• Colorado law allows lenders to sue the homeowner for a deficiency judgment after foreclosure.Big house in Colorado image by Marzanna Syncerz from Fotolia.com
  
  The state of Colorado has laws in place designed to protect the rights of lenders as well as homeowners involved in real estate transactions. Lenders in Colorado may obtain a judgment of foreclosure, a tax lien judgment or a deficiency judgment if the homeowner fails to make the required payments on the mortgage loan or property taxes.
  
  

Tax Lien Judgments

• Colorado homeowners who fail to pay their property taxes when due may receive a tax lien judgment. Receiving a tax lien judgment means that the homeowner will have their real estate sold at public auction to cure the debt. Buyers must register with the state of Colorado and are required to provide information to the Internal Revenue Service (IRS) such as name, address, social security number, federal tax identification number and a buyer registration form. According to Colorado law, potential buyers can apply for a tax certificate as soon as the property taxes on the property becomes delinquent. Redemption by the homeowner is allowed anytime before a tax lien judgment or deed is issued. Tax lien judgments or deeds are issued 3 years after the tax lien is placed on the property.
  
  

Judgment of Foreclosure

• Colorado lenders can apply for a foreclosure judgment in the event the homeowner defaults on the home loan. Defaulting on the loan means that the homeowner failed to maintain the property insurance, failed to make timely mortgage payments or did not comply with the terms of the mortgage loan. According Foreclosure.com, nonjudicial foreclosure is the most common method of obtaining a foreclosure judgment in Colorado. Using a nonjudicial foreclosure method allows the lender to obtain a judgment of foreclosure without going through the court system. Lenders who wish to foreclose using this method must have a power of sale clause written into the original loan documents. A power of sale clause gives the lender the right to sell the home without obtaining a court order if the owner fails to abide by the terms of the loan. Lenders who do not have a power of sale clause written into the loan must use a judicial foreclosure process and obtain a court date to receive a judgment of foreclosure.
  
  

Deficiency Judgment

• Homeowners who lose their home to foreclosure in Colorado are responsible for any deficiencies that result from the sale of the home. A deficiency may occur if the home is sold for less than the amount due on the mortgage loan. Homeowners can avoid paying a deficiency judgment to the lender if they can prove the lender sold the home for less than a good faith estimate of the property value.