August 1, 2014

Colorado Court of Appeals: Landlord Granted Security Interest in Decedent’s Personal Property As Described in the Lease

The Colorado Court of Appeals issued its opinion in In re Estate of Wheeler on Thursday, June 20, 2013.

Lease—Security Interest—Personal Property—Collateral.

Mary Beth Wheeler, personal representative of the Estate of David Wheeler, appealed the trial court’s grant of summary judgment to Tower Building, LLC and Lorraine E. Ring (collectively, Landlord). The judgment was affirmed.

David was the sole proprietor of a jewelry store located in a building owned by Landlord. After David died, Landlord filed a claim to recover unpaid rent and interest. Landlord asserted that David’s lease for his jewelry store granted it a security interest in David’s personal property located in the store at the time of his death.

Mary Beth contended that Landlord did not have an enforceable security interest in David’s personal property, because the lease did not sufficiently describe the property. A security interest is enforceable against the debtor and third parties if the security agreement provides a sufficient description of the collateral. Here, the lease described the collateral as all of debtor’s personal property and identified the location of the property as the leased premises. Therefore, the lease for use of Landlord’s building created an enforceable security interest in David’s personal property, which was located in his jewelry store when he died.

Summary and full case available here.

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