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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Arizona

Deeds of trust are the predominant secured real estate financing instrument in use in Arizona (A.R.S. &sect;&nbsp;33-801 et seq.), but mortgages may also be used (A.R.S. &sect;&nbsp;33-701 et seq.). A deed of trust may only secure real property located in Arizona; a deed of trust securing real property located in Arizona and one or more other states will be treated as a mortgage (A.R.S.&nbsp;&sect;&nbsp;33-801(8)).

SECURITY INSTRUMENT USED

Deeds of trust and mortgages must be in writing signed by the mortgagor/trustor; the mortgagee/beneficiary need not sign. Acknowledgments are necessary; Arizona has adopted the Uniform Recognition of Acknowledgments Act (A.R.S. &sect;&nbsp;41-251 et seq.). Documents shall have a caption briefly stating the nature of the instrument (e.g. - deed of trust, release of mortgage, etc.) in order to facilitate appropriate indexing. In addition, documents must be on a paper that is not larger than 8 &frac12; inches in width and not longer than 14 inches, and have a print size no smaller than 10-point type and a &frac12;” margin at the top, bottom and sides of each page clear of all writing or marks, including page numbers, initials, etc.; provided, however, the first page must have a 2” margin at the top with the left 3&frac12;” of the top margin to be used to show the name of the person requesting the recording and address to which the document is to be returned after recording. If the first page does not comply with the top margin requirements, a separate sheet that meets the requirements and that reflects the title of the document shall be attached to the front of the document. (A.R.S. &sect;&nbsp;11-480).

RECORDING REQUIREMENTS

If the mortgagor/trustor is not the obligor but encumbers property for the debt of another, A.R.S. &sect;&sect;&nbsp;12-1566, 12-1641 et seq., 33-814, 44-141,&nbsp;44-142, 47-3419 and 47-3605, and Arizona Rule of Civil Procedure-17(f), limiting the liability of a surety, should be waived. The mortgagee/beneficiary should consider conspicuous waiver of right to trial by jury and the statutes of limitation.

STATUTES TO BE WAIVED

To be consistent with A.R.S.&nbsp;&sect;&nbsp;44-1201, the principal usury statute, the usury provision should include wording similar to the following: “The undersigned agrees to an effective rate of interest that is the rate stated in the loan documents plus any additional rate of interest resulting from any other fees, costs or charges which may be deemed interest under Arizona law.”

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Future advances are secured if so stated in the deed of trust/mortgage. Priority of lien for future advances depends on whether the advance is obligatory (in which case the lien dates from the date the deed of trust/mortgage was originally recorded) or discretionary (in which case intervening lienholders have priority over the lien for the future advance, so long as the senior secured lender has actual knowledge of the intervening lien).

SECURING FUTURE ADVANCES

Additional advances made under the mortgage/deed of trust to protect the collateral are secured by the lien of the mortgage/deed of trust and will be deemed obligatory.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL

As more fully set forth in A.R.S. &sect;&nbsp;33-803, qualified trustees include (i)&nbsp;lending institutions doing business under the laws of Arizona, (ii)&nbsp;members of the state bar of Arizona, (iii)&nbsp;real estate brokers, insurance agents and escrow agents licensed under the laws of Arizona, and (iv)&nbsp;companies regulated by the Comptroller of the Currency, FDIC, FHLB, NCUA, FCA, FRB or any successors. A qualified individual trustee is prohibited from also being a beneficiary of a trust deed.

CORPORATE OR INDIVIDUAL

Arizona residency is not independently required but may be necessary to meet qualifications to be licensed under Arizona law for a particular profession or occupation.

RESIDENCY REQUIREMENT

A mortgage may only be foreclosed by an action at law filed in the county where all or a portion of the encumbered real property is located (A.R.S.&nbsp;&sect;&sect;&nbsp;33-721 and 12-401(12)). After entry of judgment against the mortgagor, the mortgaged property is sold at a sheriff's sale. A deed of trust may be foreclosed either (i)&nbsp;as a mortgage by an action at law or (ii)&nbsp;by exercise of the power of sale (A.R.S. &sect;&nbsp;33-807). The trustee's sale procedure is commenced by recording a notice of trustee's sale, in the form required by statute (A.R.S. &sect;&nbsp;33-808(C)), in the office of the recorder of each county wherein the trust property is situated (A.R.S. &sect;&nbsp;33-808(A)(1)). Within 5 business days after recording the notice of sale, a copy of the notice together with a statement of the breach or non-performance must be mailed by certified or registered mail to each person who was an original party to the trust deed, except the trustee (A.R.S. &sect;&nbsp;33-809(C)), although the practice is to also mail the notice and statement to known successors to the original trustor or beneficiary. Within 30 days after recording of the notice of sale, a copy of the notice must be mailed to each person who has a record interest in the trust property to be sold (A.R.S. &sect;&nbsp;33-809(B)). The notice must be published at least once a week for 4 consecutive weeks in a newspaper of general circulation in each county in which any portion of the trust property is located; the last date of publication must be not less than 10 days prior to the date fixed for the sale (A.R.S. &sect;&nbsp;33-808(A)(4)). The notice must also be posted at least 20 days before the date of sale in a conspicuous place on the trust property, if posting can be accomplished without a breach of the peace, and at 1 of the places provided for posting public notices at a building that serves as the location of a superior court of the county in which the trust property is situated (A.R.S. &sect;&nbsp;33-808(A)(3)). The sale date may not be earlier than 90 days after the date the notice of trustee's sale is recorded (A.R.S. &sect;&nbsp;33-807(D)). The sale is conducted by the trustee, the trustee's attorney or an agent of the trustee and may be postponed from time to time by announcement at the time and place of the sale of the postponed date and time (A.R.S. &sect;33-810(B)). The trustor (or successor in interest) and junior lienholders have “reinstatement” (cure) rights that preclude the beneficiary from accelerating the debt before 5:00 p.m. Mountain Standard Time on the last business day before the sale date (A.R.S. &sect;&nbsp;33-813(A)). Any defense or objection to a trustee sale must be filed and court order obtained stopping the sale no later than 5:00 p.m. Mountain Standard Time of the last business day prior to the scheduled sale date, or else all defenses and objections to the sale are waived. (A.R.S. &sect; 33-811(C)).

BRIEF DESCRIPTION OF PROCEDURE

Barring a bankruptcy filing, a trustee's sale proceeding is usually completed within about 4 months. Completion of judicial foreclosure depends upon the court's calendar and whether judgment is obtained by summary judgment or the case proceeds to trial; this commonly requires 9-18 months to complete, exclusive of redemption periods.

TYPICAL LENGTH OF PROCEDURE

Any person, including the trustee or beneficiary, may bid at a trustee's or sheriff's sale, but only the beneficiary may make a credit bid, in lieu of cash (A.R.S. &sect;&sect;&nbsp;33-810(A) and 12-1622(A)). No person making the sale shall become a purchaser or be interested in such sales (A.R.S. &sect;&nbsp;12-1622(C)). At a trustee's sale, the trustee is required to obtain from every bidder (except the beneficiary) a $10,000 deposit, in a form satisfactory to the trustee, as a condition of entering a bid (A.R.S. &sect;&nbsp;33-810(A)). The property is sold to the highest bidder, and the bid price must be paid, for a trustee's sale, no later than 5:00 p.m. of the following business day (A.R.S. &sect;&nbsp;33-811(A)) and, for a sheriff's sale, within 5 working days after the sale (A.R.S. &sect;&nbsp;12-1624).

FORECLOSURE BID REQUIREMENTS

The trustee's deed shall raise the presumption of compliance with the requirements of the deed of trust sale and shall constitute conclusive evidence of meeting such requirements in favor of purchasers or encumbrancers for value and without actual notice. Knowledge of the trustee shall not be imputed to the beneficiary (A.R.S. &sect;&nbsp;33-811(B)).

TRUSTEE'S DEED

On or before the last business day prior to the date of the trustee's sale the trustor may reinstate by paying all past due amounts including costs and fees. There is no redemption period after a trustee's sale (A.R.S. &sect;&nbsp;33-811(E)). After a sheriff's sale, the property sold may be redeemed under rules applicable to executions of judgments (A.R.S. &sect;&nbsp;12-1281 et seq.). Absent an abandonment, the debtor and others have 6 months after a sheriff's sale to redeem (A.R.S. &sect;&nbsp;12-1282(B)).

REDEMPTION PERIOD AND PRICE

The deed of trust scheme is a creature of statutes (In re Vasquez, 228 Ariz. 357, &para;&nbsp;4, 266 P.3d 1053, 1055 (2011)). No statute in the statutory scheme vests a trustee with the authority or power to rescind the sale of a property sold by the trustee's power of sale.

RESCISSION OF TRUSTEE'S SALE

Statutory redemption periods may not be shortened or waived except by agreement of the parties after the sheriff's sale has been completed. A.R.S. &sect;&nbsp;12-1566(C) operates to eliminate all rights of redemption when any debtor applies for a fair market value determination.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

An extinguished subordinate lien on trust property may be revived when the trustor reacquires trust property from the foreclosure sale purchaser (A.R.S. &sect;&nbsp;33-806(A)). The revived lien is subordinate to subsequent purchase money liens granted by the trustor (Transamerica Fin. Servs., Inc. v. Lafferty, 175 Ariz. 310, 316, 856 P.2d 1188, 1194 (App. 1993)).

LIEN REVIVAL

For a deed of trust, an action to recover a deficiency after a trustee's sale must be commenced, if at all, within 90 days after the date of the sale (A.R.S. &sect;&nbsp;33-814(A)). A deficiency judgment shall be for an amount equal to the sum of the total debt owed the beneficiary as of the date of trustee's sale less the fair market value (as defined in A.R.S. &sect; 33-814(A)) of the trust property on the date of sale as determined by the court, or the sale price at the trustee's sale, whichever is higher (Id.). When determining the deficiency amount in a summary judgment action, the creditor has the burden of providing evidence in support of its fair market value determination. Reliance on either the trustee's sale price or the credit bid amount is insufficient. (MidFirst Bank v. Chase, 230 Ariz. 366, 284 P.3d 877 (App. 2012)). For a mortgage, the judgment of foreclosure entered by the court should expressly provide for the collection of a deficiency if the full amount of the debt is not recovered from the sheriff's sale. The deficiency is limited to the difference between the unpaid secured debt and the greater of the sale price at the sheriff's sale or the fair market value of the property (A.R.S. &sect;&sect;&nbsp;33-725(B), 33-727(B), and 12-1566(B)). If the court determines that the sale price was less than the amount of the judgment because of diminution in value of such real property while such property was in the judgment debtor's ownership, possession, or control because of voluntary waste committed or permitted by the judgment debtor, a deficiency shall exist in the amount of the diminution of value as determined by the court (A.R.S. &sect;&nbsp;33-729(B)). Notwithstanding the foregoing, if a mortgage is a purchase money mortgage of all or part of the purchase price of a parcel of real property of 2.5 acres or less that is limited to and utilized for a single 1-family or single 2-family dwelling, there is no deficiency. (A.R.S. &sect;&nbsp;33-729(A)). Furthermore, no deficiency may be pursued against property under a deed of trust that consists of 2.5 acres or less that is limited to and utilized for a single 1-family or a single 2-family dwelling that is sold under the trustee's power of sale regardless of whether the deed of trust is a purchase money deed of trust (A.R.S. &sect;&nbsp;33-814(G)). However, without a completed structure suitable for dwelling purposes (i.e. vacant land), anti-deficiency protection will not apply (BMO Harris Bank v. Wildwood Creek Ranch, LLC, 340 P.3d 1071 (Ariz. 2015)). In 2014, the Arizona legislature further narrowed its anti-deficiency protection. For purchase money mortgages and deeds of trust that are originated after December&nbsp;31, 2014, anti-deficiency protection does not apply to property containing a dwelling that (1)&nbsp;was developed for commercial resale to a third party, (2)&nbsp;was never substantially completed, or (3)&nbsp;was never actually utilized as a dwelling (A.R.S. &sect;&sect;&nbsp;33-729(C), 33-814(H); BMO Harris Bank v. Wildwood Creek Ranch, LLC, 340 P.3d 1071 (Ariz. 2015)). In 2015, the Arizona Court of Appeals held that, although borrowers cannot waive the anti-deficiency protections of A.R.S. &sect; 33-814, guarantors can do so (Arizona Bank & Trust v. James R. Barrons Trust, 237 Ariz. 401).

DEFICIENCIES

In the absence of a non-disturbance agreement between the lender and tenant, a trustee's sale forecloses all leases that are subordinate or junior to the deed of trust. Judicial foreclosure eliminates only the interest of those tenants who are named and served as defendants in the judicial foreclosure action.

EFFECT OF FORECLOSURE UPON LEASES

Borrower may pay any rate of interest agreed to in writing (A.R.S. &sect;&nbsp;44-1201(A)(2)). Otherwise, the usury limitation is 10%. (Special limitations apply to consumer loans and for medical debt.)

USURY CEILING

USURY EXEMPTIONS

Financing statements involving timber to be cut, as extracted collateral, minerals or fixtures are to be filed in the office where a mortgage on real estate would be recorded (A.R.S. &sect;&nbsp;47-9501(A)(1)). In all other cases, financing statements must be filed in the office of the Secretary of State (A.R.S. &sect;&nbsp;47-9501(A)(2)).

LOCATIONS FOR FILING

A mortgage or deed of trust will be effective as a financing statement filed as a fixture filing from the date of recording if the requirements of A.R.S. &sect;&nbsp;47-9502(C) are met.

SECURITY INSTRUMENT USED AS FIXTURE FILING

To charge the community property of a marital community, “joinder” of both spouses is required in any transaction of guaranty, indemnity or suretyship; otherwise, recourse will be limited to the sole and separate property of the signatory spouse (A.R.S. &sect;&nbsp;25-214).

UNUSUAL PROVISIONS OR REQUIREMENTS OR SPECIAL PROBLEMS IN ENFORCEMENT

A.R.S. &sect;&sect;&nbsp;12-1566, 12-1641 et seq., 33-814, 44-141, 44-142, 47-3419 and 47-3605, and Arizona Rule of Civil Procedure-17(f). (These limit the liability of a surety.)

If the guaranty contract so provides, a creditor may bring a deficiency action against personal guarantors of a loan before exhausting the collateral (A.R.S. &sect;&nbsp;33-814(C); First Credit Union v. Courtney, 233 Ariz. 105, &para;12, 309 P.3d 929, 932 (App. 2013)). However, if a trustee's sale is held, an action to recover a deficiency from a guarantor must be commenced within 90 days after the date of sale (A.R.S. &sect;&nbsp;33-814(A), (C)). The deficiency is limited to the difference between the unpaid debt and the greater of the sale price at the trustee's sale (or sheriff's sale) and the fair market value of the property on the date of sale (Id.; A.R.S. &sect;&nbsp;12-1566(E)). The anti-deficiency protection discussed in the “Deficiencies” section above also applies to deficiency actions brought against guarantors.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

6 years after cause of action accrues in an action for debt evidenced by a written contract executed within Arizona (A.R.S. &sect; 12-548) (4 years if executed outside the state) (A.R.S. &sect;12-544(3)).

STATUTE OF LIMITATIONS PERIOD

Recorded release executed by creditor in legally recordable form, which must identify the lien being released and state the date of recordation and the docket and page (or other recording reference) of the lien (A.R.S. &sect;&nbsp;33-707(A)). Failure to record the release within 30 days after receiving satisfaction of debt exposes the creditor to damages (A.R.S.-&sect;&nbsp;33-712).

REQUIREMENTS FOR RELEASE OF LIEN

If manufactured housing has been affixed to the real property by the filing of an Affidavit of Affixture with the County Recorder in the county where the manufactured housing is located, then a security interest is perfected in the same manner as with real property. If an Affidavit of Affixture has not been recorded in the county where the manufactured housing is located, then the manufactured housing is considered personal property and a security interest is perfected by recording notice of the lien on the Certificate of Title to the manufactured housing. Generally the County Assessor of the county where the manufactured housing is located will provide information on whether or not an Affidavit of Affixture has been filed. A.R.S. &sect; 42-15203, 47-9303.

MANUFACTURED HOUSING

Resident debtor's equity in a home (including a condominium or a mobile home) not to exceed $250,000 protected by homestead, but no homestead protection available against recorded consensual liens, including a mortgage or deed of trust (A.R.S. &sect;&sect;&nbsp;33-1101; 33-1103(A)). Only one homestead exemption may be held for a married couple. A judgement creditor is entitled to payment of its lien balance upon a voluntary sale of homestead property after the homestead amount is paid to the judgement debtor. A judgement creditor may force the sale of homestead property if the equity exceeds the homestead exemption amount. Further, a judgement creditor is entitled to payment of excess proceeds upon a re-financing of a homestead property.

HOMESTEAD ISSUES

Arizona is a community property state and the presumption is that all property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is acquired by gift, devise, or descent or property acquired after service of a petition for dissolution (A.R.S. &sect;&nbsp;25-211(A)). While the spouses have equal control and disposition rights over the community property and equal power to bind the community, any transaction for the acquisition, disposition, or encumbrance of an interest in real property, other than an unpatented mining claim or a lease of less than 1 year, or any transaction or guaranty, indemnity, or suretyship, requires the joinder of both spouses (A.R.S. &sect;&nbsp;25-214(C)).

COMMUNITY PROPERTY

MORTGAGE TAX

None on foreclosure sale or deed in lieu of foreclosure.

DOCUMENTARY STAMP TAX

The Transaction Privilege Tax, often referred to in Arizona as the “Speculative Builder's Tax,” is approximately 1&frac12;% - 5% (depending on the city) of the gross income of the sale of a project. The Speculative Builder's Tax is imposed on every person engaging or continuing business as a Speculative Builder within a city. A Speculative Builder is an owner-builder who sells (including any transfer of the equitable ownership) or contracts to sell improved real property: (i)&nbsp;prior to completion of construction; (ii)&nbsp;within 24 months after substantial completion of construction; (iii)&nbsp;at any time for custom, model, or inventory homes; or (iv)&nbsp;at any time for improved residential or commercial lots without a structure. Gross income of a Speculative Builder considered taxable is the total selling price from the sale of improved real property. Tax liability for a Speculative Builder occurs at the close of escrow or transfer of title, whichever occurs earlier. If a commercial project is owned for over 24 months after the improvements were completed, then you are not considered a Speculative Builder and no taxes are owed upon sale of a project or units therein. Speculative Builders should retain records of the tax they paid during construction to document tax paid to contractors. Many contractors may not show the tax as a separate charge on their invoices. In cases involving reconstruction contracting, the Speculative Builder may exclude from gross income the “prior value” allowed for construction contracting in determining taxable gross income. On Foreclosure Sale: In certain instances transaction privilege (excise) taxes may apply. On Deed in Lieu of Foreclosure: In certain instances transaction privilege (excise) taxes may apply.

TRANSFER TAX

Enforceable so long as the law of the state chosen is not contrary to a fundamental policy of the State of Arizona and the parties and transaction have a reasonable connection with the state whose law is chosen.

ENFORCEABILITY OF AGREEMENTS AS TO CHOICE OF LAW

Arizona has enacted the Uniform Commercial Real Estate Receivership Act, A.R.S. &sect; 33-2601 et seq. In addition, receivership is available to prevent waste or other harm or to enforce an assignment in a mortgage or deed of trust of the interest of the mortgagor/trustor in leases and rents, issues and profits after default (A.R.S. &sect;&sect;&nbsp;12-1241 and 33-702(B)).

RECEIVERSHIP

No special rules other than standards of commercial reasonableness and good faith and fair dealing. (Special rules may apply to consumer loans.)

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

A foreign corporation creating or acquiring indebtedness or security interests in real or personal property, or collecting or enforcing same, is generally exempt from qualifying to transact business in Arizona (A.R.S. &sect;&nbsp;10-1501(B)). Post-foreclosure operation of the collateral or judicial enforcement of remedies will require the lender to qualify. Generally, licensure is required for persons who for compensation or in the expectation of compensation either directly or indirectly make, negotiate, or offer to make or negotiate (i)&nbsp;a Mortgage Banking Loan (i.e. a loan that is funded exclusively from such respective person's own resources, that is directly or indirectly secured by a mortgage or deed of trust or any lien interest on real estate located in Arizona, and that is created with the consent of the owner of the real property); (ii)&nbsp;a Commercial Mortgage Loan (i.e. a loan that is directly or indirectly secured by a mortgage or deed of trust or any lien interest on commercial property and created with the consent of the owner of the commercial property); or (iii)&nbsp;a Mortgage Loan (i.e. any loan, other than that set forth in clause (i), secured by a mortgage or deed of trust or any lien interest on real estate located in Arizona and created with the consent of the owner of the real estate) (A.R.S. &sect;&sect;&nbsp;6-943(A), 6-941, 6-971). Some lenders are exempt from the Arizona Mortgage Banker Act licensure requirements if exemption tests are met (A.R.S. &sect;&sect;&nbsp;6-942, 6-972 et seq.). For example, a commercial mortgage banker is exempt if (i)&nbsp;its commercial mortgage business is regulated by this state, another state, the United States, or a court; (ii)&nbsp;it makes commercial mortgage loans of more than $250,000 in the regular course of business that it funds exclusively from its own resources (i.e., it qualifies as an institutional investor); or (iii)&nbsp;it sells commercial property and receives 1 or more mortgages or deeds of trust as security for a purchase money obligation (A.R.S. &sect;&sect;&nbsp;6-971, 6-972). Lenders making consumer loans as defined in the statute must obtain a consumer lender's license (A.R.S. &sect;&nbsp;6-601 et seq.).

LENDER QUALIFICATION AND/OR LICENSURE

There are no unusual provisions or requirements for modifications of existing mortgage loans.

MODIFICATION

A.R.S. &sect;&nbsp;49-295 authorizes the State to ask the attorney general to apply for an order establishing an environmental lien against real property to protect the State's interest in recovering money expended for a remedial action. If authorized by the court in response to the State's application, the lien can apply only to the property related to the remedial action and in which the responsible party has an ownership interest and cannot attach to property used primarily for single- or multi-family housing. An environmental lien is subordinate to any other lien that is perfected and recorded before the attachment of the environmental lien. A copy of the lien must be sent by the State to any senior lienholder, including the holder of a mortgage or security interest. In certain circumstances, a landowner may be required under A.R.S. &sect;&nbsp;49-152 to record a Declaration of Environmental Use Restriction (“DEUR”) as a restrictive covenant against real property. A DEUR is required if the landowner has undertaken remediation but elected to use institution controls or to leave contamination on the property exceeding residential standards. Once recorded, a DEUR runs with the land, binding the owner and its successors. At certain sites remediated through a State program and maintained on a State repository list, the DEUR may not be extinguished through foreclosure of a tax lien, mortgage, deed of trust, or other encumbrance, in which case the foreclosing party would take the property subject to the restrictions imposed by the DEUR.

ENVIRONMENTAL LIEN LAW ISSUES

A complete discussion of Arizona notary rules is found at https://azsos.gov/sites/default/files/notary_manual_and_cover.january.pdf. Of particular importance is the requirement that a notarial certificate contain a description of the notarized document that includes, at a minimum, the title or type of document, the document date, the number of pages of the document, and any additional signers other than those named in the notarial certificate (A.R.S. &sect;&nbsp;41-264(F)). This provision applies only if the notary or electronic notary attaches a notarial certificate to a document using a separate sheet of paper. This requirement encompasses most current commercial real estate finance transactions. Officers (or the officer's spouse) of named parties or parties receiving a direct beneficial interest from a transaction are prohibited from notarizing a document (A.R.S. &sect;&nbsp;41-252(B)). An acknowledgment is required before recording deeds of trust and mortgages (A.R.S. &sect;&sect;&nbsp;33-701 and 33-818). Acknowledgments must contain (i)&nbsp;correct language as depicted in A.R.S. &sect;&nbsp;41-265, (ii)&nbsp;the date of the acknowledgment, (iii)&nbsp;the correct signature of the notary, and (iv)&nbsp;a notarial seal or stamp. An Arizona acknowledgment should appear as follows: STATE OF ARIZONA&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ) ) ss. County of _______________ ) On this ____ day of _________, 20__, before me personally appeared ____________, whose identity was proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to this document [or whom I know personally], and who acknowledged that he/she signed the above/attached document.

NOTARY BLOCK

Arizona does have a State Bar opinion report, which can be found at: <a target="_blank" rel="noopener noreferrer" href="https://www.americanbar.org/content/dam/aba/administrative/business_law/az_model.pdf">https://www.americanbar.org/content/dam/aba/administrative/business_law/az_model.pdf</a>

LEGAL OPINIONS

All mechanics' lien claimants under the same prime contract are on equal footing without reference to the date of recording or to the time of furnishing work or materials, so that all liens arising under the same prime contract relate back to, and attach as of, the date work is first commenced (A.R.S. §&nbsp;33-1000). (The exception is the lien of an architect, engineer or surveyor, which attaches when labor or materials are furnished by others to a degree sufficient to indicate that work has commenced (A.R.S. §§&nbsp;33-992(B) and 33-1007).) Mechanics' liens are preferred over all other liens and will have priority over a lender's lien unless the lender's lien is recorded before labor or materials are furnished to the site (A.R.S. §&nbsp;33-992(A)). If a lender records its lien before mechanics' liens attach, subsequent obligatory loan advances will have priority over mechanics' liens. If work commences before the lender records its lien, which results in “broken priority,” the title insurance underwriter may be willing to insure over mechanics' liens with indemnities from a financially responsible party. Under the 1998 amendment to A.R.S. §&nbsp;33-992, construction lenders can wait until 10 days after construction begins to record without losing priority over mechanic's liens claims.To have a valid claim of lien, every person who furnishes labor or materials for which a lien may be claimed (except for a person performing actual labor for wages) must serve the owner, the original contractor, the construction lender, and the person with whom the claimant has contracted for the purchase of those items with a written preliminary 20-day notice in the form set forth in A.R.S. §&nbsp;33-992.01. To perfect its lien, the claimant must record a notice and claim of lien with the county recorder of the county in which the property is located within 120 days after completion of work (or 60 days after recordation of a notice of completion) and serve a copy upon the owner (A.R.S. §&nbsp;33-993(A)).

INCEPTION OF LIEN

Under Arizona law, a chattel is a fixture and considered part of real estate if (1)&nbsp;it is annexed to the realty or something appurtenant thereto, (2)&nbsp;it has adaptability or application as affixed to the use for which the real estate is appropriated, and (3)&nbsp;it is intended to be permanently attached to the realty (Fish v. Valley Nat'l Bank of Phoenix, 64 Ariz. 164, 169, 167 P.2d 107, 111 (1946)). Generally, a security interest in fixtures is subordinate to an interest in the related real property unless the mortgagee consents to or disclaims an interest in the goods as fixtures or the mortgagor has the right under the mortgage to remove the fixture (A.R.S. §§&nbsp;47-9334(C), (F)(1), (F)(2)).

PRIORITY AS TO REMOVABLE FIXTURES

Arizona applies the theory of equitable subrogation set forth in the Restatement (Third) of Property: Mortgages (“Restatement”) §&nbsp;7.6(a). Equitable subrogation permits a person that fully pays off and discharges the underlying mortgage obligation of another to be treated as the beneficial owner of such obligation and retain its priority (Restatement §&nbsp;7.6(a)). In the context of intervening mechanics' liens, the Arizona Supreme Court held that equitable subrogation can prevent intervening mechanics' lienholders from being unjustly enriched under A.R.S. §&nbsp;33-992(A) (Weitz Co. L.L.C. v. Heth, 235 Ariz. 405, ¶&nbsp;27, 333 P.3d 23, 30 (2014)). When a single mortgage is recorded against multiple parcels, a third party attains equitable subrogation rights by paying the pro rata amount of the superior obligation and obtaining a full release of the parcel at issue from the mortgage lien (Id.). These rights apply even if a mechanics' lien attaches before a third party satisfies the superior obligation (Id.).

EQUITABLE SUBROGATION

Mortgage lenders normally obtain an ALTA extended coverage lender's policy (the form varies).

FORM USUALLY REQUIRED BY LENDER

The most commonly used endorsements are: <table>
 <tbody>
 <tr>
 <td width="282">
 Comprehensive
 </td>
 <td width="312">
 ALTA 9/9.7
 </td>
 </tr>
 <tr>
 <td width="282">
 Same as Survey
 </td>
 <td width="312">
 ALTA 25
 </td>
 </tr>
 <tr>
 <td width="282">
 Contiguity
 </td>
 <td width="312">
 ALTA 19
 </td>
 </tr>
 <tr>
 <td width="282">
 Access and Entry
 </td>
 <td width="312">
 ALTA 17/17.1
 </td>
 </tr>
 <tr>
 <td width="282">
 Tax Parcel
 </td>
 <td width="312">
 ALTA 18/18.1
 </td>
 </tr>
 <tr>
 <td width="282">
 Water Rights
 </td>
 <td width="312">
 ALTA 41/41.3/CLTA 103.5
 </td>
 </tr>
 <tr>
 <td width="282">
 Location and Map
 </td>
 <td width="312">
 ALTA 22/22.1
 </td>
 </tr>
 <tr>
 <td width="282">
 Zoning
 </td>
 <td width="312">
 ALTA 3
 </td>
 </tr>
 <tr>
 <td width="282">
 Deletion of Arbitration
 </td>
 <td width="312">
 CLTA 110.1-06
 </td>
 </tr>
 <tr>
 <td width="282">
 Restrictions, Encroachments & Minerals
 </td>
 <td width="312">
 ALTA 28 Series
 </td>
 </tr>
 <tr>
 <td width="282">
 Mineral Rights; Reservations in Patent
 </td>
 <td width="312">
 LTAA Endorsement No. 7/AZ 226
 </td>
 </tr>
 <tr>
 <td width="282">
 Planned Unit Development
 </td>
 <td width="312">
 ALTA 5
 </td>
 </tr>
 <tr>
 <td width="282">
 Condominium
 </td>
 <td width="312">
 ALTA 4
 </td>
 </tr>
 <tr>
 <td width="282">
 Variable Rate
 </td>
 <td width="312">
 ALTA 6/6.2
 </td>
 </tr>
 <tr>
 <td width="282">
 Environmental Lien
 </td>
 <td width="312">
 ALTA 8.1/8.2
 </td>
 </tr>
 <tr>
 <td width="282">
 Private Rights
 </td>
 <td width="312">
 ALTA 9.6
 </td>
 </tr>
 <tr>
 <td width="282">
 Subdivision
 </td>
 <td width="312">
 ALTA 26
 </td>
 </tr>
 <tr>
 <td width="282">
 Policy Authentication
 </td>
 <td width="312">
 ALTA 39
 </td>
 </tr>
 <tr>
 <td width="282">
 Future Advance Priority
 </td>
 <td width="312">
 ALTA 14 (Modified Paragraph 4(f))
 </td>
 </tr>
 </tbody>
</table> &nbsp;

Arizona

Mortgage Law Summary

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Mortgage Law Summary for Arizona

Arizona

Mortgage Law Summary

Continue reading theMortgage Law Summary for Arizona

Continue reading the
Mortgage Law Summary for Arizona