The Civil Litigator
| Publication year | 1981 |
| Pages | 1631 |
| Citation | Vol. 10 No. 7 Pg. 1631 |
1981, July, Pg. 1631. The Civil Litigator
Judicial intervention in Public Trustee foreclosures is on the increase. In 1980 there were 861 foreclosures initiated through the Public Trustee in the City and County of Denver alone.(fn1) No statistics were available regarding how many of these were interrupted by contested Rule 120 hearings, temporary restraining orders, preliminary injunctions and other forms of judicial intervention. Nevertheless, it seems apparent to those involved in real estate-oriented litigation that an ever-increasing number of such foreclosures find their way into the courts.
The contested foreclosure proceeds along on the civil docket as any civil case, with the delay and expense which often accompanies the resolution of civil disputes. If the trend towards judicial intervention continues, the state trial court system will be burdened with an ever-increasing share of foreclosure actions. Several cases are now pending in the Colorado appellate courts, any one of which may have significant impact on the viability of the Public Trustee foreclosure process.(fn2) Consistent with due process and basic fairness, the courts should exhibit restraint and circumspection before undertaking the burden of this largely administrative task.
Colorado has long recognized that public policy demands that property interests be freely alienable.(fn3) The ability to alienate freely promotes commerce and enhances each property owner's beneficial use and enjoyment of his land. The right to encumber real estate as security for the advancement of funds is merely a part of the right to alienate freely. The right to encumber similarly furthers the landowner's beneficial use of his property. The most common example of such use, the purchase money mortgage, has permitted countless persons who would otherwise be unable to do so to acquire and hold land.
The lender's willingness to enter into such transactions depends to a large extent upon its ability to recover quickly and inexpensively the security for its loan upon a default. The Public Trustee foreclosure has evolved to fulfill the lender's need while safeguarding the borrower's rights. If, because of judicial intervention, the Public Trustee foreclosure becomes more akin to a full-blown judicial proceeding, then the lender's incentive to loan will be lessened and the prospective land purchaser will suffer. In an economy where currently too few are able to enter the real estate market, this added disincentive to lenders might have enormous consequences. In assessing the
current trend toward judicial intervention, it is necessary to review the development of the Public Trustee foreclosure.
Prior to the Public Trustee Act of 1894, deeds of trust were held by private trustees. The private trustees were given broad discretionary power in the sale of the property(fn4) and the debtor had no right to redeem.(fn5) The procedure was efficient and provided incentive to lenders to extend loans by promising a sale of the secured property upon a default as a means to recover the loan. However, certain...
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