Colorado § 38-41-207 - Proceeds exempt - bona fide purchaser.

§ 38-41-207. Proceeds exempt - bona fide purchaser.

(1) The following proceeds are exempt from execution or attachment for a period of three years after receipt if the person entitled to the exemption keeps the exempted proceeds separate and apart from other money so that the proceeds may be always identified:

(a) The proceeds from the exempt amount under this part 2, in the event the property is sold by the owner;

(b) The proceeds from a sale of homestead property under section 38-41-206 paid to the owner of the property or person entitled to the homestead; or

(c) The proceeds from insurance covering destruction of homestead property held for use in restoring or replacing the homestead property, up to the amount specified in this section.

(2) If the person receiving the proceeds uses the proceeds in the acquisition of other property for a home, the same homestead exemption to which the owner was entitled on the property sold carries over to the new property. The homestead exemption is not valid against a person entitled to a vendor's lien or the holder of a purchase money mortgage against the new property.

Source: R.S. p. 386, § 64. G.L. § 1350. G.S. § 1638. R.S. 08: § 2957. C.L. § 5931. CSA: C. 93, § 29. L. 53: p. 413, § 5. CRS 53: § 77-3-7. C.R.S. 1963: § 77-3-7. L. 75: Entire section R&RE, p. 1446, § 4, effective July 14. L. 2007: Entire section amended, p. 879, § 8, effective May 14. L. 2022: Entire section amended, (SB 22-086), ch. 74, p. 376, § 5, effective April 7.

Cross references: (1) For the legislative declaration in the 2007 act amending this section, see section 1 of chapter 226, Session Laws of Colorado 2007.

(2) For the legislative declaration in SB 22-086, see section 1 of chapter 74, Session Laws of Colorado 2022.

ANNOTATION

Law reviews. For article, "Executions and Levies on Tangible Property", see 27 Dicta 143 (1950).

Section protects rights of creditors and homestead owner. This section makes provision for the protection of the rights of both the creditors and the owner of the homestead. Union Nat'l Bank v. Wright, 78 Colo. 346, 242 P. 54 (1925).

Debtor's right to dispose of homestead. This section does away with every doubt as to the debtor's right to dispose of his homestead; the last clause puts at rest all uncertainty as to the effect of a judgment lien upon the homestead. Barnett v. Knight, 7 Colo. 365, 3 P. 747 (1884).

Exemption for debtor conveying to ex-wife. A debtor, who conveyed his interest in the family home to his ex-wife for a promissory note and deed of trust, was allowed to exempt the note and deed of trust for one year as "proceeds" under this section, even through he was not allowed to claim an exemption under § 38-41-201. In re Hoover, 35 B.R. 709 (Bankr. D. Colo. 1984).

Sale of homestead property prior to bankruptcy did not preclude debtor from claiming exemption in the proceeds where the debtor had specifically reserved his homestead rights at time funds were disbursed. In re Swartzendruber, 72 B.R. 463 (Bankr. D. Colo. 1987).

Debtors were allowed to claim homestead exemption on proceeds from sale of Oregon home, even though Colorado statutes specify that the exemption applies to real properties located in Colorado. In re Bloedon, 137 B.R. 824 (Bankr. D. Colo. 1992).

Debtor entitled to homestead exemption even though she had listed her house for sale, only resided there for ten days after filing petition for bankruptcy, and her family had already relocated to another state. In re Raymond, 987 F.2d 675 (10th Cir. 1993).

The homestead proceeds exemption covers surplus proceeds paid to a debtor following a nonjudicial public trustee sale. In re Elliot, 448 B.R. 843 (Bankr. D. Colo. 2011).

Refinancing of a home mortgage does not qualify as a sale of the home. Refinancing does not convey an ownership interest in real estate and is not the equivalent of a sale of the home. Proceeds from the refinancing are not, therefore, entitled to an exemption. Polimino v. Peters, 345 B.R. 708 (Bankr. D. Colo. 2006).

In order to give the debtor full benefit of the homestead exemption, the withdrawal of some funds from the segregated homestead account for non-exempt purposes does not terminate the exempt status of the balance. Fleet v. Zwick, 994 P.2d 480 (Colo. App. 1999).

Attorney's charging lien under former § 12-5-119 (now § 13-93-114) is not subject to a homestead exemption that may be claimed upon sale proceeds of an exempt homestead under this section or § 38-41-201. A proceeding to enforce an attorney's charging lien is not a levy upon property under either a writ of execution or a writ of attachment. In re Benbow, 496 B.R. 605 (Bankr. D. Colo. 2013).

A debtor may not claim any portion of the proceeds from any real property to which an attorney's charging lien attaches as exempt property under the Colorado homestead exemption. In re Benbow, 496 B.R. 605 (Bankr. D. Colo. 2013).