CPTA LEGISLATIVE COMMITTEE MEETING MINUTES
The meeting was held on October 4th , 2006 at the Jefferson County Courthouse. In attendance were Angela Dazlich, Bob Sagel, Jack arrowsmith, Jill Voegtle, Mary Schaefer, Mary Wenke, Roxy Huber, Sandy Berry, Sandy Hume, Tina Whitmer, Peg Ackerman and Rich Krohn via telephone. Robert Hopp was also present as a guest to the committee.
1. Call to order was made by Bob Sagel, Committee Chair.
2. Roxy Huber was appointed meeting secretary.
3. HB 1387 Cleanup
Rich’s Topics
1) Allow redemption by non-consensual lienors (for example holders of judgment liens) whose liens are recorded after recording of the NED or LP (see 38-38- 104(1)(a)(V) and 302(1)(c));
It was agreed we will work with the bar to accomplish this.
2) Provide a procedure as existed under the old law for redemption (as well as cure) payments to be made through the officer by the owner or borrower; and
After much discussion, it was decided we need to see language on this one. No one was specifically opposed, but we needed to review our intent and identify what exactly we wanted to do.
3) Address the probably unconstitutionality of 38-38-103(1)(c) as a violation of due process under Mennonite Board, 462 U.S. 791, 103 S.Ct. 2706 (1983) and subsequent cases.
Rich, Larry, and Robert need to discuss this one and identify solution.
Some other issues that I have identified in reviewing and lecturing on the Act are as a follows (note that to save time the quoted passages are excerpts from my seminar papers, which are copyrighted materials):
– The definition in 38-38-100.3(10) is "holder of evidence of debt" but the term as generally used in the Act is just "holder."
– There is confusion about 38-38-103(1)(b) concerning giving notice to unrecorded lessees and other requirements for notices to "occupant."
– Clarify under 38-38-109(1)(a) and (b) that the mailing list can be amended up to 65 days before the initial sale date without republication if that is the intent or add "actual" or other language to clarify.
– Also under the same provision
Two possible uncertainties are raised by the new language of C.R.S. § 38-38-109(1)(b). First, this subsection speaks of mailing the combined notice or corrected combined notice to the persons on the "amended mailing list." This begs the question of whether re-mailing is required if the mailing list is unchanged and republication is solely because of an error in the combined notice. Normal caution would require re-mailing in either case. Secondly, the same subsection provides that the officer is to continue "the initial date of sale." This creates some uncertainty as to whether this remedial provision would be available if an error in the combined notice or mailing list were discovered after the initial sale date, but before the property had actually gone to sale.
– Here are a couple more that are easier to quote from my materials
Under C.R.S. § 38-38-109(1)(c), if the holder receives the request for a cure statement 30 or fewer days before the sale date and does not provide the cure statement by noon on the seventh day prior to the sale date, the officer continues the sale week to week "until the statement is filed," subject to the overall limitation that on continuance of sale stated in C.R.S. § 38-38-109. The quoted language leaves it somewhat unclear whether a statement received fewer than seven days prior to the then scheduled sale date would allow the sale to go on as scheduled. The author takes the position that it would be proper for the officer to continue the sale to the next sale date at least seven days after receipt of the statement "for good cause shown" under C.R.S. §38-38-109(1)(a). Also, references in subsection C.R.S. § 38-38-109(1)(c)(I)(A) are made to both the Public Trustee and officer in leaving the effect of this paragraph somewhat unclear.
In a Public Trustee foreclosure, if the holder receives a request for a cure statement more than 30 days before the date of sale and does not file the cure statement within 10 calendar days after receipt, the Public Trustee is to assess a fine of the greater of $150.00 or 1/32 of 1% of the outstanding principal balance of the secured indebtedness, but only if a cure is made. This section is silent as to what sanctions the Public Trustee may impose, and what remedies may be pursued, in order for the Public Trustee to recover this fine, but the Public Trustee would presumably be entitled to withhold issuance of a confirmation deed under C.R.S. § 38-38-501 or possibly return of original loan documents in the event of a withdrawal, analogizing to the provisions related to an administrative withdrawal under C.R.S. § 38-38-109(3)(b).
– If deemed necessary, clarify that use of good faith estimates does not extend effective time period of a cure statement under 38-38-104(5).
– Clarify whether the assignment must be recorded prior to recording of the NED/LP under 38-38-302(1)(e)
– Correct 38-38-302(3)(b) to say initial written statement must be filed 14 days after sale to be consistent with (3)(a)and allow PT to have figures by first day of first junior lienor redemption period (15th day after sale)
– Look at 38-38-302(4)(a) and 301 and clarify what to do if note and trust deed state different default rates and align with situation where officer has calculated redemption amount differently based on failure of CP holder to provide timely redemption statement
– Clarify whether a certificate of purchase holder accepting a short redemption would not share in excess sales proceeds under C.R.S. § 38-38-111, but the same would not apply to a junior lienor accepting a short redemption
– Clarify whether fees and costs for which the lienor provides the officer receipts, invoices, evidence of electronic account to account transfer, or a copy of loan servicing screens verifying such costs were incurred as of the date of sale (including per diem accruals) are also included under 38-38-302(6)
– Address the following issue related to lien claimants
Under C.R.S. § 38-38-306, mechanic’s lien claimants and other statutory lien claimants continue to have the same rights as others to redeem as junior lienors, even if the claim has not been reduced to judgment, with the claimed lien amount being held in escrow by the officer until final judgment is entered on the claim. Any excess amounts (or the full amount if the lien claimant fails to establish his right to the lien) held by the officer will be refunded to the owner of the property as of the date of sale (not as in other cases under the Act to the owner as of the date of recording of the NED or lis pendens), "so long as the last redeeming lienor has otherwise been satisfied." The quoted language is not further explained, but it would appear to involve a determination of whether the equity received in the property by that last redeeming lienor was sufficient to fully satisfy the amount of its lien.
– Address the following issue related to omitted parties
C.R.S. § 38-38-506(3) provides that, if an interested person, as defined above, files with the officer at any time a document affirming the omitted party’s interest in the property based on the recorded instrument from which the omitted party’s interest is derived (or the oral or written lease in the event the omitted party is a lessee, subject to the terms of that lease), then the interest of the omitted party shall not be affected by the foreclosure and the omitted party shall have no cure or redemption right. This language presents the intriguing possibility that any interested person may ratify the rights of an omitted party, which might lead to unanticipated consequences distinctly unfavorable to a different party taking title to the property in the foreclosure proceeding. See, C.R.S. § 38-38-506(2)(c).
Respectfully submitted,
Roxy Huber