Welcome to your crash course on Colorado treasurer’s deed sales! Who hasn’t dreamed of owning property in one of the most beautiful states in the country? Over the past 20 years, Colorado has seen explosive growth statewide. And why not? Colorado boasts pristine mountain skylines and crystal-clear rivers and lakes—no wonder John Denver loved singing about it so much. Thankfully, the dream of owning or investing in property here has now become easier than ever, thanks to revamped tax-sale laws and the simplified process of acquiring a treasurer’s deed from a county tax sale.

How We Got Here

Before we dive into the treasurer’s deed sale itself, it’s helpful to understand how the current format developed. Historically, Colorado’s tax-lien process was quite elusive for most investors. Part of the challenge was that many counties still held tax lien auctions at the courthouse, but beyond that, the process itself often wasn’t the most lucrative option for savvy investors.

When you purchased a tax lien in Colorado, it was strictly “buyer beware.” One major pitfall first-time buyers encountered involved how interest rates and excess proceeds were handled. Historically, if you purchased a tax lien, you bid up the amount you were willing to pay—and the interest rate you would receive was prime plus 9%. While that sounds good at first glance, the catch was that you only earned that interest on the original delinquent tax amount rather than on your total bid.

For example, if the delinquent tax amount was $300, you would only earn prime + 9% on that $300—even if you paid $3,000 for the lien. In many other states, the interest is tacked onto the entire overbid amount, but in Colorado, the county kept the difference between the base bid for the delinquent taxes and the amount you paid for the lien.

The Impact of Tyler v. Hennepin

Enter the case of Tyler v. Hennepin—a Minnesota court ruling whose ripple effect reached Colorado. While the specifics of Minnesota’s tax-lien system differ, the underlying principle of the case was unjust enrichment, meaning a county or investor shouldn’t receive property without compensating the owner.

As a result of Tyler v. Hennepin, Colorado’s tax-sale process underwent some pivotal changes. It shifted to a system more closely resembling Florida’s: yes, there is still a tax lien sale, but instead of simply exchanging your tax lien for a treasurer’s deed, the treasurer now auctions the deed to the highest bidder. The difference between the lien amount and the winning bid becomes the overbid surplus, which is then available to any lienholder (including the original property owner or other parties with valid claims) to claim—much like in Florida.

How it Works Now

In the past, Colorado investors could purchase a tax lien, wait three years, and directly convert that lien into a treasurer’s deed—gaining ownership of the property. Under the new format:

  1. Purchase a Tax Lien: You still buy the tax lien at a county auction.
  2. Waiting Period: After three years (the redemption period), you can apply for a treasurer’s deed.
  3. Public Auction: Instead of the county simply issuing you the deed, the treasurer now sells that deed at a public auction.
  4. Overbid Surplus: Any surplus beyond the lien amount is classified as an overbid surplus, which goes into a pool for qualified parties to claim—mirroring the process used in Florida.

For new investors, this transparency and surplus protection can be both a benefit and a risk. On one hand, it levels the playing field, helping to prevent unjust windfalls. On the other, it means you no longer acquire property simply by holding onto a lien until the redemption period ends.

Next Steps for Investors

Colorado’s new treasurer’s deed system might look more complex on the surface, but in many ways, it’s more investor-friendly than the old process. By ensuring that excess proceeds are handled fairly and giving property owners and lienholders a clear path to claim surpluses, Colorado has modernized its approach to real estate investing and tax sales.

If you’re interested in buying property through a treasurer’s deed, doing your homework on local county rules and regulations is essential—different counties can have slight variations in how they conduct sales. But one thing is certain: Colorado has made it easier than ever to invest in its stunning landscapes, whether you’re a seasoned investor or just starting out.

Thanks for joining this crash course! We hope this blog post helps you better understand how Colorado’s treasurer’s deed sales work, why they changed, and what this means for aspiring investors. Good luck, and enjoy the beauty of the Centennial State as you embark on your property-owning journey!

And if you’re unsure how to handle title issues when you get the property, consider reaching out to Tax Title Services for guidance on obtaining title insurance without going through a quiet title action.

We have been in business for over 20 years and certified 40,000+ tax sale properties for title insurance nationwide.