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ARIZONA REAL ESTATE LAW

25-211 – Liability of community property and separate property for community and separate debts

Landlord and Tenant

Obligations and Liabilities of Landlord

  • 33-301 – Posting of lien law and rates by innkeepers
  • 33-302 – Maintenance of fireproof safe by innkeeper for deposit of valuables by guests; limitations on liability of innkeeper for loss of property of guests
  • 33-303 – Discrimination by landlord or lessor against tenant with children prohibited; classification; exceptions

Article 2 Obligations and Liabilities of Tenant

  • 33-321 -Maintenance of premises
  • 33-322 – Damage to premises; classification
  • 33-323 – Liability of person in possession of land for rent due thereon
  • 33-324– Denial of landlord’s title by lessee in possession prohibited

Article 3 Termination of Tenancies

  • 33-341 – Termination of tenancies
  • 33-342 – Effect of lessee holding over
  • 33-343 – Premises rendered untenantable without fault of lessee; nonliability of tenant for rent; right to quit premises

Article 4  Remedies of Landlord

  • 33-361 – Violation of lease by tenant; right of landlord to reenter; summary action for recovery of premises; appeal; lien for unpaid rent; enforcement; notice and pleading requirements
  • 33-362 – Landlord’s lien for rent

Article 5 Applicability of Chapter

33-401 – Formal requirements of conveyance; writing; subscription; delivery; acknowledgment; defects
33-402 – Forms for conveyances; quit claim; conveyance; warranty; mortgage
33-405 – Beneficiary deeds; recording; definitions

Article 2 – Foreclosure
33-721 – Foreclosure of mortgage by court action
33-722 – Election between action on debt or to foreclose
33-723 – Right of junior lien holder upon foreclosure action by senior lien holder
33-724 – State as party to foreclosure actions
33-725 – Judgment of foreclosure; contents; sale of property; resale
33-726 – Redemption of property by payment to officer directed under foreclosure judgment to sell the property
33-727 – Sale under execution; deficiency; order of liens; writ of possession
33-728 – Recording upon record that mortgage is foreclosed and judgment satisfied; effect
33-729 – Purchase money mortgage; limitation on liability
33-730 – Limitation on deficiency judgment on mortgage or deed of trust as collateral for consumer goods

33-741 – Definitions
33-742 – Forfeiture of interest of purchaser in default under contract
33-743 – Notice of election to forfeit and reinstatement of purchaser’s interest
33-744 – Completion of forfeiture by judicial process
33-745 – Completion of forfeiture by notice
33-746 – Request for copy of notice of election to forfeit
33-747 – Appointment of successor account servicing agent
33-748 – Seller’s right to foreclose
33-749 – Other remedies
33-750 – Conveyance by seller; payment in full; payoff deed

33-807 – Sale of trust property; power of trustee; foreclosure of trust deed
33-808 – Notice of trustee’s sale
33-809 – Request for copies of notice of sale; mailing by trustee or beneficiary; disclosure of information regarding trustee sale
33-810 – Sale by public auction; postponement of sale
33-811 – Payment of bid; trustee’s deed
33-812 – Disposition of proceeds of sale
33-813 – Default in performance of contract secured; reinstatement; cancellation of recorded notice of sale
33-814 – Action to recover balance after sale or foreclosure on property under trust deed

Article 5 – Judgment Liens on Real Property
* (Homestead exception to lien enforcement (ARS 33-964(B)
Article 6 – Mechanics’ and Materialmen’s Liens
Article 7 – Personal Property Liens

* (Homestead exception to lien enforcement (ARS 33-964(B)

Article 2 – personal property exemptions

Arizona Residential Landlord and Tenant Act

Arizona Department of Housing 602-771-1000
will mail a copy to you at no charge

Article 1  General Provisions

  • 33-1571 – Real property loans; exercise of due on sale clauses; prohibition

The Garn St. Germaine Act at 12 USC 1701j-3(d), generally precludes a lender from exercising a due on sale clause when a borrower dies and someone else inherits (so long as mortgage payments remain current).

33-714Expiration of mortgage and deed of trust; applicability

Kalway v Calabria Ranch HOA, CV-20-0152-PR, AZ Supreme Court, 3/22/22  In this case, we are asked to decide the extent to which a homeowners’ association (“HOA”) may rely on a general-amendment-power provision in its covenants, conditions, and restrictions (“CC&Rs”) to place restrictions on landowners’ use of their land. Although CC&Rs are generally enforced as written, we interpret such restrictions to reflect the reasonable expectations of the affected homeowners. Construing such provisions narrowly, as with any restrictive covenant on real property, we hold that a general-amendment-power provision may be used to amend only those restrictions for which the HOA’s original declaration has provided sufficient notice.

Examining the extent to which a homeowners’ association may rely on a general-amendment power provision in its covenants, conditions and restrictions (“CC&Rs”) to place restrictions on landowners’ use of their land, the Arizona Supreme Court held that the provision may be used to amend only those restrictions for which the HOA’s original declaration has provided sufficient notice. A.R.S. § 33-1817(A) permits the amendment of CC&Rs by a majority vote if such voting scheme is specified in the original declaration. But that declaration must give sufficient notice of the possibility of a future amendment; that is, amendments must be reasonable and foreseeable. The Court held that an HOA cannot create new affirmative obligations where the original declaration did not provide notice to the homeowners that they might be subject to them. It must give notice that a restrictive or affirmative covenant exists and that the covenant can be amended to refine it, correct an error, fill in a gap, or change it in a particular way. Future amendments cannot be entirely new and different in character, untethered to an original covenant. Applying those principles, very few of the challenged amendments here survive because they failed to provide notice of the challenged amendments.

CREDITOR QUESTIONS IN GENERAL

Arizona treats deeds of trust as conveying a lien, not as conveying title. See, e.g. Brant v. Hargrove, 129 Ariz. 475 (1981) (“Commonly referred to as the lien theory, this approach views a mortgage as not passing legal title, the right of possession, or the other incidents of ownership to the grantee-mortgagee.”). Under a title theory, the creditor is permitted to enter the land upon default, but in lien states, the creditor is required to foreclose in order to obtain a right of possession. In Arizona, creditors secured either by a mortgage or a deed of trust have no right of possession pre-foreclosure. See ARS 33-703.

A deed of trust conveys legal title in real property to a third party—the trustee—to secure the performance of a contract. A.R.S. §§ 33–801(8), –805; Snyder v. HSBC Bank, USA, N.A., 873 F.Supp.2d 1139, 1153 (D.Ariz.2012). The trustee holds legal title until the loan balance is paid or the security reclaimed. See A.R.S. § 33–801(8), (10); Hatch Cos. Contracting, Inc. v. Ariz. Bank, 170 Ariz. 553, 556, 826 P.2d 1179, 1182 (App.1991) (explaining “deed of trust ‘conveys’ the trust property to a trustee who holds the property for the benefit of the beneficiary designated in the deed of trust”). In the interim, the trustee holds only “bare legal title—sufficient only to permit him to convey the property at the out of court sale.” Eardley v. Greenberg, 164 Ariz. 261, 264, 792 P.2d 724, 727 (1990) (quoting Brant v. Hargrove, 129 Ariz. 475, 480 n. 6, 632 P.2d 978, 983 n. 6 (App.1981) (internal quotations omitted). A deed of trust is therefore “ ‘[i]n practical effect … little more than a mortgage with a power to convey upon default,” ’ id. (quoting In re Bisbee, 157 Ariz. 31, 34, 754 P.2d 1135, 1138 (1988)), and the two are treated similarly. See Brant, 129 Ariz. at 480, 632 P.2d at 983 (agreeing with reasoning in Hamel v. Gootkin, 20 Cal.Rptr. 372, 374 (App.1962), that it would be unrealistic to treat deeds of trust differently from mortgages, in determining whether a deed of trust defeated a joint tenancy, where the two “perform the same basic function”).

Although the beneficiary under a deed of trust, like a mortgagee, may have an interest in the property itself, the fact remains he has no interest in the title. See Saxman v. Christmann, 52 Ariz. 149, 154, 79 P.2d 520, 522 (1938). “Such encumbrancers cannot maintain an action to quiet title, for they have no title.” Id.; see also Berryhill v. Moore, 180 Ariz. 77, 88, 881 P.2d 1182, 1193 (App.1994) ( “[A] mortgagee’s interest does not attach to the title. Rather, it attaches to the land. Thus, under Arizona law, a mortgagee cannot bring an action to quiet title because the mortgagee has no title.”) (internal citations omitted).

Biel Properties, LLC v. CRG Partners, II, LLC (2015 WL 1605657) (April 9, 2015).

Pence v. Glaze, 1 CA-CV 02-0520, 1/29/04: A layman who files what may be an invalid deed of trust on a debtor’s residence because the deed of trust was not signed by the debtor’s spouse who jointly owned the residence cannot be liable for filing an invalid lien under ARS Section 33-420(a) unless the layman knows or has reason to know the deed is invalid. Such knowledge cannot be presumed on the theory that every person is presumed to know the law.

Does interest in property have priority over recorded judgment?

Cecelia M. and Randall Lewis v. Ann and Ray C. Debord October 6, 2014 – 2 CA-CV 2014-0004 –
Whether a judgment creditor may satisfy his or her judgment by executing on the judgment debtor’s real property that was transferred to a subsequent purchaser after recordation of the judgment pursuant to A.R.S. § 33-961(A) but before attachment of the information statement required under A.R.S. §§ 33-961(C) and 33-967(A). Here, the Debords acquired their interest in the property in July 2012.But the Lewises did not attach an information statement to their recorded judgment until August 2013. Because the Debords acquired their interest in the property before the Lewises complied with § 33-967(A), the Debords’ interest in the property has priority over the Lewises’ judgment lien.  Accordingly,the Lewises cannot satisfy their judgment by executing on the Debords’ property.  The trial court therefore did not err in granting summary judgment in favor of the Debords. See Ochser, 228 Ariz. 365, ¶ 11, 266 P.3d at 1065;Pi’Ikea, 234 Ariz. 284, n.7, 321 P.3d at 454 n.7

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 BECOME A LIEN ON HOMESTEAD PROPERTY:

After 100 years of case law, in 2021 the Arizona Legislature decided to pass law that allows creditors to get a judgment against our homes.  Section 33-964 thus establishes the general rule that a recorded judgment does become a lien on homestead property.

Old law: 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

  • the 2022 revision of 33-964 establishes the general rule that a judgment lien does attach to homestead property, and that homeowners do not hold their homestead property free and clear of judgment liens. See A.R.S. § 33-964(B).

ABANDONMENT OF HOMESTEAD BY CONVEYING TO TRUST A.R.S. § 33-1104(A): (NOTE THIS IS NOW OLD LAW WITH THE PASSAGE OF 2021 33-946)

  • 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.  Read opinion

Tax liensDaystar vs Maricopa County Treasurer (Az Ct App, Div One 5-6-04) good review of tax liens statutes and governing law.

Attorney General’s  re predatory lending and other scams.

10/2017 – Turtle Rock III Homeowners Assoc. v. Fisher (No. 1 CA-CV 16-0455) (October 26, 2017) opinion here.  The Arizona Court of Appeals held That homeowners associations (“HOAs”) must have a written, promulgated schedule of fines in order to impose them against members, and the HOA must be able to prove that the fines are reasonable.

In this case, the HOA sought to impose a $25 per day fine against a homeowner for violations of the CC&Rs. The HOA was successful in the trial court, but the homeowner appealed. The Court of Appeals reversed, finding for with the homeowner. “Without competent evidence of a fee schedule timely promulgated demonstrating the fine amounts and the appropriateness of such amounts, monetary penalties are per se unreasonable.” Even if a written fee schedule existed, however, the HOA still had the burden to prove the fines were reasonable. A.R.S. §33-1803(B)

CONCLUSION: HOA’s must have a written fine schedule for violations of CC&Rs and a basis to prove the fines are reasonable in order for them to be enforceable.

Equitable lien for community resources used to pay pre-marriage sole and separate debts: If community funds are used to pay on separate property, the spouse has a community property interest.  There is a formula in the decision.

Drahos v Rens (PR for Drahos), No. 2 CA-CIV 5501 (Ct App., AZ, Div 2, 12/13/83) In Arizona, property owned or acquired by either spouse prior to marriage is separate property and does not change its character after the marriage except by agreement or operation of law. A.R.S. § 25-213. Sellers v. Allstate Insurance Company, 113 Ariz. 419, 555 P.2d 1113 (1976); Kingsbery v. Kingsbery, 93 Ariz. 217, 379 P.2d 893 (1963). Therefore, a residence which is separate property does not change its character because it is used as a family home and mortgage payments are made from community funds. In re Estate of Sims, 13 Ariz. App. 215, 475 P.2d 505 (1970); Schock v. Schock, 11 Ariz. App. 53, 461 P.2d 697 (1969). Because Mr. Drahos acquired his residence before marriage and took title solely in his own name, the property clearly is, as the trial court recognized, his sole and separate property, even though the couple resided there and mortgage payments and repairs were allegedly made with community funds. The community, which contributed capital to the separate property, is nevertheless entitled to some form of compensation. Honnas v. Honnas, 133 Ariz. 39, 648 P.2d 1045 (1982); Lawson v. Ridgeway, 72 Ariz. 253, 233 P.2d 459 (1951); Hanrahan v. Sims, 20 Ariz. App. 313, 512 P.2d 617 (1973). The community has the right to an equitable lien against the separate property even though the character of that property has not changed. Stauss v. Stauss, 82 Ariz. *250 268, 312 P.2d 148 (1957); Lawson v. Ridgeway, supra; Potthoff v. Potthoff, 128 Ariz. 557, 627 P.2d 708 (App. 1981).

Decisions in this and other jurisdictions have disputed how to calculate the amount of the equitable lien. The Arizona Supreme Court has stated that when community funds are used to improve separate property, a value-at-dissolution formula which takes into account the enhanced value of the property should be utilized rather than an amount-spent formula, which is a simple reimbursement scheme. Honnas v. Honnas, supra; Lawson v. Ridgeway, supra. In this case it was only alleged that community funds were used to pay the mortgage and make repairs. There was no indication in the record that the increased value of the residence is in any way attributable to anything besides the general trend of rising real estate values. Therefore, we must determine whether the value-at-dissolution formula applies when community funds are used to benefit but not necessarily improve separate property. We believe that it should. The language in the Honnas decision is quite expansive.

Arizona Court of Appeals holding that disclaimer deeds should not be analyzed as postnuptial agreements.

Saba v. Khoury, No. 1 CA-CV 19-0609 FC (AZ Div 1, Ct Appeals, 1/21/21) The Arizona Court of Appeals, Div. One, affirmed the superior court’s marriage dissolution decree, holding that disclaimer deeds should not be analyzed as postnuptial agreements. Unlike postnuptial agreements, which necessarily require both spouses’ involvement and define each spouse’s property rights in the event of death or divorce, disclaimer deeds are unilateral and simply renounce ownership in property; absent fraud or mistake, such deeds must be enforced. The Court of Appeals also held that the superior court properly credited the community with all the payments made from Wife’s separate bank account toward the principal owed on the two home loans; the parties commingled funds in the account, and Wife failed to adequately distinguish, by tracing, which funds in that account should be considered her separate property. Finally, here, where Husband disclaimed ownership in a rental property, the community is not entitled to the full appreciation value of the property under Femiano v. Maust, 248 Ariz. 613 (Ct. App. 2020).

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