Nonjudicial foreclosures are fairly straightforward. They come about because the borrower executed a document, usually a deed of trust, authorizing the sale of the property upon default and satisfaction of all state preforeclosure requirements.
After the required notice period has expired, a representative of the lender will usually go to the place designated by law for public sales, which is typically the courthouse steps for the county or parish where the property is located.
State law also usually provides the time period for the legal hours of sale, such as “between one o’clock and four o’clock in the afternoon.” You can nail down a more specific time by calling the lender’s representative the day before the auction.
Colorado has a hybrid procedure involving public trustees. The governor appoints a public trustee for each county. They are supposed to make sure that the foreclosure takes place in an impartial and fair manner. The public trustee has many responsibilities leading up to the foreclosure and actually conducts the auction. The lender must obtain a court order, after something called a Rule 120 Proceeding, before it can go forward with the foreclosure auction. Despite the need for a court order, Colorado foreclosures are considered nonjudicial.
At the appointed time, the auctioneer will read the foreclosure notice. He or she will ask for bids, just like at any other auction. If there are no bids, the auctioneer, or a separate person from the lender’s offices, will offer the credit bid amount. Provided there are no other bids, the auctioneer will accept that amount and sell the property to the lender. In the alternative, another bidder might place the highest offer and be awarded the property.
Sometimes the winning bidder must have the funds available to close immediately. Other times, the bidder must make an immediate earnest money deposit in a predetermined percentage and proceed to closing within a certain number of days. The winning bidder usually does not have the benefit of normal purchase contingencies, such as property inspection, good title, or ability to secure financing.
Once you pay the earnest money, you must proceed to closing or forfeit the earnest money.