CO Code § 38-35-124 (2021)
2021 Colorado Code|Title 38 - Property - Real and Personal|Article 35 - Conveyancing and Recording|Part 1 - General Provisions|§ 38-35-124. Requirements Upon Satisfaction of Indebtedness

  Except as provided in articles 22 and 23 of this title or as otherwise provided in this section, when all indebtedness, whether absolute or contingent, secured by a lien on real property has been satisfied, unless the debtor requests in writing that the lien not be released, the creditor or holder of the indebtedness shall, within ninety days after the satisfaction of the indebtedness and receipt from the debtor of the reasonable costs of procuring and recording the release documents, record with the appropriate clerk and recorder the documents necessary to release or satisfy the lien of record or, in the case of an indebtedness secured by a deed of trust to a public trustee, file with the public trustee the documents required for a release as prescribed by section 38-39-102.    If the debtor requests in writing that the lien be released, or fails to request in writing that the lien not be released, then the debtor's request or the actual release cancels any obligations on the part of the creditor or holder to make any further loan or advance that would be secured by the lien. If the person satisfying the indebtedness requests in writing delivery to him or her of the canceled instruments of indebtedness at the time of satisfaction, the creditor or holder is relieved of any further obligation or liability under this section after the delivery has been completed.    Upon satisfaction of the indebtedness, the creditor or holder shall return to the person satisfying the indebtedness all papers and personal property of the debtor that have been held by the creditor or holder in connection with the indebtedness. A creditor or holder who fails to comply with this section is liable to the owner of the real property encumbered by such indebtedness and to any other person liable on such indebtedness for all actual economic loss incurred enforcing the rights provided under this section, including reasonable attorney fees and costs.      For indebtedness secured by a lien on real property where the ability of a debtor to draw upon a line of credit continues notwithstanding that all amounts outstanding under the line of credit have been paid in full, any lien on real property securing that line of credit continues, and no lien release under this section is required, until the line of credit expires and all indebtedness, whether absolute or contingent, has been satisfied unless, before expiration of the line of credit, all outstanding indebtedness is satisfied and the debtor relinquishes in writing all right to make any further draw upon the line of credit.    The debtor relinquishes all right to make a further draw by either requesting in writing that the line of credit be closed by the creditor or by written notification by the debtor or debtor's designee that the real property is being conveyed upon payment of all indebtedness. Upon satisfaction of all indebtedness in connection with the conveyance of the real property and notice to the creditor or holder of the conveyance, the creditor or holder shall terminate the line of credit, record the release of the lien on real property, or in the case of a deed of trust, file with the public trustee the documents required for release, and return all papers and personal property as set forth in this section.         History. Source: L. 87: Entire section added, p. 1338, § 1, effective April 22. L. 91: Entire section amended, p. 1920, § 48, effective June 1. L. 2002: Entire section amended, p. 1331, § 2, effective July 1. L. 2016: Entire section amended,(HB 16-1356), ch. 348, p. 1418, § 1, effective August 10.    ANNOTATION   In action brought against the United States by local housing authority to quiet title to real property, federal law preempted this Colorado statute. Hous. Authority of City of Fort Collins v. U.S., 980 F.2d 624 (10th Cir. 1992).   This section clearly and unequivocally requires a satisfaction of an indebtedness before a creditor is required to file the documents necessary for a release of lien. Hohn v. Morrison, 870 P.2d 513 (Colo. App. 1993).   This section clearly requires that, upon tender of a payment fully satisfying an obligation secured by real property, the deed of trust securing that obligation must be released. Crown Bank v. Crowder Mortgage Corp., 5 P.3d 954 (Colo. App. 2000).   A lender cannot place conditions on its release of a deed of trust other than the satisfaction of the indebtedness secured by that deed of trust. This conclusion is consistent with the apparent purpose of the statute, which is to permit the owners of real property to obtain the release of liens by the payment of the full amount secured by the lien and thereby permit the owner to sell, pledge, or otherwise deal with the property of the lien. If a lien holder were permitted further to condition the release of the lien, it could use that ability to coerce settlement of other disputes or accounts, a result the statute was clearly intended to prevent. Crown Bank v. Crowder Mortgage Corp., 5 P.3d 954 (Colo. App. 2000).