Chapter 20 - § 20.38 • BORROWING AND PLEDGING

• Jurisdiction: Colorado

§ 20.38 • BORROWING AND PLEDGING

The Code seems to contain no specific provision with regard to mortgaging the property of the estate and prescribes no particular procedure in that regard, although it incorporates the Colorado Fiduciaries' Powers Act, which contains numerous provisions with respect to fiduciary powers referring to the power to borrow and pledge. The power to borrow and pledge is included in the broad powers of the representative when he or she steps into the decedent's shoes. C.R.S. §§ 15-1-804(2)(g), (h), and (p); see C.R.S. § 15-16-306. Some of the provisions in the Colorado Fiduciaries' Powers Act that relate to borrowing and pledging are mentioned below.⁴⁷

Before borrowing, the representative should carefully consider the effect on the estate of a decline in the value of the estate after the borrowing. He or she should consider the advisability of a sale, even at apparently disadvantageous prices, against the element of speculation involved in borrowing. These are questions of judgment at the time, with no certain way of knowing in advance where the advantage will lie. If a customary form of mortgage or trust deed is used to secure the debt, care should be taken to delete all warranties unless there is a will authorizing the making of warranties.

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