“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.
Tag Archives: Deed of Trust
Dennis Shaw and First Horizon Home Loan Corporation, v. 17 West Mill St, LLC, 2013CO37 (June 24, 2013)
Deutsche Bank Trust Co. Americas, and Saxon Mortgage, v. Veronica E. Samora, 2013COA81 (May 23, 2013)
“Samora chose to accept … misrepresentations rather than … investigate the transaction after discovering the document was a warranty deed with the name of an individual [Wasia] she had never met.” (Opinion). Samora was the victim of a complex real estate fraud. As part of the fraud, she relied on misrepresentations about a warranty deed she signed, and unknowingly transferring title to Wasia. Wasia deeded the house to Saxon for a loan. Deutsche Bank (DB), Saxon’s trustee, sought to quiet title. The appellate court held that the Samora-Wasia deed was valid. As a consequence: 1) Samora’s claims accrued when she alerted the DA to the fraud, 2) there was no fraud in the factum because she knew she signed a deed, and 3) DB (who was not “closely related” to Saxon) was a holder in due course. Thus, the deed was not voided and the Wasia-Saxon deed was not a spurious lien. Title quieted in Saxon.
When it comes to real property, a rose is not a rose by any other name. A deed of trust securing an interest in property that does not include a “legal description” is not validly recorded. A street address is not a “legal description.” The Supreme Court gave this response in answering a certified question from the District of Colorado Bankruptcy Court. This case involved a deed of trust that referenced a legal description in an exhibit; it had a street address, but was recorded without the exhibit. The creditor foreclosed on the property after the owner filed for bankruptcy. The bankruptcy Trustee asserted his power to claw-back property, but could only do so if he did not have “notice” of the deed. At the time of the petition, the deed lacked any legal description, and, therefore, it was not validly recorded. The Trustee, lacking “notice,” could claw-back the property from the creditor.