Colorado § 18-5-802 - Equity skimming of real property.

§ 18-5-802. Equity skimming of real property.

(1) A person commits the crime of equity skimming of real property if the person knowingly:

(a) Acquires an interest in real property that is encumbered by a loan secured by a mortgage or deed of trust and the loan is in arrears at the time the person acquires the interest or is placed in default within eighteen months after the person acquires the interest; and

(b) Either:

(I) Fails to apply all rent derived from the person's interest in the real property first toward the satisfaction of all outstanding payments due on the loan and second toward any fees due to any association of real property owners that charges such fees for the upkeep of the housing facility, or common area including buildings and grounds thereof, of which the real property is a part before appropriating the remainder of such rent or any part thereof for any other purpose except for the purpose of repairs necessary to prevent waste of the real property; or

(II) After a foreclosure in which title has vested pursuant to section 38-38-501, C.R.S., collects rent on behalf of any person other than the owner of the real property.

(2) Repealed.

(3) Equity skimming of real property is a class 5 felony.

(4) It shall be an affirmative defense to this section:

(a) That all deficiencies in all underlying encumbrances at the time of acquisition have been fully satisfied and brought current and that, in addition, any regular payments on the underlying encumbrances during the succeeding nine months after the date of acquisition have been timely paid in full; except that this shall not be an affirmative defense to a crime that includes the element set forth in subparagraph (II) of paragraph (b) of subsection (1) of this section;

(b) That any fees due to an association of real property owners for the upkeep of the housing facility, or common area including buildings and grounds thereof, of which the real property is a part have been paid in full.

(5) The provisions of this section shall not apply to any bona fide lender who accepts a deed in lieu of foreclosure or who forecloses upon the real property.

(6) The provisions of this section shall not apply to any bona fide purchaser who acquires fee title in any real property without agreeing to pay all underlying encumbrances and takes fee title subject to all underlying encumbrances, if the following written, verbatim warning was provided to the seller in capital letters of no less than ten-point, bold-faced type and acknowledged by the seller's signature:

WARNING: PURCHASER, __________, WILL NOT ASSUME OR PAY ANY PRESENT MORTGAGE, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AGAINST THE PROPERTY. THE SELLER, __________, UNDERSTANDS HE/SHE WILL REMAIN RESPONSIBLE FOR ALL PAYMENTS DUE ON SUCH MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AND FOR ANY DEFICIENCY JUDGMENT UPON FORECLOSURE.

I HAVE HAD THE FOREGOING READ TO ME AND UNDERSTAND THE PURCHASER, __________, WILL NOT ASSUME ANY PRESENT MORTGAGES, DEEDS OF TRUST, OR OTHER LIENS OR ENCUMBRANCES AGAINST THE PROPERTY DESCRIBED AS __________.

DATE _______________ SELLER _______________.

Source: L. 87: Entire part added, p. 671, § 1, effective July 1. L. 89: (1)(b) and (4) amended, p. 907, § 1, effective April 24; (2) repealed and (3), (4)(a), and (6) amended, pp. 861, 838, §§ 156, 73, effective July 1. L. 2009: (1) and (4)(a) amended, (HB 09-1227), ch. 155, p. 668, § 1, effective September 1.

ANNOTATION

Law reviews. For article, "Equity Skimming: A Crisis in Residential Real Estate", see 19 Colo. Law. 871 (1990).

Violation of this section subjects attorney to disciplinary action as engaging in conduct involving dishonesty, conduct reflecting adversely on the practice of law, and conduct which constitutes the violation of a criminal law. People v. Phelps, 837 P.2d 755 (Colo. 1992).