A buyer in Mesa County, Colorado is purchasing a property and financing it with a deed of trust. The lender's attorney discovers that the property has an existing deed of trust from a previous owner that was never released, even though the previous loan was paid off 10 years ago. The title company has issued a commitment with this as an exception. Which Colorado legal concept most directly provides a remedy to clear this cloud on title?
Correct Answer
A) Filing a quiet title action in district court to extinguish the unreleased lien
When a deed of trust or mortgage lien remains unreleased on title despite the underlying debt being satisfied, the proper legal remedy in Colorado is a quiet title action filed in district court. A quiet title action (governed by C.R.S. § 38-35-110 et seq.) asks the court to declare that the old lien is extinguished and that the current owner holds clear title. This removes the cloud on title and allows the title company to insure the property without exception. The party who paid off the loan would need to provide evidence of satisfaction to support the action.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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