Is your association receiving notice whenever a public trustee foreclosure is initiated?  If not, it could be because your association has not updated or recorded a document specifying where notices of foreclosures must be sent.

When a public trustee foreclosure is initiated, “interested parties” are notified.  An interested party is “Each person, except the public trustee, who appears to have an interest in the property described in the combined notice by an instrument recorded prior to the date and time of the recording of the notice of election and demand…”   An association is an “interested party,” by the nature of its statutory lien. Simple enough, right? Yet, it doesn’t explain those times your association didn’t find out about the foreclosure until after the property sold – those times when the association failed to receive the requisite Superlien payment and perhaps also missed out on collecting overbid funds if the property was sold to a third party. So what happened?

Colorado Revised Statutes require the public trustee to mail a combined notice of foreclosure that provides information about the pending foreclosure, including upcoming important dates and deadlines, to the persons listed on a mailing list.  But here’s the catch: the statute specifically states that “If a recorded instrument does not specify the address of the party purporting to have an interest in the property under such recorded instrument, the party shall not be entitled to notice and any interest in the property under such instrument shall be extinguished upon the execution and delivery of a deed pursuant to section 38-38-501.” [Emphasis added].

In other words, if an association has not ensured a document was recorded with the county specifying the association’s proper address, such association will not receive notice of a foreclosure, and will be losing its ability to participate in, and potentially benefit from, the sale of the property.

Recording the notice certainly doesn’t stop the public trustee foreclosure from moving forward but it does ensure the association will receive important information about the foreclosure and be aware of filing deadlines that ultimately may result in monies to the association.

In order to receive notice and fully participate in the public trustee foreclosure process, make sure your association has recorded a “Declaration of Address for Foreclosure Notification” with the Clerk and Recorder in the county in which your association is located.

For more information about public trustee foreclosure in general, please see this flowchart or contact any Altitude Community Law attorney at 303.432.9999.