Lawsuits, Liens and Judgments

Lawsuits, Liens and Judgments2020-11-20T17:20:59-07:00

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LAWSUITS, LIENS AND JUDGMENTS

IMPORTANT: THIS FIRM MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR CURRENT STATUS OF ANY LAW, CASE, ARTICLE OR PUBLICATION CITED HEREIN OR LINKED TO.  WARNING – SOME OF THESE REFERENCES ARE PRE-BAPCPA.

“Judgment-proof” is a legal concept and refers to those individuals, such as minors and those not legally competent, against whom a judgment may not be entered, or if entered, is not enforceable.  “Collection-proof” is a factual concept and refers to an individual who does not have sufficient non-exempt assets against which a creditor could levy execution.

Typically unsecured liens do not exist after bankruptcy because the liens did not attach to anything before bankruptcy. The judgments are void per 11 USC 524(a)(1).  A void judgment cannot create a post-petition lien.  Therefore the judgments do not attach as liens to property acquired post-petition.

It is true that pre-petition liens on nonexempt property survive bankruptcy, but that requires that the liens have attached pre-petition to property owned pre-petition.

524 (a) A discharge in a case under this title—

(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;


Article: Will My Judgment Get Discharged in Bankruptcy? Ward and Smith, P.A. – Lance P. Martin

WARNING: Talk to an experienced bankruptcy attorney in order to know your rights and obligations.


A.R.S. Section 33-964: B. Except as provided in section 33-1103, a recorded judgment shall not become a lien on any homestead property.  Any person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien.  The protection of A.R.S. Section 33-964(B) is good, but not necessarily all-encompassing when the homestead’s equity exceeds $150,000.00.  In Judge Haines’ Rand v. United Auto Group decision 400 B.R. 749 (Bankr. Az 2008), he mentioned creditors had another possible recourse, specifically A.R.S. Section 33-1105 whereby the creditor can require an execution sale and obtain a bid in excess of the consensual liens plus the homestead amount and the allowable costs of sale under Title 12.  Also see, ARS 33-1103 (A)(4).  Except – To the extent that a judgment or other lien may be satisfied from the equity of the debtor exceeding the homestead exemption under section 33-1101.  See also Evans vs Young, 661 P.2d 1148 (Az Court of Appeals, Div 1, 1983) (“In conclusion, we find that a judgment lien obtained pursuant to A.R.S. § 33-964 does not extend to homestead property. Given the special protection of the homestead statutes, a judgment creditor can reach excess value in the property over the amount of the homestead exemption only by first invoking the appraisal procedure set forth in A.R.S. § 33-1105.”)

Note:  The recorded judgment lien survives the bankruptcy.  The creditor can go after real property the debtor owned at the time of filing the bankruptcy that secures that lien. This is the reason why these liens must be avoided under 522, irrespective of the Haines decision in Rand that the lien does not attach to debtor’s homestead.  522 addresses an “interest” in debtor’s property in support of a lien avoidance.  Irrespective of the fact as to whether there is equity in the property, or that the homestead exemption is not affected by a lien, a debtor’s interest is impaired, and thus avoidance is appropriate, otherwise, what is the point of 522?  The point of 522 is to give the debtor a fresh start and that is not achieved by the refusal to avoid a lien which will remain in place post discharge and could eventually be foreclosed when property values increase.

It appears that the judgment lien and the right to enforce that lien survive a Chapter 7.  If the judgment creditor seeks to enforce its lien prior to the expiration of that lien, perhaps the owner could file a Chapter 13 and pay the creditor the value of the excess equity.  Sales to enforce Judgment liens are done by Sheriff’s sale and somewhat rare. The expense in the form of bonding the Sheriff of this procedure make it very price prohibitive.


Pacific, et al. v. Castleton, et alDecember 27, 2018 – 1 CA-CV 17-0667 – Whether a judgment creditor may attach a judgment lien to homestead property, or whether it may execute on its judgment only by way of a forced sale of the property under Ariz. Rev. Stat. section 33-1105.

§ 33-964 A RECORDED JUDGMENT DOES NOT BECOME A LIEN ON HOMESTEAD PROPERTY:

Section 33-964 thus establishes the general rule that a recorded judgment does not become a lien on homestead property. See also Union Oil Co. of Ariz. v. Norton Morgan Commercial Co., 23 Ariz. 236, 245 (1922) (holding that “no lien shall be permitted to attach to the real property claimed as a homestead”).

EXCESS EQUITY (consensual secured debts + homestead) IN HOMESTEAD CAN BE JUDICIALLY FORECLOSED UNDER § 33-1105

See In Evans v. Young, 135 Ariz. 447, 453 (App. 1983), and Grand Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 13 (App. 1983); see also In re Rand, 400 B.R. 749 (Bankr. D. Ariz. 2008) (clarifying that a recorded judgment does not create a lien on property subject to homestead even when the value of the property exceeds the amount of the homestead. “It remains the case that both the homestead statute and the judgment lien statute both conceive of the ‘homestead’ as being the real property, not the equity value of such real property.” 400 B.R. at 754); and In re Glaze, 169 B.R. 956, 966 (Bankr. D. Ariz. 1994)

ONCE A JUDGMENT ATTACHES IT RUNS WITH THE LAND

  • 33-964 establishes the general rule that a judgment lien does not attach to homestead property, and that homeowners hold their homestead property free and clear of judgment liens. See A.R.S. § 33-964(B). Although it is true that once a lien has attached, it “runs with the land,”, but in this case the judgment lien never attached to the Home in the first place.

ABANDONMENT OF HOMESTEAD BY CONVEYING TO TRUST A.R.S. § 33-1104(A):

  • When a homestead exemption is abandoned by a conveyance of the property, the judgment lien does not re-attach to the property upon the sale. See Sec. Tr. & Sav. Bank, 29 Ariz. 325, 332 (1925).
  • 33-1104(A)(3) a homeowner “may remove from the homestead for up to two years” without abandoning the homestead exemption. Sepics’ departure from the Home shortly before its sale did not constitute an abandonment.
  • Because of the protection afforded by the homestead statutes, the Judgment never attached as a lien to the Home. Therefore, the Sepics conveyed the Home free and clear of the Judgment.

CONCLUSION: For the foregoing reasons, we affirm the entry of an injunction enjoining a Sheriff’s sale of the Home.

Typically unsecured liens do not exist after bankruptcy because the liens did not attach to anything before bankruptcy. The judgments are void per 11 USC 524(a)(1).  A void judgment cannot create a post-petition lien.  Therefore the judgments do not attach as liens to property acquired post-petition.

It is true that pre-petition liens on nonexempt property survive bankruptcy, but that requires that the liens have attached pre-petition to property owned pre-petition.

524 (a) A discharge in a case under this title—

(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;


Article: Will My Judgment Get Discharged in Bankruptcy? Ward and Smith, P.A. – Lance P. Martin

WARNING: Talk to an experienced bankruptcy attorney in order to know your rights and obligations.


A.R.S. Section 33-964: B. Except as provided in section 33-1103, a recorded judgment shall not become a lien on any homestead property.  Any person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien.  The protection of A.R.S. Section 33-964(B) is good, but not necessarily all-encompassing when the homestead’s equity exceeds $150,000.00.  In Judge Haines’ Rand v. United Auto Group decision 400 B.R. 749 (Bankr. Az 2008), he mentioned creditors had another possible recourse, specifically A.R.S. Section 33-1105 whereby the creditor can require an execution sale and obtain a bid in excess of the consensual liens plus the homestead amount and the allowable costs of sale under Title 12.  Also see, ARS 33-1103 (A)(4).  Except – To the extent that a judgment or other lien may be satisfied from the equity of the debtor exceeding the homestead exemption under section 33-1101.  See also Evans vs Young, 661 P.2d 1148 (Az Court of Appeals, Div 1, 1983) (“In conclusion, we find that a judgment lien obtained pursuant to A.R.S. § 33-964 does not extend to homestead property. Given the special protection of the homestead statutes, a judgment creditor can reach excess value in the property over the amount of the homestead exemption only by first invoking the appraisal procedure set forth in A.R.S. § 33-1105.”)

Note:  The recorded judgment lien survives the bankruptcy.  The creditor can go after real property the debtor owned at the time of filing the bankruptcy that secures that lien. This is the reason why these liens must be avoided under 522, irrespective of the Haines decision in Rand that the lien does not attach to debtor’s homestead.  522 addresses an “interest” in debtor’s property in support of a lien avoidance.  Irrespective of the fact as to whether there is equity in the property, or that the homestead exemption is not affected by a lien, a debtor’s interest is impaired, and thus avoidance is appropriate, otherwise, what is the point of 522?  The point of 522 is to give the debtor a fresh start and that is not achieved by the refusal to avoid a lien which will remain in place post discharge and could eventually be foreclosed when property values increase.

It appears that the judgment lien and the right to enforce that lien survive a Chapter 7.  If the judgment creditor seeks to enforce its lien prior to the expiration of that lien, perhaps the owner could file a Chapter 13 and pay the creditor the value of the excess equity.  Sales to enforce Judgment liens are done by Sheriff’s sale and somewhat rare. The expense in the form of bonding the Sheriff of this procedure make it very price prohibitive.


Pacific, et al. v. Castleton, et alDecember 27, 2018 – 1 CA-CV 17-0667 – Whether a judgment creditor may attach a judgment lien to homestead property, or whether it may execute on its judgment only by way of a forced sale of the property under Ariz. Rev. Stat. section 33-1105.

§ 33-964 A RECORDED JUDGMENT DOES NOT BECOME A LIEN ON HOMESTEAD PROPERTY:

Section 33-964 thus establishes the general rule that a recorded judgment does not become a lien on homestead property. See also Union Oil Co. of Ariz. v. Norton Morgan Commercial Co., 23 Ariz. 236, 245 (1922) (holding that “no lien shall be permitted to attach to the real property claimed as a homestead”).

EXCESS EQUITY (consensual secured debts + homestead) IN HOMESTEAD CAN BE JUDICIALLY FORECLOSED UNDER § 33-1105

See In Evans v. Young, 135 Ariz. 447, 453 (App. 1983), and Grand Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 13 (App. 1983); see also In re Rand, 400 B.R. 749 (Bankr. D. Ariz. 2008) (clarifying that a recorded judgment does not create a lien on property subject to homestead even when the value of the property exceeds the amount of the homestead. “It remains the case that both the homestead statute and the judgment lien statute both conceive of the ‘homestead’ as being the real property, not the equity value of such real property.” 400 B.R. at 754); and In re Glaze, 169 B.R. 956, 966 (Bankr. D. Ariz. 1994)

ONCE A JUDGMENT ATTACHES IT RUNS WITH THE LAND

  • 33-964 establishes the general rule that a judgment lien does not attach to homestead property, and that homeowners hold their homestead property free and clear of judgment liens. See A.R.S. § 33-964(B). Although it is true that once a lien has attached, it “runs with the land,”, but in this case the judgment lien never attached to the Home in the first place.

ABANDONMENT OF HOMESTEAD BY CONVEYING TO TRUST A.R.S. § 33-1104(A):

  • When a homestead exemption is abandoned by a conveyance of the property, the judgment lien does not re-attach to the property upon the sale. See Sec. Tr. & Sav. Bank, 29 Ariz. 325, 332 (1925).
  • 33-1104(A)(3) a homeowner “may remove from the homestead for up to two years” without abandoning the homestead exemption. Sepics’ departure from the Home shortly before its sale did not constitute an abandonment.
  • Because of the protection afforded by the homestead statutes, the Judgment never attached as a lien to the Home. Therefore, the Sepics conveyed the Home free and clear of the Judgment.

CONCLUSION: For the foregoing reasons, we affirm the entry of an injunction enjoining a Sheriff’s sale of the Home.

Judgment renewal affidavit satisfied statute despite several alleged defects.

MRH Sub I, LLC v. Pilat, 2019 WL 2539192 (Ariz.App. June 20, 2019) 

This case concerns the requirements under Arizona law to renew a judgment by affidavit. MRH   Sub I, LLC (“MRH”) acquired   the judgment from CitiMortgage, Inc. (“Citi”).   MRH moved to renew the judgment on October 13, 2017, just three days before it would have expired, when it filed the “Judgment Renewal Affidavit” in the superior court (the “Renewal Affidavit”).

Defendant/Appellants moved to strike MRH’s Renewal Affidavit as invalid and laden with misrepresentations. They argued the Renewal Affidavit was invalid because it did not meet the formal requirements of A.R.S. § 12-1612; and misrepresented certain specifics of the judgement.

The superior court denied the motion.  It found that the Renewal Affidavit “substantially [met] the requisites of an affidavit … in light of the purpose of A.R.S. § 12-1612, which is to notify interested parties of the existence and continued viability of the judgment.”

In re Charnock, 318 B.R. 720 (BAP 9th Cir, 2004) has the legislative history of 522(f)(2) and  says that the debtor may avoid a judgment lien recorded before a consensual lien regardless of state law, because Congress wanted to favor consensual liens regardless of the priority of recording.

Does a contractual agreement barring a party from executing on the judgment tolls the enforcement period

Harle v. Williams: No. 1 CA-CV 17-0665 (Az Ct Appeals, Div One 3-14-19)  Holds that the enforcement period on a judgment is tolled until the judgment is executable, and this judgment wasn’t executable until the date of William’s breach.

Harle and Williams were business partners, then the partnership split.  Harle sued Williams. In 2011 the two reached a settlement in which Williams agreed to a total judgment amount and to make monthly payments. As long as Williams made his monthly payment, according to the terms of the settlement, Harle was precluded from recording or enforcing the judgment.  The superior court held the judgment had not expired.  After all, the court implied, it would be very unfair to allow a debtor to promise the world to a judgment holder in order to convince them to hold off on recording a judgment, but then back out after 5 years, and leave the judgment holder  “[prejudiced in the extreme].”  (NOTE – renewal of judgments in Arizona is now changed from 5 to 10 years).

ARIZONA SUPREME COURT DECIDES STATUTE OF LIMITATION RUNS FROM THE DATE OF FIRST UNCURED MISSED PAYMENT

Mertola LLC v Alberto J Santos/Arlene Santos CV-17-0109-PR (AZ debt collectionSupreme Court, 7-27-18)  Statute of limitation for debt collection in Arizona – cause of action to collect the entire debt accrued as of the date of Santos’s first uncured missed payment.

Decision:

Mertola, LLC, sued Alberto Santos and his wife Arlene Santos to collect an outstanding credit-card debt. Although the credit-card agreement gave the creditor the option of declaring the debt immediately due and payable upon default, we hold that even if that option was not exercised, the cause of action to collect the entire debt accrued as of the date of Santos’s first uncured missed payment. Mertola’s claim was barred by the statute of limitations six years after that date pursuant to A.R.S. § 12-548(A)(2).  We vacate the court of appeals’ opinion and affirm the trial court’s summary judgment in favor of Santos. We award Santos reasonable attorney fees pursuant to the Account Agreement and costs pursuant to A.R.S. § 12-341.

LAW OF THE CASE DOCTRINE IN BANKRUPTCY

Reprint from Weil Bankruptcy Blog – by Robert Lemons & Candice Carson

When a court reaches a decision in a case, the law of the case doctrine generally provides that parties should not be able to relitigate the same issue in that case, and for the court to adhere to its prior decision.What Happened in Brizinova I?

In Brizinova I, Estella Brizinova and Edward Soshkin (together, the “Debtors”), who were husband and wife, jointly filed a chapter 7 case, and the Trustee was immediately appointed on the petition date. Ms. Brizinova held 100% of the stock of ENSI Consulting, Inc. (“ENSI”), an online auto supply parts company that employed both Ms. Brizinova and Mr. Soshkin, with Mr. Soshkin serving as ENSI’s bookkeeper. The Debtors’ schedules listed a value in the amount of zero dollars for Ms. Brizinova’s shares in ENSI. The Trustee asserted that the Debtors continued to operate ENSI to generate post-petition sale proceeds after filing their chapter 7 case (the “Sale Proceeds”), and that the Sale Proceeds were property of the Debtors’ estate. The Debtors refused to turn over the Sale Proceeds to the Trustee.

In response, the Trustee filed a complaint against the Debtors to recover the Sale Proceeds and seeking damages for conversion and violation of the automatic stay arising from the transfer of the Sale Proceeds. The Debtors filed a motion to dismiss the Trustee’s complaint arguing, inter alia, that the Sale Proceeds were not property of the Debtors’ estate because ENSI was not operating when the bankruptcy petition was filed and that the allegations were too speculative and, therefore, the element of each claim was not adequately pleaded.

The court sustained the Trustee’s turnover and automatic stay violation claims, but denied in part the Trustee’s conversion claim because the complaint did not identify specifically the property that was allegedly converted.What Happened in Soshkin?

Rather than repleading the denied conversion claim, the Trustee commenced another adversary proceeding alleging substantially similar claims to the Sale Proceeds as in Brizinova I against Zlata Soshkin, the daughter-in-law of the Debtors. Ms. Soshkin moved to dismiss the Trustee’s complaint but argued an additional defense that was not included in the Debtors’ motion to dismiss in Brizinova I — that the Sale Proceeds were property of ENSI and were not the property of the Debtors’ estate. In response, the Trustee argued that the law of the case doctrine required the court to reach the same conclusions as those ruled in Brizinova I and find that the Trustee adequately pleaded that the Sale Proceeds were property of the Debtors’ estate.

When considering the law of the case doctrine, Judge Stong found that “[t]wo considerations stand out as fundamental: whether there is identity of parties between the prior and subsequent matters; and whether the prior decision is a final one.”What Happened in Brizinova II?

In Brizinova II, the Debtors used the same argument made in Soshkin — that the Sale Proceeds were property of ENSI and not the Debtors’ estate — in a second attempt to dismiss the Trustee’s adversary proceeding against the Debtors by filing a motion for summary judgment. The Trustee opposed this motion because the court previously held in Brizinova Ithat the Trustee adequately alleged that the Sale Proceeds were property of the Debtors’ estate and, therefore, the law of the case doctrine required the court to reach the same conclusion for the motion for summary judgment.

Judge Stong, applying a substantially similar analysis as she did in Soshkin, held that the law of the case doctrine did not apply and that the Trustee did not adequately plead that the Sale Proceeds were property of the Debtors’ estate.When May a Bankruptcy Court Apply the Law of the Case Doctrine?

Although Soshkin and Brizinova II did not involve situations where the law of the case doctrine was applicable, they do provide some guidance for when it may apply in a bankruptcy case. Clearly, the parties to the old and new litigation must be the same. The question of whether the first order was a final judgment may be trickier. Presumably, an order granting a motion to dismiss or granting summary judgment in an adversary proceeding would satisfy the final judgment requirement because that order would end the litigation. Similarly, a judgment in favor of a plaintiff in an adversary proceeding presumably would also satisfy the final judgment requirement. Whether orders granting or denying motions in the main bankruptcy case are final judgments may be harder to determine. As Judge Stong noted, however, the requirement of a final judgment in the law of the case doctrine is similar to the same requirement for the related rule of res judicata. Accordingly, case law considering the application of res judicata in bankruptcy cases should provide an additional source of guidance. Regardless, as demonstrated by the decisions in the Brizinovacase, parties should not assume that the law of the case doctrine will apply and should ensure that they also fully argue the underlying merits in the matter at hand.


Footnotes:

  1. Even when the law of the case doctrine does apply, it does not dictate that a court must follow its own prior decision, but instead allows the court to consider whether it should under the circumstances. See, e.g., Colvin v. Keen, 900 F.3d 63, 68, 73 (2d Cir. 2018) (“[W]hen a court . . . faces the question whether to depart from its own prior ruling, the court has wide discretion to make whichever decision it thinks preferable.”). This article focuses instead, though, on the gating question of when the doctrine may even be available for consideration by a bankruptcy court. The law of the case doctrine may also refer to a situation where a lower court considers adhering to a ruling made by a higher court in the same case, which is not addressed in this article.
  2. See In re Brizinova, 588 B.R. 311, 323 (Bankr. E.D.N.Y. 2018) (referred to as Soshkin); In re Brizinova, 592 B.R. 442, 455 (Bankr. E.D.N.Y. 2018) (referred to as Brizinova II). 
  3. See In re Brizinova, 554 B.R. 64, 76, 88 (Bankr. E.D.N.Y. 2016) (referred to as Brizinova I).
  4. See Soshkin, 588 B.R. at 322; Brizinova II, 592 B.R. at 453.
  5. Brizinova I, 554 B.R. at 88.
  6. Soshkin, 588 B.R. at 323.
  7. Id. at 335.
  8. Brizinova II, 592 B.R. at 456. 
  9. Id. (internal quotation marks omitted) (citing Datiz v. Int’l Recovery Assocs., Inc., No. 15-cv-3549 (ADS)(AKT), 2017 WL 59085 at *2 (E.D.N.Y. Jan. 4, 2017).

Good discussion on issue preclusion, collateral estoppel and exceptions to discharge

In re Duran, Adv. Case No. 4:17-ap-00523-BMW (2/22/19 – AZ Bankruptcy Court).  Doctrine of Collateral Estoppel “The preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as ‘res judicata.’” Taylor v. Sturgell, 553 U.S. 880, 892, 128 S. Ct. 2161, 2171, 171 L. Ed. 155 (2008). “These terms have replaced a more confusing lexicon. Claim preclusion describes the rules formerly known as ‘merger’ and ‘bar,’ while issue preclusion encompasses the doctrines once known as ‘collateral estoppel’ and ‘direct estoppel.’” Id. 553 U.S. at 892 n.5, 128 S. Ct. 2161 n.5.

Generally speaking, “[t]he doctrine of issue preclusion forecloses relitigation of those
issues of fact or law that were actually litigated and necessarily decided by a valid and final
judgment in a prior action between the parties” and applies to both findings of fact and
determinations of law. In re Duncan, 713 F.2d 538, 541 (9th Cir. 1983); In re Hagele, No. AP
14-02200, 2016 WL 3965899, at *4 (B.A.P. 9th Cir. July 18, 2016).

Outside of bankruptcy, perfection is not a condition to a valid lien.

So, for example, if a title loan company (or any loan company) does not perfect the lien at all, then provided that no other lienholders have recorded anything with DMV, the lender can repossess if you don’t stay current.  Perfection is about notice only.  Lack of perfection does not make the lien invalid, but it does make it junior in priority to any other liens subsequently recorded.

This is true with any lien (not just DMV liens) but also liens for personal property recorded as UCCs, lender’s liens on real property that are not recorded with the recorder’s office, etc.)

However, once a borrower files BK, the bankruptcy code requires a lien to be perfected within 30 days after taking out the loan.

If not, the bankruptcy code allows a trustee to avoid it at the trustee’s discretion.  So, once the debtor files BK, timely perfection was necessary to preserve the lien and to prohibit a trustee from avoiding the lien.

If the trustee elects not to avoid the lien for any reason, then after BK, the lien still exists, and the lender is back to the status quo of enforcing its lien, even though it was not perfected.  Lack of perfection risks the lien being avoided under the BK code.


In re Cortez, 191 B.R. 174 (1995) : an unavoided, non-perfected lien still is valid. “An unrecorded, thus unperfected, deed of trust is subject to avoidance by the bankruptcy trustee as a hypothetical lien creditor, pursuant to § 544. The appellee’s unperfected deed of trust was subject to avoidance during the debtors’ bankruptcy. However, because it was not avoided, it survived the bankruptcy, even though it was not perfected. In re Eakin, 153 B.R. 59, 60 (Bankr.D.Idaho 1993) (so long as the lien, although it could have been, was not avoided, a valid security interest passes through a bankruptcy filing unaffected). In the instant case, while the appellee was listed as an unsecured creditor and the debt was discharged, the appellee was actually a secured creditor under California law by virtue of the deed of trust lien which had not been avoided in bankruptcy. Its lien survived the bankruptcy; thus, the bankruptcy court did not err by denying the debtors’ motion to reopen the case to avoid the lien.”

See also: North Canyon Ranch Owners Association v. Allen No. 1 CA-CV 17-0227 (2018 Ariz. App. Case – unpublished) that confirms this rule of law and cites Cortez (although this case dealt with an HOA which does not have to be recorded).

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