Redemption: who can redeem after the sale, and how
The foreclosure process and your options · 1 study hours
Bottom line: In C.R.S. 38-38-301 to 306 the right to redeem after a public trustee sale belongs to lienors, not to the owner, so for an owner the real chance to keep the home is the cure before the sale.
Bottom line first, said kindly. If you hoped that you could take your home back after the sale by paying what the buyer paid, the Colorado statute that sets up redemption after a public trustee sale (C.R.S. 38-38-302) does not give that right to the owner. It gives it to lienors, meaning people and companies holding a recorded claim against the property, such as a second mortgage. We read the whole group of sections, 38-38-301 through 38-38-306, and found no post-sale redemption right for the owner. That is hard to hear, and it is why curing before the sale (Lesson 2) is so important: it is the owner's real window. Other laws may exist outside these sections, and a lawyer or legal aid office can tell you about them. This is general education, not legal advice.
What "redemption" means
To redeem is to buy the property back from a foreclosure sale by paying the sale price plus interest and allowed costs. After a public trustee sale, the high bidder gets a certificate of purchase. The sections we study here give certain lienors a short, strict time to redeem, in a set order. If nobody redeems, the title is confirmed to the buyer after the redemption periods end (C.R.S. 38-38-501).
Who is a lienor
The definitions section says "lienor" includes without limitation the holder of a certificate of purchase or of a certificate of redemption (C.R.S. 38-38-100.3). A junior lien is a deed of trust or other lien that ranks below the one being foreclosed (also in 38-38-100.3). The statute adds other kinds of lienors:
- a judgment creditor whose judgment has become a recorded lien (C.R.S. 38-38-306);
- a mechanic's lien claimant or another person with a recorded statutory lien, even before a judgment (C.R.S. 38-38-306);
- a lessee (a tenant under a lease) and a holder of an easement (a right to use part of the property), who are treated as lienors but without any lien amount (C.R.S. 38-38-305(1));
- an installment land contract vendor (the seller in a payment-over-time land contract), treated as a lienor for the unpaid price (C.R.S. 38-38-305). The buyer in such a contract, the vendee, is treated as an owner for the purposes of the article (C.R.S. 38-38-305).
Please do not read the last bullet as a promise of rights. It says how the vendee is classified for the foreclosure article, and the same section says the vendee must follow every owner requirement in it. If you are in a land contract, ask a lawyer.
The rules a lienor must meet to redeem
To redeem, a lienor must meet all of these to the satisfaction of the public trustee (C.R.S. 38-38-302(1)):
- hold a lien created or recognized by a state or federal statute, or a deed of trust, or a court judgment;
- hold a junior lien;
- have that lien recorded before the foreclosure notice was recorded, and be one of the people entitled to cure;
- file a notice of intent to redeem with the public trustee within eight business days after the sale (a late one is allowed only in limited situations); and
- attach the lien paper and a signed statement of the amount needed to redeem. If that amount is zero, the lienor has no right to redeem unless section 38-38-305 applies.
The order and the clock
The holder of the certificate of purchase must send the trustee, no later than 13 business days after the sale, a signed statement of interest and other sums (C.R.S. 38-38-302(3)). Interest on the sale price is charged at the default rate in the loan papers, or at the regular rate if none is specified. If the holder fails to submit the statement, the trustee may figure the amount: the bid, plus interest computed as bid x regular annual rate / 365 x number of days since the sale (C.R.S. 38-38-302(3)).
On the ninth business day after the sale, the officer sets each lienor's redemption period. The junior lienor with the most senior recorded lien may redeem no sooner than 15 and no later than 19 business days after the sale. It pays by 12 noon on its last day (C.R.S. 38-38-302(4)). Each later lienor, in order of priority, gets an additional five business days, and must pay the prior redeemer's amount plus interest plus its own claim. When a lienor redeems, a certificate of redemption is recorded, and it works as an assignment to the lienor of the buyer's interest (C.R.S. 38-38-304(3)). A lienor with a lien on only part of the property must redeem the whole property; there is no partial redemption (C.R.S. 38-38-302). Redemption rights under federal law are separate from these rights (C.R.S. 38-38-302).
Example with real numbers
Marcus's home sells at the sale for a high bid of $240,000. The loan's regular rate is 6%. A second-mortgage company, which holds the most senior junior lien, files its notice of intent to redeem in time. Suppose the holder never files a statement, so the officer estimates the interest for 24 days since the sale (made-up numbers):
- Interest for a year: $240,000 x 0.06 = $14,400.
- Per day: $14,400 / 365 = $39.45.
- For 24 days: $39.45 x 24, which is $946.85 (using the unrounded daily figure).
- Amount to redeem, before other allowed sums: $240,000 + $946.85 = $240,946.85.
- If a later lienor redeems after that, it must pay the first redeemer's amount plus interest plus its own claim, so the cost goes up each turn.
Marcus did not appear anywhere in that list. That is the point of this lesson: the redemption sections speak of lienors, not owners.
What an owner can still do
- Before the sale: file the notice of intent to cure at least 15 calendar days before the sale and pay by noon the day before (Lesson 2).
- Ask about help programs through your servicer's single point of contact, and about the dual tracking pause (Lesson 2).
- Talk to a lawyer or legal aid early. A court can set a sale aside by order, and if it does, the certificate of purchase is cancelled and the loan is reinstated (C.R.S. 38-38-109(2)). A lender that bought at the sale can also rescind it within eight business days (C.R.S. 38-38-113). Neither is something to count on.
- Look at later lessons on your options and on money left over after a sale.
Law cited
- C.R.S. 38-38-100.3
- C.R.S. 38-38-301
- C.R.S. 38-38-302
- C.R.S. 38-38-304
- C.R.S. 38-38-305
- C.R.S. 38-38-306
- C.R.S. 38-38-501
- C.R.S. 38-38-104
- C.R.S. 38-38-109
- C.R.S. 38-38-113
Key terms
- Redeem
- To buy the property back from a foreclosure sale by paying the sale price plus interest and allowed costs.
- Redemption period
- The short time, set by the public trustee, in which a lienor may redeem.
- Lienor
- A person or company holding a recorded claim against the property. The definition includes the holder of a certificate of purchase.
- Junior lien
- A deed of trust or other lien that ranks below the one being foreclosed, such as a second mortgage.
- Certificate of purchase
- The paper the winning bidder gets at the sale.
- Certificate of redemption
- The paper recorded when a lienor redeems. It works as an assignment of the buyer's interest to that lienor.
- Notice of intent to redeem
- The filing a lienor must make with the public trustee within eight business days after the sale.
- Per diem interest
- Interest figured for each day, such as the daily amount used to compute redemption cost.
- Easement
- A right to use part of someone else's property, such as a path or utility line.
- Installment land contract
- A contract to buy land paid over time, where the seller keeps title until paid. The seller is the vendor and the buyer is the vendee.
- Mechanic's lien
- A recorded claim by a contractor or supplier who was not paid for work on the property.
Flashcards
Who may redeem after a public trustee sale under C.R.S. 38-38-302?
Lienors and assignees who meet the requirements, such as a qualifying junior lienor.
Does the text of 38-38-301 to 306 give the owner a post-sale redemption right?
No. We found none; the owner's real window is the cure before the sale.
How soon must a lienor file its notice of intent to redeem?
Within eight business days after the sale (C.R.S. 38-38-302).
What redemption window does the most senior junior lienor get?
No sooner than 15 and no later than 19 business days after the sale.
How much extra time does each later lienor get?
An additional five business days, in order of priority.
When must the certificate-of-purchase holder file its statement of sums?
No later than 13 business days after the sale.
How is interest estimated if the holder files no statement?
Bid x regular annual rate / 365 x days from the sale to the redemption date.
Can a lienor redeem part of the property?
No. It must redeem the entire property.
How are lessees and easement holders treated?
As lienors, but without any lien amount (C.R.S. 38-38-305).
What does a certificate of redemption do?
It works as an assignment to the redeeming lienor of the buyer's interest (C.R.S. 38-38-304).
Quiz: 10 questions
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Under C.R.S. 38-38-302, who may redeem after a public trustee sale?
- A The owner of the home, in every case
- B Any bidder at the sale
- C The public trustee
- D A qualifying lienor, such as a junior lienor
Show answer and why
Answer: D. A qualifying lienor, such as a junior lienor
The section gives the right to a lienor or assignee that meets the listed requirements. It does not mention an owner, a bidder or the trustee as redeemers.
C.R.S. 38-38-302(1)
A lienor must file a notice of intent to redeem with the public trustee within how many business days after the sale?
- A Three
- B Eight
- C Fifteen
- D Nineteen
Show answer and why
Answer: B. Eight
The statute says within eight business days after the sale. Fifteen and nineteen are the start and end of the first lienor's redemption window, not the filing deadline.
C.R.S. 38-38-302(1)
The junior lienor with the most senior recorded lien may redeem no sooner than 15 and no later than how many business days after the sale?
- A 8
- B 13
- C 19
- D 25
Show answer and why
Answer: C. 19
The statute says no sooner than fifteen nor later than nineteen business days after the sale. Thirteen is the deadline for the certificate holder's statement and eight is the notice deadline.
C.R.S. 38-38-302(4)
After the first redeeming lienor, each later lienor in priority gets an additional period of how many business days?
- A Five
- B Ten
- C Fifteen
- D Thirty
Show answer and why
Answer: A. Five
The statute gives each subsequent lienor an additional period of five business days, in priority order.
C.R.S. 38-38-302(4)
A home sells for a high bid of $240,000. No holder statement is filed, so the officer estimates interest at the regular rate of 6% for 24 days (bid x rate / 365 x days). About how much is the interest?
- A $39.45
- B $946.85
- C $1,200.00
- D $14,400.00
Show answer and why
Answer: B. $946.85
240,000 x 0.06 = 14,400 a year; 14,400 / 365 = 39.45 a day; 39.45 x 24 is about 946.85. The $39.45 answer is one day, and $14,400 is a full year.
C.R.S. 38-38-302(3)
Which of these is NOT given a right to redeem in C.R.S. 38-38-301 through 38-38-306?
- A A judgment creditor with a recorded judgment lien
- B A mechanic's lien claimant with a recorded lien
- C A lessee, treated as a lienor without a lien amount
- D An owner whose home was sold, simply because the person was the owner
Show answer and why
Answer: D. An owner whose home was sold, simply because the person was the owner
Sections 302, 305 and 306 name lienors, lessees and easement holders, and similar claimants. No section in that group gives the owner a redemption right.
C.R.S. 38-38-302; 38-38-305; 38-38-306
Under C.R.S. 38-38-305, how is a lessee (tenant under a lease) or easement holder treated?
- A As the new owner of the home
- B As a person who may bid first at the sale
- C As a lienor, but without any lien amount
- D As a person with no rights at all
Show answer and why
Answer: C. As a lienor, but without any lien amount
The section says a lessee or easement holder is considered a lienor without any lien amount and is subject to the lienor requirements.
C.R.S. 38-38-305(1)
The holder of the certificate of purchase must submit its statement of sums to the officer no later than how many business days after the sale?
- A 13
- B 8
- C 5
- D 30
Show answer and why
Answer: A. 13
The statute says no later than thirteen business days following the sale. Eight business days is the lienor's deadline to file its notice.
C.R.S. 38-38-302(3)
A lienor holds a lien on only part of the property that was sold. What must it do to redeem?
- A Redeem just its part
- B Redeem the entire property
- C Nothing, it automatically loses the right
- D Redeem only after all other lienors have redeemed
Show answer and why
Answer: B. Redeem the entire property
The statute says a lienor with a lien on less than all of the property must redeem the entire property, and partial redemption is not permitted.
C.R.S. 38-38-302(9)
Sam owned a home that sold at a public trustee sale yesterday. Sam asks whether he can redeem as the owner under 38-38-302. What is the most accurate reply?
- A Yes, by paying the bid plus interest within 19 business days
- B Yes, but only if the bank agrees in writing
- C Yes, if Sam files a notice of intent to redeem within 8 business days
- D The redemption sections give the right to lienors, not owners; the owner's tool was the cure before the sale, and an attorney can explain any other law
Show answer and why
Answer: D. The redemption sections give the right to lienors, not owners; the owner's tool was the cure before the sale, and an attorney can explain any other law
Section 302 names lienors and assignees. The eight and nineteen business day periods belong to lienors, so the other three answers describe rights an owner does not have under that section.
C.R.S. 38-38-302(1); 38-38-104
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