June 26, 2015
by Larry Castle
The Castle Law Group
USFN Member (Colorado)
This CO article appeared in the USFN e-Update (May 2015 ed.) and is reprinted here for those readers who missed it.
On April 21, 2015 the Colorado State Legislature passed House Bill 15-1142. The bill offers the opportunity to have electronic public trustee nonjudicial foreclosure sales through either the internet or other electronic medium. The law becomes effective on September 1, 2015. There are very few particulars contained within the new statute.
What we do know is that there is an additional fee of no more than $60, authorized by the statute to be added to the total public trustee fees for the use of the electronic sale process. This further fee must be paid by the foreclosing party prior to the sale.
We also know that the only requirements outlined in the bill are that the combined notice of sale and rights to cure and redeem sent by the public trustee to all interested parties, must identify: the electronic address for the sale; the location of computer workstations that will be available to the public; and how the public is to obtain instructions on accessing the sale and submitting bids. Furthermore, combined notice must provide a statement that the bidding rules will be posted on the internet, or other electronic medium used to conduct the sale, at least two weeks prior to the sale date.
For electronic sales only, the statute is amended to allow the holder of the evidence of debt, through its attorney, to submit both a minimum and maximum bid. Neither the holder nor its attorney needs to physically attend the sale in order to competitively bid. By statute, the electronic bid will be increased in increments incorporated into the electronic program used by the public trustee. The foreclosing party will not be able to set the incremental increases of the bid. It is important to note that Colorado statute also requires that the foreclosing party bid based upon the fair market value of the property, less reasonable costs of sale. Additionally, there will continue to be a post-sale right of redemption for junior lienholders. The redemption amount is the bid amount, plus allowable expenses from the sale date to the redemption date.
It is important to note that the new statute specifically states that the county, the officer, as well as employees of the county or officer acting in their official capacity in preparing, conducting, and executing an electronic sale are not liable for the failure of any device that would prevent a person from participating in the electronic sale process.
The legislature did not provide any guidance regarding the rules for the electronic sales, leaving that to the public trustees. This may create the possibility for each county public trustee (who may choose to have electronic sales) to design different rules and methodologies, as well as use different technologies.
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