July 20, 2019

Colorado Court of Appeals: Insufficient Notice of Tax Lien Renders Tax Deed Voidable

The Colorado Court of Appeals issued its opinion in Sandstrom v. Solen on Thursday, February 25, 2016.

Validity of a Tax Deed—Void or Voidable—Redemption Rights of Tenants in Common—Summary Judgment—Duty of Diligent Inquiry.

Bradford appealed the summary judgment concluding that the Arapahoe County Treasurer (Treasurer) properly invalidated a tax deed in his favor. Bradford also appealed the grant of summary judgment quieting title to the subject property in favor of Solen and Ibbotson.

The subject parcel was assessed as a 50% undivided interest in mineral rights beneath surface property owned by Bradford. That undivided interest was conveyed as two undivided interests to Solon and his sister Ibbotson. Because of an error on the part of the assessor, the Treasurer had billed the parcel by mailing tax bills to Solon only. The taxes went unpaid for tax years 2004 through 2007. In 2005, Bradford purchased the 2004 tax lien.

On August 30, 2008, Bradford applied for a tax deed for the parcel. Before a deed is issued to a purchaser, CRS § 39-11-128(1)(a) requires the treasurer to serve a notice of the purchase of a tax lien on all persons having an interest or title of record in or to the property if “upon diligent inquiry” the residence of such persons can be determined. Here, the Treasurer sent notice to Solen of the application for tax deed but did not obtain title work for the parcel or check the county clerk and recorder’s records. On February 26, 2009, the Treasurer issued a tax deed transferring the entire undivided one-half interest in the mineral estate to Bradford.

In 2013, an oil and gas lessee of Ibbotson’s notified the Treasurer that she claimed ownership of the parcel. On August 26, 2013, the Treasurer issued and recorded a declaration of invalid treasurer’s deed that purportedly invalidated Bradford’s tax deed. In December 2013, the Treasurer filed this action seeking a declaratory judgment that the declaration of invalid treasurer’s deed was a valid document, thereby canceling title in Bradford. The Treasurer’s complaint admitted that she had failed to conduct diligent inquiry prior to issuing the tax deed. Bradford counterclaimed against the Treasurer and cross-claimed against Solen and Ibbotson for a decree quieting title in the parcel. The district court entered summary judgment in favor of the Treasurer, Solen, and Ibbotsen.

On appeal, Bradford argued the district court erred in finding that the tax deed issued to her was invalid and void. The Court of Appeals concluded that the tax deed was voidable for failure to provide Ibbotson with notice. Because the statutory requirements of CRS § 29-11-128(1) were not met, the district court properly voided the tax deed.

Bradford also argued that it was error to conclude that as tenants in common, Ibbotson and Solen were entitled to quiet title in the parcel and that because Solen received notice of the requested tax deed, he was estopped from challenging her title under the tax deed. The Court disagreed, noting that a tenancy in common is a form of ownership in which each cotenant owns a separate fractional share of undivided property. The parcel was assessed as a single parcel, and Solen and Ibbotson each owned an undivided interest in the entire parcel. The tax deed purported to convey the entire parcel, and therefore either cotenant had the right to notice and to redeem the entire parcel. It is irrelevant whether Solen is estopped because Ibbotson was willing and ready to redeem if she had received notice.

Bradford also contested Solen’s standing, but the Court found that Solen had standing.

The Court affirmed the order.

Summary and full case available here, courtesy of The Colorado Lawyer.

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