This is the 35th in a series of brief articles that Moye White is sending to its clients and friends to provide practical insight about the opportunities & challenges in today's world.
On April 29, 2010, Governor Ritter signed into law House Bill 10-1249, which permits expedited foreclosures of residential real property in certain situations. For real property foreclosures commenced on or after August 1, 2010, the expedited process will be available when either: (i) the property being foreclosed has been abandoned, or (ii) the grantor of the lien (usually the owner) has agreed to an accelerated foreclosure.
In a typical foreclosure, the foreclosure sale will be set between 110 to 125 days after the public trustee records the creditor’s Notice of Election and Demand (“NED”). The NED is the document that initiates the foreclosure process. With the new expedited proceedings, the foreclosure sale will be set between 45 and 65 days after the public trustee records the NED.
In order to qualify for the expedited process, the lien must be against residential real property, and it must be a first lien. The residential real property must be used primarily for personal, family, or household purposes.
In any foreclosure, the foreclosing party (usually a lender) who holds the evidence of debt (the “Holder”) must obtain an order from the appropriate court authorizing the foreclosure. In the new expedited foreclosure process, the Holder must obtain an additional court order allowing for the accelerated procedure. In expedited foreclosures, the two court proceedings are combined into one. The order for an expedited foreclosure may be obtained either before or after foreclosure proceedings have commenced. However, if the Holder chooses to obtain the order after starting the foreclosure process, it will be pressed for time due to the abbreviated sale schedule.
When applying for the court order, the Holder must present evidence that either the property has been abandoned, or the grantor of the lien has agreed to the expedited proceedings. If the Holder shows by “clear and convincing evidence” that the property has been abandoned, and there is no opposition to the Holder’s application, the court must enter an order authorizing the accelerated foreclosure. In making its showing of abandonment, the Holder will generally need to provide an affidavit from itself, its agent, the local sheriff, or other appropriate county official. The affiant must attest, under oath, that based on his or her personal knowledge, the property is not actually occupied. The affiant must have inspected the property on more than one occasion and each time determined that the property was abandoned. In addition, the affidavit must set forth certain particular facts which evidence that the property has been abandoned. Photographs or other documentary evidence must also be supplied to the court.
The mechanics of an expedited sale are different than a traditional sale. The required paperwork is different and, of course, matters proceed more quickly. If the Holder does not file the required paperwork in a timely manner, the public trustee may withdraw the foreclosure and impose costs and fees against the Holder. Additionally, the Holder has less flexibility in delaying the sale date than it would in a traditional foreclosure.
The expedited foreclosure process was obviously intended to reduce the harm caused to lenders when borrowers abandon their homes. The procedures reduce the duration of the foreclosure process to approximately half that of a traditional foreclosure. However, before undertaking an expedited foreclosure, the lender must be careful to ensure that it has all of the requisite information available to establish abandonment or (if the lender should be so lucky) the agreement of the owner.
If you have questions or would like further information, contact: David Laird at (303) 292-2900.
Moye White LLP has prepared this bulletin to provide general information; however this bulletin does not provide legal advice and does not create an attorney-client relationship between the reader and Moye White. No legal or business decision should be based solely on the content of this bulletin.