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SUPREME COURT, STATE OF COLORADO Court Address: 2 East Fourteenth Avenue Fourth Floor Colorado State ... - page 20 / 22





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negligence of a party or its agent, especially in a commercial transaction with an institutional

lender, a title company can avoid paying a title claim by resorting to an equitable doctrine. The

Missouri decision specifically states:

It is clear from a review of these cases that equitable subrogation is allowed only in extreme cases bordering on if not reaching the level of fraud. Sec. 442.390, RSMo 1986, provides that documents filed for record with the recorder shall "impart notice to all persons of the content thereof and all subsequent purchasers and mortgagees shall be deemed, in law and equity, to purchase with notice." (Emphasis supplied). For courts to allow equitable subrogation where no extreme circumstances are present would be nothing less than a judicial repeal of Sec. 442.390 and would place the lending of money secured by real estate at great risk and insecurity. In none of the cases in which subrogation has been ordered has the lender been allowed to advance ahead of a recorded lien in the absence of complicity by the superior lien holder in obtaining the loan."

Landmark Bank, 725 S.W. 2d at 928 (citation omitted).

Holding that someone who misses a judgment lien may be treated as if he took title ahead

of the lien, in a situation where there is no fraud, collusion, or other overriding equity in favor of

that person, is not consistent with the Colorado legislative declaration that the recording act and

"all other laws concerning or affecting title to real property and every interest therein and all

recorded instruments, decrees, and orders of courts of record, including all proceedings in suits

or causes wherein such orders or decrees have been entered or rendered, shall be liberally

construed with the end in view of rendering such titles absolute and free from technical defects

so that subsequent purchasers and encumbrancers by way of mortgage, judgment, or

otherwise may rely on the record title and so that the record title of the party in possession is

sustained and not defeated by technical or strict construction." Colo. Rev. Stat. § 38-34-101

(emphasis added). As noted above, a judgment lien creditor has the status of a good faith

purchaser for value without notice. A good faith purchaser with a recorded encumbrance is


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