Alh Holding Company,v. The Bank Of Telluride

18 P.3d 742 (2000)

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Nature of the Case

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Facts

P sold real property to Linda Crocker and Robert Hackley for $165,000. In connection with the sale, the buyers borrowed $110,000 from P in exchange for a promissory note secured with a vendor's purchase money deed of trust in favor of P. The buyers also borrowed $55,000 from D and signed a promissory note secured with a purchase money deed of trust in favor of D. P and D knew before the closing, that the other would be loaning money to the purchaser and that both loans would be secured by deeds of trust conveying interests in the same property. Telluride Mountain Title Company closed the transaction for both parties on June 29, 1993, and on the following day recorded the deeds of trust. The deed of trust in favor of D was recorded before that of P. The buyers defaulted. D initiated a public trustee's foreclosure sale of its interest in the property, characterizing its own deed of trust as a superior lien to that of P. P brought an action against the D, seeking a preliminary injunction and a declaratory judgment resolving the respective priorities of the two deeds of trust. The district court concluded that as a matter of Colorado law, a vendor's purchase money deed of trust takes priority over a third-party's purchase money deed of trust, and it entered judgment in favor of P. The court of appeals reversed, holding that because the D's deed of trust was recorded first, it was entitled to priority, absent an agreement to the contrary. The dissent disagreed reasoning of the Restatement (Third) of Property § 7.2 (1997), affording priority among purchase money mortgages on real property to those given to vendors prevailed. P appealed.