Colorado Tax Sales Overview
The Tax Lien Process
Every year in the Fall, the Treasurer's Office will release a list of properties that are delinquent on their property taxes. If those accounts remain delinquent, a tax lien sale will be held.
A public auction will be held to sell those liens. The starting bid ("face value") is the taxes, interest, and fees owed. Investors at the public auction will bid a premium ("overbid") for purchasing those liens. A premium ("overbid") is an amount paid over and above the amount of delinquent taxes, interest, and fees owed. The premium bid is not part of the investment and interest is not paid on premiums/overbids. Premiums/overbids will not be refunded or returned. At the conclusion of the sale, the total advertised amount plus the premium/overbid will be due.
Simple interest accrues on the tax lien at a rate of 9 percent above the Federal Discount rate as of September 1 each year rounded to the nearest full percent. That interest rate is constant throughout the life of the tax lien certificate. The tax lien certificate holder retains the right to endorse future delinquent taxes onto the certificate for up to 15 years.
At any time after the tax sale and prior to a property being sold at public auctions, a property owner has the right to redeem (pay off) that lien.
The tax lien sale is not a guaranteed way to make money or gain property. It is important that you do your due diligence and understand the risk.
Treasurer's Deed Auction Process
Anytime 3-15 years after the purchase of a tax lien certificate, an investor, a "lawful holder," can request that the property be sold at public auction. A deposit will be required to cover the costs associated with advertising, posting, notifying interested parties, and other expenses of the Treasurer's Office associated with the public auction. The application will be on a form furnished by the Treasurer's Office.
This public auction will provide an opportunity for the property to be sold at fair market value with overbid funds going to the property owner, bringing Colorado into compliance with the Tyler v. Hennepin County decision. The Treasurer's Office will actively work to notify the property owner and other known interested parties of the potential sale.
At any time prior to the property being sold at public auction, the property owner retains the right to redeem the tax lien certificate, paying back taxes, interest, fees, and costs.
The initial bid for the public auction will be set by the Treasurer at the redemption amount for the lien plus actual fees and costs associated with the public auction by the Treasurer's Office.
If there are no bids at the public auction, the Treasurer's Deed will be issued to the lawful holder who requested the public auction. In that case, the fair market value of the property will have been determined to be the amount of the lien plus the Treasurer's fees.
If there is a bid at the public auction the lien holder can either:
- Redeem the property from the successful bidder and receive the Treasurer's Deed, or
- Be reimbursed the redemption amount plus the fees and expenses of the Treasurer's Office which were paid by the tax lien certificate holder prior to the sale.
Any overbid amount from the auction will go to the property owner.
Tyler v. Hennepin County
On May 23, 2023, the United States Supreme Court, in a unanimous decision, determined that Treasurer's Deeds issued, after a property owners' failure to pay property taxes in Minnesota and other states that operated in a similar manner, were a violation of the Takings Clause of the Constitution since the value of the property was more than the debt owed.
During the Legislative session that followed, the Colorado Legislature passed House Bill 24-1056 to update and make Colorado's Treasurer's Deed process Constitutional.