Colorado Amends Laws Regarding Internet or Electronic Foreclosure Sales
September 21, 2015
By Paul McSheffrey, J.D.
Recently enacted Colorado House Bill 15-1142 amends provisions regarding foreclosure sales by public trustee. The changes concern the option for a trustee to conduct a foreclosure sale via the internet or other electronic method.
Colorado Revised Statutes, 38-37-104 (1)(b)(X) revises the maximum fee that a public trustee may charge. A trustee may charge no more than sixty dollars for the cost of conducting a public foreclosure sale via the internet or other electronic medium.
The changes also include a new definition of “electronic transfer.” Under 38-37-108(2), it is defined as “a transfer of funds initiated by using an electronic terminal, telephonic instrument, or computer or magnetic tape to order or authorize a financial institution to credit or debit an account.” The definition specifically excludes transactions originated by paper instruments such as a check or draft.
Section 38-38-103 provides for the information that must be included in the published combined notice of foreclosure sale. There are now requirements for foreclosure sales conducted by means of the internet or other electronic medium. If conducted electronically, the notice must include the electronic address, the location of computer workstations that are available to the public and information about how to obtain instructions on accessing the sale and submitting bids, and a statement that the bidding rules for the sale will be posted on the internet or other electronic medium used to conduct the sale. The bidding rules shall be posted at least two weeks before the date of sale.
Additionally, 38-38-106 has been amended regarding the form of a bid. Where a foreclosure sale is conducted electronically, the holder of the evidence of debt may include a maximum bid. If the holder elects to include a maximum bid, and there are competing bids for the property, the bid shall be increased incrementally up to the maximum by the electronic program used to conduct the sale.
Under 38-38-110, the county, the officer, or its employees acting in their official capacities in conducting the sale are not liable for the failure of any computer hardware, network, or software that prevents a person from participating in an internet or electronic sale.
These changes take effect on September 1, 2015 unless a referendum petition is filed for the November general election in 2016. In that case, the act would take effect based on the official declaration of the vote. The changes made in the act apply to foreclosure sales on or after the effective date.
Paul McSheffrey, JD, is a senior regulatory compliance consultant with CLA. He is a graduate of Northeastern University and earned his juris doctor at the New England School of Law. He is admitted to the Bar in both Massachusetts and New York.
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