Chapter 24 - § 24.9 • REDEMPTION

• Jurisdiction: Colorado

§ 24.9 • REDEMPTION

§ 24.9.1—In General

Redemption is a statutory right.³⁹⁸ It is not a right derived from principles of equity, but depends on the provisions of the statute creating the right.³⁹⁹ It appears that prior to 1894, no right of redemption existed with respect to a mortgage or trust deed containing a power of sale.⁴⁰⁰ In the absence of statute, there is no redemption from a sale made pursuant to a partition action.⁴⁰¹ The right of redemption must be exercised in strict compliance with the statute's terms⁴⁰² and cannot be enlarged by judicial interpretation.⁴⁰³ The redemption laws were enacted with the beneficent view of helping creditors recover their just demands, nothing more. The redemption laws may not be used as an instrument of oppression when substantial justice can be done without enforcing them to the letter.⁴⁰⁴ However, the statute allowing redemption should be liberally construed to the end that all the property of a debtor may pay as many debts as possible.⁴⁰⁵

A lienor who holds a certificate of purchase cannot, without the consent of the junior lienor, pay off a junior lien and thereby prevent the junior lienor from redeeming,⁴⁰⁶ but an owner of the property may do so.⁴⁰⁷

A lienor holding a lien on less than all of, or a partial interest in, the property sold at sale must redeem the entire property. No partial redemption is permitted.⁴⁰⁸ It was formerly held that a junior lienor with a lien upon an undivided interest in the property may redeem the entire property if there are no other lienholders with liens on the other undivided portion of the property,⁴⁰⁹ but that where there were competing lienholders, each having a superior lien on a separate interest in the property, each lienor could redeem only that portion of the property on which he or she had a lien.⁴¹⁰

§ 24.9.2—Redemption Amount

The redemption amount is the amount for which the property was sold with interest from the date of sale, together with all sums allowed under C.R.S. § 38-38-301.⁴¹¹ Interest on the amount for which the property was sold is charged at the default rate specified in the evidence of debt, deed of trust, or other lien being foreclosed or, if not specified, at the regular rate specified in the evidence of debt, deed of trust, or other lien being foreclosed. If different interest rates are specified in the evidence of debt, deed of trust, or other lien being foreclosed, the interest rate specified in the evidence of debt prevails. If the evidence of debt does not specify an interest rate, including a default interest rate, the applicable interest rate as specified in the deed of trust or other lien being foreclosed applies.⁴¹² If not otherwise provided for, interest will be at the statutory rate specified in C.R.S. § 5-12-101.⁴¹³ The holder of a certificate of purchase may pay at any time after the sale and during the redemption period the fees and costs that the holder may pay and may include any such amounts as part of the amount to be paid upon redemption.⁴¹⁴ A redeeming lienor may, during his or her redemption period, pay the fees and costs that the holder of the evidence of debt may pay.⁴¹⁵

Expenses not incurred in connection with the foreclosure are not allowable upon redemption, even though included in the bid.⁴¹⁶ Prior to the 1987 amendment of the foreclosure statute,⁴¹⁷ there was no provision for the payment of the purchaser's attorney fees.⁴¹⁸

When a foreclosing creditor bids in the amount of its debt, the debtor may challenge the propriety of sums claimed by the purchasing creditor to have been owed at foreclosure.⁴¹⁹ The basis for this rule lies in the purpose sought to be furthered by foreclosure and redemption procedures: to permit creditors to recover only their just demands.⁴²⁰

For acceptance as full redemption of an amount less than the amount set out above, see § 24.9.4 under the subheading "Statement of Redemption."

If an aggrieved person contests the amount set forth in the statement filed by a redeeming lienor or by a holder of a certificate of purchase and a court determines that the redeeming lienor or holder of the certificate of purchase has made a material misstatement on the statement with respect to the amount due and owing to the redeeming lienor or the holder of the certificate of purchase, the court must, in addition to other relief, award to the aggrieved person the aggrieved person's court costs and reasonable attorney fees and costs.⁴²¹

§ 24.9.3—Who May Redeem

Requirements for redemption: A lienor or the assignee of a lien is entitled to redeem if the following requirements are met to the officer's satisfaction:⁴²²

• The lienor's lien is a deed of trust or other lien that is created or recognized the state or federal statute or by judgment or a court of competent jurisdiction.
• The lien is a junior lien.⁴²³
• The lienor's lien appears by instruments that were duly recorded in the office of the clerk and recorder of the county prior to the recording of the notice of election and demand or lis pendens and the lienor is one of the persons who would be entitled to cure, regardless of whether such lienor filed a notice of intent to cure. If, prior to the date and time of the recording of the notice of election and demand or lis pendens, a lien was recorded in an incorrect county, the holder's rights are valid only if the lien is rerecorded in the correct county at least 15 calendar days prior to the actual date of sale.⁴²⁴
• The lienor has, within eight business days after the sale, filed a notice with the officer of the lienor's intent to redeem. A lienor may file a notice of intent to redeem more than eight business days after the sale if:

○ No lienor junior to the lienor seeking to file the late intent to redeem has redeemed.
• • ○ The redemption period for the lienor seeking to file the late intent to redeem has not expired.
•• ○ A redemption period has been created by the timely filing of a notice of intent to redeem.
• • ○ The notice of intent to redeem is accompanied by a written authorization from the attorney for the holder of the certificate of purchase according to the records of the officer conducting the sale, or, if no attorney is shown, then the holder of the certificate of purchase, or, if a redemption has occurred, from the immediately prior redeeming lienor, authorizing the officer to accept such notice of intent to redeem.

• The lienor has attached to the notice of intent to redeem the original instrument and any assignment of the lien to the person attempting to redeem, or certified copies thereof, or in the case of a qualified holder, a copy of the instrument evidencing the lien and any assignment of the lien to the person attempting to redeem. (If the original instrument is delivered to the officer, the officer must return the instrument to the lienor and retain a copy.)
• The lienor has attached to the notice of intent to redeem a signed and properly acknowledged statement of the lienor, or a signed statement by the lienor's attorney, setting forth the amount required to redeem the lienor's lien, including per diem interest, through the end of the 19th business day after the sale. If the amount required to redeem the lienor's lien shown on the statement is zero, the lienor has no right to redeem unless he is a lessee, easement holder, or installment land contract vendee.⁴²⁵

A redeeming junior lienor need not comply with the homestead exemption statute.⁴²⁶ A redeeming junior lienor is not required to foreclose his or her lien⁴²⁷ or obtain a judgment,⁴²⁸ but is entitled to a deficiency judgment to the extent that the debt exceeds the fair market value of the property.⁴²⁹ Fair market value is the price a buyer is willing to pay and the seller is willing to accept under circumstances that do not amount to coercion.⁴³⁰ A junior lienor who fails to redeem loses his or her interest in the property.⁴³¹ The United States is not required to file a notice of intention to redeem.⁴³²

Lessee, easement holder: A lessee of property or the holder of an easement encumbering property is considered as a lienor, but without any lien amount, and is subject to all of the requirements with respect to lienors. If a subsequent lienor redeems from the redemption of a lessee or easement holder, the subsequent lienor takes the property subject to such lease or easement.⁴³³ If a lessee fails to redeem, his or her lease is extinguished.⁴³⁴

Installment land contract vendor: An installment land contract vendor of the property is considered as a lienor for the unpaid portion of the purchase price, interest, and other amounts provided under the installment land contract, and is subject to all the requirements with respect to lienors. He or she is not considered an owner as to any portion of the property.⁴³⁵

Holder of certificate of purchase: The term "lienor" includes the holder of a certificate of purchase for the property issued upon the foreclosure of a lien thereon, and the priority of the lien represented by the certificate of purchase is the same as the priority of the lien foreclosed by such certificate of purchase holder.⁴³⁶

Judgment creditor: A judgment creditor whose judgment has been made a lien of record and who has complied with the other conditions required of a lienor may redeem as a lienor.⁴³⁷ The term "judgment creditor" means a judgment creditor of the person whose lands are sold; it does not include a judgment creditor of one having no interest in the land.⁴³⁸ Formerly, it was not necessary that judgment creditors have a lien; the redemption procedure itself included the levying of an execution,⁴³⁹ but no sale under the execution was required.⁴⁴⁰ The purpose of redemption is to help creditors recover their just demands and nothing more. The creditor's duty is to accept the tender and to assist in the satisfaction of the judgment. The debtor has a legal right to pay a judgment and thereby prevent a redemption by the judgment creditor or his or her...