Tax Foreclosure in Colorado: What Homeowners Need to Know
A guide from AuctionBlock.org
If you own a home in Colorado and have fallen behind on your property taxes, you should know that Colorado uses a tax lien sale system. The county sells tax lien certificates on delinquent properties to investors, and if you do not redeem your property within the statutory period, the investor can apply for a tax deed and take ownership. This guide explains the full process, your redemption rights, real exemption programs, and where to find help.
How Property Tax Collection Works in Colorado
Property taxes in Colorado are collected by the county treasurer. Taxes are due in full by April 30 of each year, or in two installments: the first half is due by February 28 (or the last day of February) and the second half is due by June 15. If taxes are not paid by the due date, they become delinquent and interest begins to accrue.
Under Colorado Revised Statutes (C.R.S.) Section 39-10-104.5, delinquent taxes accrue interest at the rate of 1% per month (12% per year).
The statutes governing tax lien sales and redemption are found primarily in C.R.S. Title 39, Articles 11 and 12.
The Tax Lien Sale Process
Colorado counties hold annual tax lien sales, typically in November or December. Here is how the process works:
1. Delinquency and Notice After the payment deadline, unpaid taxes become delinquent. The county treasurer sends notice of the delinquent taxes to the property owner. Before the lien sale, the treasurer must publish notice in a newspaper of general circulation for at least four weeks (C.R.S. Section 39-11-102).
2. The Tax Lien Sale Under C.R.S. Section 39-11-108, the county treasurer holds a public sale of tax lien certificates. Bidders bid a premium (an amount over and above the delinquent taxes) for the right to purchase the lien. The bidder offering the highest premium wins. The interest rate on the lien is set by statute, not by bidding -- the certificate accrues interest at the rate established by C.R.S. Section 39-12-103 (currently the federal discount rate plus 3 percentage points, or 9%, whichever is higher, with a maximum of 18%).
In many Colorado counties, the sale is conducted online.
If no one bids on a property, the county holds the lien (C.R.S. Section 39-11-110).
3. What the Buyer Receives The successful bidder receives a tax lien certificate. This is a lien against the property, not ownership. The homeowner retains possession, use, and title to the property during the redemption period.
4. Subsequent Taxes The certificate holder may also pay subsequent years' delinquent taxes, which are added to the lien balance and accrue interest at the same rate (called "endorsements" in Colorado, under C.R.S. Section 39-12-103).
The Redemption Period
Colorado provides a redemption period during which the homeowner can pay off the tax lien and prevent the issuance of a tax deed.
Standard Redemption Period: Three Years Under C.R.S. Section 39-12-104, the tax lien certificate holder may not apply for a treasurer's deed (tax deed) until the lien has been outstanding for at least three years from the date of the original lien sale. This three-year period is effectively the homeowner's redemption window.
Redemption Process Under C.R.S. Section 39-12-104, to redeem, the property owner must pay the county treasurer:
- The amount of the original lien, plus all interest
- Any endorsements (subsequent taxes paid by the certificate holder) plus interest
- Fees and costs
The homeowner can redeem at any time before a treasurer's deed is issued.
After Three Years: Tax Deed Application After the certificate has been outstanding for three years, the certificate holder may apply to the county treasurer for a treasurer's deed under C.R.S. Section 39-11-120. The treasurer must then send a notice to the property owner by certified mail, giving them a final opportunity to redeem. The owner has an additional period (specified in the notice) to redeem before the deed is issued. If the owner does not redeem, the county treasurer issues a treasurer's deed to the certificate holder.
Treasurer's Deed and Legal Challenges Once a treasurer's deed is issued, the former owner loses all rights to the property. However, under C.R.S. Section 39-12-104, a former owner may challenge the validity of the tax deed in court within five years after the deed is issued, but only on limited grounds (such as failure of the county to provide proper notice).
Exemption and Assistance Programs
Colorado has several property tax relief programs.
Senior Property Tax Exemption Under Article X, Section 3.5 of the Colorado Constitution and C.R.S. Section 39-3-203, homeowners age 65 or older who have owned and occupied their primary residence for at least 10 consecutive years may qualify for an exemption of 50% of the first $200,000 of actual value (the exact amounts are adjusted periodically by the state legislature). This exemption can significantly reduce your annual property tax bill. Apply through your county assessor.
Disabled Veteran Property Tax Exemption Under Article X, Section 3.5 of the Colorado Constitution and C.R.S. Section 39-3-203, qualifying disabled veterans (those with a 100% permanent disability rating from the U.S. Department of Veterans Affairs) are eligible for the same property tax exemption as seniors, regardless of age or length of ownership. Apply through your county assessor.
Property Tax Deferral for Seniors and Active Military Under C.R.S. Section 39-3.5-101 et seq., homeowners age 65 or older, or active-duty military members, may qualify to defer all or part of their property taxes. Under this program, the state pays the property taxes and places a lien on the home. The deferred taxes, plus interest at a rate set by statute, become due when the home is sold or transferred. This program can prevent delinquency for homeowners on fixed incomes. Apply through your county treasurer.
Homestead Exemption Colorado's homestead exemption (C.R.S. Section 38-41-201 et seq.) protects up to $250,000 of equity in your primary residence from certain creditors. This does not exempt you from property taxes but protects equity during other financial difficulties.
Property Tax Work-Off Program Some Colorado counties offer programs allowing seniors to work off a portion of their property taxes through volunteer service to the county. Check with your county treasurer or assessor for availability.
Legal Aid and Assistance Organizations
If you are facing tax lien foreclosure in Colorado, the following organizations can help:
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Colorado Legal Services -- Provides free civil legal assistance to low-income residents statewide. Offices in Denver, Colorado Springs, Fort Collins, Pueblo, Grand Junction, Greeley, and other cities. Phone: 303-837-1313. Website: coloradolegalservices.org
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Metro Volunteer Lawyers -- Pro bono legal assistance for low-income residents in the Denver metro area. Website: metrovolunteerlawyers.org
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Colorado Bar Association Lawyer Referral Service -- Connects residents with attorneys. Phone: 303-831-5723. Website: cobar.org
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Colorado Housing and Finance Authority (CHFA) -- Administers homeowner assistance programs. Website: chfainfo.com
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Colorado Division of Housing -- Part of the Department of Local Affairs. Provides information on housing assistance programs. Website: cdola.colorado.gov/housing
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HUD-Approved Housing Counseling Agencies -- Find approved counselors at hud.gov/findacounselor.
Emergency Action Steps
If your property taxes are delinquent or a tax lien has been sold on your property in Colorado, take these steps:
1. Contact your county treasurer. Find out the exact amount owed, including interest, penalties, and any endorsements. Ask about payment plans.
2. Check whether a tax lien certificate has been sold on your property. Your county treasurer can tell you the lien amount, the interest rate, and when the three-year maturation period expires.
3. Apply for the senior or disabled veteran property tax exemption. If you are 65 or older (and have owned/occupied for 10+ years) or are a 100% disabled veteran, this exemption can cut your tax bill significantly.
4. Apply for the property tax deferral program. If you are 65 or older and cannot afford your property taxes, the deferral program can prevent future delinquency by having the state pay your taxes.
5. Contact Colorado Legal Services. Call 303-837-1313 for free legal assistance with your tax lien situation.
6. If a treasurer's deed application has been filed, respond immediately. You will receive a notice giving you a final opportunity to redeem. Pay the full amount before the deadline in the notice.
7. Visit auctionblock.org/get-help. AuctionBlock.org is a mission-driven company dedicated to foreclosure prevention. We can help you understand Colorado's tax lien system and connect you with resources.
Key Statutory References
- C.R.S. Section 39-10-104.5 -- Interest on delinquent taxes
- C.R.S. Section 39-11-102 -- Notice of tax lien sale
- C.R.S. Section 39-11-108 -- Tax lien certificate sale
- C.R.S. Section 39-11-110 -- County-held liens
- C.R.S. Section 39-11-120 -- Treasurer's deed application
- C.R.S. Section 39-12-103 -- Interest on tax lien certificates
- C.R.S. Section 39-12-104 -- Redemption and three-year period
- C.R.S. Section 39-3-203 -- Senior and disabled veteran exemption
- C.R.S. Section 39-3.5-101 -- Property tax deferral
Legal Disclaimer
This guide is provided by AuctionBlock.org for educational purposes only. It does not constitute legal advice. Tax laws and local procedures vary by county and change over time. You should consult with a licensed attorney in Colorado for advice specific to your situation. AuctionBlock.org is a mission-driven company organization. We are not a law firm and do not provide legal representation. AuctionBlock.org is a newly established organization and has not yet served any families.
For help with tax foreclosure prevention, visit auctionblock.org/get-help.