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Law Offices of Ronald W. Rutz
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November 2, 1999: Obligation to "Helper"; Expectations When Pay Off Loan

Q: Last year a neighborhood kid without being asked started shoveling snow off my sidewalk. I paid him each time although his "fee" seemed high. But this year, I am not paying!! I want to do it myself.

A: Although there are many exceptions, the general rule is that a volunteer is not entitled to compensation. But once a "course of conduct" has been established, the snow shoveler can expect to perform the service and to be paid the "usual fee" unless otherwise informed. Thus, before the next storm tell him that he should not clear your sidewalk and if he does, you won't pay him. If you really want to be technical, put it in writing (saving a copy) or take someone along to overhear your statements. Yes, it is true that a minor can not enter into binding contracts. But if he takes you to court or if arbitration is used, there are any number of legal theories that can be used to hold you liable, besides the unarticulated but obviously powerful "theory" of the cute hardworking kid vs. the mean old stingy man.

As an aside, this same concept of reliance on a course of conduct until properly notified otherwise means that someone buying a business may be liable to suppliers who continue to make deliveries, purchasers of land may have to honor a lease until proper termination notice is given, or someone paying expenses for another may be liable to those relying on past payment of their bills.

Q: We paid off our loan six months ago. Shouldn't we be getting something back?

A: Indeed you should! Upon satisfaction of the debt, the lender must return the originally recorded deed of trust (Colorado's equivalent of a mortgage), a release of the deed of trust signed by the lender directing that the lien imposed by the deed of trust be released from the public record, and the original promissory note marked paid in full. Until the release is recorded, the lien will "cloud" title to your real estate and be considered an existing encumbrance, even though you paid it off. On the other hand, until you receive back the original note, you could still be liable (even though you paid the entire amount owed) if the note is transferred to a "bona fide purchaser for value in the normal course of business without knowledge that it has been paid." The general theory is that it is better to force the debtor to pay on the "hot paper" than throw uncertainty into these financial markets. Fortunately, there are some defenses available but that is for another column. What probably has happened is that your "paper" has been sold several times in the secondary market and the actual documents can not be located by the current holder. Often the "hard copies" are stored (like gold is at Fort Knox) in a central warehouse (Philadelphia seems to be where the documents are most often "discovered") or have not caught up with the latest owners (like your luggage when several airplane changes are made). Thus you need to vigorously and repeatedly demand the documents.

Assuming that the documents are located, the lender normally sends the paperwork directly to the Public Trustee (not you) who will record the release and thereafter return the documents to you.

If the lender sends everything to you, then all three documents, plus the appropriate fee, need to be taken to the Public Trustee (address and telephone number in the telephone directory) for processing. Do not record yourself. If you do nothing, then the lien is still legally in place, even though you do not owe anything and you have all of the paperwork.

The bottom line is that you must take immediate action. If you do not, then you will run into problems if you try to refinance or sell the property because the lien is still part of the public record.

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