Tax sales, redemption and the treasurer's deed

Bottom line first. A tax sale is not a foreclosure sale. You can redeem (pay what is owed and keep the house) before a treasurer's deed ends your ownership. Since July 1, 2024, a deed does not come just because a buyer shows up with a paper. The buyer must first win a public auction, and if that auction brings in more than the minimum bid, the extra (the overbid) goes first to certain lienholders and then to the owner. So yes, an owner can get money after a tax lien goes toward a deed. This lesson shows the steps so you know what to ask the county treasurer. If the house went through a mortgage foreclosure instead, see /courses/colorado-foreclosure/ for the sale itself; this course starts after that sale.

What is actually sold at a tax sale

When property taxes go unpaid, the county treasurer (the county official who collects property taxes) does not sell your house. The treasurer sells a tax lien, which is the county's claim against the property for the unpaid taxes, plus interest and fees. A buyer pays that debt and, in return, gets the right to be repaid with interest, or in the end to ask for a deed if the debt is not paid. Each tax lien is sold for an entire piece of property (C.R.S. 39-11-115(1)).

Step by step

1. Warning notice. By September 1 each year, the treasurer mails a notice to each person known to owe the previous year's taxes. It must give a payment date at least fifteen days after mailing and say the treasurer will advertise and sell a tax lien at public auction (a sale open to public bidders) if the taxes are not paid (C.R.S. 39-11-101).
2. Auction. The auction starts on or before the second Monday in December (C.R.S. 39-11-109). Bidders pay the taxes, delinquent interest and fees due, or they pay the largest amount above those. The treasurer sets the bidding rules and announces them (C.R.S. 39-11-115).
3. Certificate of purchase. The winning bidder gets a certificate of purchase, a paper (or record) that describes the property and states the interest rate and the total taxes, interest and fees paid (C.R.S. 39-11-117). It can be passed on to someone else by endorsement (C.R.S. 39-11-118). The holder may pay later years' taxes, and those are added to the certificate (C.R.S. 39-11-119).
4. Waiting and redeeming. You are still the owner during this time. You can pay to redeem (see below).
5. Option certificate auction. If nothing is redeemed, the holder of the certificate of purchase may apply for a public auction (see below). Only after that process can a treasurer's deed be issued, and the deed ends the former owner's rights.

The extra bid: where it goes

If a bidder pays more than the taxes, interest and fees, the extra is called a premium here. The statute says that "the excess amount shall be credited to the county general fund" (C.R.S. 39-11-115(1)). So the extra a bidder pays at a tax lien auction does not go to the owner. The sources we read give the former owner no right to it.

Redemption: how to keep the property

Redeem means pay the amount needed to cancel the tax sale. The law lets the owner, the owner's agent or attorney, anyone with a legal or equitable claim, or a holder of a tax sale certificate redeem (C.R.S. 39-12-103(1)). Redemption may be made at any time before the treasurer's deed is executed. The amount is the taxes, delinquent interest and costs for which the lien was sold, plus redemption interest from the date of sale, plus later taxes the buyer paid, with interest on those too (C.R.S. 39-12-103(3)). The rate is set by formula, nine percentage points above the discount rate, so ask the treasurer for the exact payoff figure. You pay the treasurer, who holds the money for the buyer (C.R.S. 39-12-103(3)). The treasurer then issues a certificate of redemption showing the date, amount and who paid (C.R.S. 39-12-105). If the treasurer had to send and publish notices before a deed, the cost of those notices must be paid first when you redeem (C.R.S. 39-11-130).

The treasurer's deed: the 2024 process

Colorado used to require a treasurer to issue a deed once someone presented a certificate of purchase and met the conditions. A 2024 law, HB24-1056, ended that, effective July 1, 2024. Some statute websites still show older text, so check dates.

Now the order is this:

1. The lawful holder (the person who legally holds the certificate of purchase) applies to the treasurer for a public auction of a certificate of option for treasurer's deed, called an option certificate here. The law sets an application form and a deposit. Ask the county treasurer that held the auction for the amounts.
2. The treasurer sends notices. The treasurer's work includes a review of the property's title work (the record of who has claims on the property), so that known interested parties are told.
3. At the auction, the treasurer may accept only bids above the minimum bid: what is owed to the lawful holder plus the treasurer's fees and costs. If nobody makes and pays such a bid, the lawful holder is deemed the purchaser.
4. If the winning bid is higher than the minimum bid, the difference is the overbid. The overbid is paid out as described in the next section.
5. If the property stays unredeemed, the holder of the option certificate presents it with the other required papers and gets the treasurer's deed, which gives full rights to the property.

The notice is your warning. If you get one, call the treasurer that day. Dates, days to act and claim steps are not in the summary we read, so ask the county treasurer that held the auction.

One narrow protection from the older text: an owner under a legal disability (not defined in our sources) could redeem within nine years after the deed was recorded (C.R.S. 39-12-104). We did not check whether the 2024 act changed this, so ask a lawyer.

So, is there surplus money after a tax deed?

Yes, it can be. If the option certificate auction brings an overbid, the owner can receive money. The law pays the overbid in this order:

1. Junior lienors who filed a notice of intent to redeem, in order of recording priority. A junior lienor is someone with a recorded claim on the property that ranks behind the tax lien, such as a second lender.
2. The owner of the property gets whatever remains after those payments.

Junior lienholders may also file to redeem, but only as to a portion of the overbid, and only if they follow the procedure. If the lawful holder wins at the minimum bid, there is no overbid, so there is nothing extra to pay out. How to claim, forms and deadlines: ask the county treasurer that held the auction, in writing, and keep their answer. Do not pay anyone a fee to look it up, and review the finder rules in the last lesson.

Two older rules still stand. The premium a bidder pays at the first tax lien auction goes to the county general fund (C.R.S. 39-11-115(1)), as the section above says, so the owner does not get that part. And net proceeds when the county sells real estate it received from the treasurer are paid out to taxing jurisdictions (C.R.S. 39-11-145).

Why the change? In 2023 the U.S. Supreme Court held in Tyler v. Hennepin County that a county that kept the money from selling a tax-foreclosed home beyond the tax debt took the owner's property without just compensation. Colorado changed its law in 2024 in response: HB24-1056, effective July 1, 2024, brings the treasurer's deed process in line with that decision by sending the value above the debt back toward the owner. How the new rules treat a deed on a lien sold before that date is not in the summary, so ask the treasurer.

Example with real numbers: redeeming

Marcus owes $2,000 in property taxes. With delinquent interest and advertising fees, the amount due at the auction is $2,400.

1. A bidder pays $3,000 for the tax lien. That is the $2,400 due plus $600 more.
2. The $600 extra "shall be credited to the county general fund" (C.R.S. 39-11-115(1)). Marcus does not receive it.
3. The bidder, Jordan, later pays $700 of next year's taxes, endorsed on the certificate (C.R.S. 39-11-119).
4. Marcus decides to redeem. He owes the $2,400 for which the lien was sold, plus the $700 later taxes, plus redemption interest on both: $2,400 + $700 = $3,100, plus interest (C.R.S. 39-12-103(3)). The $600 extra bid is not on the list.
5. He pays the treasurer before any deed is signed, and the treasurer gives him a certificate of redemption (C.R.S. 39-12-105). He keeps the house.
6. If Marcus does nothing, Jordan cannot just ask for a deed. Jordan must first apply for a public auction of the option certificate (HB24-1056). See the next example.

Example with real numbers: the overbid order

Take a different house, owned by Elena. The lawful holder applies for an option certificate auction. The minimum bid (what is owed to the holder plus the treasurer's fees and costs) is $18,000. A bidder named Omar wins at $60,000. A second lender, the junior lienor, filed a notice of intent to redeem and is owed $10,000. These numbers are made up.

1. Overbid = winning bid minus minimum bid: $60,000 - $18,000 = $42,000.
2. The junior lienor is paid first, from the overbid: $42,000 - $10,000 = $32,000 left.
3. Elena, as owner, gets what remains: $32,000.
4. Check: $18,000 + $10,000 + $32,000 = $60,000, the winning bid.

What to ask the treasurer

• Was a tax lien on my property sold, and when?
• Has the holder applied for an option certificate auction, and when is it?
• Was there an overbid, and who has claimed it?
• What is the exact redemption amount today?
• Do you hold any money for me from this sale, and what steps and deadlines apply to claim it? Please answer in writing.