Oakwood Holdings, LLC v. Mortgage Investments Enterprises, LLC

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ADVANCE SHEET HEADNOTE
February 12, 2018

2018 CO 12

No. 16SC666, Oakwood Holdings, LLC v. Mortgage Investments Enterprises, LLC—
Foreclosure—Redemption—§ 38-38-302, C.R.S. (2017)—Right to Cure.

This case requires the supreme court to determine whether a junior lienor who

has complied with its obligations under section 38-38-302, C.R.S. (2017), is entitled to

redeem, or whether it has a duty to accept a tendered lien payoff from the certificate of

purchase holder who bought the property at a foreclosure sale and who obtained a

power of attorney from the debtor-prior owner authorizing the certificate holder to pay

off the prior owner’s debts.

The court concludes that under the plain language of the applicable redemption

statutes, a junior lienor who has complied with its obligations by timely filing its notice

of intent to redeem is entitled to do so and, at that point, has no duty to accept a

tendered payoff from a certificate of purchase holder like the respondent did here.

Although the debtor-prior owner had a right to cure before the foreclosure sale, the

respondent gained no additional rights by obtaining a limited power of attorney from

the debtor-prior owner after the sale.
 Accordingly, the supreme court reverses the judgment of the court of appeals

and remands this case for further proceedings.
 The Supreme Court of the State of Colorado
2 East 14th Avenue • Denver, Colorado 80203

2018 CO 12

Supreme Court Case No. 16SC666
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 15CA1046
Petitioner:
Oakwood Holdings, LLC,
v.
Respondent:
Mortgage Investments Enterprises LLC.
Judgment Reversed
en banc
February 12, 2018

Attorneys for Petitioner:
Sweetbaum Sands Anderson PC
Geoffrey P. Anderson
Reagan Larkin
Denver, Colorado

Navaro & Associates LLC
Steven Navaro
Castle Rock, Colorado

Attorneys for Respondent:
Murr Siler & Accomazzo, P.C.
Joseph A. Murr
Daniel R. Delaney
Kara J. Snow
Denver, Colorado

JUSTICE GABRIEL delivered the Opinion of the Court.
¶1 This case involves the rights of two parties who participated in Colorado’s

statutory foreclosure and redemption process. Petitioner Oakwood Holdings, LLC and

respondent Mortgage Investments Enterprises LLC each claim a right to the deed on a

piece of foreclosed property. In 2014, Mortgage Investments purchased the property at

a foreclosure sale. On or around the date of the foreclosure sale, Oakwood purchased

junior liens on the property and then attempted to redeem pursuant to section

38-38-302, C.R.S. (2017). Mortgage Investments, however, did not provide redemption

figures and instead, acting under a limited power of attorney granted by the prior

property owner, attempted to pay off the amount due to Oakwood under the junior

liens. Oakwood, however, refused the payment.

¶2 Mortgage Investments then filed the present declaratory judgment action,

seeking a declaration that its payoffs were valid and that Oakwood was not entitled to

redeem the property. The parties ultimately filed cross-motions for summary

judgment, the district court granted summary judgment for Oakwood, Mortgage

Investments appealed, and in a unanimous, published opinion, a division of the court of

appeals reversed. Mortg. Inv. Enter. LLC v. Oakwood Holdings, LLC, 2016 COA 111,

___ P.3d ___. Oakwood then sought certiorari, which we granted.1

1 Specifically, we granted certiorari to review the following issue:

Did the court of appeals err in holding that petitioner, a junior lienor, has a duty
to accept the tender of funds from the respondent, a certificate of purchase
holder acting on behalf of a foreclosed debtor, after the junior lienor has filed a
notice of intent to redeem but before it has tendered redemption funds.
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¶3 We now reverse the division’s judgment. We conclude that under the plain

language of the applicable redemption statutes, a junior lienor who has complied with

its obligations under section 38-38-302 by timely filing its notice of intent to redeem is

entitled to redeem, and at that point, it has no duty to accept a tendered lien payoff

from a certificate of purchase holder. Although a debtor-owner is sometimes entitled to

cure, the statute is clear that he or she must do so before the foreclosure sale is

complete, and Mortgage Investments gained no additional rights by obtaining the

limited power of attorney from the debtor-prior owner after the sale in this case.

Accordingly, once Oakwood complied with the statutory requirements to redeem, it

was permitted to do so and had no obligation to accept what amounted to cure funds

tendered by Mortgage Investments on behalf of the debtor-prior owner. The district

court therefore properly granted summary judgment in Oakwood’s favor.

I. Facts and Procedural Background

¶4 The prior owners of the home at issue in this case purchased the property in

2006. By 2014, the owners had defaulted on their obligations to several homeowners’

associations affiliated with their property. The senior lienor-association initiated

foreclosure proceedings, and on September 25, 2014, the Sheriff’s Department sold the

property to Mortgage Investments at a public auction.

¶5 The next day, Mortgage Investments obtained a limited power of attorney from

the previous homeowner. This limited power of attorney authorized Mortgage

Investments to pay off the outstanding balances on the junior liens.

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¶6 At about the same time, Oakwood acquired the liens held by the junior

lienor-associations, and on October 1, 2014 and October 6, 2014, Oakwood filed notices

of intent to redeem those liens pursuant to section 38-38-302. After receiving these

notices, Mortgage Investments sent Oakwood cashier’s checks, which it asserted were

“being tendered on behalf of” the prior owner and as “payment in full” on the junior

liens. Oakwood acknowledged receipt of these tenders but informed Mortgage

Investments that it was unwilling to accept the payoffs.

¶7 Upon Oakwood’s refusal of the tendered funds, Mortgage Investments filed the

present declaratory judgment action, as well as a motion for a temporary restraining

order and preliminary injunction. As pertinent here, Mortgage Investments’ complaint

sought the “entry of an order declaring that the payoffs in question are valid; [and] that

Defendant Oakwood Holdings, LLC is not entitled to redeem the Property.” Oakwood

filed counterclaims, and subsequently, both parties moved for summary judgment.

¶8 The district court granted summary judgment in Oakwood’s favor. The court

began its analysis by noting that effective January 1, 2008, the pertinent statutes had

eliminated a homeowner’s formal statutory redemption rights after the foreclosure sale

and had combined the pre- and post-sale cure periods into one before-sale cure and

payoff period. Because the foreclosure sale had already occurred in this case, the court

found that (1) Mortgage Investments, which was standing in the debtor-prior owner’s

shoes under a power of attorney, could not pay off Oakwood’s liens and (2) the

pertinent statutes “[did] not compel a party to accept a payment that would satisfy its

debts.” In support of this determination, the court observed that “the General

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Assembly has not taken affirmative action to give a certificate of purchase holder the

right to purchase recorded debts. Meanwhile, the General Assembly has specifically

preserved the right of a junior lienholder to redeem.” The court thus concluded that

Oakwood had a right to redeem, notwithstanding Mortgage Investments’ attempted

payoffs.

¶9 Mortgage Investments appealed, and in a unanimous, published opinion, a

division of the court of appeals reversed. Mortg. Inv., ¶ 1. As pertinent here, the

division concluded that contrary to Oakwood’s contention, Mortgage Investments had

not attempted to make a post-foreclosure redemption. Id. at ¶ 25. Rather, it had

attempted “to pay, on behalf of the debtor, outstanding liens encumbering the property

it had purchased at the foreclosure sale.” Id. The division noted that the redemption

statute does not explicitly give a certificate of purchase holder the right to make such a

payment. Id. at ¶ 27. Conversely, however, the division observed that the statute also

does not explicitly give a junior lienor the right to refuse such a payment prior to the

start of the junior lienor’s redemption period and before the junior lienor tenders

redemption funds. Id. The division thus looked to what it perceived to be the intent of

the statutory scheme and concluded that “prior to the start of a junior lienor’s

redemption period and before a junior lienor tenders redemption funds, a certificate of

purchase holder may pay, on behalf of the debtor, existing liens encumbering the

foreclosed property.” Id. at ¶ 37.

¶10 We then granted certiorari.

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 II. Analysis

¶11 We begin by discussing the standard of review and the applicable principles of

statutory construction. We then consider the general principles behind the right of

redemption and Colorado’s statutory scheme governing the right of redemption as part

of the foreclosure process.

A. Standard of Review and Principles of Statutory Construction

¶12 This case requires us to consider the pertinent redemption statutes, and we

review questions of statutory interpretation de novo. UMB Bank, N.A. v. Landmark

Towers Ass’n, 2017 CO 107, ¶ 22, ___ P.3d ___, ___. In construing a statute, “we look to

the entire statutory scheme in order to give consistent, harmonious, and sensible effect

to all of its parts, and we apply words and phrases in accordance with their plain and

ordinary meanings.” Id. If the statutory language is clear, we must apply it as written

and need not resort to other rules of statutory construction. Id. Our ultimate goal is to

effectuate the legislature’s intent. See St. Vrain Valley Sch. Dist. RE-1J v. Loveland, 2017

CO 54, ¶ 11, 395 P.3d 751, 754. Accordingly, we must respect the legislature’s choice of

language, and we do not add words to the statute or subtract words from it. Turbyne v.

People, 151 P.3d 563, 567–68 (Colo. 2007).

B. The Right of Redemption: General Principles

¶13 The redemption laws were developed to help creditors “recover their just

demands, nothing more.” Plute v. Schick, 71 P.2d 802, 804 (Colo. 1937). The goal of

redemption is to use the debtor’s property to pay “as many debts as possible.”

Walker v. Wallace, 246 P. 553, 553 (Colo. 1926). Redemption statutes therefore seek “to

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benefit both debtors and creditors by reducing the property owner’s debt while

satisfying every possible creditor through the continual redemption of the same piece of

real property.” First Nat’l Bank of Southglenn v. Energy Fuels Corp., 618 P.2d 1115,

1119 (Colo. 1980). Thus, when a piece of property is purchased at a foreclosure sale, a

junior lienor may redeem and obtain a certificate of redemption. Sant v. Stephens,

753 P.2d 752, 756 (Colo. 1988). Such a certificate operates as an assignment of the

purchaser’s interest in the foreclosed property. Id. The assignment, however, is subject

to the rights of others who may be entitled to redeem. Id. After all redemption periods

have expired, the holder of the certificate of purchase or the lienor who last redeemed

receives a deed to the property. Id.

¶14 Notably,

[t]he right to redeem from an execution sale is a creature of statute. The
right of redemption has long been recognized as a substantive right to be
exercised in strict compliance with statutory terms. It is not a right
derived from principles of equity, but depends entirely upon the
provisions of the statute creating the right.

Johnson v. Smith, 675 P.2d 307, 310 (Colo. 1984) (citations omitted). Accordingly, the

right of redemption “is not to be enlarged by judicial interpretation, yet a liberal

construction is to be given the statute allowing redemption to the end that all the

property of a debtor may pay as many debts as possible.” Walker, 246 P. at 553.

C. Section 38-38-302

¶15 In Colorado, the right to redeem has been codified by the General Assembly at

section 38-38-302. In its current form, the statute provides that a lienor or assignee of a

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lien is entitled to redeem if certain conditions have been met. Specifically, the statute

provides, in pertinent part:

A lienor or assignee of a lien is entitled to redeem if the following
requirements are met to the satisfaction of the officer:

(a) The lienor’s lien is a deed of trust or other lien that is created or
recognized by state or federal statute or by judgment of a court of
competent jurisdiction;

(b) The lien is a junior lien as defined in section 38-38-100.3(11);

(c) The lienor’s lien appears by instruments that were duly recorded in the
office of the clerk and recorder of the county prior to the recording of the
notice of election and demand or lis pendens and the lienor is one of the
persons who would be entitled to cure pursuant to section 38-38-104(1),
regardless of whether such lienor filed a notice of intent to cure. If, prior to
the date and time of the recording of the notice of election and demand or
lis pendens, a lien was recorded in an incorrect county, the holder’s rights
under this section shall be valid only if the lien is rerecorded in the correct
county at least fifteen calendar days prior to the actual date of sale.

(d) The lienor has, within eight business days after the sale, filed a notice
with the officer of the lienor’s intent to redeem.

§ 38-38-302(1).

¶16 The plain language of this provision makes clear that a junior lienor is “entitled”

to redeem if it meets the requisite conditions, id., and it is undisputed that Oakwood

has satisfied each of these conditions here. Moreover, we perceive nothing in the

statute that requires a junior lienor to accept payment from a more senior lienor in

satisfaction of its claim once the junior lienor has complied with the prerequisites for

redemption. Had the legislature intended such a requirement, it could have so

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provided. We, however, may not add such words to the statute. See Turbyne, 151 P.3d

at 567.2

¶17 We are not persuaded otherwise by Mortgage Investments’ assertion that the

statute gives it a right to pay off a junior lien at any time prior to a junior lienor’s tender

of the redemption funds. Under section 38-38-104(1), C.R.S. (2017), subject to an

exception not pertinent here, a debtor-owner has a right to cure before the foreclosure

sale. To do so, the owner must file a written notice of intent to cure together with

evidence of his or her right to cure “no later than fifteen calendar days prior to the date

of sale . . . .” § 38-38-104(1)(a)(I). The statute does not provide the owner with any right

to cure after the sale has occurred. See § 38-38-104(1).

¶18 Here, Mortgage Investments claims that it acquired what is essentially a right to

cure by way of the power of attorney that it obtained from the debtor-prior owner the

day after the foreclosure sale. We perceive nothing in the redemption statute, however,

that grants Mortgage Investments greater rights than the prior owner had.

Accordingly, just as the prior owner had no right to cure after the sale had occurred,

Mortgage Investments had no right to pay off the junior liens after the sale had

occurred and after Oakwood had filed its timely notices of intent to redeem, regardless

of when Oakwood tendered its redemption funds.

2 Although we reach our decision based on the statute’s plain language and therefore
need not turn to other tools for determining legislative intent, we note that in 2010, the
General Assembly considered and rejected an amendment to the redemption statute
that would have added what Mortgage Investments now contends is already there.
Specifically, Senate Bill 10-93 proposed requiring “a junior lienor to accept the tendered
payment and to execute a release of the lien.” See S.B. 10-93, 67th Gen. Assemb.,
2d Reg. Sess. (Colo. 2010). This bill, however, was never enacted.
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¶19 We likewise are unpersuaded by Mortgage Investments’ assertion that this

court’s decisions in Plute, 71 P.2d at 803–04, and WYSE Financial Services, Inc. v.

National Real Estate Investment, LLC, 92 P.3d 918, 919-23 (Colo. 2004), mandate the

relief that Mortgage Investments seeks.

¶20 In Plute, 71 P.2d at 803, a man named Schick held a lien on a property and

purchased the property at a foreclosure sale. Thereafter, the holder of a junior lien (in

this case, a judgment) sold that lien to the Plutes, and the Plutes claimed a right to

redeem. Id. As soon as Schick learned of this, he tendered to the district court payment

of the Plutes’ judgment. Id. The Plutes, however, refused to allow the judgment to be

satisfied and filed a notice of intent to redeem, although they did not tender any

redemption funds to the trustee until after Schick had paid the money to the clerk of

court. Id. Relying primarily on equitable principles, this court ultimately concluded

that the Plutes had no right to the property but rather could only collect and satisfy

their judgment. Id. at 804.

¶21 In WYSE, 92 P.3d at 919–20, a junior lienholder, National, obtained an

assignment of a judgment against the debtor, gave notice of its intent to redeem,

tendered payment of the statutory redemption amount to the public trustee, and

received a certificate of redemption, which it recorded. Two days later, the certificate of

purchase holder, Realamerica, contracted with the debtor for the right to act as her

agent and to satisfy the judgment against her. Id. at 920. That same day, Realamerica

tendered a cashier’s check to the county court in satisfaction of the judgment, and the

question became whether National’s right to redeem could be extinguished by a

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subsequent satisfaction of the underlying judgment. Id. at 920–21. We concluded that

because National had complied with the statutory requirements for redemption, it was

entitled to the deed to the property. Id. at 923. As pertinent here, we explained, “In the

absence of any satisfaction of its judgment by at least the point at which it paid the

public trustee, National was entitled to, and did, make redemption as permitted by

statute.” Id. (emphasis added). We thus concluded that National’s redemption rights

were necessarily unaffected by Realamerica’s later attempts to satisfy the judgment. Id.

¶22 For several reasons, we do not agree that Plute and WYSE support Mortgage

Investments’ position here.

¶23 First, both Plute and WYSE were decided under versions of the statute that

preceded the legislative amendment eliminating the right of debtor-owners to redeem

after the foreclosure sale. For example, at the time that we decided WYSE, the statute

provided, in pertinent part:

[W]ithin seventy-five days after the date of the sale of the property by
virtue of any foreclosure of a mortgage, deed of trust, or other lien or by
virtue of an execution and levy, the owner of the property, or any other
person liable after the foreclosure sale for the deficiency, may redeem the
property . . . .

§ 38-38-302(1), C.R.S. (2004). In 2008, however, the General Assembly repealed and

reenacted section 38-38-302 in its entirety, amending all of its language. See Ch. 305,

sec. 21, § 38-38-302, 2006 Colo. Sess. Laws 1467–71. As pertinent here, the amended

statute, which is the one applicable in this case, removed all references to an owner’s

redemption after foreclosure. See § 38-38-302. For this reason alone, the analysis in

Plute and WYSE does not assist Mortgage Investments.

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¶24 Second, as Oakwood points out, Plute turned on the application of equitable

principles. See Plute, 71 P.2d at 804. As noted above, however, the right of redemption

is a creature of statute, and the right to redeem must be exercised in strict compliance

with the statute’s terms. Johnson, 675 P.2d at 310.

¶25 Finally, to the extent that Mortgage Investments suggests that the “dispositive

fact” in WYSE was the timing of the tender there at issue and that WYSE stands for the

proposition that a certificate of purchase holder can preclude redemption by tendering

payment in full at any time before the junior lienholder tenders the redemption amount,

we perceive nothing in WYSE that goes that far. Rather, in our view, WYSE simply

made clear that a certificate of purchase holder could not prevent a junior lienholder

from redeeming once the junior lienholder had given notice of its intent to redeem and

tendered the redemption funds, as had occurred there. WYSE, 92 P.3d at 923. We did

not reach the question presented in this case, namely, whether the certificate of

purchase holder could prevent redemption under the present statute once the

foreclosure sale had occurred and a junior lienor had filed a timely notice of intent to

redeem.

III. Conclusion

¶26 For these reasons, we conclude that under section 38-38-302, once the foreclosure

sale was complete and Oakwood had timely filed its notice of intent to redeem, the

statute entitled it to redeem, and it had no obligation to accept Mortgage Investments’

tendered payoff of the junior lien. Accordingly, we reverse the judgment of the division

below and remand this case for further proceedings consistent with this opinion.

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