Court Opinion

ID: 9560678
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:53:31.800764+00
Date Added: 2024-06-11T09:13:05.918321
License: Public Domain

QUINN, Chief Justice,
dissenting in part:
I respectfully dissent from Part IV of the court’s opinion, which holds that the failure of a junior lienholder to exercise redemption rights under section 38-39-103, 16A C.R.S. (1982), at a public sale foreclosing on an undivided one-half interest in the property does not extinguish the junior lienholder’s redemptive rights in a subsequent foreclosure sale of the entire property.
The right to redeem at a public sale foreclosing on a deed of trust is purely *762statutory, and, therefore, the issue posed by this case must be resolved in the context of the redemption statutes and the purposes behind them. See Walker v. Wallace, 79 Colo. 380, 382, 246 P. 553, 553 (1926). Section 38-39-102(1), 16A C.R.S. (1982), states that an owner of real estate sold as a result of a foreclosure of a deed of trust may redeem the premises by paying within seventy-five days after the date of the sale the amount for which the property was sold plus interest, taxes, and any other proper charges provided by law. Section 38-39-103, 16A C.R.S. (1982), provides, in pertinent part, as follows:
(1) If no redemption is made within the redemption period provided for in section 38-39-102, the encumbrancer or lienor having the senior lien, according to the records of the county clerk and recorder’s office of the county where the real estate is situate, on the sold premises or some part thereof subsequent to the lien upon which such sale was held may redeem within ten days after the expiration of the above redemption period by paying the amount required by section 38-39-102, and each subsequent encum-brancer and lienor in succession shall have and be allowed a five-day period to redeem, according to the priority of his lien, and may redeem within the five-day period allotted to him by paying all redemption amounts theretofore paid with interest and the amount of all such liens with interest prior to his own held by such persons as are evidenced in the manner required in this section or, if no encumbrancer or lienor prior to himself has redeemed, by paying the amount required in section 38-39-102.
(2) No lienor or encumbrancer is entitled to redeem unless, within the redemption period provided for in section 38-39-102, he files a notice of his intention to redeem with the public trustee, sheriff, or other official making the sale and unless his lien appears by instruments duly recorded or filed as permitted by law.
(Emphasis added).
The plain terms of section 38-39-103 make clear that junior lienholders having a lien “on some part” of the real property sold at a foreclosure sale must file a notice of intention to redeem within seventy-five days from the date of the foreclosure sale in order to preserve their liens and to exercise their redemptive rights at the foreclosure proceeding.
A construction of section 38-39-103 that requires all junior lienholders, regardless of whether their liens cover the entire property or only a fractional interest thereof, to exercise their rights of redemption at a foreclosure sale of a prior partial interest in order to preserve their redemptive rights in a subsequent foreclosure sale of the entire property would promote the purposes of the statutory foreclosure scheme in several ways. Such a construction would enhance the prospects of obtaining the maximum price at a foreclosure sale and paying off as many debts as possible through the redemption process, and also would effectuate much needed certainty and predictability in this area of the law. I agree in this respect with the following observations of the United States District Judge in his resolution of this issue:
[Redemption statutes seek to benefit both debtors and creditors by reducing the property owner’s debt while satisfying every possible creditor through the continual redemption of the same piece of property. First National Bank v. Energy Fuels, [200 Colo. 540, 618 P.2d 1115 (1980)]. Thus, the end to be achieved is a rule which encourages recovery of the highest price for the debt- or’s property and at the same time protects the value and marketability of that property following sale.
In my opinion, this policy is served by a rule which requires all junior lienors to participate in the redemption process in order to preserve their interests, even where the foreclosure sale involves only a partial interest in the property. This rule encourages participation in the redemption process, thereby maximizing the price obtained upon sale. Moreover, this rule leaves no confusion about the *763rights of subsequent lienors following the issuance of the trustee’s deed and therefore protects the value of the property interest obtained upon purchase or redemption.
Sant v. Stephens, 580 F.Supp. 1003, 1006-07 (D.C.Colo.1983) (footnote omitted); see also Bailey v. Erny, 68 Colo. 211, 189 P. 18 (1920) (redemption laws are “not intended to induce speculation upon the part of the execution purchasers”). Moreover, this construction would also protect a person purchasing a partial interest in the property at a foreclosure sale under a junior lien from losing the value of that interest by reason of a junior lienholder’s purchase of the entire interest at a subsequent foreclosure sale under a senior lien.
I acknowledge that requiring all junior lienholders to exercise their redemptive rights at a foreclosure sale of a prior partial interest in order to preserve their rights at a subsequent foreclosure sale, even though their liens extend to the entire property rather than merely the fractional interest for which the former foreclosure proceeding was conducted, might counteract the rule of not utilizing the property interest of two joint tenants to satisfy the judgment creditor of one joint tenant, at least to the extent that this rule might come into play at the subsequent foreclosure sale of the entire property. See First National Bank v. Energy Fuels Corp., 200 Colo. 540, 545, 618 P.2d 1115, 1119 (1980). To the extent that this requirement brings about this result, however, I believe it should be viewed as the unavoidable by-product of construing the statute in a manner that enhances the primary goals of maximizing the price obtained at a foreclosure sale, paying off as many debts as possible through successive redemptions, and bringing about certainty and predictability in foreclosure proceedings.
In the instant case, for example, the Ro-ginskis could have preserved their redemptive rights by filing a timely notice of intention to redeem in the Valley Bank and Trust foreclosure proceeding and exercising their redemptive rights at that proceeding by paying the sum for which J. James Patterson’s undivided one-half interest was sold to Sant at the foreclosure sale, plus interest and other proper charges provided by law. The Roginskis could then have preserved their right to redeem in the Horace Mann foreclosure by filing a notice of intention to redeem, and upon payment of the sum for which the property was sold to Sant at that foreclosure proceeding, plus interest and other costs provided by law, the Roginskis could have obtained a public trustee’s deed which would have vested them, as the last redeeming lienholders, with title free and clear of all liens and encumbrances recorded or filed subsequent to their lien. See § 38-39-110, 16A C.R.S. (1982). This process would have maximized the price obtained at both foreclosure proceedings, would have utilized the property to pay off as many debts as possible through successive redemptions, and would have provided Sant, who purchased J. James Patterson’s undivided one-half interest at the Valley Bank and Trust foreclosure of the junior lien, with reimbursement in full for the value of the property interests which he purchased at both foreclosures.
In contrast to the majority, I would answer “yes” to Question No. 2, and hold that the failure of a junior lienholder to exercise redemption rights under section 38-39-103 at a public sale foreclosing on an undivided one-half interest in the property extinguishes the junior lienholder’s redemptive rights in a subsequent foreclosure sale of the entire property.
I am authorized to say that Justive RO-VIRA joins me in this dissent.