It was a $1million mistake. A title company (Agent) closed 2 loans, for 2 different banks, 2 months apart, assuring both banks that they were first position lienholders for the same property. The Agent’s underwriter eventually paid over $1 million to resolve the banks’ competing claims over foreclosure proceeds. Underwriter sued Agent, and won. Agent appealed, challenging the interpretation of their contract and the applicability of a statutory defense for reliance on a payoff statement. The court of appeals held: 1) Agent was an “escrow” because it “handled” money during the closings, 2) Agent couldn’t rely on a “payoff statement” under CRS 38-35-124.5, as it didn’t indicate the amounts owed to the actual creditor or holder of the debt, and 3) the contractual phrase “actual prejudice” meant “substantial detriment to the significant interests of the party.” Affirmed.
Tag Archives: Escrow
Fidelity National Title Company, f/k/a Security Title Guaranty Company v. First American Title Insurance Company, 2013COA80 (May 23, 2013)
TCF Equipment Finance, Inc. v. Public Trustee for the City and County of Denver, 2013COA8 (January 17, 2013)
Garnishment defined: He owes me money, you owe him money; where’s my money? Here, a Public Trustee held excess funds following a foreclosure sale and redemption. Creditor did not obtain judgment until after the foreclosure, and the redemption period expired. Creditor sought to garnish the excess from the Public Trustee, who claimed the excess funds cannot be garnished. CRS 38-38-111 dictates distribution of excess funds following a foreclosure, and states that after the redemption period for junior lien holders ends, excess funds are paid to the owner. CRCP 103 permits garnishing funds of a judgment debtor held in escrow by a public entity. The court of appeals held the statute did not bar garnishment because Creditor was not a junior lienor, but a judgment creditor. Thus, the funds were subject to garnishment once the Public Trustee determined the excess funds were due to Debtor.