due-on-sale clause in Colorado

1983After trial, the district court acknowledged that in Malouff v. Midland Federal Savings & Loan Association, 181 Colo. 294 , 509 P.2d 1240 (1973), we had held a due-on-sale clause to be a reasonable restraint on alienation in the case of an outright sale, but concluded that the exercise of the clause in the ease of an installment land contract was an unreasonable restraint on alienation.

1983After trial, the district court acknowledged that in Malouff v. Midland Federal Savings & Loan Association, 181 Colo. 294 , 509 P.2d 1240 (1973), we had held a due-on-sale clause to be a reasonable restraint on alienation in the case of an outright sale, but concluded that the exercise of the clause in the ease of an installment land contract was an unreasonable restraint on alienation.

1983We decided that issue in Income Realty & Mortgage, Inc. v. Columbia Savings & Loan Association, 661 P.2d 257 (1983).

1983We resolved that question in Income Realty & Mortgage, Inc. v. Columbia Savings & Loan Association, 661 P.2d 257 (1983), where we held that a due-on-sale clause is a per se reasonable restraint on alienation.

1983While it appears that the petitioners would benefit from our striking down the due-on-sale clause, it is far less clear that consumers as a group would be benefited. 4 See Williams v. First Federal Savings & Loan Association, 651 F.2d 910 , 928 n. 47 (1981).

1982In Fidelity Federal, supra, the borrower had given Fidelity Federal a deed of trust which contained a due-on-sale clause.

1981See Carpenter v. Winn, 39 Colo.App. 238 , 566 P.2d 370 (1977); Mutual Federal Savings & Loan Ass'n v. Wisconsin Wireworks, 58 Wis.2d 99 , 205 N.W.2d 762 (1973).

1981See Carpenter v. Winn, 39 Colo.App. 238 , 566 P.2d 370 (1977); Mutual Federal Savings & Loan Ass'n v. Wisconsin Wireworks, 58 Wis.2d 99 , 205 N.W.2d 762 (1973).

1981And, on the facts present here, under the interpretation of Malouff v. Midland Federal Savings & Loan Ass’n, 181 Colo. 294 , 509 P.2d 1240 (1973) set out in Bakker v. Empire Savings & Loan Ass’n, Colo.App., 634 P.2d 1021 (1981); Krause v. Columbia Savings & Loan Ass’n, supra, there are no other grounds upon which plaintiffs could succeed in having the due-on-sale clause declared unenforceable.

1981And, on the facts present here, under the interpretation of Malouff v. Midland Federal Savings & Loan Ass’n, 181 Colo. 294 , 509 P.2d 1240 (1973) set out in Bakker v. Empire Savings & Loan Ass’n, Colo.App., 634 P.2d 1021 (1981); Krause v. Columbia Savings & Loan Ass’n, supra, there are no other grounds upon which plaintiffs could succeed in having the due-on-sale clause declared unenforceable.

1981As relevant here, that statute provides: “(1) Subject to the limitations and exceptions as provided in this section, any person with a security interest in real estate shall not, directly or indirectly: (a) Accelerate or mature the indebtedness secured by such real estate on account of the sale or transfer of such real estate or on account of the assumption of such indebtedness; except that this paragraph (a) shall not apply if the person to whom the real estate would be sold or transferred is reasonably determined by the person holding the security interest to be financially incapable of reti

1981As relevant here, that statute provides: “(1) Subject to the limitations and exceptions as provided in this section, any person with a security interest in real estate shall not, directly or indirectly: (a) Accelerate or mature the indebtedness secured by such real estate on account of the sale or transfer of such real estate or on account of the assumption of such indebtedness; except that this paragraph (a) shall not apply if the person to whom the real estate would be sold or transferred is reasonably determined by the person holding the security interest to be financially incapable of reti

1981Because subsection (l)(a) applies to indebtedness secured by the real estate “on account of the sale or transfer of such real estate or on account of the assumption of such indebtedness,” and an installment sale is a “sale or transfer of the real property” for purposes of the due-on-sale clause in the deed of trust, Krause v. Columbia Savings & Loan Ass’n, Colo. App., 631 P.2d 1158 (1981), the plaintiffs’ contention is without merit.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Tucker v. Pulaski, 252 Ark. 849 , 481 S.W.2d 725 ; Clark v. Lachenmeier, 237 So. 2d 583 (Fla. App. 1970); Gunther v. White, _ Tenn. __, 489 S.W.2d 529 . *304 V.

1973Tucker v. Pulaski, 252 Ark. 849 , 481 S.W.2d 725 ; Clark v. Lachenmeier, 237 So. 2d 583 (Fla. App. 1970); Gunther v. White, _ Tenn. __, 489 S.W.2d 529 . *304 V.

1973Tucker v. Pulaski, 252 Ark. 849 , 481 S.W.2d 725 ; Clark v. Lachenmeier, 237 So. 2d 583 (Fla. App. 1970); Gunther v. White, _ Tenn. __, 489 S.W.2d 529 . *304 V.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Tucker v. Pulaski, 252 Ark. 849 , 481 S.W.2d 725 ; Clark v. Lachenmeier, 237 So. 2d 583 (Fla. App. 1970); Gunther v. White, _ Tenn. __, 489 S.W.2d 529 . *304 V.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.

1973Super. 283 , 244 A.2d 151; Stith v. Hudson City Savings Institution, 63 Misc. 2d 863 , 313 N.Y.Supp.2d 804; Gunther v. White, _ Tenn. __, 489 S.W.2d 529 ; People’s Savings Assn. v. Standard Industries, Inc., 22 Ohio App. 2d 35, 257 N.E.2d 406 ; Walker Bank & Trust Company v. Neilson, 26 Utah 2d 383, 490 P.2d 328 . *301 We hold the due-on-sale clause here to be a reasonable restraint on alienation.