Bulletin: CO000040

Dear Associates:

This Bulletin will address the recent Colorado Supreme Court decision in Franklin Bank, N.A. v. Bowling as it relates to a title examiner's duty to search names in the chain of title.

BACKGROUND FACTS

In Franklin Bank, N.A. v. Bowling, Bruce and Elizabeth Bowling purchased a condominium unit in Eagle County from Patrice Merritt. The Bowlings obtained title insurance commitment, which did not refer to any judgment liens encumbering the property. Subsequently, Franklin Bank sought to execute a judgment against the property previously filed against Grady Merritt, the husband of Patrice Merritt. Grady Merritt appears in the chain of title as T. Grady Merritt and was the record owner at the time the judgment lien was filed. One day after the Judgment is recorded, T. Grady Merritt quitclaims his interest in the property to his wife for nominal consideration. The Bowlings sought to enjoin the execution of the property on the grounds that the liens were filed against Grady Merritt, not T. Grady Merritt.

THE DECISION

The Court held that the Bowlings, through their "agent title insurer" had constructive notice of the lien because when an individual uses a first initial and a full middle name, there is a presumption that he may transact business under his middle name rather than under his full first name. Accordingly, the title examiner, as the "purchaser's agent", is on constructive notice of the judgment lien filed against Grady Merritt, even though the examiner was searching for recordings against T. Grady Merritt.

COMPANY POLICY

Where an individual in the chain of title uses a first initial and a full middle name, a title examiner should assume that the person is transacting business under his middle name. In such cases, the examiner should check for judgments, liens and encumbrances under the grantor's middle name as well as the grantor's first initial and full middle name.