As we anticipated, the 2012 Colorado Legislative Session may be a busy one as it relates to laws affecting associations. On opening day, SB12-030 was introduced as a “clean-up” bill for certain administrative provisions of the public trustee foreclosure statute. However, in our opinion it does more than that. One significant proposed amendment is to 38-38-302 to require that individuals holding an assignment of lien must attach a copy of the the lien assignment to any Notice of Intent to Redeem filed with the Public Trustee. Why does this matter to your association?
1) An intent to redeem must be filed within 8 days after a sale and often times the sale of a lien by an association doesn’t become viable until after the sale date. This means that an intent may be filed to protect the right to redeem but the sale of the lien not occur until a day or so before the redemption deadline. This would impede potential sales;
2) Public Trustees may use the purchase price in the assignment of lien to limit what the investor/assignee can receive in subsequent redemptions. In simple form, if the investor paid $500 to purchase a lien with a $1000 balance and then redeems the property but a junior lien holder wants to redeem from the investor the public trustee may say that the investor is only allowed to receive $500 NOT the $1000 lien balance. It is our understanding that some public trustees have taken this position in the past. This again impedes potential sales of association liens.
We will continue to analyze this proposed bill and provide our insights into its impact. We will also have your annual Legislative Tracking Report online soon for your ease in tracking the status of bills.