Mortgage Investments Enterprises LLC v. Oakwood Holdings, LLC
2016 COA 111
Colo. Ct. App.2016Background
- Debtors' property was foreclosed in September 2014 after a homeowners association judgment; Mortgage Investments (MI) bought the certificate of purchase at the sheriff’s sale.
- Oakwood purchased two junior encumbrances (a Fox Run lien and two CMA judgments) the day before the sale; Oakwood filed notices of intent to redeem those liens shortly after the sale.
- MI obtained a power of attorney from the debtors the day after the sale and, before Oakwood’s statutory redemption period began and before Oakwood tendered redemption funds, MI tendered payment (on behalf of the debtors) to satisfy the Fox Run lien and one CMA judgment; Oakwood refused the tenders.
- MI sued for declaratory relief and sought injunctive relief to prevent Oakwood’s redemption; the district court denied a preliminary injunction and later granted summary judgment to Oakwood.
- The court of appeals reversed, holding that because MI tendered payment before Oakwood had effected redemption (i.e., before Oakwood paid redemption funds within its statutory period), Oakwood had a duty to accept the tender and assist in satisfaction of the judgments and liens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a certificate-of-purchase holder must accept payment tendered on behalf of the debtor before a junior lienor’s statutory redemption period begins | MI: A certificate holder may pay liens on behalf of the debtor pre-redemption; because Oakwood had not yet redeemed, it was required to accept tender and satisfy the liens | Oakwood: Statute is silent but elimination of owner post-sale redemption (2008) and policy prevent a requirement to accept such tenders; Oakwood’s notice of intent created a choate redemption right | Held: MI’s pre-redemption tenders were effective; Oakwood had not accomplished redemption and thus had a duty to accept tender and assist satisfaction of the liens. |
| Whether pre-2008 cases allowing debtors to pay judgments remain applicable after elimination of owner post-foreclosure redemption | MI: Plute/Osborn still govern the creditor’s duty to accept payment until a junior lienor actually redeems | Oakwood: Those cases are inapposite because the General Assembly eliminated owners’ post-foreclosure redemption rights in 2008 | Held: Plute and Osborn remain relevant—those precedents establish that creditors must accept tenders until redemption is actually accomplished. |
| Whether MI failed to act within any relevant statutory period such that it lost the right to tender payments | Oakwood argued MI delayed and thus could not act "in the debtor’s shoes" | MI showed tenders were made before Oakwood paid redemption funds and before Oakwood’s redemption period commenced | Held: MI’s tenders occurred before Oakwood effected redemption; timing did not bar acceptance. |
| Policy question: whether allowing certificate holders to tender pre-redemption undermines foreclosure sale competition | Oakwood: Allowing pre-redemption tenders circumvents redemption rights and creates incentives to buy liens instead of bidding at sale | MI: Allowing pre-redemption payment encourages participation and protects creditors’ recovery | Held: Court found policy favors permitting certificate holders to tender pre-redemption to satisfy liens, promoting competitive sales and creditor recovery. |
Key Cases Cited
- Plute v. Schick, 71 P.2d 802 (Colo. 1937) (debtors have a legal right to pay judgments and prevent redemption prior to actual redemption)
- Osborn Hardware Co. v. Colorado Corp., 510 P.2d 461 (Colo. App. 1973) (creditor must accept debtor’s tender and assist in satisfaction of judgment)
- WYSE Fin. Servs., Inc. v. Nat’l Real Estate Inv., LLC, 92 P.3d 918 (Colo. 2004) (redemption is effective only when the junior lienor actually pays the statutory redemption amount within the redemption period)
- Davis Mfg. & Supply Co. v. Coonskin Props., Inc., 646 P.2d 940 (Colo. App. 1982) (recognizing debtor’s right to pay and obtain satisfaction of debts)
- Sant v. Stephens, 753 P.2d 752 (Colo. 1988) (statutory redemption rights must be strictly complied with)