## Facts

- Marvin and JoRene Martinez fell behind on mortgage payments, and Affordable Housing Network, Inc. (AHN) solicited them with purported foreclosure-assistance services.
- AHN representatives falsely stated that AHN was a nonprofit 501(c)(3) and part of a HUD-approved program affiliated with Fannie Mae, and offered to help refinance or sell the home while preserving the Martinezes’ equity.
- The Martinezes signed an option agreement granting AHN an option to purchase for an amount equal to the mortgage cure; AHN could exercise only by curing default within ten days and placing the deed into escrow, with release conditioned on proof the mortgages were or would be satisfied at closing.
- AHN later had the Martinezes sign a quitclaim deed, representing it was only for AHN’s protection if the homeowners abandoned the property.
- AHN cured the arrearage, recorded the quitclaim deed instead of placing it in escrow, did not satisfy the mortgages, and marketed the property for sale without informing the Martinezes.
- Troco, Inc. purchased the property from AHN without a title search or title insurance while the Martinezes remained in open, exclusive possession.

## Issues

1. Whether Troco qualified as a bona fide purchaser for value without notice, given the Martinezes’ exclusive possession and AHN’s purported title obtained through a quitclaim deed and other irregularities.
2. Whether an interest obtained through AHN’s fraud could pass to a purchaser free of the homeowners’ equitable rights absent actual or constructive notice.

## Decision

- The Colorado Supreme Court reversed the court of appeals.
- The Court held Troco was on inquiry notice and therefore was not a bona fide purchaser without notice.
- Because Troco lacked bona fide purchaser protection, AHN’s fraudulently obtained interest did not pass free of the Martinezes’ equitable claims.
- The case was remanded for further proceedings consistent with the holding.

## Legal Principles

- A purchaser has inquiry notice when known facts would cause a reasonable purchaser to investigate further; failure to investigate results in imputed knowledge of what a reasonable inquiry would have revealed.
- Open, exclusive possession of real property by someone other than the person conveying record title is constructive notice of the possessor’s potential legal or equitable interests and triggers a duty to inquire.
- Acquisition of purported title through a quitclaim deed, especially in a distressed-homeowner context, is a circumstance that can contribute to inquiry notice because it signals uncertainty in the grantor’s interest.
- Transactional irregularities—such as unsatisfied mortgages and departure from agreed escrow protections—can combine with possession and deed form to require further investigation and defeat bona fide purchaser status.

## Conclusion

Because the Martinezes remained in exclusive possession and multiple circumstances indicated defects in AHN’s title, Troco had a duty to investigate; its failure to do so placed it on inquiry notice and barred bona fide purchaser protection, so title could not be quieted in Troco free of the homeowners’ equitable rights.


Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201 (Colo. 2005)