Real Estate Law Forum
| Publication year | 1983 |
| Pages | 1438 |
| Citation | Vol. 12 No. 9 Pg. 1438 |
1983, September, Pg. 1438. Real Estate Law Forum
In response to the question posed by Robert Brown of Sherman & Howard in the "Real Estate Law Newsletter" in the July, 1983 Colorado Lawyer, I have the following comments: . . . Robert Brown . . . asked: "Where a promissory note permits acceleration, does the cure amount include interest at the default rate under the note on the accelerated principal or only the late installment of principal?" In light of the express language of the "cure" statute and upon consideration of the policy behind this statute, it has been our practice to include in the cure amount interest at the default rate under the note on the accelerated principal so long as the language of the pertinent note or deed of trust allows the accrual of penalty interest on the unpaid principal balance.
Section 38-39-118, C.R.S. 1973 (1982 Repl. Vol.) allows a debtor to cure the default by paying to the officer conducting the sale the following:
This language clearly states that in order to cure, the debtor must pay all delinquent interest payments exclusive of that portion of the principal which would not have been due in the absence of acceleration. Note that interest which would not have been due in the absence of acceleration is not excluded from the amounts which the debtor must pay. Thus, the statute by its terms seems to allow penalty interest accrued on the accelerated principal to be collected for a cure although the accelerated principal itself may not be... all delinquent principal and interest payments which are due as of the date of such payment exclusive of that portion of the principal which would not have been due in the absence of acceleration, plus all costs, expenses, late charges, attorneys' fees and other fees incurred by the holder of such note, deed of trust, or mortgage as of the date of payment in connection with such proceedings for collection and foreclosure. (Emphasis added.)
This statute was enacted by the legislature in order to permit a debtor to prevent a foreclosure by allowing the debtor to cure and thus to reinstate the note in accordance with its terms. I have found no indication of a legislative intent to allow debtors to avoid valid interest penalties resulting from acceleration of the note due to the debtor's default.
This conclusion applies only...
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