Colorado Tax Lien Investing Guide

Colorado is a tax lien state with a variable interest rate and a premium-bidding auction format. A 2024 law, House Bill 24-1056, significantly changed how an investor obtains a Treasurer’s Deed after non-redemption.

System Overview

Colorado counties sell liens on delinquent real property rather than the properties themselves. The purchaser receives a certificate of purchase, which is a lien against the property. The owner keeps the property and may redeem by paying the taxes plus interest. The governing law is Title 39, Article 12 of the Colorado Revised Statutes.

What the Investor Is Purchasing

You are buying a lien (a debt secured by the property), not the property. You earn interest if the owner redeems. You have no right to enter or possess the property. Obtaining title requires a separate, multi-step Treasurer’s Deed process (described below).

Current Statutory Framework

The interest rate is set by C.R.S. § 39-12-103 and redemption by C.R.S. § 39-12-108 (Colorado Revised Statutes, Title 39, Article 12). The Treasurer’s Deed process was rewritten by House Bill 24-1056, approved May 10, 2024 and effective July 1, 2024.

How Auctions Work

Colorado uses premium bidding. The interest rate is fixed for the year, and investors compete by bidding cash amounts (premiums) above the tax amount; the highest premium wins. Counties generally hold sales annually, often in October or November, with many using online platforms. County treasurers publish the rate and sale details ahead of time (Lake County; Clear Creek County).

Interest, Penalty & Premium Mechanics

The annual rate equals the federal discount rate as of September 1 plus 9 percentage points, subject to a statutory minimum. This is a maximum/statutory rate, not a guaranteed return. The premium is the central risk: any amount bid above the tax amount is not refunded on redemption and earns no interest. If the lien redeems early, the lost premium can exceed the interest earned, producing a net loss. Always model premium impact with our bid calculator before bidding.

Redemption Timeline

The owner may redeem the property within three years after the date of the tax lien sale (C.R.S. § 39-12-108). The redemption period begins on the date of sale. Any person with an interest may redeem by paying the amounts required by statute.

Treasurer’s Deed & HB24-1056

Do not assume you simply wait three years and receive a Treasurer’s Deed. Effective July 1, 2024, House Bill 24-1056 ended the old requirement that a county treasurer issue a deed upon presentation of a certificate of purchase. The new process applies to applications on or after July 1, 2024 and works as follows:

• The lawful holder of the certificate of purchase applies for a public auction for a certificate of option for treasurer’s deed (option certificate), using the required form and deposit.
• The treasurer conducts a title review and provides notice to known interested parties, then holds a public auction.
• The treasurer accepts only bids greater than the amount owed to the lawful holder plus the treasurer’s fees and costs.
• If an overbid occurs (a bid above the minimum), the overbid is paid in recording priority to junior lienors who filed a notice of intent to redeem; any remaining overbid is paid to the property owner.
• If no qualifying bid is made, the lawful holder is deemed the purchaser of the option certificate.
• If the property remains unredeemed, the holder of the option certificate may present it (with required documentation) to obtain the Treasurer’s Deed.

This change brings Colorado into compliance with a U.S. Supreme Court decision affirming a property owner’s right to surplus equity above the tax debt. County treasurers may have local procedural differences in implementing the auction, notice, and title-review steps, so verify the current process with the specific county treasurer.

Required Due Diligence

• Confirm the announced annual interest rate and sale date with the county treasurer.
• Model the maximum premium you can pay without losing money under early, mid, and late redemption.
• Review the property’s value, use, and condition; a worthless property is a poor foreclosure target.
• Understand the post-HB24-1056 deed process, including the public auction and overbid distribution, before relying on deed acquisition.

State-Specific Risks & Exceptions

• Premium loss: Premiums are non-refundable and earn no interest; early redemption can cause a net loss.
• HB24-1056 process: Deed acquisition now requires a public auction and may involve overbidders and overbid distribution to the owner and junior lienors.
• Bankruptcy: A federal bankruptcy filing triggers an automatic stay; HB24-1056 addresses the effect of a bankruptcy related to the property.
• County variation: Notice, title-review, and auction procedures may differ by county.

County-Level Verification Checklist

Before bidding, verify with the specific county treasurer:

• The announced interest rate and the sale date, format, and platform.
• Registration, deposit, and bidder eligibility requirements.
• The published property list and statutory notices.
• The current HB24-1056 Treasurer’s Deed application process, deposit, and notice procedures for that county.

A county’s procedure illustrates local practice but is not universal statewide. Always confirm current requirements with the applicable county treasurer and a qualified professional.