38-38-101. Owner of evidence of debt may elect to foreclose - notice - record of sale - withdrawal.

Statute text

(1) Whenever the owner of an evidence of debt which is secured by a deed of trust containing a power of sale declares a violation of any of the covenants of such deed of trust and elects to advertise all or a portion of the property therein described for sale, such owner shall file with the public trustee of the county wherein such property is located:

(a) Two notices of election and demand for sale, which shall be originally executed by the owner of the evidence of debt which is secured by such deed of trust or the agent or attorney for such owner;

(b) The original evidence of debt, such as a note or bond, or, in lieu thereof, one of the following:

(I) A corporate surety bond issued by a company authorized to issue such bonds in the state of Colorado in one and one-half times the face amount of such original evidence of debt; or

(II) A copy of the evidence of debt together with a certification from the owner of the evidence of debt or the agent or attorney for such owner that the owner is an entity described in subsection (1.5) of this section, is the owner and holder of the original evidence of debt, the copy of the evidence of debt is true and correct, and the use of the copy of the evidence of debt is subject to the conditions described in subsection (1.6) of this section. Following the foreclosure sale, a copy of the evidence of debt, either marked as cancelled or showing the amount of any deficiency, shall be attached to and recorded by the public trustee with the duplicate certificate of purchase as required by section 38-38-401.

(c) The original deed of trust securing such evidence of debt or a copy thereof certified as true and correct by the county clerk and recorder of the county where such deed of trust was recorded;

(d) A certificate executed by the owner of the evidence of debt secured by such deed of trust, or the agent or attorney for such owner, which states to the best of the knowledge of the person executing such certificate the name and address of the current owner of the property described in the notice of election and demand for sale;

(e) An affidavit executed by the owner of the evidence of debt secured by such deed of trust, or the agent or attorney for such owner, which states the outstanding principal balance due and owing upon the evidence of debt secured by such deed of trust; and

(f) A list specifying the names and addresses to which all notices required by this article shall be mailed, which may be amended or supplemented in writing prior to the dates required for the mailing of such notices.

(1.5) The following entities may elect to file with the public trustee a copy of the original evidence of debt in lieu of the original and the certification required by paragraph (b) of subsection (1) of this section:

(a) A bank, as defined in section 11-101-401 (5), C.R.S.;

(b) An industrial bank, as defined in section 11-108-101 (1), C.R.S.;

(c) A savings and loan association licensed to do business in Colorado;

(d) A supervised lender, as defined in section 5-1-301 (46), C.R.S., that is licensed to make supervised loans pursuant to section 5-2-302, C.R.S., and that is either:

(I) A public entity, defined as an entity that has issued voting securities that are listed on a national security exchange registered under the federal "Securities Exchange Act of 1934"; or

(II) An entity in which all of the outstanding voting securities are held, directly or indirectly, by a public entity;

(e) An entity in which all of the outstanding voting securities are held, directly or indirectly, by a public entity also owning, directly or indirectly, all of the voting securities of a supervised lender, as defined in section 5-1-301 (46), C.R.S., that is licensed to make supervised loans pursuant to section 5-2-302, C.R.S.;

(f) A federal housing administration approved mortgagee;

(g) A federally-chartered credit union doing business in Colorado or a state-chartered credit union, as defined in section 11-30-101, C.R.S.;

(h) An agency of the federal government; or

(i) A federally-created corporation that originates, guarantees, or purchases loans.

(1.6) Any owner of an evidence of debt who elects to foreclose without the original evidence of debt pursuant to paragraph (b) of subsection (1) of this section and subsection (1.5) of this section shall by operation of law be deemed to have agreed to indemnify and defend any person liable for repayment of any portion of the original evidence of debt in the event that the original evidence of debt is presented for payment for any amount other than a noted deficiency following issuance of a certificate of purchase pursuant to section 38-38-401 and any person who sustains a loss due to any title defect that results from reliance upon a foreclosure sale at which the original evidence of debt was not presented. Such indemnity shall be limited to actual economic loss suffered together with any court costs and reasonable attorney fees incurred in defending a claim brought as a direct and proximate cause of the failure to produce the original evidence of debt. The public trustee shall be immune from any claims for liability or damages resulting from any injury as described under this subsection (1.6).

(1.7) In the event that the owner of an evidence of debt commences a foreclosure without production of the original evidence of debt, the owner of the evidence of debt may submit the original evidence of debt to the public trustee or sheriff prior to the occurrence of the foreclosure sale. In such event, the sale shall be conducted and administered as if the original evidence of debt had been submitted at the time of commencement of such proceeding and any indemnities deemed to have been given by the owner of the evidence of debt under subsection (1.6) of this section shall be considered null and void.

(1.8) In the event that a foreclosure is conducted by an alleged owner of the evidence of debt where the evidence of debt has not been produced and it is subsequently determined that the alleged owner was not the true and lawful owner of the evidence of debt, the only claims for the true and lawful owner of the evidence of debt shall be solely against the indemnitor as provided in subsection (1.6) of this section and not against the real property. Nothing in this section shall preclude a person liable for repayment of the evidence of debt from pursuing remedies allowed by law, including, but not limited to, actions for fraud.

(2) Only for the purposes of articles 37 to 40 of this title, the following shall be presumed to be the owner of such evidence of debt:

(a) The person who is the obligee of and who is in possession of an original evidence of debt;

(b) The person in possession of an original evidence of debt together with an original assignment or conveyance thereof to such person; or

(c) The person in possession of a negotiable instrument evidencing a debt which has been duly negotiated to such person or to bearer or indorsed in blank.

(3) Within ten working days following the receipt of such notice of election and demand for sale, the public trustee shall commence a foreclosure proceeding by causing a copy of the same to be recorded in the office of the county clerk and recorder of the county in which the property described in such notice of election and demand for sale is located, and the recording fee for the same shall be collected as part of the expense of such sale.

(4) The public trustee shall thereupon publish a notice of sale which advertises the property described in such notice of election and demand for sale in accordance with the terms of sale specified in such deed of trust; except that such sale shall be held at the place designated in section 38-38-110, and the notice of sale shall designate the actual place of sale, the date and time of sale, and the recording information of the deed of trust being foreclosed and shall comply with section 24-70-109, C.R.S.

(5) The date specified in the notice of sale by the public trustee for the sale of property by virtue of the foreclosure of a deed of trust shall be fixed in accordance with the provisions of section 38-38-108.

(6) Unless a longer period of advertising is prescribed in a deed of trust, all deeds of trust shall be deemed to prescribe advertising the notice of sale in some newspaper of general circulation in the county or counties in which the property described in such notice of sale is located for four weeks, which means publication once each week, for five successive weeks. The fees to be allowed for printing such notices of sale shall be as provided by law for the publication of the legal notices or advertising. It is a duty of the public trustee to audit all bills for printing such notices of sale.

(7) (a) The public trustee, within twenty days after the date of the first publication of the notice of sale, shall mail a copy of such notice as it appeared in a newspaper of general circulation to the grantor at the address given in the deed of trust, and the public trustee shall also mail a like notice to each person who appears to have acquired a record interest in the property described in such notice of sale subsequent to the recording of such deed of trust, whether by deed, mortgage, judgment, or any other instrument of record, and, if the foreclosing party has a lien with priority over the lessee or lessees who have unrecorded possessory interests in the property being foreclosed and desires to terminate such possessory interests with the foreclosure, as evidenced by the inclusion of the names of the lessee or lessees or the occupant or occupants in the list supplied the public trustee pursuant to subsection (1) of this section, the public trustee shall also mail such a notice to the lessee or lessees of the premises as provided in section 38-38-305 (1.5). Such notice shall be mailed to such person at the address given in the recorded instrument, or, if such notice is being sent to the lessee or lessees of the premises, such notice shall be mailed as provided in section 38-38-305 (1.5). Postage costs under this section shall be part of foreclosure costs. If such recorded instrument does not give such address or if only the county and state are given as the address of such person, it will not be necessary to mail any notice to such person. It is not necessary to mail a copy of said printed notice to any person whose interest does not appear of record at the time said notice of election and demand for sale is recorded.

(b) At the request of the owner of an evidence of debt which is secured by the deed of trust being foreclosed, the public trustee shall correct any errors in the published notice of sale and shall postpone the original sale to a future date so as to permit a corrected notice of sale to be published in accordance with subsection (6) of this section, which future date may be subsequent to the expiration of the sixty-day period prescribed by section 38-38-108 (1), if necessary, but in no event later than thirty days after the fifth publication of the corrected notice of sale. The public trustee shall mail a copy of the corrected notice of sale as it appears in a newspaper of general circulation within ten days of the first correct publication in the same manner as set forth in paragraph (a) of this subsection (7). On the originally scheduled sale date as stated in the incorrect publication of the notice of sale, the public trustee shall make an oral announcement of the date and time of said postponed sale.

(8) The public trustee shall secure one originally executed copy of the notice of election and demand for sale and also a printed copy of the notice of sale as published in a book to be kept for that purpose, which book shall be open for the inspection of the public at all reasonable hours.

(9) All notices which the public trustee is required by law to mail pursuant to this article shall be mailed to the names and addresses set forth on the list, as amended or supplemented, required by paragraph (f) of subsection (1) of this section. The public trustee shall have no liability for any errors or omissions in the names and addresses set forth on said list, as amended or supplemented.

(10) Whenever such public trustee makes a sale of the property described in a deed of trust, such public trustee shall enter in a book to be kept for that purpose a record of the name of the person executing such deed of trust, the date thereof, a brief description of the property therein described, the date of the sale, the name of the newspaper printing the notice of the sale, a list of the names and addresses of the persons to whom the printed notice was mailed, the name and last post-office address of the purchaser at such sale, and the amount at which such property was sold in separate parcels, if so sold, or en masse. The public trustee shall not be entitled to any fees whatever for keeping such notice or record.

(11) Whenever the owner of an evidence of debt which is secured by a deed of trust files with the public trustee, prior to the sale, a written withdrawal of the notice of election and demand for sale, the foreclosure proceedings shall thereupon terminate. The public trustee shall record the withdrawal and collect all expenses actually incurred and, in addition thereto, a withdrawal fee equal to the amounts authorized under section 38-37-104 (1) (b) and, if applicable, section 38-38-104 (2) (c) (II).

(12) The owner of an evidence of debt which is secured by a deed of trust may not elect to foreclose the lien of said deed of trust against only a portion of the property encumbered by said deed of trust unless such portion is so encumbered as a separate and distinct parcel or lot by the original or an amended deed of trust. Any foreclosure conducted by a public trustee pursuant to a power of sale contained in a deed of trust against less than all of the property then encumbered by the lien of such deed of trust shall not affect the lien of such deed of trust nor the power of sale contained therein as to the remaining property.

(13) Any notice of election and demand for sale filed with the public trustee and any notice of sale published and mailed in accordance with the provisions of this section shall contain the following:

(a) A statement that the property described in such notices is all of the property then encumbered by the lien of the deed of trust or a statement that the property described in such notices is only a portion of the property then encumbered by the lien of the deed of trust; and

(b) A statement of the amount of the outstanding principal balance due and owing upon the evidence of debt secured by the deed of trust being foreclosed as set forth in the affidavit required by paragraph (e) of subsection (1) of this section.

(14) In the event that the amount of the outstanding principal balance due and owing upon the evidence of debt secured by the deed of trust being foreclosed is erroneously set forth in the statement required by paragraph (b) of subsection (13) of this section, such error shall not affect the validity of the notice of election and demand for sale, the notice of sale, any other documents executed in connection therewith, or any public trustee sale which may be held pursuant to such notices.