclosures or non-judicial foreclosures. This means that the process can be initiated in a courtroom or by the lender directly as a result of what’s called a “power of sale clause.”
The power of sale clause gives a private lender the authority to sell a Colorado foreclosure if that clause exists in the original contract, because it pre-authorizes such a sale when the terms of the loan are breached. A judicial foreclosure, of course, is necessary when no such clause exists in the terms of the loan, and the lender needs to bring the borrower to court to initiate Denver foreclosure proceedings.
In the case of non-judicial proceedings, the system in Colorado requires attorneys for the lender to file documents with the Office of the Public Trustee, a governor-appointed officer local to each county in the state. At that point, the Public Trustee must file a Notice of Election and Demand, which must be published for five weeks in a local newspaper.
The borrower in each state has specific rights that are outlined in state law, and give an amount of time to “cure” the bad debt. In Colorado, the owner can file an “Intent to Cure” document that will stop proceedings within 15 days of a foreclosure sale. The borrower does have up to 75 days after the sale to redeem the property for the price of the sale plus interest. Each case is unique, and borrowers and investors alike should seek legal and professional consultation to ensure their interests are represented fully.