The Supreme Court of Arizona finally and clearly answered the question of “whether an action to quiet title to real property may proceed where the underlying debt remains unpaid but the statute of limitations for suit on that debt has expired.”
This case involved a married couple (the Arocas) who signed a promissory note secured by a deed of trust against their home in 2007. The deed of trust was in second position.
The note quickly went into default, but the lender took no action to foreclose its deed of trust. Many years later, in 2022, the Arocas filed suit against the lender for quiet title claiming that, since the six-year statute of limitations on the promissory note had expired, the Deed of Trust was now invalid under ARS 12-1104. It was a wrongful lien that should be removed. The lender defended claiming that, although the statute of limitations for suit on the promissory note had expired, the lien created by the Deed of Trust continues for up to 50 years under ARS 33-714.
The lender won at the trial court level. Appeals ensued and ultimately the Arizona Supreme Court reviewed the case. The Supreme Court ruled in favor of the Arocas. It determined that the Arocas were entitled to a quiet title judgment discharging the Deed of Trust lien on their property because any action on the promissory note was barred by the statute of limitations. See ARS 12-1104(B).
This Supreme Court decision opens the door for homeowners and other property owners to eliminate old deeds of trust. There are many of these and a title company will require them to be paid and released should a property owner try to sell. Now they can be removed by a quiet title action and equity can be freed.
The new rule in Arizona is that, if a lender wants to foreclose its deed of trust, it must take action before the statute of limitations for enforcement of its promissory note runs.
If you have questions concerning a real estate matter or other legal matter, call one of our experienced attorneys at 602-277-4441 or use the form below to schedule a free consultation.