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SUPREME COURT, STATE OF COLORADO Court Address: 2 East Fourteenth Avenue Fourth Floor Colorado State ... - page 21 / 22





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entitled to expect that "first in time is first in right." Hicks had no way of knowing that would

change, because the statutes and cases say that constructive notice equals actual notice, and

subsequent interests are bound by matters of which they have notice. It took a District Court trial

and an appeal to find out that, in this case, he now has what amounts to a third lien. That hardly

seems conducive to promoting a reliable and certain system of title records.


It is the opinion of the Real Estate Law Section of the Colorado Bar Association that

equitable subrogation is not appropriate in this case because there is no compelling equitable

claim by the Respondents, and because the judgment lien creditor's interests are, in fact,

prejudiced by application of the doctrine. If, however, the Court determines to apply the doctrine

here, the Real Estate Law Section requests guidance with respect to how it will be implemented

in order to avoid, to the maximum extent possible, the otherwise inevitable litigation that will

result. The Court of Appeals decision leaves open several questions, such as, what will be the

terms of payment of the debt to which the subrogees have been subrogated? Is it on the terms of

the new loan or that of the loan to which they have been subrogated? Can a subrogee obtain

greater rights over an intervening lienholder than the debt for which it is subrogated, as the Court

of Appeals appeared to permit? Who is the obligor of the debt? If not the original borrower, has

not the intervening lienholder been prejudiced? What is the status of purchase money that is

subrogated (the cash paid by the Londres)? While the Real Estate Law Section believes these

questions need not be reached, to the extent equitable subrogation is permitted in this instance, a

framework for its implementation should be constructed for the purpose of aiding buyers, sellers,

lenders and their attorneys in evaluating real estate titles in the future.


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