What Happens If I Don't Pay Property Taxes in Colorado?

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt.

All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. Accordingly, if you don't pay the real property taxes on your Colorado home, the county treasurer can hold a tax lien sale, often on the internet. The winning bidder gets a certificate of purchase and the right to collect the delinquent amounts from you.

You can pay off the overdue amounts and "redeem" the home within a specified time. Eventually, the lien purchaser can ask for the property to be sold at a public auction if you don't pay off the past-due amounts, plus interest and costs.

How Do Property Taxes Work?

People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.

If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account.

But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.

What Are the Consequences of Not Being Able to Pay Property Taxes in Colorado?

Again, if you don't pay your property taxes in Colorado, the delinquent amount becomes a lien on your home. Once there's a tax lien on your home, the tax collector may sell that lien at an auction. This auction is called a "tax lien sale."

Then, if you don't pay off the amount of the lien plus various other amounts in a specified amount of time, the winning bidder can ask for your home to be sold at a public auction.

How Does Colorado Handle Tax Non-Payment?

In Colorado, property taxes become due and payable on January 1 of the year following that in which they're levied and become delinquent on June 16 of that year. (Colo. Rev. Stat. § 39-10-102 (2024).) Properties are eligible for a tax lien sale the same year they become delinquent.

The county treasurer sells tax liens at a public auction. Colorado tax sales typically occur in the fall of each year but must be held on or before the second Monday in December. (Colo. Rev. Stat. § 39-11-109 (2024).)

The bidding starts at the amount of the delinquent taxes, interest, and fees that are due. (Colo. Rev. Stat. § 39-11-115 (2024).)

Notice of the Tax Lien Sale

No later than September 1, the treasurer will mail you a notice that you're behind on taxes. The notice will inform you that the treasurer will sell the tax lien for your home at a public auction on a certain date if you don't pay the delinquency by the date specified in the notice, which is no less than 15 days from the date the notice was mailed. (Colo. Rev. Stat. § 39-11-101 (2024).)

The treasurer must also publish notice of the tax lien sale, including the date, time, and place of sale, in a newspaper, and post the notice in a conspicuous place in the treasurer's office. (Colo. Rev. Stat. § 39-11-102 (2024).)

If Someone Buys the Tax Lien at the Sale

The winning bidder at the auction is issued a certificate of purchase and gets the right to collect the tax debt from you, plus interest. (Colo. Rev. Stat. § 39-11-108 (2024).)

If No One Bids on the Tax Lien at the Sale

If no one bids for the lien at the sale, the county treasurer will "strike off" the lien to the county (or city, town, or city and county) for the amount of past-due taxes, delinquent interest, and fees. (Colo. Rev. Stat. § 39-11-108 (2024).)

How to Redeem the Property

Many states allow delinquent taxpayers to pay off the amounts owed and keep the home. This process is called "redeeming" the property.

Right to Redeem the Property In Colorado

In Colorado, you get a three-year redemption period following the sale, during which you can redeem the property. (Colo. Rev. Stat. § 39-11.5-102 (2024).)

How Much You'll Have to Pay to Redeem Your Colorado Home

To redeem your Colorado property following the tax lien sale, you must pay the following:

• the amount of the delinquent taxes
• the amount of the delinquent interest
• costs, like newspaper advertising fees
• redemption interest from the date of sale, and
• all taxes accruing on the home after the sale, which the purchaser paid, and that are endorsed on the certificate of purchase, plus redemption interest. (Colo. Rev. Stat. § 39-12-103 (2024).)

What Happens If You Don't Redeem Your Colorado Home

In 2024, the Colorado Legislature passed House Bill 24-1056 to update Colorado's tax deed process and align state law with the U.S. Supreme Court's decision in Tyler v. Hennepin County. (In Tyler v. Hennepin County, a unanimous U.S. Supreme Court ruled that it's unconstitutional for the state or local government to take your home to cover your property tax bill and then keep the profits.)

Under the revised Colorado law, anytime between 3 and 15 years after purchasing a tax lien certificate, the holder of the certificate may file an application for a public auction of the property. (Colo. Rev. Stat. § 39-11.5-102 (2024).) The treasurer's office then notifies the property owner and other known interested parties about the potential sale. (Colo. Rev. Stat. § 39-11.5-104 (2024).) The sale will take place no more than 125 calendar days nor less than 110 calendar days after the first date of advertising or the date of the mailing of the known interested party notice if publication isn't required. (Colo. Rev. Stat § 39-11.5-105 (2024).)

In compliance with the Tyler decision, the public auction provides an opportunity for the property to be sold for its fair market value, with the overbid funds going to the property owner. You'll have to ask for the overage; you won't get it automatically. Call the treasurer to find out how to claim your funds. These laws are effective as of July 1, 2024. (See Colo. Rev. Stat. § 39-11.5-101 to § 39-11.5-119 (2024).)

You can redeem the property at any time before the sale.

When Tax Liens Expire

Tax liens are generally valid for 15 years and are, in most cases, canceled at the 15-year anniversary date of the sale if not redeemed or if a sale hasn't been applied for before the 15-year date. (Colo. Rev. Stat. § 39-11-148 (2024).)

What Happens to My Mortgage in a Tax Sale?

Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.

Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.

What Options Do I Have If I Can't Afford to Pay My Property Taxes in Colorado?

Even though you'll get a redemption period after a Colorado tax lien sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable. You could, for example:

• find out if you meet the criteria for a property tax abatement, or
• request a change in the property's assessment if you feel your assessed property value isn't the fair market value.

Getting Help With Property Tax Issues in Colorado

If you're already facing a property tax lien sale in Colorado and have questions (or need help redeeming your property), consider talking to an attorney. A foreclosure lawyer, tax lawyer, or real estate lawyer can most likely help you.