Colorado Deficiency Judgment Law

Foreclosures in Colorado can be conducted both judicially and non-judicially.  Non-judicial foreclosure is the most common type of foreclosure in Colorado, but it is usually supervised by the Court.  A deficiency is created when a lender forecloses on a property and receives less than what was owed on the property.  A deficiency judgment is created when a lender sues and gets a judgment on the amount still owed on the loan after the foreclosure.  Colorado has the following restrictions on obtaining a deficiency judgment:

  • Colorado Statute 38-38-106(6) states that the holder (lender) must make a bid at the foreclosure sale of at least the lender’s good faith estimate of the fair market value of the property less foreclosure expenses and certain outstanding taxes and liens.  The holder is not required to bid more than is owed to the lender.
  • The failure of the lender to make this bid will not invalidate the foreclosure, but it may be raised by the borrower as a defense to any deficiency lawsuit filed by the lender.

What the fair market value of a property is can be difficult to determine and the homeowner and the mortgage company will likely disagree as to that value.  If you live in Colorado and have questions about whether your particular situation might give rise to a deficiency judgment, speak to an attorney in your area for specific guidance.  Or continue searching this site for potential foreclosure options

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