Chapter 11 - § 11.2 • BACKGROUND AND CHARACTERISTICS

• Jurisdiction: Colorado

§ 11.2 • BACKGROUND AND CHARACTERISTICS

§ 11.2.1—Historical Development

Bond for Title

A common transaction in early Colorado was the bond for title. Title bonds were said to be mortgages at common law, and the relationship of the parties was that of mortgagor and mortgagee.³

Trust Deeds

Prior to the act creating the office of public trustee,⁴ security interests in real property were created by trust deeds to private trustees. The public trustee act arose out of the "panic" of 1893 and was for the purpose of protecting people of small means by giving a period of redemption not allowed under foreclosure by private trustees, and keeping down the costs of foreclosure so that they would not be prohibitive.⁵

The creation of the office of public trustee eliminated the practice of foreclosing deeds of trust through the exercise of the power of sale by a private trustee. C.R.S. § 38-39-101 provides:

Any deed of trust that names any person other than a public trustee as trustee therein or that secures an obligation other than an evidence of debt shall be deemed and taken to be a mortgage for all purposes and foreclosed only as mortgages are foreclosed in and through the courts; except that any deed of trust that names a public trustee as trustee therein and secures an obligation other than an instrument evidencing a debt shall be released as provided in section 38-39-102(5).

§ 11.2.2—Mortgage and Deed of Trust Compared

A mortgage is a conveyance of an estate or interest in land by way of pledge or security for payment of a debt.⁶ A deed of trust in real property given for security for a debt is a mortgage.⁷ As the Colorado Supreme Court has said, "a deed of trust . . . is essentially a mortgage containing a power of sale . . . ."⁸ A deed of trust that grants a power of sale to the public trustee but contains no provision on the manner in which the power of sale is to be exercised is not for that reason void or voidable. It may be foreclosed through the public trustee or by a judicial foreclosure.⁹

§ 11.2.3—Interpretation

Promissory notes and mortgages or deeds of trust are subject to the principles of interpretation and construction that govern contracts generally. The primary goal of interpretation is to determine and give effect to the intent of the parties. In determining such intent, the terms of the instrument are to be given their plain and ordinary meaning. Where the language of the applicable instruments is clear and unambiguous, it must be given...