Can a Colorado county keep the surplus value when it forecloses on property for unpaid taxes, after the U.S. Supreme Court's Tyler v. Hennepin County decision?

Plain-English summary

In May 2023, the U.S. Supreme Court decided Tyler v. Hennepin County, holding that a government cannot keep more property than it is owed when it forecloses for unpaid taxes. Doing so, the Court said, is an unconstitutional taking under the Fifth Amendment. Colorado Attorney General Phil Weiser, acting on his own initiative, looked at Colorado's tax-foreclosure laws and concluded that several of them are likely unconstitutional under Tyler.

The opinion walks through Colorado's two-step process for collecting delinquent property tax. First comes the tax lien sale: the county auctions a tax lien certificate to the highest bidder. The owner keeps title and can redeem the property by paying off the tax debt with interest. The opinion concludes this step is fine. The owner is not deprived of property at this stage, so Tyler does not apply.

The constitutional problem comes at the second step. If the owner does not redeem within three years, the lien holder can pay an extra fee and apply for a treasurer's deed. Once the treasurer issues that deed, the property transfers in full to the lien holder. There is no statutory mechanism to refund the owner for the difference between the property's value and the tax debt. The lien holder gets the entire property, often worth far more than the tax owed. That, under Tyler, is a taking without compensation.

The opinion also flags Colorado's mobile-home foreclosure process as problematic. Counties have the power to "distrain and sell" a mobile home for unpaid tax, and any surplus from the sale "shall be credited to the county general fund." That direct retention of surplus value violates Tyler.

The opinion is careful to note that real-property treasurer's deeds are rare in Colorado, and most parcels that go through the process have little or no equity. Mobile homes are the bigger concern in practice. The AG ends by recommending that the legislature amend the affected statutes to create a refund or surplus-recovery mechanism.

What this means for you

If you own real property in Colorado and have fallen behind on property tax

Most importantly, you still have time. Colorado's process gives you three years to redeem your property after a tax lien is sold, and if you have a legal disability, an additional nine-year window. Use that time. The fastest way to protect your equity is to pay off the tax lien with interest before any treasurer's deed is issued.

If a treasurer's deed has already been issued and you lost equity in the property, this opinion is a road map for arguing that your loss was an unconstitutional taking. You would need to bring a claim, likely against the county, asserting that the deed transferred value above your tax debt without just compensation. Tyler is the controlling federal authority. Talk to a real estate or constitutional litigation attorney quickly because deadlines and procedural complications apply to claims like this.

If you own a mobile home in Colorado

The opinion identifies mobile-home foreclosure as the area where constitutional problems are most likely to arise. Several specifics matter:

• Mobile home tax foreclosures lack the disability safeguards that apply to real property. The nine-year extended redemption window for owners with disabilities does not apply.
• If the county sells the mobile home outright (a "distraint sale"), surplus proceeds go to the county general fund. The opinion calls this likely unconstitutional under Tyler, unless the home was abandoned or sold for less than the tax debt.
• Notice requirements exist on paper but reportedly have failed in practice; some owners lose title without effective notice.

If you have lost a mobile home through tax foreclosure where the home's value exceeded what you owed, the opinion supports a takings claim for the difference. The county is the likely defendant. A housing legal aid clinic or a real estate attorney can help.

If you are a county treasurer or county attorney

This opinion is a flashing yellow light. The AG, the state's chief legal officer, has put on record that issuing a treasurer's deed to a lien holder when the property's fair market value exceeds the tax debt likely results in an unconstitutional taking. Distraint sales of mobile homes that retain surplus for the county general fund are likely unconstitutional under § 39-10-111.5(6)(a)(II)(d).

Until the legislature acts, treat each treasurer's deed application as a potential takings exposure. Document property values. Consider whether the county can structure foreclosures (especially mobile home sales) to refund surplus to former owners. The opinion does not give you safe harbor, but it gives you a clear warning of where liability sits.

Strike-off properties (where no one bids and the county takes the lien) are also exposed. If the county later sells a struck-off property for more than the tax debt and keeps the surplus, that is the same constitutional problem.

If you are a tax lien investor

The opinion does not directly answer what happens to your investment if Tyler blocks issuance of a treasurer's deed. Footnote 9 expressly leaves that question open. But the practical risk is real: a lien you bought expecting to acquire a high-value property for the cost of back taxes may not deliver that property if the courts enforce Tyler in Colorado. Plan accordingly. Tax-lien certificates as interest-bearing instruments are still valid; tax-lien certificates as a path to acquiring valuable real estate at a discount are now legally uncertain.

If you are a Colorado state legislator

The opinion is an explicit invitation. Footnote 10 says: "the policymaking branches of Colorado state government may wish to amend the statutes at issue to ensure any such processes do not violate a property owner's rights protected by the Takings Clause." Specific targets:

• § 39-11-120 and related real-property treasurer's deed statutes need a surplus-refund mechanism.
• § 39-10-111.5(6)(a)(II)(d) directs surplus from mobile-home distraint sales to the county general fund. That provision is the most clearly unconstitutional under Tyler.
• The mobile-home statutes lack notice and disability safeguards that apply to real property. The constitutional concern is amplified there.

A model is the New York City statute discussed approvingly in Tyler: a 20-day window after foreclosure for the owner to demand surplus from the sale. Colorado can build something similar.

If you are a real estate attorney advising clients on tax-distressed property

The reporters in the citations matter. Tyler is a U.S. Supreme Court decision (143 S. Ct. 1369). Hall v. Meisner is from the Sixth Circuit. Moorehead, Carousel Farms, Fowler Trust, and E-470 are Colorado Supreme Court decisions. Continental Res. v. Fair and Nieveen are Nebraska Supreme Court decisions that the U.S. Supreme Court vacated and remanded after Tyler. Hawaii Housing Authority v. Midkiff and the older Lawton and Nelson cases are U.S. Supreme Court decisions from various eras.

When advising buyers of tax-deeded property, the title insurance question is acute. A treasurer's deed issued post-Tyler may carry uncured constitutional defects that could support a former-owner claim against the property. Quiet title actions, already standard practice for tax-deeded property, are now more important, not less.

Common questions

Q: Did Tyler v. Hennepin County actually make Colorado's tax foreclosure laws unconstitutional?
A: It made them constitutionally vulnerable. The AG opinion is the AG's analysis of the question; it predicts that a court applying Tyler would find Colorado's treasurer's-deed and mobile-home distraint procedures unconstitutional in cases where the property's value exceeds the tax debt. Until a Colorado court rules, the statutes remain on the books, and county treasurers must decide how to operate under that uncertainty.

Q: Is the tax lien sale itself unconstitutional?
A: No. The opinion is clear: the auction of a tax lien certificate is not a taking because the owner's title is unchanged at that stage. The constitutional problem only arises later, when a treasurer's deed actually transfers ownership.

Q: I lost my home through tax foreclosure before Tyler was decided. Can I get the surplus?
A: The opinion does not address whether Tyler applies retroactively. As a general matter, U.S. Supreme Court decisions interpreting the federal Constitution apply to existing cases, but procedural and timing rules (statutes of limitations, finality of the prior tax sale, etc.) may bar claims. You need a lawyer to evaluate your specific situation. Move quickly.

Q: What is a "distraint sale" of a mobile home?
A: It is one of four collection options Colorado law gives a county treasurer for delinquent mobile-home taxes. Under § 39-10-111.5(2)(a), the treasurer can distrain (seize) the mobile home and sell it. Surplus from such sales currently goes to the county general fund. The opinion identifies this as the most clearly unconstitutional piece of the mobile-home statutes.

Q: How rare are real-property treasurer's deeds in Colorado?
A: Very rare. The opinion's footnote 3 says nearly all real properties that transfer this way "have little to no monetary value or have been abandoned by the original owner," giving examples like tiny or abnormally shaped parcels, easement-burdened land, or contaminated property. The constitutional problem is more theoretical for real property than for mobile homes.

Q: What about the "premium" paid at tax lien auctions?
A: The premium (the amount above the minimum bid) goes to the county general fund and does not earn interest for the lien holder. The opinion does not directly address whether keeping the premium raises Tyler issues; the focus is on what happens at the deed stage, not at the auction stage.

Q: Does this affect my mortgage?
A: Indirectly. When a treasurer's deed is issued, the new owner takes title free of mortgage liens, but the original owner remains personally liable for the mortgage debt. So the mortgage doesn't disappear, even though the security for it does. That is not a Takings Clause issue in itself; it is just how Colorado's tax-deed system has worked for decades (Moorehead v. John Deere, 1978).

Background and statutory framework

Colorado's two-step delinquent-tax process is older than Tyler and was not designed with takings law in mind. A tax lien attaches January 1 of the tax year. If the owner doesn't pay by the delinquency date in the following year, the county auctions the lien. The winning bidder gets a tax lien certificate, which earns 9 to 12 percent interest annually. The owner can redeem at any time during the following three years by paying off the tax debt plus interest.

If the owner doesn't redeem after three years, the lien holder applies for a treasurer's deed. After statutory notice requirements, the treasurer issues the deed and "all right, title, interest, and estate" in the property transfers to the lien holder, free of any mortgage or other liens (Moorehead v. John Deere, 572 P.2d 1207). Critically, there is no statutory mechanism for the original owner to recover the difference between the property's market value and the tax debt that was satisfied.

The mobile-home process, codified at § 39-10-111.5, is structurally different. The county treasurer has discretion among four collection methods, including a distraint sale (selling the mobile home itself, not just a tax lien). Under § 39-10-111.5(6)(a)(II)(d), surplus proceeds from a distraint sale go directly to the county general fund. The mobile-home process also lacks the disability safeguards that apply to real property and reportedly has notice failures.

Tyler v. Hennepin County, decided May 25, 2023, involved Geraldine Tyler's $40,000 condominium that Hennepin County, Minnesota, foreclosed on for about $15,000 in unpaid taxes. The county kept the entire property and the surplus. The U.S. Supreme Court, in a unanimous decision by Chief Justice Roberts, held this violated the Takings Clause. The Court traced the principle (a government cannot take more than it is owed) back to the Magna Carta and through American common law from the Founding through the Fourteenth Amendment.

The Tyler decision approved one model statute (a New York City water-bill foreclosure with a 20-day surplus-recovery window discussed in Nelson v. City of New York, 1956) and rejected another. The pattern that violates the Takings Clause is the one Colorado has: a foreclosure that transfers full title without giving the owner a reasonable mechanism to recover surplus value.

Tyler's reach was confirmed in two post-Tyler grants, vacates, and remands by the U.S. Supreme Court in Nebraska cases (Fair v. Continental Res. and Nieveen v. Tax 106). Nebraska's tax-lien statute, similar in structure to Colorado's, had been upheld by the Nebraska Supreme Court before Tyler. After Tyler, the U.S. Supreme Court vacated those decisions and sent them back. That parallel is the strongest signal in the opinion that Colorado's statutes face the same fate.

The opinion takes care to delineate what is and isn't a taking. The tax lien sale itself is not a taking: title doesn't transfer, the owner can redeem, and the tax-lien holder has no present interest in the property (Hall v. Meisner, 51 F.4th 185, 6th Cir. 2022). The taking happens at the moment ownership transfers, which under Colorado law is the issuance of the treasurer's deed. So Colorado's vulnerability is at the deed stage, not the auction stage.

The mobile-home distraint sale is a taking even more directly: the home is sold, surplus exists, and the statute directs that surplus to the county. There is no mechanism for the owner to recover it. The AG's conclusion: that statutory provision is "likely unconstitutional under Tyler" unless the home was abandoned or sold for less than the tax debt.

Citations and references

U.S. Supreme Court cases:
- Tyler v. Hennepin County, 143 S. Ct. 1369 (2023) (controlling Takings Clause analysis)
- Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229 (1984)
- Preseault v. ICC, 494 U.S. 1 (1990)
- Nelson v. City of New York, 352 U.S. 103 (1956) (approved water-bill foreclosure model)
- United States v. Lawton, 110 U.S. 146 (1884) (just compensation when government keeps property)
- U.S. v. Miller, 317 U.S. 369 (1943)

Federal circuit and post-Tyler GVRs:
- Hall v. Meisner, 51 F.4th 185 (6th Cir. 2022) (taking occurs when title transfers)
- Fair v. Continental Res. (S. Ct., GVR after Tyler)
- Nieveen v. Tax 106 (S. Ct., GVR after Tyler)

State court cases:
- Continental Res. v. Fair, 971 N.W.2d 313 (Neb. 2022) (vacated post-Tyler)
- Nieveen, 974 N.W.2d 15 (Neb. 2022) (vacated post-Tyler)
- Moorehead v. John Deere Industrial Equip. Co., 572 P.2d 1207 (Colo. 1978)
- Actarus, LLC v. Johnson by & through Johnson, 451 P.3d 1270 (Colo. App. 2019)
- Carousel Farms Metro. Dist. v. Woodcrest Homes, Inc., 442 P.3d 402 (Colo. 2019)
- Fowler Irrevocable Trust 1992-1 v. Boulder, 17 P.3d 797 (Colo. 2001)
- E-470 Public Highway Authority v. Revenig, 91 P.3d 1038 (Colo. 2004)

Constitutional and statutory authority:
- U.S. Const. amend. V (Takings Clause)
- Colo. Const. art. II, § 15
- Title 39, Articles 1, 3, 5, 10, 11, and 12 of the Colorado Revised Statutes (delinquent property tax process)
- § 13-81-101(3), C.R.S. (legal disability definition)
- § 24-31-101(1)(a), C.R.S. (AG formal opinion authority)

Source

• Landing page: https://coag.gov/attorney-general-opinions/
• Original PDF: https://coag.gov/app/uploads/2023/07/AG-Formal-Opinion-No-23-01.pdf

Original opinion text

PHIL WEISER
Attorney General

RALPH L. CARR
COLORADO JUDICIAL CENTER
1300 Broadway, 10th Floor
Denver, Colorado 80203
Phone (720) 508-6000

NATALIE HANLON LEH
Chief Deputy Attorney General
SHANNON STEVENSON
Solicitor General
TANJA WHEELER
Associate Chief Deputy Attorney
General

STATE OF COLORADO
DEPARTMENT OF LAW

FORMAL
OPINION
OF
PHILIP J. WEISER
Attorney General

Office of the Attorney General

No. 23-01
July 27, 2023

Philip J. Weiser, Attorney General of the State of Colorado, as chief legal representative for the State, issues this Formal Opinion sua sponte pursuant to his authority under § 24-31-101(1)(a), (d), C.R.S. (2023).

QUESTIONS PRESENTED AND SHORT ANSWERS

Question Presented.
(1) Are Colorado laws governing the process to recover unpaid property taxes on real property and mobile homes unconstitutional, in part or in full, following the recently decided U.S. Supreme Court decision, Tyler v. Hennepin County, 143 S. Ct. 1369 (2023)?

Short Answer.
(1) Yes, in part. Under Colorado law, in rare circumstances, a taxpayer may lose all rights to their real property or mobile home as a result of unpaid property tax and have no right to receive any compensation if the value of the property or mobile home exceeds the amount of the tax debt. In those rare circumstances, following Tyler, Colorado's statutory process for both real property and mobile homes may be found to result in deprivations of property that constitute an unconstitutional taking in violation of the Fifth Amendment Takings Clause of the U.S. Constitution.

LEGAL AND FACTUAL BACKGROUND

I. In rare circumstances, Colorado's statutory process to recover unpaid property taxes deprives a property owner of value that exceeds the amount of the unpaid property taxes.

A. The process for real property.

In Colorado, a tax lien attaches to real property at noon on January 1 for the property tax that is due for the current year. §§ 39-1-105, 39-1-107(1), C.R.S. If the property owner fails to pay the property tax due by the delinquency date in the following year, the county is required to auction off the unpaid tax liens. §§ 39-10-102, 39-11-109, C.R.S. The winning bidder at auction is issued a tax lien certificate of purchase, which conveys no ownership interest in the underlying real property.

The property owner may redeem their property by paying off the tax debt—including interest and fees—at any time until a treasurer's deed is issued to the winning bidder. § 39-12-103(3), C.R.S. If the property owner redeems the property, the holder of the lien receives the outstanding tax debt plus interest. If the property owner does not pay the lien, at the end of three years, the lien holder can pay an additional fee and apply to the county treasurer for a treasurer's deed. § 39-11-120(1), C.R.S. After fulfilling statutory notice requirements, the county treasurer issues the deed, and all "right, title, interest, and estate" in the property transfers to the lien holder. §§ 39-11-128, 136, C.R.S.

Upon the issuance of the treasurer's deed, the prior property tax obligations are extinguished, and the purchaser of the tax lien then has title to the property, free and clear of any mortgage or other liens. Moorehead v. John Deere Industrial Equip. Co., 572 P.2d 1207, 1209 (Colo. 1978). However, any mortgages or other liens (other than property tax) are not paid off or extinguished. Instead, the original property owner remains personally liable for those debts.

If no person bids on the lien at auction, the treasurer "strikes off" the lien to the county. § 39-11-108(3), C.R.S. If the property owner does not redeem within three years, the county board of commissioners may apply for a treasurer's deed. § 39-11-142(1), C.R.S. After receiving a treasurer's deed, the county may use the property for a public project, lease it, or sell it. § 39-11-143(2), C.R.S. After one year, if the county has not "retained" (i.e., used) or leased the property, the property "shall be sold" at a public sale (so long as the highest bid exceeds the assessment). § 39-11-143(4)(a), C.R.S.

Tax liens typically offer a high rate of return (between 9 and 12 percent per annum in recent years). § 39-12-103(3), C.R.S. At auction, the minimum bid is the outstanding tax, interest, and fees. § 39-11-115(1), C.R.S. The amount of the winning bid over the minimum bid is the "premium." Any premium goes to the county general fund. § 39-11-115(1), C.R.S. Interest does not accrue on the premium. Paying a premium effectively reduces the rate of return on the lien. In Boulder County, for example, the average premium in recent years has been between 5 and 7 percent of the tax due. However, it's been reported that investors may pay much larger premiums for more desirable property.

As noted above, if the property owner does not redeem within three years, the lien holder may pay the tax and interest due and apply to the county treasurer for a treasurer's deed. § 39-11-120(1), C.R.S. Title to the property does not transfer until after the treasurer processes the application and gives certain statutorily required notices. § 39-11-128, C.R.S. The time to process the deed varies by county but is typically several months or longer.

Even after the new owner acquires title, the original owner has an additional nine-year window to redeem the property if they can establish that they were "under legal disability" when the tax deed was executed. § 39-12-104(1), C.R.S. Colorado law defines "disability" to include "any person who is a minor under eighteen years of age, a mental incompetent, or a person under other legal disability and who does not have a legal guardian." § 13-81-101(3), C.R.S.; see also Actarus, LLC v. Johnson by & through Johnson, 451 P.3d 1270, 1274 (Colo. App. 2019). As a practical matter, this can make it difficult for the new owner to sell the property, unless they pursue a quiet title action.

B. The process for mobile homes.

Mobile homes and manufactured homes without a permanent foundation are subject to a property tax separate from the tax for the land they sit on. § 39-5-202, C.R.S. Colorado statute grants county treasurers discretion to pursue one of four mechanisms to recover tax debt on mobile homes: (1) pursue a collection action for the tax; (2) distrain and sell the mobile home; (3) "strike off to the county the tax liens by declaring them county-held"; or (4) sell the tax lien on the mobile home. § 39-10-111.5(2)(a), (4), C.R.S.

If the former owner of a mobile home wishes to redeem their home after a "sale," they must pay the full purchase price (as opposed to merely paying the tax debt). § 39-10-111.5(6)(a)(I), (II), C.R.S. And for a mobile home located on land not owned by the homeowner, the redemption period is one year. § 39-10-111.5(6)(a)(I), C.R.S. The statute is at best ambiguous as to whether this redemption provision applies only to outright sales or to sales of tax liens also. Unlike real property, the mobile home statute contains no safeguards for owners experiencing a disability at the time they lose the property. See generally § 39-10-111.5, C.R.S. Finally, though the statute requires pre-sale notice to owners and the holders of any liens, § 39-10-111.5(3), C.R.S., it's been reported that some owners of mobile homes lose title without effective notice.

II. The Supreme Court recently held in Tyler that Minnesota's statutory process for collecting property tax violates the Takings Clause.

The Takings Clause of the Fifth Amendment, applicable to states through the Fourteenth Amendment, provides ". . . nor shall private property be taken for public use, without just compensation." U.S. CONST. amend. V. The Colorado Constitution contains similar private property protections: "Private property shall not be taken or damaged, for public or private use, without just compensation." COLO. CONST. art. II, § 15.

A taking occurs when the government takes title to—or other interest in—private property. See Hall v. Meisner, 51 F.4th 185, 196 (6th Cir. 2022), cert. denied, __ S. Ct. __ (June 20, 2023). The remedy for a taking is to "put the landowner in the same pecuniary position as though the taking had not occurred." Fowler Irrevocable Trust 1992-1 v. Boulder, 17 P.3d 797, 806 (Colo. 2001) (citing U.S. v. Miller, 317 U.S. 369, 373 (1943)). So long as a property owner has a reasonable mechanism to receive compensation for takings, the property owner has no takings claim. See Preseault v. ICC, 494 U.S. 1, 11 (1990); see also E-470 Public Highway Authority v. Revenig, 91 P.3d 1038, 1041 (Colo. 2004) ("The General Assembly may provide the method for calculating just compensation when a landowner's property is taken in a condemnation proceeding provided that the method satisfies the constitutional guarantee of just compensation."). Because the Takings Clause requires only a reasonable method to receive compensation, not actual compensation, Tyler describes with approval a New York City statute that allows the city to foreclose on property for unpaid water bills—and keep any excess value—because the property owner had a 20-day window to demand any surplus from the sale. 143 S. Ct. at 1378 (discussing Nelson v. City of New York, 352 U.S. 103 (1956)).

In Tyler, the U.S. Supreme Court held that a government may take property to pay a tax debt, but not without compensating the property owner for the difference between the value of the property and the debt. 143 S. Ct. at 1379. The Tyler legal analysis reaches back to the Magna Carta and analyzes U.S. law during the time periods of the Constitution's enactment and the Fourteenth Amendment's enactment. Id. at 1376-78. Tyler finds a "consensus" in all three times that "a government could not take more property than it was owed." Id. at 1377. Nothing in Tyler's analysis turns on whether the property is sold to satisfy the tax debt. The focus is on whether the property owner has an opportunity to recover the excess. And Tyler discusses with approval an 1884 case holding that just compensation is required where the government keeps a property, rather than selling it. Id. at 1378 (discussing United States v. Lawton, 110 U.S. 146 (1884)). There does not appear to be a reasonable basis to conclude that the Tyler Court would have ruled differently where the government gives the property to a third party who has paid the tax debt with no opportunity for the taxpayer to recover the excess.

Following Tyler, the Supreme Court vacated and remanded a pair of Nebraska cases "for further consideration in light of" Tyler. Fair v. Continental Res., __ S. Ct. ; Nieveen v. Tax 106, __ S. Ct. . Those cases appealed the Nebraska Supreme Court's decision that Nebraska's tax lien statute—a statutory scheme that follows a process similar to Colorado law—does not violate the Takings Clause. Continental Res. v. Fair, 971 N.W.2d 313, 323 (Neb. 2022); Nieveen, 974 N.W.2d 15, 26 (Neb. 2022).

ANALYSIS

A. Tax lien sales are not a taking; therefore, Tyler does not apply at this stage in Colorado's statutory process.

Colorado follows a two-step statutory process for delinquent real property taxes and most mobile home property taxes: (1) the tax lien sale; and (2) the treasurer's deed. A tax lien sale does not implicate the Fifth Amendment for two reasons. First, as discussed above, whether the county receives the sale proceeds is irrelevant to the Tyler analysis. What matters is whether the property owner is deprived of property with a value exceeding the tax debt owed. Second, the tax lien sale is not a taking. After the tax lien sale, the property owner's right, title, and interest to the property remains unchanged. See Hall, 51 F.4th at 196. Because there is no taking, Tyler does not apply at this stage.

That said, a tax lien investor may, if certain conditions are met, eventually receive the property. But at the time of the tax lien sale, the investor has no present interest in the property, and the original owner's interest is unchanged. If there is no taking, then no takings analysis is necessary.

B. Under Tyler, in rare circumstances, an unconstitutional taking occurs by the issuance of a treasurer's deed.

A taking may occur under Tyler when a treasurer's deed is issued because, at that stage, the property owner loses their interest in the property. See Hall, 51 F.4th at 196. Tyler holds that a government may take property to satisfy delinquent property tax, but it may not take more than is owed. 143 S.Ct. at 1379. And as discussed above, the logic of Tyler (and of takings jurisprudence in general) does not warrant a different outcome where the county gives property away versus selling it. Colorado statute directs county treasurers to issue treasurer's deeds when certain conditions are met. § 39-11-120(1), C.R.S. Because the statute does not grant county treasurers discretion over when to issue treasurer's deeds, a court is likely to find these statutes unconstitutional to the extent they result in the government taking property valued in excess of the amount owed.

C. Under Tyler, distraint sales of mobile homes are unconstitutional unless the home has been abandoned or the tax debt exceeds the value of the home.

The portion of the statute that allows counties to sell a mobile home, rather than a tax lien on the home, violates Tyler because "any surplus of the sale proceeds over and above taxes, delinquent interest, and costs of making the seizure and advertising the sale of a mobile home shall be credited to the county general fund." § 39-10-111.5(6)(a)(II)(d), C.R.S. Such sales, however, are uncommon because most counties hold tax lien sales on mobile homes, rather than selling the home outright and keeping the proceeds.

To the extent that any county sells a mobile home for more than the tax debt in a distraint sale pursuant to section 39-10-111.5(6)(a)(II)(d), such sale is likely unconstitutional under Tyler. The former owner is entitled to just compensation unless the county can show that the mobile home was abandoned.

Issued this 27th day of July, 2023.

/s/ Philip J. Weiser
PHILIP J. WEISER
Colorado Attorney General

Footnotes:

1 The Colorado Revised Statutes use the terms "treasurer's deed" and "tax deed" interchangeably. See, e.g., § 39-11-129, C.R.S. (using both "tax deed" and "treasurer's deed"). Other sources also use the term "tax lien deed."

2 There is additional complexity relating to liens for unpaid taxes in subsequent years. The purchaser of the first-year lien has the right to buy the second and third-year liens at the minimum bid price (explained in further detail below), and at the same rate of interest as the first-year lien. §§ 39-11-119, 39-12-103(4), C.R.S.

3 The issuance of treasurer's deeds is extremely rare for real property in Colorado. Because the statutory scheme gives property owners three years to redeem their property and requires notice before transfer, the vast majority of property owners pay any property tax due—thus not losing their property. Of those properties that transfer ownership through this mechanism, nearly all have little to no monetary value or have been abandoned by the original owner. Examples include parcels of land that are very small or abnormally shaped, making them incompatible with commercial or residential use; land dominated by an easement which renders the land without use; and contaminated property requiring substantial investment to remediate. However, given the different process for mobile homes, constitutional concerns are more likely to arise in that context.

4 See https://bouldercounty.gov/property-and-land/treasurer/taxes/tax-lien-sale/.

5 A lien holder who pays a premium risks losing money if the property owner redeems quickly. According to the Adams County treasurer, 38% of liens are paid off within six months. See https://www.adcogov.org/sites/default/files/investing-in-tax-lien-certificates-v2019.pdf.

6 See https://bouldercounty.gov/property-and-land/treasurer/taxes/tax-lien-sale/.

7 For property tax years commencing on or after January 1, 2022, a mobile home with an actual value less than or equal to $28,000 is exempt from property tax. § 39-3-126.5(3), C.R.S.

8 Read in isolation, the language of the Fifth Amendment could suggest that the government can take property for private use without compensation. This is not so. Taking for private use is unconstitutional under both the Fifth Amendment and Colorado law, regardless of whether the government pays compensation. Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 241 (1984) (collecting cases); Carousel Farms Metro. Dist. v. Woodcrest Homes, Inc., 442 P.3d 402, 408 (Colo. 2019).

9 There is a related question as to whether a tax lien investor who is denied a treasurer's deed because of Tyler would have a claim. This opinion does not address that issue.

10 As discussed in subsections B and C of the Analysis section, it is the opinion of the Attorney General that Tyler will render several Colorado statutes unconstitutional, when ultimately applied by a court. Accordingly, the policymaking branches of Colorado state government may wish to amend the statutes at issue to ensure any such processes do not violate a property owner's rights protected by the Takings Clause of the Fifth Amendment of the U.S. Constitution.