1997
HOUSE BILL 971143
BY REPRESENTATIVES Lawrence, C. Berry, Dyer, George, Kaufman, Kreutz, Schauer, Schwarz, Tool, Anderson, Clarke, Dean, Epps, Grossman, Nichol, Swenson, and Veiga;
also SENATORS Norton, Arnold, Bishop, Chlouber, Congrove,
Dennis, Hopper, J. Johnson, Martinez, Mutzebaugh, Perlmutter,
Powers, Reeves, Schroeder, Weddig, Wells, and Wham.
CONCERNING SPURIOUS DOCUMENTS AFFECTING TITLE TO
PROPERTY.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. Article 35 of title 38, Colorado Revised Statutes, 1982 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW PART to read:
PART 2
SPURIOUS LIENS AND DOCUMENTS
3835201. Definitions. AS
USED IN THIS PART 2, UNLESS THE CONTEXT OTHERWISE REQUIRES:
(1) "FEDERAL OFFICIAL OR EMPLOYEE"
MEANS AN APPOINTED OR ELECTED OFFICIAL OR ANY EMPLOYEE OF THE
GOVERNMENT OF THE UNITED STATES OF AMERICA OR OF ANY AGENCY OF
SUCH GOVERNMENT AS DEFINED FOR PURPOSES OF THE AFEDERAL
TORT CLAIMS ACT@,
28 U.S.C. SEC. 2671.
(2) "LIEN" MEANS AN ENCUMBRANCE
ON REAL OR PERSONAL PROPERTY AS SECURITY FOR THE PAYMENT OF A
DEBT OR PERFORMANCE OF AN OBLIGATION.
(3) "SPURIOUS DOCUMENT" MEANS
ANY DOCUMENT THAT IS FORGED OR GROUNDLESS, CONTAINS A MATERIAL
MISSTATEMENT OR FALSE CLAIM, OR IS OTHERWISE PATENTLY INVALID.
(4) "SPURIOUS LIEN" MEANS A
PURPORTED LIEN OR CLAIM OF LIEN THAT:
(a) IS NOT PROVIDED FOR BY A SPECIFIC
COLORADO OR FEDERAL STATUTE;
(b) IS NOT CREATED, SUFFERED, ASSUMED,
OR AGREED TO BY THE OWNER OF THE PROPERTY IT PURPORTS TO ENCUMBER;
OR
(c) IS NOT IMPOSED BY ORDER, JUDGMENT,
OR DECREE OF A STATE COURT OR A FEDERAL COURT.
(5) "STATE COURT" MEANS A COURT
ESTABLISHED PURSUANT TO TITLE 13, C.R.S.
(6) "STATE OR LOCAL OFFICIAL OR EMPLOYEE"
MEANS AN APPOINTED OR ELECTED OFFICIAL OR ANY EMPLOYEE OF:
(a) THE STATE OF COLORADO;
(b) ANY AGENCY, BOARD, COMMISSION, OR
STATE DEPARTMENT IN ANY BRANCH OF STATE GOVERNMENT;
(c) ANY INSTITUTION OF HIGHER EDUCATION;
OR
(d) ANY SCHOOL DISTRICT, POLITICAL SUBDIVISION,
COUNTY, MUNICIPALITY, INTERGOVERNMENTAL AGENCY, OR OTHER UNIT
OF LOCAL GOVERNMENT IN COLORADO.
3835202. Recording or filing.
(1) ANY STATE OR LOCAL OFFICIAL OR EMPLOYEE, INCLUDING
THE CLERK AND RECORDER OF ANY COUNTY OR CITY AND COUNTY AND THE
COLORADO SECRETARY OF STATE, MAY ACCEPT OR REJECT FOR RECORDING
OR FILING ANY DOCUMENT THAT THE STATE OR LOCAL OFFICIAL OR EMPLOYEE
REASONABLY BELIEVES IN GOOD FAITH MAY BE A SPURIOUS LIEN OR SPURIOUS
DOCUMENT.
(2) NO STATE OR LOCAL OFFICIAL OR EMPLOYEE,
INCLUDING THE CLERK AND RECORDER OF ANY COUNTY OR CITY AND COUNTY
AND THE COLORADO SECRETARY OF STATE, SHALL BE LIABLE TO ANY PERSON
OR CLAIMANT FOR EITHER THE ACCEPTANCE OR REJECTION FOR RECORDING
OR FILING OF ANY DOCUMENT THAT THE STATE OR LOCAL OFFICIAL OR
EMPLOYEE REASONABLY BELIEVES IN GOOD FAITH MAY BE A SPURIOUS LIEN
OR SPURIOUS DOCUMENT.
(3) NO STATE OR LOCAL OFFICIAL OR EMPLOYEE,
INCLUDING THE CLERK AND RECORDER OF ANY COUNTY OR CITY AND COUNTY
AND THE COLORADO SECRETARY OF STATE, SHALL BE OBLIGATED TO ACCEPT
FOR RECORDING OR FILING ANY LIEN OR CLAIM OF LIEN AGAINST A FEDERAL
OFFICIAL OR EMPLOYEE OR A STATE OR LOCAL OFFICIAL OR EMPLOYEE
BASED UPON THE PERFORMANCE OR NONPERFORMANCE OF THAT OFFICIAL'S
OR EMPLOYEE'S DUTIES UNLESS SUCH LIEN OR CLAIM OF LIEN IS ACCOMPANIED
BY A SPECIFIC ORDER ISSUED BY A STATE COURT OR FEDERAL COURT AUTHORIZING
THE RECORDING OR FILING OF SUCH LIEN OR CLAIM OF LIEN.
3835203. Action to enforce.
(1) NO SPURIOUS LIEN OR SPURIOUS DOCUMENT SHALL HOLD
OR AFFECT ANY REAL OR PERSONAL PROPERTY LONGER THAN THIRTY DAYS
AFTER THE LIEN OR DOCUMENT HAS BEEN RECORDED OR FILED IN THE OFFICE
OF ANY STATE OR LOCAL OFFICIAL OR EMPLOYEE, INCLUDING THE OFFICE
OF THE CLERK AND RECORDER OF ANY COUNTY OR CITY AND COUNTY OR
THE OFFICE OF THE COLORADO SECRETARY OF STATE, UNLESS WITHIN THE
THIRTY DAYS:
(a) AN ACTION HAS BEEN COMMENCED TO ENFORCE
SUCH LIEN OR DOCUMENT IN THE STATE DISTRICT COURT FOR THE COUNTY
OR CITY AND COUNTY IN WHICH THE LIEN OR DOCUMENT WAS RECORDED
OR FILED OR THE FEDERAL DISTRICT COURT IN COLORADO; AND
(b) A NOTICE OF LIS PENDENS STATING THAT
SUCH AN ACTION HAS BEEN COMMENCED IS RECORDED OR FILED IN THE
OFFICE WHERE THE LIEN OR DOCUMENT WAS RECORDED OR FILED.
(2) THE NOTICE OF LIS PENDENS REQUIRED
BY PARAGRAPH (b) OF SUBSECTION (1) OF THIS SECTION MUST COMPLY
WITH THE REQUIREMENTS OF SECTION 3835110 AND RULE
105 (f) OF THE COLORADO RULES OF CIVIL PROCEDURE AND MUST INCLUDE
THE CIVIL ACTION NUMBER OF THE ACTION THAT HAS BEEN COMMENCED
TO ENFORCE THE LIEN OR DOCUMENT. FAILURE TO COMPLY WITH THE REQUIREMENTS
OF THIS SUBSECTION (2) SHALL RENDER THE NOTICE OF LIS PENDENS
INVALID.
3835204. Order to show
cause. (1) ANY PERSON WHOSE
REAL OR PERSONAL PROPERTY IS AFFECTED BY A RECORDED OR FILED LIEN
OR DOCUMENT THAT THE PERSON BELIEVES IS A SPURIOUS LIEN OR SPURIOUS
DOCUMENT MAY PETITION THE DISTRICT COURT IN THE COUNTY OR CITY
AND COUNTY IN WHICH THE LIEN OR DOCUMENT WAS RECORDED OR FILED
OR THE FEDERAL DISTRICT COURT IN COLORADO FOR AN ORDER TO SHOW
CAUSE WHY THE LIEN OR DOCUMENT SHOULD NOT BE DECLARED INVALID.
THE PETITION SHALL SET FORTH A CONCISE STATEMENT OF THE FACTS
UPON WHICH THE PETITION IS BASED AND SHALL BE SUPPORTED BY AN
AFFIDAVIT OF THE PETITIONER OR THE PETITIONER'S ATTORNEY. THE
ORDER TO SHOW CAUSE MAY BE GRANTED EX PARTE AND SHALL:
(a) DIRECT ANY LIEN CLAIMANT AND ANY PERSON
WHO RECORDED OR FILED THE LIEN OR DOCUMENT TO APPEAR AS RESPONDENT
BEFORE THE COURT AT A TIME AND PLACE CERTAIN NOT LESS THAN TEN
DAYS NOR MORE THAN TWENTY DAYS AFTER SERVICE OF THE ORDER TO SHOW
CAUSE WHY THE LIEN OR DOCUMENT SHOULD NOT BE DECLARED INVALID
AND WHY SUCH OTHER RELIEF PROVIDED FOR BY THIS SECTION SHOULD
NOT BE GRANTED;
(b) STATE THAT IF THE RESPONDENT FAILS
TO APPEAR AT THE TIME AND PLACE SPECIFIED, THE SPURIOUS LIEN OR
SPURIOUS DOCUMENT WILL BE DECLARED INVALID AND RELEASED; AND
(c) STATE THAT THE COURT SHALL AWARD COSTS,
INCLUDING REASONABLE ATTORNEY FEES, TO THE PREVAILING PARTY.
(2) IF, FOLLOWING THE HEARING ON THE ORDER
TO SHOW CAUSE, THE COURT DETERMINES THAT THE LIEN OR DOCUMENT
IS A SPURIOUS LIEN OR SPURIOUS DOCUMENT, THE COURT SHALL MAKE
FINDINGS OF FACT AND ENTER AN ORDER AND DECREE DECLARING THE SPURIOUS
LIEN OR SPURIOUS DOCUMENT AND ANY RELATED NOTICE OF LIS PENDENS
INVALID, RELEASING THE RECORDED OR FILED SPURIOUS LIEN OR SPURIOUS
DOCUMENT, AND ENTERING A MONETARY JUDGMENT IN THE AMOUNT OF THE
PETITIONER'S COSTS, INCLUDING REASONABLE ATTORNEY FEES, AGAINST
ANY RESPONDENT AND IN FAVOR OF THE PETITIONER. A CERTIFIED COPY
OF SUCH ORDER MAY BE RECORDED OR FILED IN THE OFFICE OF ANY STATE
OR LOCAL OFFICIAL OR EMPLOYEE, INCLUDING THE CLERK AND RECORDER
OF ANY COUNTY OR CITY AND COUNTY AND THE COLORADO SECRETARY OF
STATE.
(3) IF, FOLLOWING THE HEARING ON THE ORDER
TO SHOW CAUSE, THE COURT DETERMINES THAT THE LIEN OR DOCUMENT
IS NOT A SPURIOUS LIEN OR SPURIOUS DOCUMENT, THE COURT SHALL ISSUE
AN ORDER SO FINDING AND ENTER A MONETARY JUDGMENT IN THE AMOUNT
OF ANY RESPONDENT'S COSTS, INCLUDING REASONABLE ATTORNEY FEES,
AGAINST ANY PETITIONER AND IN FAVOR OF THE RESPONDENT.
SECTION 2. The
introductory portion to 49.3106 (1.5), Colorado
Revised Statutes, 1992 Repl. Vol., as amended, is amended to read:
49.3106. Duties of filing
officer. (1.5) EXCEPT AS AUTHORIZED
BY SECTION 3835202, C.R.S., a filing officer shall
not reject a document submitted for filing under this title unless:
SECTION 3. 3835109 (4),
Colorado Revised Statutes, 1982 Repl. Vol., as amended, is repealed
as follows:
3835109. Instrument may
be recorded validity of unrecorded instruments liability
for fraudulent documents. (4) Anyone
who violates the recording or filing limitations of subsection
(3) of this section commits a class 1 misdemeanor and shall be
punished as provided in section 181106, C.R.S.
SECTION 4. 1011106,
Colorado Revised Statutes, 1994 Repl. Vol., is amended to read:
1011106. Determination
of insurability required. (1) No
policy or contract of title insurance shall be written unless
and until the title insurance company has caused to be conducted
a reasonable examination of the title and has caused to be made
a determination of insurability of title in accordance with sound
underwriting practices for title insurance companies. Evidence
thereof shall be preserved and retained in the files of the title
insurance company or its agent for a period of not less than fifteen
years after the policy or contract of title insurance has been
issued. In lieu of retaining the original copy, the title insurance
company, or the agent of the title insurance company, may, in
the regular course of business, establish a system whereby all
or part of these writings are recorded, copied, or reproduced
by any photographic, photostatic, microfilm, microcard, miniature
photographic, or other process which accurately reproduces or
forms a durable medium for reproducing the original. This section
shall not apply to either a company assuming no primary liability
in a contract of reinsurance or a company acting as a coinsurer
if one of the other coinsuring companies has complied with this
section.
(2) A TITLE INSURANCE COMPANY SHALL NOT
BE OBLIGATED TO MAKE A WRITTEN DISCLOSURE TO ITS PROSPECTIVE INSUREDS
PRIOR TO THE ISSUANCE OF A TITLE INSURANCE POLICY OF THE FOLLOWING
DOCUMENTS IF A REASONABLE EXAMINATION OF TITLE REFERRED TO IN
SUBSECTION (1) OF THIS SECTION REVEALS A RECORDED DOCUMENT THAT:
(a) IS A SPURIOUS LIEN OR SPURIOUS DOCUMENT
AS DEFINED IN SECTION 3835201, C.R.S.;
(b) IS NOT, ACCORDING TO SOUND UNDERWRITING
PRACTICES FOR TITLE INSURANCE COMPANIES, AN IMPAIRMENT OF RECORD
CONCERNING THE PROPERTY TO BE INSURED; OR
(c) ALTHOUGH IT MAY PURPORT TO DO SO,
DOES NOT ENCUMBER THE PROPERTY TO BE INSURED.
SECTION 5. Safety clause.
The general assembly hereby finds, determines, and declares that
this act is necessary for the immediate preservation of the public
peace, health, and safety.
____________________________ ____________________________
Charles E. Berry Tom Norton
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Judith M. Rodrigue Joan M. Albi
CHIEF CLERK OF THE HOUSE SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE
OF COLORADO