Lease Finance Inc. v. Cohen

• Decision Date: 11 April 1985
• Docket Number: No. 83CA1286,83CA1286
• Citation: 705 P.2d 1008
• Parties: LEASE FINANCE INCORPORATED, a Colorado Corporation, Plaintiff-Appellee, v. Stephen J. COHEN and Carol Ann Cohen, Defendants-Appellants. . II
• Court: Colorado Court of Appeals

Page 1008

705 P.2d 1008

LEASE FINANCE INCORPORATED, a Colorado Corporation, Plaintiff-Appellee, v. Stephen J. COHEN and Carol Ann Cohen, Defendants-Appellants.

No. 83CA1286.

Colorado Court of Appeals Div. II.

April 11, 1985.

Rehearing Denied May 9, 1985.

Certiorari Denied Sept. 9, 1985.

Lobus & Bradley, P.C., John A. Lobus, Lakewood, for plaintiff-appellee.

Silver and Hayes, P.C., Jack Silver, Peggy E. Stevens, Denver, for defendants-appellants.

VAN CISE, Judge.

Defendants, Stephen J. and Carol Ann Cohen, appeal from a judgment in favor of plaintiff, Lease Finance Incorporated (Lease Finance), holding that it may sell the Cohens' property in execution of its judgment. We affirm.

The stipulated facts are as set forth below. In 1977, Edward G. Clements acquired record title to certain land and improvements in Arapahoe County, Colorado. At that time, a deed of trust to the property for the benefit of Columbia Savings and Loan Association (Columbia) to secure a $119,200 note was signed and recorded. Between March 1978 and October 1979, five additional deeds of trust on the property were signed by Clements and recorded to secure indebtednesses aggregating $570,000.

In February 1980, Columbia commenced foreclosure proceedings. On April 2, the property was sold by the public trustee to Columbia as high bidder for the amount due on its first deed of trust note, and a certificate of purchase was issued to Columbia.

In January 1980, Lease Finance obtained a $104,826 judgment against Clements. On May 12, during the redemption period, a transcript of that judgment was recorded.

On April 27, 1980, the Cohens entered into a receipt and option contract to purchase the property from Clements. This contract was recorded June 4. Clements conveyed the property to the Cohens by deed dated June 10 and recorded June 11.

To purchase the property, the Cohens paid Clements $255,000, which was the then fair market value of the property. Of this purchase money, $125,035 was paid by Clements, as record owner, to the public trustee to redeem the property from the sale, and a certificate of redemption was issued to him and recorded June 11, a few minutes before the recording of Clements' deed to the Cohens. On June 21, $109,849 was paid for a release of the second deed of trust. The balance of the purchase money was used to pay the premium on the title insurance policy, the recording fees, property taxes, water bills, and the broker's commission.

From the briefs, it appears that within the next few weeks the remaining deeds of trust were released as to the subject property. The amount paid therefor is not shown.

In April 1981, Lease Finance brought this action against the Cohens to have the court declare its judgment to be a lien against the property and order foreclosure and sale in execution. The Cohens counterclaimed, seeking a decree quieting title in them against Lease Finance's claimed judgment lien. They also cross-claimed against Clements for judgment for breach of warranty of title in the amount of Lease Finance's judgment if the court should determine it to be a valid lien on the property.

The trial court determined that the Cohens had constructive notice of the judgment from the date of the recording of the transcript thereof May 12, 1980, and that Lease Finance did not have notice of the Cohens' interest in the property prior to the recording of the receipt and option contract on June 4. It held that Clements' redemption, as record owner, preserved the lien of Lease Finance's judgment upon the subject property even if Clements "had no measurable equity in the real estate after redemption," and that the Cohens' title was subject to Lease Finance's judgment lien. The court entered judgment granting leave to Lease Finance to commence a sale in execution of its judgment and, in effect, held against the Cohens on their counterclaim.

Judgment was entered in the amount of the judgment lien against Clements on the Cohens' cross-claim. Clements has not appealed.

I.

No issue having been raised as to these matters, we assume that Clements' redemption as record owner was procedurally correct and that the Cohens, as grantees of Clements, acquired the full fee title to the property, subject only to outstanding liens and encumbrances. The primary issue at trial was, and on appeal is, whether Lease Finance's judgment is a lien against the property after the conveyance to the Cohens.

The Cohens contend that a judgment lien may not be enforced against property in the hands of a subsequent purchaser when, as here, at the time the lien is recorded and at...