Colorado Homestead Laws

State homestead exemptions protect a homeowner’s equity from creditor collection actions during bankruptcy or other debt collection proceedings. Homestead laws prevent creditors from forcing sales to collect on unsecured debts when a debtor files for bankruptcy, since bankruptcy laws are meant to give a debtor a “fresh start” once the debts are discharged. Homestead exemptions cover all primary residences, including mobile homes and condo units.

Colorado‘s Homestead Exemption Laws

Colorado has two homestead exemption laws. One applies to homeowners over the age of 60, disabled veterans, and qualifying spouses. The other provides exemptions to all homeowners with equity up to the statutory amount.

Homestead Exemption

The Colorado statute (law) (§ 38-41-201) provides an automatic homestead property exemption of up to $350,000 for qualified homeowners.

Qualified homeowners under the constitutional exemption include:

• Owner-occupiers of the property who are over the age of 65 and have lived in the same property for at least ten years

• Disabled veterans or their spouses. A “disabled veteran” is someone who is 100% disabled according to VA guidelines and who has served in the active military or in Colorado’s National Guard in an active capacity.

• Surviving spouses of a deceased active-duty service member, or one who died of service-related injuries

Colorado’s constitution (Art. X, § 3.5) also provides a permanent property tax exemption for these individuals of 50% of the first $200,000 of the actual value of their primary residence from property taxes. This exemption is not related to the homestead exemption, but is sometimes called a “homestead exemption.”

Statutory Exemption 

Colorado state law (CRS § 38-41-201) exempts up to $250,000 of home equity for all residential property. When homeowners file a Chapter 7 bankruptcy, Colorado’s bankruptcy exemption laws protect their primary residence from creditors, up to the exemption limit.

The homestead protection prevents creditors from placing a lien on the property or forcing a sale to pay off unsecured debts in a collection action.

Property Protected by Homestead Exemptions

Both homestead exemptions only protect the owner’s primary residence. Colorado has expanded the definition of a “dwelling” to include any type of residence used as a primary dwelling (§ 38-41-201.7), including:

• Houses and condominium units

• Trailers and mobile homes

• Boats

• Railway cars, shipping containers, and sheds

• Yurts and tiny homes

The principal requirement is that the owner resides in the residence.

What the Exemption Does Not Protect

The homeowner’s exemption only protects the homeowner’s equity in the property. Equity is calculated by subtracting your mortgage balance from the home’s actual value (market value). If the home is assessed at $500,000 and you owe $300,000 on the mortgage, your equity is $200,000. Colorado’s homestead law keeps creditors from taking up to $250,000 of your equity.

The exemption only prevents unsecured creditors from taking your equity. The exemption does not protect you from:

• Secured debts, such as mortgages and deeds of trust

• Tax liens

• Mechanic’s liens

The homeowner’s exemption only applies to your primary residence. You cannot claim more than one property under the exemption. It only applies to real property and will not protect most personal property (unless you use that property as a residence). It cannot protect you in a foreclosure. If you have concerns about the homestead exemption in bankruptcy or foreclosure, you should contact a Colorado bankruptcy attorney to discuss your options and alternatives.

Colorado Homestead Laws: Related Resources

• Colorado Property and Real Estate Laws

• Bankruptcy Exemptions: Chapter 7

• Consumer Bankruptcy: Saving Your Home

• Find a Debtor/Creditor Attorney

Get Legal Advice from a Colorado Real Estate Lawyer

Property owners have other exemptions under Colorado law such as property tax exemptions that must be filed with the state assessor’s office. Review your state protections and exemptions with a Colorado real estate attorney to ensure you receive all the benefits of Colorado’s laws.