Chapter 24 - § 24.2 • JUDICIAL FORECLOSURE

• Jurisdiction: Colorado

§ 24.2 • JUDICIAL FORECLOSURE

§ 24.2.1—In General

A mortgage can be foreclosed only by sale;²² there is no strict foreclosure of a mortgage in Colorado.²³ The necessity for a foreclosure and sale cannot be avoided by the device of placing a deed in escrow to be delivered upon the borrower's default.²⁴ A deed of trust may be treated as a mortgage and foreclosed by judicial proceedings.²⁵ A deed of trust that names any person other than a public trustee as trustee, or that secures an obligation other than an evidence of debt, is deemed to be a mortgage and must be foreclosed by judicial proceedings.²⁶ For limitations of actions to foreclose a mortgage or deed of trust, see § 11.9.8.

An officer has no responsibility or liability for unknown damage, debt, or liens when a third party seeks a judicial foreclosure and sale.²⁷

§ 24.2.2—Parties

The grantor of a deed of trust need not be named as a party in a foreclosure action where he or she has disposed of all of his or her interest in the property and no personal judgment is sought against him or her.²⁸ Failure to name parties having a record interest in the property renders the decree void as to them.²⁹ One not having a record interest in the property need not be named, and the decree will be valid as against him or her.³⁰ Failure to name a junior encumbrancer does not render a decree void as to the parties who appear.³¹ A foreclosure defective for want of parties does not destroy the security; the mortgage may still be enforced by suit against those as to whom the first foreclosure is void.³²

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Notes:

^[22] C.R.S. § 38-35-117.

^[23] Nevin v. Lulu & White Silver Mining Co., 15 P. 611 (Colo. 1887); Marshall v. Russell, 158 P. 141 (Colo. 1916); Bonfils v. McDonald, 270 P. 650 (Colo. 1928) (assignment of leasehold for security); Larson v. Hinds, 394 P.2d 129 (Colo. 1964). See Pope v. Parker, 271 P. 1118 (Colo. 1928) (contract held to be mortgage).

^[24] Larson v. Hinds, 394 P.2d 129 (Colo. 1964); Weil v. Colo. Livestock Prod. Credit Ass'n., 494 P.2d 134 (Colo. App. 1971) (deed delivered to lender).

^[25] Neikirk v. Boulder Nat'l Bank, 127 P. 137 (Colo. 1912); Handy v. Rogers, 351 P.2d 819 (Colo. 1960). See C.R.S. § 38-38-701(4).

^[26] C.R.S. § 38-39-101.

^[27] C.R.S. § 38-38-702(3).

^[28] De Cunto, Barra & Co. v. Johnson, 70 P. 955 (Colo. App. 1902).

^[29] Pioneer State Bank v. Herron, 272 P. 631 (Colo. 1928).

^[30] Stoll v. Colo. Inv. & Realty Co., 241 P. 725 (Colo. 1925). See C.R.C.P. 105(b).

^[31] Watkins v. Perry, 1914...