Colorado § 38-38-201 - Foreclosure of installments without acceleration.

§ 38-38-201. Foreclosure of installments without acceleration.

(1) Any mortgage or deed of trust securing an evidence of debt payable by installments giving the right to declare the whole indebtedness due and payable on default of the payment of any part thereof may, at the election of the holder of the evidence of debt, be foreclosed as to any one or more past due installments of principal or interest as if the mortgage or deed of trust separately secured each of the past due installments, and, in the event of such election, the officer conducting the foreclosure shall apply the following provisions:

(a) Attorney fees allowed for the attorney for the holder of the evidence of debt shall not exceed ten percent of the amount of principal, interest, and late charges included in the bid prepared in accordance with section 38-38-106.

(b) Fees and costs allowable under section 38-38-107 may be included in the bid.

(c) The amount for which the property is foreclosed shall include past due installments and all sums advanced for fees and costs by the holder of the evidence of debt pursuant to the terms of the mortgage or deed of trust securing the debt.

(d) Not more than one foreclosure proceeding may be commenced pursuant to this section in a period of twelve months.

(e) The notice of election and demand or complaint filed to commence the foreclosure shall contain the following statement: "This is a foreclosure on one or more installments, without acceleration, as authorized by section 38-38-201, Colorado Revised Statutes."

(f) No deficiency bid shall be made by the holder of the evidence of debt or accepted by the officer conducting the foreclosure sale. Upon the sale and the expiration of all redemption periods, the maker of the secured indebtedness and all parties who may be personally liable thereon shall be released from personal liability on the indebtedness, unless the property is redeemed under section 38-38-302.

(g) The foreclosure shall not affect the continuance of the lien of the mortgage or deed of trust as to any remaining obligation secured by it but not covered by the foreclosure, whether the remaining obligation is due before or after the foreclosure, and the title acquired as a result of the foreclosure shall be subject to the lien securing the remaining obligation.

(2) Nothing in this section shall be construed to prevent the holder of an evidence of debt secured by any mortgage or deed of trust from exercising any option contained therein to declare the whole indebtedness due and payable, nor shall any of the provisions of this section be applicable to a foreclosure in which the whole indebtedness has been declared due and payable.

Source: L. 90: Entire article R&RE, p. 1663, § 2, effective October 1. L. 2006: Entire section amended, p. 1466, § 19, effective January 1, 2008.

Editor's note: (1) The provisions of this section are similar to provisions of several former sections as they existed prior to 1990. For a detailed comparison, see the comparative tables located in the back of the index.

(2) The effective date for amendments made to this section by chapter 305, Session Laws of Colorado 2006, was changed from July 1, 2007, to January 1, 2008, by section 27 of chapter 404, Session Laws of Colorado 2007. (See L. 2007, p. 1849.)

ANNOTATION

Law reviews. For article, "Real Estate Potpourri: Attorney's Fees in Foreclosure — Are They Limited to 10 Percent?", see 13 Colo. Law. 226 (1984). For article, "1987 Statutory Amendments Concerning Foreclosures of Deeds of Trust and Mortgages", see 16 Colo. Law. 1386 (1987).

Annotator's note. Since § 38-38-201 is similar to §§ 38-38-105 and 38-38-106 as they existed prior to the 1990 repeal and reenactment of this article and article 39, relevant cases construing those provisions have been included in the annotations to this section.

Application of section limited. This section applies only to the situation where there is a foreclosure for nonpayment of an installment without any attempt to accelerate. Jacobs Invs. v. PRD Holdings, Ltd., 44 Colo. App. 184, 612 P.2d 1149 (1980).

Obligee has reasonable time to elect to declare indebtedness due. Under an ordinary acceleration clause in a mortgage or trust deed, the obligee has a reasonable time after the default or the event which gives rise to the right to accelerate in which to elect to declare the indebtedness due. Malouff v. Midland Fed. Sav. & Loan Ass'n, 181 Colo. 294, 509 P.2d 1240 (1973).

Attorney fees in foreclosures cannot exceed ten percent of the sum for which the property is foreclosed and must be shown to be reasonable. San Miguel Basin State Bank v. Oliver, 748 P.2d 1342 (Colo. App. 1987).

Limitation on attorney fees is applicable both to foreclosures based on default in one or more installments and to foreclosures for the whole amount of accelerated indebtedness. Kern v. Gebhardt, 717 P.2d 998 (Colo. App. 1985), aff'd, 746 P.2d 1340 (Colo. 1987) (decided under law in effect prior to 1987 amendment).

Attorney fees on foreclosed deed of trust. When a deed of trust is foreclosed as a mortgage, the court may award attorney fees. Bakers Park Mining & Milling Co. v. District Court, 662 P.2d 483 (Colo. 1983), aff'd, 746 P.2d 1340 (Colo. 1987) (decided under law in effect prior to 1987 amendment).

PART 3

REDEMPTION

Cross references: For tax sale redemptions, see article 12 of title 39.