When you don’t pay the real property taxes on your Colorado home, the county treasurer can sell the tax lien that exists on your property, generally to an investor. You then get an opportunity to pay off the overdue amounts plus interest and "redeem" the home within a certain period of time. If you don't redeem within the allotted amount of time, you could lose your home.
In Colorado, after you fall behind in property taxes, the county treasurer can hold a tax lien auction. The lien on your home is then sold to the highest bidder. The winning bidder gets a certificate of purchase and the right to collect the delinquent amounts from you. Eventually, the purchaser of the lien can obtain title to the home if you don’t pay off the past-due amounts, plus interest and costs.
What happens if no one buys the lien at the sale. If no one bids on the lien at the sale, the county treasurer will strike off the unsold lien to the county (or city, town, or city and county) (Colo. Rev. Stat. § 39-11-108). This means the county gets the certificate of purchase and can eventually obtain title to your home. (For details on the tax lien sale process in Colorado, see What Happens If I Don't Pay Property Taxes in Colorado.)
In Colorado, you get a certain amount of time (called a redemption period) to pay off the tax debt after the lien sale -- otherwise you could lose your home. This is called “redeeming” the home.
You get a three-year redemption period following the sale during which you can redeem the property (Colo. Rev. Stat. § 39-11-120). If you haven't redeemed after three years, the holder of the certificate of purchase can apply to the treasurer for title to your home and receive a treasurer’s deed to the property.
When your right to redeem ends. You can redeem at any time before the treasurer signs the treasurer’s deed giving title to the purchaser (Colo. Rev. Stat. § 39-12-103).
To redeem the property, you’ll have to pay the county treasurer:
You don’t have to pay any excess amount that the winning bidder paid to buy the lien. (In some states you must reimburse the purchaser for the full amount he or she paid for the lien. This is not the case in Colorado.)
Example. Say you owed $10,000 in delinquent taxes, interest, and costs at the time of the tax lien sale. An investor buys the lien at the sale for $10,500. You don’t have to pay the extra $500 over what you actually owed at the time of the sale in order to redeem. The purchaser forfeits this amount to the county general fund (Colo. Rev. Stat. § 39-11-115). Rather, you’ll have to pay $10,000 plus redemption interest from the sale date, as well as reimburse the purchaser for any subsequent taxes he or she paid on the home plus interest.
Even though you get at least three years before you’ll lose your home after a tax lien sale, in most cases, it is better to take action before you even become delinquent on your taxes to make them more affordable. For example, you could:
Keep in mind that neither the abatement procedure nor the appeal procedure suspends the deadline for paying your property taxes.
To find the statutes that discuss tax lien sales in Colorado, go to Colorado Revised Statutes, Title 39, Articles 11 and 12 of the Colorado Revised Statutes.