Finders, heir hunters and bad deals

Bottom line first. You can check for foreclosure surplus money, and claim it, for free. A "finder" may offer to do that for a cut, but Colorado law sets hard limits on what a finder may charge and when. Often the deal is not even enforceable. This lesson shows you the limits so you can say no, or say yes with your eyes open. We know this may be a hard time. Nothing here is a reason to rush.

Where the money sits, and who can charge what

When a house sells at a foreclosure auction for more than is owed, the extra is called the overbid (the part of the winning bid left after the lender and other lien holders are paid). The public trustee is the county official who runs most Colorado foreclosure sales and holds that money. For a sale by the public trustee, the unclaimed overbid is held for six months from the date of the sale (C.R.S. 38-38-111(3)(a)(II)). An overbid of twenty-five dollars or more that is still unclaimed after six months is presumed abandoned (C.R.S. 38-13-214) and is transferred to the administrator, which in Colorado means the state treasurer (C.R.S. 38-13-1301(1)(d)). An unclaimed overbid under twenty-five dollars goes to the county general fund (C.R.S. 38-38-111(3)(a)(II)). How the overbid is split and who is paid first is covered earlier in this course. Here we only ask: who may charge you to get it?

The answer depends on where the money is when you sign.

Stage 1: the money is still with the public trustee

An agreement to pay someone to recover, or help recover, money the public trustee holds for the borrower "is not enforceable" (C.R.S. 38-38-111(2.5)(c)). A person who induces or tries to induce you to sign one commits a class 2 misdemeanor (a criminal offense, in the lower range of misdemeanors). Plain words: during this stage nobody can force you to pay a finder, and pushing you to sign is itself an offense. The public trustee must also put a notice on its website telling borrowers to call after the sale because money may be due (C.R.S. 38-38-111(2.5)(a)), and must make reasonable efforts to find your address and mail you a notice about a remaining overbid of twenty-five dollars or more (C.R.S. 38-38-111(2.5)(b)). You do not need a middleman to find out.

Stage 2: the money has moved to the state treasurer

After the transfer, the rules change. An agreement to be paid for helping recover an overbid is not enforceable unless it was signed at least two years after the date of the transfer (C.R.S. 38-13-1304(1)(a)). An agreement signed earlier is not something you can be made to honor. An agreement signed later is enforceable only if every one of these is true (C.R.S. 38-13-1304(1)(b)):

• It is in writing and signed by the owner.
• It describes the property and the date of the foreclosure sale the overbid came from.
• It states what services the finder will provide.
• The pay is no more than 10 percent of the overbid (HB25-1224, 2025). This cap applies to every agreement since June 4, 2025, whenever it was signed. It replaced the old 20 percent and 30 percent caps, which depended on how long after the transfer you signed.
• It states that you may file a claim directly with the state treasurer without being charged a fee by the treasurer.

Heads up: some statute websites still show the older 20 and 30 percent figures. The 2025 act cut them, so trust the 10 percent cap.

The summary of the 2025 act speaks only of the cap, so the two-year waiting rule and the other items above are taught here from the statute text we saved. Ask the state treasurer to confirm the current wording before you rely on them.

A person who induces or tries to induce you to sign an agreement that misses any of these commits a class 2 misdemeanor (C.R.S. 38-13-1304(2)). And even when you did sign a written agreement, you may argue at any time that the pay is excessive or unjust (C.R.S. 38-13-1304(3)).

The general finder rule also asks that the paper state the amount you can expect to recover, figured before and after the fee (C.R.S. 38-13-1301(1)(c)). Ask for those two numbers in writing.

Two more details. You may name a finder as your agent in a signed record, and the state treasurer will then give that agent non-confidential status updates, but not your personal information (C.R.S. 38-13-1303). And one section says its finder-void rules do not apply to an agreement with an attorney to pursue a claim for specifically identified property or to contest a denial (C.R.S. 38-13-1302(5)). If a lawyer offers help, ask the lawyer to explain in writing how that fits with the overbid rule above.

The Colorado Foreclosure Protection Act

Colorado also has a law aimed at people who prey on owners facing foreclosure (C.R.S. 6-1-1101 to 6-1-1121). It covers two kinds of people. A foreclosure consultant is someone who, for pay, offers to do things like stop or delay a foreclosure sale, get a lender to wait, or protect your credit from the foreclosure (C.R.S. 6-1-1103(4)). An equity purchaser is someone who gets title to a home in foreclosure, other than a person buying it to live in (C.R.S. 6-1-1103(2)). Lawyers, banks, licensed brokers and certain others are carved out.

The key point for this lesson: the Act speaks of a "residence in foreclosure," which the law describes as your principal home with a mortgage loan at least thirty days behind or in default (C.R.S. 6-1-1103(8)). It is built for the time before a foreclosure is over. It may not reach a finder who contacts you months after the sale, and the finder rules above are the ones aimed at surplus money. If someone is selling you help with a foreclosure that has not finished, though, the Act gives you strong protections:

• A consultant's contract must be in writing, given to you at least twenty-four hours before you sign, in at least twelve-point type, and it must show the total pay (C.R.S. 6-1-1104).
• You may cancel at any time (C.R.S. 6-1-1105).
• A consultant may not charge anything until every promised service is done, may not take a lien, and may not take a power of attorney (a paper letting someone act for you) except to inspect documents (C.R.S. 6-1-1107).
• A consultant who breaks those rules faces up to one year in county jail, a fine of up to twenty-five thousand dollars, or both (C.R.S. 6-1-1108).
• With an equity purchaser, you may cancel until midnight of the third business day after signing, or until noon the day before the sale, whichever comes first (C.R.S. 6-1-1113). A contract clause that waives your rights is void (C.R.S. 6-1-1106; 6-1-1116).

How to spot a bad deal

• Someone wants money from you before they have done anything.
• They ask you to sign a deed or a power of attorney "just to file the claim."
• The paper does not say you can claim for free from the state treasurer.
• They contact you within two years of the transfer and ask for a cut.
• They want more than 10 percent of the overbid.
• They will not give you dollar amounts before and after their fee, or they rush you.

When in doubt, make the free phone call first. Then you know what is really there.

Example with real numbers

Priya's former house sold at a foreclosure auction. After the lender and all other lien holders were paid, the overbid left for her is $40,000. Three people contact her.

1. Person A calls while the public trustee still holds the money and wants 25 percent. That agreement is not enforceable (C.R.S. 38-38-111(2.5)(c)). Priya would owe nothing, and A may be committing an offense by pushing it.
2. The money later moves to the state treasurer. Person B calls 18 months after the transfer. That is under two years, so any agreement is not enforceable (C.R.S. 38-13-1304(1)(a)).
3. Person C calls 30 months after the transfer, with a signed written agreement that has all five required items. The cap is 10 percent: $40,000 x 0.10 = $4,000. Priya would receive $40,000 - $4,000 = $36,000.
4. If C had called 4 years after the transfer, the cap would still be 10 percent: $40,000 x 0.10 = $4,000, leaving Priya $36,000. Under the 2025 act the cap does not grow with time.
5. If Priya files the claim herself, the treasurer charges no fee (C.R.S. 38-13-1304(1)(b)(V)), so she keeps the full $40,000.

A finder may still save time for some people, but Priya can see exactly what the help costs and that it is optional.

This lesson in one breath

Check for free first. Never sign anything about money the public trustee holds. After the transfer, wait at least two years, look for the five required items, and watch the 10 percent cap. If a person asks for a deed, a power of attorney or money up front, walk away and call a lawyer or the state treasurer.