July 17, 2019

Colorado Court of Appeals: Tender of Funds in Satisfaction of Lien Before Redemption Period Must Be Accepted by Creditor

The Colorado Court of Appeals issued its opinion in Mortgage Investment Enterprises, LLC v. Oakwood Holdings, LLC on Thursday, July 14, 2016.

Foreclosure—Lien—Redemption.

The debtors purchased the property at issue and subsequently defaulted on their obligation to pay monthly fees to the Kimblewyck Village Owners Association (Kimblewyck). Kimblewyck filed a lien against the property. The property was also encumbered by (1) a lien filed by the Fox Run Owners Association and (2) two judgments entered in favor of Community Management Association, Inc. (CMA). Kimblewyck obtained a judgment and decree of foreclosure. Mortgage Investments Enterprises LLC (Mortgage Investments) was the successful bidder at the foreclosure sale. On the day before the foreclosure sale, Oakwood Holdings, LLC (Oakwood) purchased the Fox Run lien and both CMA judgments. Oakwood subsequently filed notices of intent to redeem the Fox Run lien and one of the CMA judgments. Mortgage Investments tendered, on behalf of the debtor, pursuant to a valid power of attorney, lien satisfaction payments to Oakwood. Although Oakwood’s period to redeem had not yet begun, it refused to accept the payments. Mortgage Investments filed a complaint for a declaratory judgment that Oakwood was required to accept Mortgage Investments’ tenders on behalf of the debtor. Oakwood subsequently redeemed the property, and the district court granted Oakwood’s motion for summary judgment.

On appeal, Mortgage Investments argued that the district court erred in concluding that Oakwood had no duty to accept tender of payment in satisfaction of its liens. Prior to the start of Oakwood’s period to redeem and before it tendered redemption funds, Oakwood had a duty to accept Mortgage Investments’ tender of payment, on behalf of the debtor, in satisfaction of the lien Oakwood sought to redeem. The district court’s judgment was reversed and the case was remanded with directions to enter summary judgment in favor of Mortgage Investments.

Summary provided courtesy of The Colorado Lawyer.

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