## Facts

- Dawn M. Leyden, Tommy Howe, and Lois Howe held a marital residence in joint tenancy in Arapahoe County, Colorado.
- In a dissolution decree, the court found Leyden owned an undivided one-third fee interest in the residence but ordered her to quitclaim that interest to Tommy and Lois to protect Lois’s interest.
- The decree required Tommy to contemporaneously execute a $10,000 promissory note to Leyden with specified interest and payment terms.
- Leyden executed the quitclaim deed; Tommy executed the promissory note.
- Leyden recorded the dissolution decree in the county real property records; the promissory note was not recorded.
- After the decree was recorded, Citicorp Industrial Bank loaned money to Tommy and Lois secured by a deed of trust on the residence.
- The borrowers defaulted; Citicorp foreclosed; Pamela Sue Evans and Debra Lynn Evans purchased the property at the foreclosure sale.
- Leyden brought a declaratory judgment action asserting an equitable lien on the residence to secure the $10,000 obligation and sought foreclosure of that lien.
- The trial court granted summary judgment for Leyden and ordered foreclosure; the court of appeals reversed; the Colorado Supreme Court granted review.

## Issues

1. Whether a dissolution decree requiring a spouse to convey her real property interest in exchange for a promissory note can create an equitable lien on the conveyed property, even if the decree does not expressly state “lien.”
2. Whether recording the dissolution decree gives constructive notice sufficient to make the equitable lien enforceable against a subsequent deed of trust holder and foreclosure purchasers.

## Decision

- The Colorado Supreme Court reversed the court of appeals and remanded with directions consistent with its opinion.
- The court held the dissolution decree and related circumstances created an equitable lien in Leyden’s favor on the residence to secure the $10,000 obligation.
- The court held the equitable lien was enforceable against Citicorp and the foreclosure purchasers because the recorded decree provided constructive notice of Leyden’s equitable interest.
- The court approved foreclosure as an appropriate remedy to satisfy the equitable lien.

## Legal Principles

- An equitable lien may arise from a written instrument or circumstances showing an intent, express or implied, that specific property will stand as security for an obligation, even without formal lien language.
- Courts determine the existence of an equitable lien by examining the substance of the transaction, not solely whether the instrument uses the word “lien” or whether the claimant retains record title.
- Recording an instrument affecting real property rights can provide constructive notice to subsequent encumbrancers and purchasers, defeating claims of bona fide status without notice.
- A dissolution decree’s property-settlement provisions can create an equitable lien on marital real property when the decree ties a spouse’s monetary entitlement to the transfer of a defined interest in that property.

## Conclusion

The court recognized that the dissolution decree effectively treated the marital residence as security for Leyden’s $10,000 entitlement, creating an equitable lien that bound a later lender and foreclosure purchasers who had constructive notice from the recorded decree, and it allowed foreclosure to enforce the lien.


Leyden v. Citicorp Indus. Bank, 782 P.2d 6 (Colo. 1989)