Argo v. Hemphill.
2022 COA 104. No. 21CA0897. Transfer of Real Property on Death—Vesting of Ownership in Grantee-Beneficiary—Lease Agreement—Unrecorded Interests.
September 8, 2022
Argo executed a last will and testament bequeathing his property to his nieces, Christina and Dianna Hemphill (collectively, the Hemphills). He also executed and recorded a beneficiary deed conveying the property to the Hemphills upon his death. Three days before his death, Argo and his wife Angela executed an agreement granting Angela a lifetime lease for the property (lease agreement). Neither Argo nor Angela recorded the lease agreement at or shortly after the time it was created. When Argo died, title to the property passed to the Hemphills, who attempted to sell the property to Rein. The sale was to be completed on March 20, 2019. More than five months after Argo’s death, Angela personally delivered the lease agreement to the Hemphills. During the next few months, Angela unsuccessfully attempted to persuade the Hemphills to honor the lease. On March 15, 2019, Angela recorded the lease agreement. The Hemphills’ sale to Rein fell apart, so they leased the property to Rein.
In April 2019, Angela filed suit against the Hemphills and Rein (collectively, defendants), seeking an adjudication of the rights of all parties to the property and a ruling that her lease agreement is enforceable against all defendants. The Hemphills counterclaimed and petitioned the court to declare that the lease agreement is a spurious document, and requested that the court quiet title to the property in them. The Hemphills and Rein separately moved for directed verdicts on grounds that the lease agreement is unenforceable. The court ruled that the agreement is unenforceable and dismissed Angela’s remaining claims. It also implicitly found that the lease agreement is a spurious document, ruled in favor of the Hemphills on their spurious document counterclaim, quieted title to the property in the Hemphills, and later awarded them $36,318.20 in fees and costs, plus interest at the statutory rate.
On appeal, Angela argued that the court erred by finding that the lease agreement is unenforceable and invalid. She maintained that the district court’s interpretation of CRS §15-15-407 is erroneous because it conflicts with the plain language and legislative intent of that statute and with the commonly understood and accepted meanings of the terms “actual notice” and “constructive notice.” Under CRS § 15-15-407(2), a grantee-beneficiary takes title to a property conveyed by a beneficiary deed subject to different types of interests at the time of the property owner’s death, including interests the grantee-beneficiary had actual notice of at the time of the owner’s death and interests that were recorded before the owner’s death. Under CRS § 15-15-407(3), an unrecorded interest in the property that the grantee-beneficiary did not have actual knowledge of when the owner died must be recorded within four months of the owner’s death. If the interest is not recorded within that time period, the holder of the interest is forever barred from asserting an interest in the property. Here, the CRS § 15-15-407 notice and recording provisions were not satisfied. Accordingly, Angela’s unrecorded lease agreement is unenforceable because defendants did not have actual notice of it at the time of the owner’s death and because it was not recorded within four months of the owner’s death, and Angela is forever barred from asserting an interest in the property. Therefore, the district court did not err by reaching this conclusion or by quieting title to the property in the Hemphills.
Angela also contended that the court erred by determining that the lease agreement is a spurious document because the court made insufficient findings to enable appellate review. Here, the judgment and decree quieting title does not explain the statutory basis for finding the lease agreement to be a spurious document and does not provide insight into the court’s reasoning or the basis for its decision, and the oral ruling did not include discussion on this issue. Thus, this portion of the judgment does not permit meaningful appellate review.
Angela further argued that the court erred by awarding attorney fees and costs to the Hemphills because the court’s order contains inadequate findings. The court’s order does not list the statutory basis for the award and does not allow the Court of Appeals to understand the court’s reasoning. Accordingly, the order does not permit meaningful appellate review.
The judgment on the Hemphills’ spurious document counterclaim and the order awarding attorney fees and costs to the Hemphills were reversed, and the case was remanded for further proceedings on these issues. Based on the holding that the lease agreement is unenforceable, the district court’s dismissal of Angela’s claims against defendants and its judgment quieting title to the property in the Hemphills in all other regards were affirmed.