Colorado § 5-5-203 - Consumer's right to rescind certain transactions.

§ 5-5-203. Consumer's right to rescind certain transactions.

In the case of a consumer credit transaction with respect to which a security interest is retained or acquired in any property that is used as the principal dwelling of the person to whom credit is extended, the consumer shall have the same right to rescind the transaction as provided in the federal "Truth in Lending Act" and regulations thereunder. In order to comply with this code, a creditor shall comply with those provisions on the right of rescission of certain transactions.

Source: L. 2000: Entire article R&RE, p. 1243, § 1, effective July 1.

Editor's note: This section is similar to former § 5-5-204, as it existed prior to 2000.

Cross references: For the definition and federal statutory cite of the "Truth in Lending Act", see § 5-1-302.

ANNOTATION

Law reviews. For case note, "Consequences of the Creditor's Failure to Acknowledge Rescission by the Debtor Under Strader v. Beneficial Fin. Co.", see 48 U. Colo. L. Rev. 437 (1977). For article, "An Overview of Home Equity as Security for a Line of Credit", see 14 Colo. Law. 226 (1985).

Annotator's note. Since § 5-5-203 is similar to § 5-5-204 as it existed prior to the 2000 repeal and reenactment of articles 1 to 3 and 4 to 6 of this title, relevant cases construing that provision have been included in the annotations to this section.

This section expressly applies to consumer credit sales and consumer loans. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

The consumer borrower and the consumer buyer are to be treated the same under this section. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

Subsection (2) is interpreted to be as "otherwise provided" under § 5-5-202(5), which states that "except as otherwise provided, no violation of this code impairs rights on a debt". Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

The requirement of tender arises only after the security interest is released. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

The creditor is specifically obligated to take any action necessary or appropriate to reflect the termination of the security interest within 10 days after receipt of the notice of rescission and no duty is imposed upon the debtor until after the performance of the creditor's obligations. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

When debtor relieved of obligation to tender. If the security interest is not released within the 10 days following notice of rescission, the debtor is relieved of the obligation to tender and the property vests in the debtor. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

Effect of failure to take possession of property tendered. After tender by the debtor, if the creditor fails to take possession of the property tendered, "ownership of the property vests in the debtor without obligation to pay . . . ". This statutory provision is intended as an impetus for the creditor to take immediate action to clear title and to fulfill its obligations. Strader v. Beneficial Fin. Co., 191 Colo. 206, 551 P.2d 720 (1976).

Applied in Griffin v. United Bank, 40 Colo. App. 513, 580 P.2d 818 (1978); Griffin v. United Bank, 198 Colo. 239, 599 P.2d 866 (1979); Varady v. White, 42 Colo. App. 389, 595 P.2d 272 (1979); Varady v. White, 661 P.2d 284 (Colo. App. 1982); Campbell v. Commercial Credit Plan, Inc., 670 P.2d 813 (Colo. App. 1983).