Source: https://cbaclelegalconnection.com/tag/real-estate/
Timestamp: 2019-04-19 08:50:32+00:00

Document:
The Tenth Circuit Court of Appeals published its opinion in United States v. Tingey on Wednesday, May 29, 2013.
The district court permitted the government to foreclose on federal tax liens on a ski cabin (the Ski Cabin) titled in the name of the D.E. Brown Family Trust (Family Trust), whose beneficiaries were Douglas Brown’s wife and children. The taxes were owed by Douglas Brown (Brown) and his wife (together, the Browns), not the trust, but the court found that the Browns were the beneficial owners of the cabin because Brown had a purchase-money resulting trust (PMRT) arising from his having purchased the cabin and then conveyed it to the Family Trust. The district court also held that under federal law, the Family Trust held legal title to the cabin as nominee for the Browns. The trustee of the Family Trust, Robert Tingey, appealed.
Tingey next argued that the district court erred in concluding that the Family Trust held the cabin in a PMRT for Brown’s benefit. The Tenth Circuit agreed with the district court that clearly Brown paid the purchase price for the cabin before legal title transferred to the Family Trust, thus meeting a threshold requirement for a PMRT.
The court also rejected Tingey’s argument that when an express trust holds legal title, a resulting trust is not possible.
Tingey challenged the district court’s ruling that the government demonstrated by clear and convincing evidence the final requirement for finding a PMRT, that Brown intended to retain the beneficial interest in the Ski Cabin. Brown made note payments out of personal funds, used the property without the trustee’s knowledge, rented the cabin out without the trustee’s involvement, and performed maintenance on the cabin. Additionally, the testimony of Tingey established that Brown set up the trust to shield the cabin from his creditors. The court affirmed the district court’s holding that the Ski Cabin was held by the Family Trust in a PMRT for the benefit of Brown.
The Tenth Circuit issued its opinion in Osguthorpe v. Ascutah, Inc. on Tuesday, January 15, 2013.
Some time ago, this lawsuit began in Utah state court regarding the development of Wolf Mountain Resorts. Since then, the litigation has not so much developed as it has metastasized: parties have proliferated, claims have collided, and issues have become intimately entangled. Eventually, one of the frustrated suitors looked to the federal courts for relief, asking for a stay of all state-court proceedings and an order compelling arbitration of the state-court claims. The federal district court declined to do so, dismissed the case, and awarded attorney’s fees to the prevailing party.
This appeal asks whether the federal district court correctly determined that the federal court should stay out of the still-unfolding state-court controversy.
The Tenth Circuit concluded that the Supreme Court’s Colorado River doctrine, see Colorado River Water Conservation District v. United States, 424 U.S. 800, 817-21 (1976), was controlling law in this case. Under the Colorado River doctrine, as a general rule, the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction. But, at times, reasons of wise judicial administration must weigh in favor of permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding. The Tenth Circuit held that Colorado River doctrine wisely counseled its abstention from duplicative interference with the exceptionally protracted state proceedings present here. A federal court should not shy away from contemporaneously exercising concurrent jurisdiction with a state court in the ordinary course of things. But this is no ordinary case. The Utah state court had already overseen years of intensive litigation before the federal court’s jurisdiction was invoked.
On Utah’s motion for attorney’s fees, the Court was concerned about the lack of specific factual findings by the federal district court in support of its decision to award those fees.
Accordingly, the Tenth Circuit AFFIRMED the district court’s dismissal and DISMISSED AS MOOT the interlocutory appeal of the district court’s order denying the motion to compel arbitration and for a stay of the state-court proceedings. In addition, the Court VACATED the district court’s award of attorney’s fees and REMANDED the matter to the district court for detailed findings of fact sufficient to afford meaningful appellate review of its award.
When deciding on commercial real estate, new entrepreneurs and solo attorneys should consider coworking as a viable real estate model. Coworking presents the opportunity for individuals from diverse fields to work daily or monthly in a shared, commercial environment at a reasonable price despite being employed by different industries or companies. Unlike some traditional commercial arrangements, one need not commit to a term of several years. Lawyers should know that coworking is an exciting and attractive real estate arrangement that brings together quality, low cost, and flexible exit options. This is a trend on the rise in Colorado uniting individuals in small businesses.
It is important for Colorado attorneys to be aware of the coworking real estate model when advising entrepreneurial clients or considering a solo practice. To understand a client’s real estate desires, a lawyer must assess the client’s financials, business savvy, and likelihood of success. Coworking presents an arrangement that is affordable, permits one to quickly build out a diverse social network, and is flexible. Such a model can potentially lead to new clients, new investors, or new resources to aid in completing work. These characteristics certainly increase the probability of business success. In sum, coworking should be considered because the arrangement hits the mark of affordable pricing and early exit options.
Joel Jacobson is a Contracts and Operations Associate with H.B. Stubbs Company, LCC – a national design and fabrication firm headquartered near Detroit, MI for exhibits displayed by technology and automotive companies. He focuses on contracts, employment law, and a variety of non-legal business issues. Joel serves on the Executive Council of the Denver Bar Association Young Lawyers Division and has an interest in topics impacting start-up companies in the Denver entrepreneurial community. He can be reached by email at jmjacobson1@gmail.com or on Twitter @J_m_Jacobson.
Effective with all motions for orders authorizing sale filed on or after June 1, 2011, the selected hearing date shall occur on a Tuesday or Thursday at 8:30 am.
Contact (720) 865-8301 for further information about the change to Rule 120.
The DORA Division of Real Estate’s Commission has changed the website where approved real estate contract forms are posted. Pursuant to Commission Rule F-7, real estate brokers are required to use Commission-approved forms in appropriate transactions or circumstances in which a relevant form is applicable.
Currently, all forms are available in Adobe Acrobat format. Select forms are available in a writeable format; all forms will be available in the writeable format by February 28, 2011.
The 2010 contract forms can still be accessed in the archives.
Today, in Weize Company, LLC v. Martz Supply Co., 09CA1369 (Colo. App. June 10, 2010), a division of the Colorado Court of Appeals held that a subcontractor suing to enforce its rights to a mechanics’ lien that has been substituted by a bond and thus discharged must still record a lis pendens. So, according to the Court of Appeals, bonding over a mechanics’ lien will not clear title, despite the clear language of the statute.
Prime contractor Colorado Regional Construction, Inc. (“CRC”), subcontracted with Weize Company, LLC (“Weize”). CCR failed to pay Weize for the work that Weize completed, so Weize recorded a mechanics lien and commenced a lawsuit. Weize’s supplier, Martz Supply Co. (“Martz”), also recorded a lien and joined in the lawsuit.
Weize filed its lawsuit in December of 2007. “Before year end, CRC substituted bonds for the liens and the court ordered the liens released.” Probably because the mechanics’ liens were released, neither Weize nor Martz recorded a lis pendens. The trial court entered a directed verdict in CCR’s favor as to the lien claims for failure to record a lis pendens, and the Court of Appeals affirmed. This author assumes that Weize and Martz were attempting to enforce their rights against the bond, and not foreclose their previously-discharged liens. When a lien is substituted, the lien claimant may bring an action against the bond (C.R.S. § 38-22-133), but the cause of action is essentially the same as a claim to foreclose a lien. Mountain Ranch Corp. v. Amalgam Enters., Inc., 143 P.3d 1065, 1068 (Colo. App. 2005).
No lien claimed by virtue of this article . . . shall hold the property longer than six months after the last work or labor is performed . . . unless an action has been commenced within that time to enforce the same, and unless also a notice stating that such action has been commenced is filed for record within that time in the office of the county clerk and recorder of the county in which said property is situate. (Emphasis by Court of Appeals).
There are some academic and practical problems with the Court’s decision.
Once a lien has been discharged, the lien is no longer “hold[ing] the property”. Instead, “upon the filing of a bond or undertaking . . . the real property described in such bond or undertaking shall be released from the lien . . . .” C.R.S. § 38-22-132 (emphasis added).
Recording a lis pendens seems completely contrary to the intent of the lien substitution provisions in the mechanics’ lien statute. The clear purpose for bonding a mechanics’ lien, as stated right in the statute itself, is to “release[ the property] from the lien and from any action brought to foreclose such lien.” C.R.S. § 38-22-132. Yet a “lis pendens notice effectively renders title unmarketable and prevents its transfer until the litigation is resolved or the notice is expunged.” Pierce v. Francis, 194 P.3d 505, 508 (Colo. App. 2008), citing Kerns v. Kerns, 53 P.3d 1157, 1164 n.6 (Colo. 2002).
In fact, it seems improper to record a lis pendens once the mechanics’ lien has been discharged. A lis pendens can only be recorded when “relief is claimed affecting the title to real property . . . .” C.R.S. § 38-35-110(1). Once a mechanics’ lien has been discharged, the bond becomes substituted security, and there is no longer any claim affecting real property.
upon the filing of a bond or undertaking . . . the real property described in such bond or undertaking shall be released from the lien and from any action brought to enforce such lien, and the bond or undertaking shall be substituted. . . . [T]he certificate of release [issued by the clerk] shall show that the property has been released from the lien and from any action brought to foreclose such lien.
C.R.S. § 38-22-132 (emphasis added). Thus, once the bond is approved, there can be no action to enforce the mechanics’ lien, and therefore no action affecting title to real property. As such, pursuant to Section 38-35-110(1), no lis pendens should be recorded.
despite bonding, the validity of a lien would still be of concern to a person interested in title to the liened property because the surety could become insolvent. In that event, “any lien claimant shall be entitled to enforce such lien claim in the same manner as if no bond had been filed.” § 38-22-129(5). Hence, if a lis pendens was not required, its absence could mislead a person seeking to obtain an interest in the liened property into concluding that even if the surety became insolvent, the property was not subject to a lien foreclosure action because the claimant here failed to [record a lis pendens].
Again, the Court’s reasoning is confusing, Once a mechanics’ lien substitution bond is approved and recorded, the property indeed is no longer subject to a lien foreclosure action. Instead of a mechanics’ lien foreclosure lawsuit, the former lien claimant can maintain an action upon the bond or undertaking. C.R.S. § 38-22-133.
Additionally, Section 38-22-129(5), which the Court of Appeals quotes above, applies only to situations where a general contractor obtains a payment bond prior to commencing work, and the payment bond surety becomes insolvent. Ironically, earlier in the opinion, the Court of Appeals clearly distinguishes payment bonds from lien release bonds in addressing CRC’s trust fund defense.
Weize also argued that having to record a lis pendens after a lien has been released would put it at risk of violating the spurious lien statute. The Court of Appeals rejected the argument, reasoning that “a lis pendens ‘provided for by specific Colorado . . . statute’ is excepted from the definition of a spurious lien.” The Court’s reasoning ignores the holding in Pierce v. Francis, 194 P.3d 505 (Colo. App. 2008), where a different division of the Court of Appeals specifically held that a notice of lis pendens is not exempted from the spurious lien statute. Specifically, the Court in Pierce held that “because a notice of lis pendens can be a spurious document, it falls under the spurious lien statute.” Id. at 508. Now in dicta, the Court in Weize suggests that a lis pendens is excepted from the spurious lien statute, thus creating a split of authority.
In addition to putting Weize at risk under the spurious lien statute, recording a lis pendens where there is no claim affecting title to real property could put Weize at risk for a slander of title claim by the property owner. Fountain v. Mojo, 687 P.2d 496, 500-01 (Colo. App. 1984) (improper filing of lis pendens can amount to tort of slander of title).
The holding in Weize may cause serious problems for property owners who want to free title from mechanics’ liens. As the appellate courts in Colorado have acknowledged, the recording of a lis pendens effectively renders title unmarketable. The reason a property owner bonds over a lien, or requires its general contractor to bond over a lien, is to free up title. That’s in fact what the statute says. But now, in light of Weize, bonding over a mechanics’ lien will no longer free up title, since the lien claimant will be required to record a lis pendens once an action is filed.
Timothy Gordon blogs at Holland & Hart’s Construction Law in Colorado and this post originally appeared here on June 10, 2010. Gordon is one of the managing editors for CBA-CLE’s Practitioner’s Guide to Colorado Construction Law. Click here to read all posts by this author.
Click here for more Construction Law Updates.
On Wednesday, Governor Ritter signed consumer protection bills HB 10-1249 and SB 10-155 (audio available here).
HB 10-1249 (.pdf) speeds the sale of foreclosed properties by reducing the number of days for a sale.
SB 10-155 (.pdf) puts requirements on gift card issuers to protect consumers by banning retailers, restaurants and others from selling gift cards that have any type of service or maintenance fee. Gift card issuers must also redeem the card, upon request, if the remaining value is $5 or less.

References: v. 
 v. 
 v. 
 v. 
 § 38
 v. 
 § 38
 § 38
 v. 
 v. 
 § 38
 § 38
 § 38
 § 38
 v. 
 v.