The Quiet Title Lawsuit; Fixing Title Defects in Real Property
Quiet Title in Arizona
Homeowners may experience problems with their property for a number of different reasons. Regardless of what the specific issue regarding the title defect is, there are two broad categories in which these title defect issues arise.
- There is some error in the recording of a document and/or the failure to record a document that exits in the real property chain of title.
- There is an actual dispute relative to one or more parties claiming the real property.
Regardless of what the cause is of the title defect the remedy is often the filing of a Quiet Title Lawsuit. Arizona law allows a property owner to file a lawsuit to clear the title to his or her property. ARS § 12-1101 allows anyone with a claim to real property to file a lawsuit in the Arizona Superior Court in order to determine who has an actual interest in the disputed real property. The Plaintiff, the person filing the lawsuit, will need to prove why he or she is entitled to clear title under A.R.S. § 12-1102. The Plaintiff’s complaint must be under oath, set forth the Plaintiff’s interest in the estate, describe the real property concerned and detail what claims the Defendant is making to the real property which are adverse to the Plaintiff’s interest.
A Quiet Title lawsuit can be useful to a property owner in a number of different situations. It can be used to remove defects to the title that show up by way of recorded instruments such as mechanics liens, judgments and lis pendens. In addition, Quiet Title actions can be used to remove unrecorded claims as well. These types of title problems include, but are not limited to, constructive trust claims and adverse possession claims.
While a quiet title lawsuit can be an invaluable tool in eliminating title defect issues on real property, it is not without risk to the Plaintiff. No one can guarantee that any lawsuit, no matter how meritorious, will be won. Even if a Defendant does not contest the lawsuit but, instead, appears and disclaims all right and title adverse to the Plaintiff, then pursuant to A.R.S § 12-1103 the Defendant shall recover his costs.
Fortunately, Arizona Law provides a procedure to minimize the risk of a Defendant recovering his/her costs. Plaintiff should comply with A.R.S. § 12-1103 (b) which allows the sending of a letter twenty days prior to the initiation of the Quiet Title lawsuit. That letter should enclose a quitclaim deed to the real property and the sum of Five Dollars. The letter demands that the Defendant execute and return the Quit Claim Deed. If this twenty day letter is sent and the Defendant does not return the signed Quit Claim Deed, then the Plaintiff is protected from an award of costs in favor of the defendant and the Court may award the Plaintiff in addition to ordinary costs, some or all of the Plaintiff’s attorney’s fees should a lawsuit be needed to resolve the issues.
Should a Lis Pendens be Filed?
It is sometimes necessary for a party filing a Quiet Title action to also record a Lis Pendens with the County Recorder’s office. The Plaintiff should record a Lis Pendens if the Defendant in the Quiet Title action has an interest which he or she could transfer to a third party purchaser. If such a transfer was made by the Defendant the third party purchaser might gain priority over the claims of Plaintiff. This can be prevented by the filing of a Lis Pendens which, in effect, freezes the title and puts all third parties on notice that the Plaintiff has disputed the claim to title. If a third party receives an interest in the real property after the Lis Pendens has been filed, that third party’s interest in the real property would be subject to the outcome of the Quiet Title lawsuit.
Combining Quiet Title Action With a Demand for Damages
Under common law, a land owner may sue another for “slander of title”. A slander of title lawsuit is difficult to prove since it requires proof of malice, a bad motive on the part of the Defendant, along with proof of special damages. However, under A.R.S. § 33-420 the owner of the property has been given a much more effective way to respond to individuals who wrongfully cloud title to real property.
A.R.S. § 33-420(a) provides as follows: “A person purporting to claim an interest in, or a lien or encumbrance against, real property, causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars or for treble the actual damages caused by the recording whichever is greater, and reasonable attorney fees and costs of the action”. Many potential Defendants, knowing that this statute poses severe consequences for their conduct, have chosen to settle rather than risk a court entering judgment against them based upon A.R.S. § 33-420 (a).
In addition to the financial ramifications posed by A.R.S. § 33-420 (a), the Arizona legislature included another hammer which a Plaintiff may use against a Defendant in A.R.S. § 33-420(c). This statutory section states “a person who is named in a document which purports to create an interest in, or lien or encumbrance against, real property and who knows that the document is forged, groundless, contains immaterial misstatement, or false claim or is otherwise invalid shall be liable to the owner or title holder for the sum of not less than one thousand dollars or for treble actual damages, whichever is greater and reasonable attorneys fees and costs, as provided in this section, if he willfully refuses to release or correct such document of record within twenty days from the date of a written request from the owner or beneficial title holder of the real property”.
Based upon the potential sanctions imposed by A.R.S. § 33-420(c) it is good practice to combine the twenty day demand letter for quiet title with a demand under A.R.S. § 33-420(c).
For those individuals who are experiencing title disputes there are ways for the real property holder to resolve these matters. First the property owner may send a demand letter. Should that prove ineffective the property owner may file a Quiet Title lawsuit – possibly combined with other lawsuit claims.
A Non Litigation Means to Remove Invalid Liens Against Real Property
A Quiet Title lawsuit and/or a suit pursuant to A.R.S. § 33-420 can be a long, time consuming and expensive process. There is another, quicker, way to clear title in some cases. A.R.S. § 33-421- Recording of Liens, provides an alternate means for affected real property owners to have liens removed.
A.R.S. § 33-421(a) provides as follows: “A non consensual lien, other than a lien recorded by a governmental entity or political subdivision or agency, a validly licensed utility or water delivery company, a mechanics liens claimant or an entity created under covenants, conditions, restrictions or declarations effecting real property shall not be recorded unless the lien is accompanied by an order or judgment from the court of competent jurisdiction authorizing the filing of lien”.
This statute restricts the definition of non consensual liens to those liens which are not agreed to by a property owner and which are not otherwise recognized under Arizona law. Although this statute makes it clear that a non consensual lien cannot be filed without a court order many individuals still file non consensual liens that are not otherwise valid under Arizona law believing that they will obtain some advantage by doing so. Instead, they merely expose themselves to liability. A County Attorney or Attorney General for the State of Arizona is authorized to help in those cases where the lien in question is invalid on its face. A.R.S. § 33-421(b) allows property owners to contact the County Attorney for the County in which the property is located or the Arizona Attorney General’s office and request the non judicial removal of these invalid liens.
A.R.S. § 33-421(b) additionally provides: “If a non-consensual lien is accepted for recording as described in sub section A, the recording officer shall accept for recording a notice of invalid lien that is signed and submitted by the Attorney General or County Attorney. The Attorney General or County Attorney shall mail a copy of the notice of invalid lien to the person who is designated as creditor and to the person who recorded the non-consensual lien at the address of each as stated on the recorded document. The recorded lien is conclusively presumed to be invalid when the invalid lien is recorded”.
When faced with a wrongful lien or other title defect, contact Platt & Westby or call 623-239-4422 for a free initial consultation with our Phoenix real estate attorneys to determine how same might be removed as quickly and inexpensively as possible.