Chapter 11 - § 11.7 • PRIORITIES

• Jurisdiction: Colorado

§ 11.7 • PRIORITIES

§ 11.7.1—In General

A mortgage or deed of trust is subject to interests in the property in existence when the mortgage or deed of trust is granted.¹¹²

§ 11.7.2—Taxes and Assessments

General property tax liens have priority over all other liens.¹¹³ A lien imposed upon property to secure the collection of the cost of abating a nuisance is not a tax or special assessment, and therefore is not a "superpriority" lien; it is extinguished by the foreclosure of a senior deed of trust.¹¹⁴

§ 11.7.3—Mechanic's Liens

A mechanic's lien extends to and covers so much of the land on which the building, structure, or improvement is made as may be necessary for the convenient use of such building, structure, or improvement.¹¹⁵ A mechanic's lien relates back to the time of the commencement of the work,¹¹⁶ and has priority over other liens which are recorded after the commencement of the work,¹¹⁷ but where the work done or labor or materials furnished are not for an entire structure, erection, or improvement, it is subject to other liens which are recorded prior to the commencement of the work.¹¹⁸

A mechanic's lien for work done or labor or material furnished for an entire structure, erection, or improvement attaches to the building, structure, or improvement in preference to any prior lien or encumbrance or mortgage upon the land on which the same is placed.¹¹⁹ The phrase "for the entire structure" is not used to designate a completed from an uncompleted building, but to distinguish new structures not before existing from betterments, repairs, improvements, and the like on previous constructed improvements.¹²⁰ For example, where landscaping is added to land upon which other improvements have been erected, the landscaping constitutes the expansion of an existing improvement.¹²¹ The rules of priority are that a mechanic's lien is a prior lien upon the improvement, while an existing mortgage or deed of trust is a prior lien upon the land.¹²² Thus, the mechanic's lien claimant is entitled to have the land sold subject to the prior encumbrance,¹²³ and to have the building, erection, or improvement itself sold.¹²⁴ The prior encumbrancer loses nothing to which his or her security had attached, nor does the lien claimant get anything beyond that which he or she may have placed upon the land.¹²⁵ But where a deed of trust expressly covering the building to be built is given for a construction loan and is recorded before work on the building begins, the lien of the deed of trust takes priority over a mechanic's lien to the extent that the loan was actually used to pay for labor and materials used in the construction of the building.¹²⁶

Where a contract of sale requires that certain improvements be made on the property, a mechanic's lien for the value of such improvements has priority over a deed of trust securing the purchase price.¹²⁷

In the case of after-acquired property, a mechanic's lien for work done and materials furnished on the after-acquired property has priority over the mortgage.¹²⁸

§ 11.7.4—Leases

A deed of trust has priority over a lease, or any new agreements or modifications thereof, made after the recording of the deed of trust,¹²⁹ but the lease cannot be terminated without the lessee's consent or for breach by the lessee, except by foreclosure and sale.¹³⁰

§ 11.7.5—Subordination Agreements

Subordination agreements are enforceable in Colorado.¹³¹ Subordination agreements may be limited¹³² or unlimited.¹³³ Partial subordinations are recognized in Colorado.¹³⁴ A subordination agreement that provides for subordination of a first deed of trust for a limited period is not extended by the filing of a foreclosure action within the subordination period.¹³⁵

§ 11.7.6—Purchase Money Mortgages

A mortgage given for...