The government’s bank bailout is not going to stop foreclosures. Could you come home from class one day to the surprise of all your possessions sitting on the curb?
A lot would have to go wrong for this to happen in Colorado. As long as you read your mail, you should not be blind-sided by a foreclosure.
Foreclosure is put into motion by a lender when a borrower has stopped paying on a loan. Here, the lender starts the process by sending a “notice to foreclose” to the Larimer County Public Trustee’s Office. The Public Trustee sets the sale of the property 110 to 125 days later and mails a notice of the foreclosure and sale date to the occupants of the property.
This time span between the beginning of foreclosure and the sale date is a “cure” period, during which the owner can try to work something out with the lender, refinance through another lender, or even try to sell the property himself.
Sometimes, the landlord does not communicate at all with the tenant during this time. In other instances, the landlord may downplay the sale, assert that new money has been raised or that a buyer is in the works. While it is possible that the landlord will pull off a “cure” during this time, tenants are better off staying out of the landlord’s drama and strictly paying attention to the sale date.
Tenants should assume that they must be moved out by the sale date. On that date, the property will be sold at a public auction. The rights of the owner of foreclosed property end and a new owner takes over.
That owner is not obligated to honor your existing lease and not required to enter into any new lease with you. There is also the complication that the new owner at auction may not remain the owner. Junior lien holders who had existing but inferior liens to the foreclosing lender have a right to become owner by paying off those superior to them in the chain of liens, including the buyer at the auction.
If you’re determined to try to stay in the property, you can wait for the sale, contact the owner from the auction and ask to enter into a new lease. Then be prepared to do the same thing with a successful junior lien holder.
If the new owner says no, you should assure the new owner that you will be out immediately and then get out immediately.
The new owner cannot lawfully dump you out on the curb without first getting an eviction order from the court. At the speediest, this will take about three weeks, and you will get notice at the outset. Of course, you want to avoid any eviction proceeding as it will affect your credit.
The trickiest part is planning a departure with the least disruption to the tenant. The lease remains in effect until the sale date. The tenant must keep paying rent to the landlord, or to a separate “receiver” if the court so notifies the tenant.
Student Legal Services will talk you through the various options – moving early, staying until the sale date, applying the security deposit. There are legal consequences to each. We’re easy to find: Room 182 of the Lory Student Center.
Kathleen Harward is the director of Student Legal Services. SLS’ column appears Mondays in the Collegian. Letters and feedback can be sent to email@example.com.