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Mortgage Investments Enterprises LLC v. Oakwood Holdings, LLC

Court of Appeals of Colorado, Third Division

July 14, 2016

Mortgage Investments Enterprises LLC, Plaintiff-Appellant,
Oakwood Holdings, LLC, Defendant-Appellee.

         Adams County District Court No. 14CV31889 Honorable Mark D. Warner, Judge

          Murr Siler & Accomazzo, P.C., Joseph A. Murr, Maris S. Davies, Denver, Colorado, for Plaintiff-Appellant.

          Sweetbaum Sands Anderson PC, Geoffrey P. Anderson, Reagan Larkin, Denver, Colorado; Navaro & Associates LLC, Steven Navaro, Castle Rock, Colorado for Defendant-Appellee.


          BOORAS JUDGE.

          ¶ 1 Plaintiff, Mortgage Investments Enterprises LLC (Mortgage Investments), appeals the district court's order granting defendant's, Oakwood Holdings, LLC (Oakwood), motion for summary judgment. We reverse the district court's judgment and remand the case with directions.

         I. Background

         ¶ 2 This case involves a dispute regarding the foreclosure and redemption processes in Colorado. Thus, to better understand the facts of this case, it is helpful to first provide a brief overview of the foreclosure and redemption procedures.

         A. Foreclosure and Redemption

         ¶ 3 The foreclosure process protects a creditor's right to repayment of debts, including homeowners' association liens and monetary judgments. Specifically, section 38-38-101, C.R.S. 2015, enables a creditor to obtain a judgment and decree of foreclosure against a debtor and have the subject property auctioned at a foreclosure sale. The creditor can then use the proceeds of the sale to satisfy the unpaid debts.

         ¶ 4 Foreclosure is not without consequences, however, particularly for creditors whose liens are subordinate to - i.e., junior to - a lien being foreclosed (junior lienors). Indeed, where multiple liens are filed against the foreclosed property, foreclosure of a senior lien generally extinguishes all junior liens. § 38-38-501, C.R.S. 2015; see also Ferguson Enters., Inc. v. Keybuild Sols., Inc., 275 P.3d 741, 745 (Colo.App. 2011).

         ¶ 5 Accordingly, to protect creditors' entitlement to payment, the General Assembly has provided them with the right to redeem foreclosed property on which they have a junior lien. See § 38-38-302, C.R.S. 2015. This right to redeem refers to a process by which title to the previously foreclosed property vests with the redeeming junior lienor, rather than with the purchaser at the foreclosure sale (the certificate of purchase holder), if (1) the junior lienor follows the required statutory procedures, including filing a notice of intent to redeem; (2) the junior lienor pays, within its statutory period for redemption, the required redemption amount; and (3) no other, more junior lienors exercise their subsequent right of redemption. See id.; see also WYSE Fin. Servs., Inc. v. Nat'l Real Estate Inv., LLC, 92 P.3d 918, 921-22 (Colo. 2004).

         ¶ 6 With respect to the timing for redemption, the "junior lienor having the most senior recorded lien" has the first opportunity to redeem, which begins "[n]o sooner than fifteen business days" and ends "nineteen business days" after the foreclosure sale. § 38-38-302(4)(a). Each subsequent junior lienor then has five business days to redeem from the previous lienor's redemption. § 38-38-302(4)(b)(I).

         ¶ 7 Prior to 2008, owners of foreclosed property also had the right to redeem from a foreclosure sale. Ch. 275, sec. 2, § 38-38-302, 1990 Colo. Sess. Laws 1664-65. Effective in 2008, however, the General Assembly eliminated that right. See Ch. 305, sec. 21, § 38-38-302, 2006 Colo. Sess. Laws 1467. Under the current scheme, only junior lienors have the right to redeem. See § 38-38-302.

         B. The Facts

         ¶ 8 Turning, now, to the facts of this case, the debtors purchased a home in Adams County (the property) in 2006. That same year, they defaulted on their obligation to pay monthly fees to the Kimblewyck Village Owners Association (Kimblewyck). Kimblewyck filed a lien against the property in December 2006.

         ¶ 9 In addition to the Kimblewyck lien, the property was also encumbered by (1) a lien filed by the Fox Run Owners Association and (2) two judgments entered in favor of Community Management Association, Inc. (CMA).

         ¶ 10 In May 2014, Kimblewyck obtained a judgment and decree of foreclosure, and the property was auctioned at a sheriff's sale on September 25, 2014. Mortgage Investments was the successful bidder at the foreclosure sale, so the Adams County Sheriff issued Mortgage Investments a certificate of purchase.

         ¶ 11 On the day before the foreclosure sale, Oakwood purchased the Fox Run lien and the two CMA judgments.[1]

         ¶ 12 And, on the day after the foreclosure sale, Mortgage Investments obtained a valid power of attorney from the debtor, which authorized Mortgage Investments to pay the Fox Run lien and the CMA judgments.

         ¶ 13 On October 1, 2014, within eight business days after the sale, pursuant to section 38-38-302(1)(d), Oakwood filed a notice of intent to redeem the Fox Run lien so that it could acquire title to the property. On October 7, 2014, Mortgage Investments tendered, on behalf of the debtor, pursuant to the power of attorney, payment to Oakwood in satisfaction of ...

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