Martinez v. Affordable Housing Network
Colorado Supreme Court
123 P.3d 1201 (2005)
Affordable Housing Network (defendant) falsely told Marvin and JoRene Martinez (plaintiffs) it was part of a federal refinancing program and had them sign an option agreement letting Affordable buy their home only if it cured mortgage deficiencies within ten days, with a quitclaim deed to be held in escrow until the mortgages were paid; Affordable instead fraudulently obtained the deed directly, cured the deficiencies 26 days later, and listed the home for sale. When the Martinezes decided to keep their home and reimbursed Affordable, Affordable nonetheless pressured them into letting an agent show it to an investor for Troco, Inc. (codefendant), which agreed to buy Affordable's interest without any further title search despite the Martinezes' continued occupancy and unpaid mortgages; Affordable then recorded the Martinezes' quitclaim deed and immediately quitclaimed the property to Troco. After learning of the sale, the Martinezes sued, and the trial court found Troco a bona fide purchaser and dismissed their claims; the court of appeals affirmed, and the Martinezes appealed.
Whether a party is considered a bona fide purchaser if he was on inquiry notice of facts that, if investigated, would have led to discovery of a title defect.