Dennis Shaw and First Horizon Home Loan Corporation, v. 17 West Mill St, LLC, 2013CO37 (June 24, 2013)

“Rather fail with honor than succeed by fraud.” – Sophocles. In this case the attorney for a borrower signed a request for a release of a lender’s deed of trust as “attorney for lender.” Lender later found out and sued, seeking to set aside the release because CRS 38-39-102 voids releases based on a “fraudulent request.” The Court upheld the trial court and reversed the court of appeals by holding that “fraudulent” means proof of actual fraud by a preponderance of the evidence, similar to common law fraud. It did so to fulfill the purpose of the statute: creating certainty, predictability, and relieving public trustees from a duty to inspect releases to determine validity. Here, borrower’s attorney signed for the lender because he had done so before and was under time pressures. It was negligent, not fraudulent. Thus, the later bona fide purchaser obtained title to the property.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2011/11SC516.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8996&courtid=2

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