What To Do When A Lender Fails or Refuses to Release Their Deed of Trust In Colorado
This article is intended for educational purposes only and not as legal advice
November 6, 2015
I cannot recall how many times clients came to me upset that a paid off deed of trust was not released from their real property title. Typically, the unreleased deed of trust impaired their ability to refinance or convey their property. They had already failed to get the paid off lender to assist them so now it was my turn. This was a huge problem during the boom lending years, and it often still is. It’s actually worse now that many of the lenders that failed to release have gone out of business. And how I deal with that is a story for another day.
C.R.S. 38-35-124 gives the lender 90 days to tender the proper release documents to the Public Trustee. That includes the notarized release form; the deed of trust or a certified copy; and typically the original canceled note although certain lenders are not required to produce the original note, at least until challenged by the borrower. Failure to release within the 90 day period subjects the lender to liability for proven economic loss plus attorney fees and court costs.
So, I did the same thing every time. I called the lender and tried to speak to a staff attorney. They of course would never get on the phone nor return my calls so I always ended up speaking with a manager in the department that handles the releases for usually the entire country. Then I very nicely introduced myself and told them to please jot down my name, address, phone number and a really short statutory reference. I knew the call was going to progress from a friendly tone to one hostile in nature so it was best to get them to take the appropriate notes in the beginning. Then I told them they were past the 90 day period, and I wanted the release documents and the release fee sent directly to me via overnight delivery. Not once did they agree. I typically got the “you need to understand that we’re super busy and we’ll get to it” or “I’ve been doing this job for x number of years . . .” The same answers that my clients got.
So, I calmly told them I didn’t remotely have to understand anymore more than they ever “understand” when the borrower pays late and they impose late fees. And no Colorado judge is going to understand either. I explained the gist of the statute and told them if they didn’t overnight the release documents and fee to o me by the next day, I was filing suit that following afternoon and would begin accruing billable hours I would collect from them at the rate of $400.00 per hour in addition to all filing fees (not low in District Court), and of course I would also be seeking economic loss damages whether provable or not. Finally, I directed them to immediately speak to their attorneys and give them the statutory reference since they were ignorant about Colorado law despite being charged with handling the releases in Colorado. Although I never once got their initial cooperation, I was always successful in getting them angry. Many hung up on me.
I admittedly often hung up angry and wanting to sue them. Even though my client’s goal was getting the lien released, I often secretly hoped nothing would arrive the next day so I could pound just one of them since virtually every one of them was rude to me on the phone and indignant that I would make them abide by Colorado law. Obviously they were “victimizing” countless Colorado property owners by failing to timely (or ever) release their liens. But, I never got a single opportunity to sue even one of them. Despite their refusal on the phone and angry uncooperative tone, 100% of the time I received the release documents the next day – including the release fee. I presume the majority of the time that they did go to their in-house attorney who advised them to get it done immediately.
Cherry Creek Title Services, Inc.,
Agent for First American Title Insurance Company & NATIC