Colorado Property Redemption Rights After Foreclosure

In Colorado, property redemption rights after foreclosure belong to junior lienholders, not to the former owner. The legislature eliminated the owner’s post-sale redemption period effective January 1, 2008, so once the public trustee’s sale happens, the borrower cannot buy the property back. Owners who want to stop a foreclosure have to act before the sale date, through the separate right to cure.¹

This is the single biggest misconception about Colorado foreclosure. The redemption procedure in Part 3 of Article 38 is written for lienors only, and it applies to public trustee (nonjudicial) foreclosures. Judicial foreclosures may follow different rules and do not always provide the same opportunities.

The Owner’s Only Option: Cure Before the Sale

If you are the property owner, the tool available to you is the right to cure under C.R.S. 38-38-104. You can stop the foreclosure by paying everything past due, plus the lender’s allowable fees and costs. You do not have to pay off the full loan balance. Once you cure, the loan returns to its normal schedule.²

Two deadlines govern the cure:

File a written notice of intent to cure with the public trustee at least fifteen calendar days before the scheduled sale date.
Pay the full cure amount by noon the day before the sale.

The right to cure is not limited to the borrower. Co-owners, the borrower’s heirs or legal representatives (if the borrower has died or become incapacitated), and holders of junior liens can all cure. Residential sales are typically scheduled 110 to 125 calendar days after the Notice of Election and Demand is recorded, and agricultural sales 215 to 230 days, which usually gives several months to put the money together.²

Who Can Redeem After the Sale

A junior lienor is any holder of a lien subordinate to the lien being foreclosed. Second mortgage holders, judgment creditors, and holders of recorded mechanic’s liens are common examples. To qualify, the lien must have been recorded before the lender filed its Notice of Election and Demand.¹

If a lien was recorded in the wrong county by mistake, the lienor can still redeem as long as the lien is re-recorded in the correct county at least fifteen calendar days before the sale.

The Redemption Timeline

Everything is measured in business days from the sale date, and every deadline closes at noon.

Within 8 business days after the sale: each junior lienor who wants to redeem must file a notice of intent to redeem with the public trustee. (A homeowners’ association acting as an “alternate lienor” on a unit association lien has 30 days instead.)
Within 13 business days after the sale: the holder of the certificate of purchase must submit a redemption statement to the public trustee. This deadline runs from the sale, not from when the certificate holder receives notice.
Between 15 and 19 business days after the sale: the most senior junior lienor who filed a timely notice may redeem.
Each successive 5-business-day window: if the most senior redeemer declines or lets the window pass, the next lienor in priority order gets five business days to redeem, and so on down the priority ladder.

Miss your five-day window and the right is forfeited. The property either moves to the next eligible lienor or, if no one else redeems, stays with the last successful redeemer (or the certificate of purchase holder if no one redeemed at all).¹

Filing the Notice of Intent to Redeem

The notice has to come with supporting paperwork. You need the original recorded lien instrument (or a certified copy), along with any assignment documents if the lien has changed hands. A “qualified holder” can submit a copy instead of the original. You also need a signed, acknowledged statement from the lienor, or a signed statement from the lienor’s attorney, detailing the amount required to redeem the lienor’s own lien, including per diem interest calculated through the nineteenth business day after the sale.¹

How Much It Costs to Redeem

The redemption amount paid by the first lienor to redeem is the foreclosure sale price plus accrued interest, attorney fees, and any advances the certificate holder made for property taxes or insurance after the sale. If a later lienor redeems from an earlier one, that lienor pays what the prior redeemer paid, plus any additional legally permitted costs. The public trustee issues a certificate of redemption with each successful redemption.

Interest Rate

Interest is charged at the default rate stated in the evidence of debt, the deed of trust, or other foreclosed lien. If the documents give different rates, the rate in the evidence of debt controls. If the evidence of debt is silent, the deed of trust or other lien controls. There is no separate statutory fallback rate; one of the loan documents will always govern.³

If the Certificate Holder Doesn’t Provide a Statement

The public trustee does not simply wait. The trustee may calculate the redemption figure independently, using the winning bid amount plus interest at the regular rate specified in the loan documents, prorated daily from the sale date through the expected redemption date, and transmit the estimate to the party who filed the intent to redeem before the redemption period opens.¹

If a party believes a redemption statement materially misstates the amount owed, they can challenge it in court. A judge who agrees must award the aggrieved party court costs and reasonable attorney fees on top of any other relief.

What Happens When Nobody Redeems

If no one files a notice of intent to redeem, title vests in the certificate of purchase holder at the close of the public trustee’s business day eight business days after the sale. The public trustee then executes and records a confirmation deed no earlier than ten and no later than fifteen business days after title vests and all statutory fees and costs have been received.⁴

If one or more lienors redeemed and then the redemption periods ran out, title vests in the holder of the last certificate of redemption. Either way, the title is free and clear of all liens and encumbrances that were junior to the foreclosed lien.

For junior lienholders who missed the deadline, the consequences are severe. Their liens are wiped out, and they cannot recover the underlying debt from the property. Courts can grant relief in rare cases where a lienor was affirmatively prevented from redeeming through no fault of their own, but those challenges are difficult to win.

Tax Consequences to Expect

A foreclosure can trigger tax liability in two ways: gain on the deemed sale of the property, and income from canceled debt. Which applies depends on whether you were personally liable for the loan.

If you were personally liable (a recourse loan) and the property’s fair market value was less than the outstanding loan balance, the difference may be treated as canceled debt income. The lender is required to file Form 1099-C for canceled debts of $600 or more.⁵ If you were not personally liable (a nonrecourse loan), the amount you “realize” on the deemed sale includes the full outstanding debt even when it exceeds the property’s fair market value, but there is no separate canceled debt income.

Several exclusions can reduce or eliminate canceled debt income:

Debt discharged in a Title 11 bankruptcy case is excluded from income.
If your total liabilities exceeded the fair market value of your total assets immediately before the cancellation, you can exclude canceled debt up to the amount by which you were insolvent.
Qualified principal residence indebtedness, up to $750,000 of mortgage debt on your main home, was excludable, but this exclusion expired for discharges on or after January 1, 2026, unless the discharge was subject to a written arrangement entered into before that date.⁶

The expiration of the principal residence exclusion is a meaningful change for homeowners losing a home. Without it, canceled mortgage debt that would have qualified now counts as taxable income unless the bankruptcy or insolvency exclusions apply. Talking to a tax professional before or shortly after the sale is usually worth the cost, because the difference between owing and not owing tax on tens of thousands of dollars of canceled debt often turns on calculations you have to get right the first time.

1
Justia. Colorado Revised Statutes Section 38-38-302 – Redemption by Lienor – Procedure – Definition
2
FindLaw. Colorado Code 38-38-104 – Right to Cure
3
FindLaw. Colorado Code 38-38-302 – Redemption by Lienor – Procedure – Definition
4
Justia. Colorado Code 38-38-501 – Title Vests Upon Expiration of Redemption Periods – Confirmation Deed – Definition
5
Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments
6
Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness