Based upon a recent United States Supreme Court decision, as well as a formal opinion issued by the Colorado Attorney General, purchasers of tax liens and/or their assigns are hereby put on notice that even though an application for deed is submitted to the La Plata County Treasurer in accordance with the requirements of CRS § 39-11-120, and the conditions of CRS § 39-11-128 are satisfied, the Treasurer may determine, in her discretion, that no tax deed may be issued when the value of the property subject to the lien exceeds the value of lien for past-due taxes.

BACKGROUND:  On May 25, 2023, the United States Supreme Court issued an opinion in Tyler v. Hennepin County, 598 U.S. 631 (2023). In that unanimous opinion, the Court struck down a process in Minnesota whereby properties were taken by taxing authorities for past-due property taxes and sold at auction, with the taxing authority keeping any amount paid over and above the past-due tax amount. The Supreme Court ruled that the government’s retainage of the excess amounts received over and above the tax debt it was owed was an unconstitutional taking of the original owner’s property.

Although Colorado’s statutes on the sale of tax liens differ in a number of material ways from the invalidated Minnesota law, the Supreme Court opinion calls into question some aspects of Colorado law as it is now written. On July 27, 2023, Colorado’s Attorney General issued a formal opinion (Colorado Department of Law Forman Opinion No. 23-01) opining, in his judgement, that Colorado’s current statutory scheme may be unconstitutional in some circumstances at the point of the tax lien sale process when treasurer deeds are issued. To date, we are unaware of any court in Colorado that has determined that the statutory process is, in fact, unconstitutional, but is unclear how courts will address this issue given the United Supreme Court’s ruling in the Tyler case. Further, any legislative fix to this issue, if one is adopted, is not anticipated until the next regular session of the Colorado General Assembly, which begins in January 2024.

At this time, the County Treasurer will still process submitted applications pursuant to her statutory duty to serve and publish notice required by CRS § 39-11-128.  However, until the legislature or the courts in Colorado address this issue, applicants for treasurer’s deeds in La Plata County need to be aware that based upon the advice of legal counsel, the Treasurer will not issue a tax deed to the tax lien purchaser when, in the Treasurer’s discretion, the value of the property subject to an application for a tax deeds exceeds the value of the taxes and fees that are owed, based on concerns of unconstitutional takings under the Fifth Amendment.

Pursuant to C.R.S. 39-11-151, “No tax lien shall be sold to an elected or appointed official, to a county employee, or to a member of the immediate family of such person or to the agent of such county official or employee during the time the official or employee holds office or is employed.”