In Colorado, a deed of trust is recorded against a property in Boulder County. The borrower later defaults, and the Public Trustee initiates foreclosure proceedings. During the foreclosure process, a second creditor records a judgment lien against the property. After the Public Trustee's sale, what happens to the judgment lien recorded after the deed of trust?
Correct Answer
B) The judgment lien is extinguished by the Public Trustee's sale because it is junior to the foreclosing deed of trust
Under Colorado's Public Trustee foreclosure law (C.R.S. § 38-38-101 et seq.), the priority of liens is determined by recording date. The deed of trust recorded first has priority over the subsequently recorded judgment lien. When the Public Trustee conducts the foreclosure sale, the sale extinguishes all junior liens — including the judgment lien recorded after the deed of trust. The buyer at the Public Trustee's sale takes title free of junior encumbrances. Any surplus proceeds after satisfying the senior lien would be distributed to junior lienholders in order of priority.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Tenancy by the entirety is a form of co-ownership available only to married couples that includes the right of survivorship and protection from individual creditors. Neither spouse can unilaterally sell or encumber the property.
Tenancy in common is a form of co-ownership in which two or more persons hold separate, undivided interests in property without the right of survivorship. Each owner can hold unequal shares and can independently transfer their interest.
A freehold estate conveys ownership rights, while a leasehold estate grants the right to possess and use property for a specific period without ownership.
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