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Revisions to Foreclosure Statutes Provide Definition of “Residential Property”

Senate Bill 12-030, which became effective on September 1, 2012, amends Section 38-38-105 of the Colorado Revised Statutes as it relates to the requirement to post notice of a hearing concerning a foreclosure sale. The statute requires a lender to post a notice when the property being foreclosed is residential property consisting of one to four family units. The amendment does not change that requirement, but clarifies that a property is not considered residential property for purposes of posting requirements unless it is constructed and occupied.

Section 38-38-105 requires that a foreclosing party obtain an order authorizing sale prior to a foreclosure sale. To obtain an order authorizing sale, the foreclosing party must, among other requirements, provide notice of the court hearing to all persons and entities who have a recorded interest in the property. Such a notice is mailed to the addresses of the interested parties and filed with the clerk of the court for posting.

Section 38-38-105(3) provides additional protection for residential property by requiring notice of the court hearing to be posted in a conspicuous place on such residential property. Prior to the enactment of Senate Bill 12-030, Section 38-38-105(3) did not define what constituted “residential property.” As amended, Section 38-38-105 now defines the term “residential property” as a “dwelling,” as defined in Section 5-1-301 of the Colorado Revised Statutes, that is constructed and occupied. Section 5-1-301 defines a dwelling as a “residential structure or mobile home that contains one to four family housing units or individual units of condominiums or cooperatives.” Accordingly, notices of foreclosure hearings for residential properties must be posted on property consisting of one to four family housing units only if such units are constructed and occupied.

Otten Johnson’s attorneys have substantial experience counseling clients¬†with their real estate matters. For more information on this Otten Johnson Alert please contact any of the attorneys in the Real Estate practice group (for a listing, click here).