Excess Foreclosure Proceeds Limit Finder's Fees
The act reduces the period during which the public trustee must hold these funds from 5 years to 6 months. It also voids any contract for payment of a finder's fee during the public trustee's custody of the funds and during the first 2 years of the state treasurer's custody of the funds, and caps the finder's fee at 20% of the amount recovered once these periods expire. For amounts that have been in the custody of the state treasurer for 3 years or more, the finder's fee may be up to 30%.
Additional requirements are imposed on the finder's contract, including the requirements that the contract:
- Is signed by the person to whom the amounts are due;
- Contains a description of the property and the date of the foreclosure sale; and
- Describes the nature of the services that the finder will perform.
Inducing, or attempting to induce, a person to enter into a contract that violates these requirements is punishable as a misdemeanor with penalties of up to 6 months in jail, a fine of up to $10,000, or both, and is designated as a deceptive trade practice under the 'Colorado Consumer Protection Act'.
(Note: This summary applies to this bill as enacted.)