Fleet Real Estate Funding Corp. v. Koch, 89CA2115

• Decision Date: 31 January 1991
• Docket Number: No. 89CA2115,89CA2115
• Citation: 805 P.2d 1206
• Parties: FLEET REAL ESTATE FUNDING CORP., Plaintiff-Appellee, v. Doris B. KOCH, a/k/a Doris Koch, Defendant-Appellant. . I
• Court: Colorado Court of Appeals

Page 1206

805 P.2d 1206

FLEET REAL ESTATE FUNDING CORP., Plaintiff-Appellee, v. Doris B. KOCH, a/k/a Doris Koch, Defendant-Appellant.

No. 89CA2115.

Colorado Court of Appeals,

Div. I.

Jan. 31, 1991.

Sparks, Dix, Enoch & Winslow, P.C., Barton L. Enoch, Brenda L. Bartels, Colorado Springs, for plaintiff-appellee.

Stephen J. Sletta, Colorado Springs, for defendant-appellant.

Opinion by Judge DUBOFSKY.

Doris Koch seeks review of the trial court's judgment declaring her secured interest in certain real property junior to and extinguished by the foreclosure of plaintiff's superior deed of trust. We find no error.

On April 26, 1985, Donald Martin and Koch purchased, as tenants in common, the realty at issue. On the same date, Koch and Martin granted Future Funding, Inc. (FFI), a deed of trust secured by the property as repayment for the purchase money. This deed of trust was recorded May 3, 1985.

On April 29, 1985, Martin executed and granted to Koch a deed of trust against an undivided 50 percent interest in the same property to secure repayment to Koch of monies lent by her to Martin and used as a down payment for the purchase of the property in accordance with Koch and Martin's co-financing agreement. This second deed of trust and the co-financing agreement were both recorded on April 29, 1985, the same day of execution. The recorded co-financing statement indicated that FFI's deed of trust was superior to Koch's.

FFI's interest was subsequently acquired by Fleet Real Estate Funding Corporation. Following default in payment required by the first deed of trust, Fleet initiated a public trustee's sale of the property. Koch received the required notice of sale and redemptive right. Fleet made a full indebtedness bid, Koch did not redeem, and Fleet received a public trustee's deed.

Fleet then brought the present action to quiet title, and the trial court on cross-motions for summary judgment decreed Fleet's title paramount and Koch's interest extinguished upon the foreclosure.

Koch argues that Fleet, by initiating a public trustee's sale rather than a judicial foreclosure, did not terminate Koch's interest since her deed of trust, although executed after Fleet's interest, was recorded first. Koch claims this is the plain effect of § 38-39-110, C.R.S. (1982 Repl.Vol. 16A). That statute, applicable to sales on foreclosure, provides that, following the expiration of the redemptive period, a foreclosing lienor's "title shall be free and clear of all liens and encumbrances recorded or filed subsequent to the recording or filing of the lien on which the sale ... was based." (emphasis added). Koch concludes the trial court erred under this section because her interest was made of record prior to the deed of trust foreclosed by Fleet. We disagree.

The recording statute, § 38-35-109(1), C.R.S. (1990 Cum.Supp.) provides:

"All deeds ... or other instruments in writing conveying, encumbering, or affecting the title to real property ... may be recorded in the office of the county clerk and recorder of the county where such real property is situated. No such unrecorded instrument ... shall be valid as against any class of persons with any kind of rights who first records, except between the parties thereto and such as have notice thereof." (emphasis added)

This statute has been construed to give priority to first or prior recorded interests provided the...