UPDATE – Arizona Supreme Court Rescinds 21-Nov-2012 Administrative Order 2012-85

10-Dec-2012, Guy W. Bluff, Esq.[1]

15 days after the Arizona Supreme Court issued its Emergency Order #2012-85 modifying Arizona’s Administrative Code relating to Certified Legal Document Preparers, the Court issued a new Order rescinding the same (see Administrative Order 2012-94).

On 21-Nov-2012, Arizona’s Chief Justice amended ACJA §7-208(F) to clarify, among other things, that Legal Document Preparers may not execute lien documents consistent with prior court rule petition decisions.  Subsequent to issuance of Order #2012-85, Arizona’s Certification and Licensing Division advised the Chief Justice that the emergency order as drafted also had the unintentional effect of prohibiting Legal Document Preparers from executing Preliminary 20 Day Notices pursuant to ARS §33-992.01. 

The Chief Justice acknowledged that the amendment was meant to apply only to the execution of Mechanic Liens and that because the wording of the amendment had caused unintended consequences, it was desirable to receive further public comment before adopting the exact wording of any amendment.

Emergency Order #2012-85 was therefore rescinded immediately and retroactively.

Practice Pointer for Attorneys:

For attorneys, it will be important to still carefully review any recorded Mechanic’s Lien to determine whether such document was signed by an appropriate person “with knowledge” as required by ARS § 33-993.



[1]           Guy W. Bluff, Esq. is a trial and business attorney licensed in Arizona, California, and Colorado.  Mr. Bluff is a frequent contributor and author of articles and books relating to Mechanic’s Liens, Preliminary Notices and Bond Claims procedures.  He is the author of the practice manual – Construction Lien Law in Arizona (©, 2005, 2009, 2012).

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Posted in Arizona, Mechanic Liens, Preliminary Notices

Effective 21-Nov-2012, Lien Service Companies Are Not Authorized to Sign 20 Day Preliminary Notices or Mechanic Liens in Arizona

30-Nov-2012, Guy W. Bluff, Esq.[1]

Effective 21-Nov-2012, the Arizona Supreme Court issued an Emergency Order changing Arizona’s Administrative Code with regard to the execution of legal documents by CLDP’s (Certified Legal Document Preparers). Arizonahas a long history of regulating what it considers to be the “Unauthorized Practice of Law” and this latest Supreme Court Order continues that policy of protecting the public from such practices.

The Supreme Court’s Administrative Order specifically provides that effective 21-Nov-2012, CLDP’s may continue to file, record, and arrange for service of legal forms, but that they are not authorized to sign documents for their customers as they have in the past as an “authorized representative” or “legal agent.”  ACJA §7-201(F)(1)(e) provides

e. File, record, and arrange for service of legal forms and documents for a person or entity in a legal matter when that person or entity is not represented by an attorney.  A certified legal document preparer may not sign any document on behalf of or as an agent or authorized representative of a person or entity.[2]

As of 21-Nov-2012, CLDPs are no longer authorized to sign 20 Day Preliminary Notices[3], Mechanic Liens[4], or other legal documents on their customers’ behalf as they have done in the past.  ALL 20 Day Preliminary Notices mailed out after the effective date of 21-Nov-2012 and ALL Mechanic’s Liens recorded after such date must now be signed by an owner, officer, member or other individual actually employed by the company OR AN ATTORNEY, in order to be legally effective.

This change has a serious and immediate impact upon contractors, subcontractors, materials suppliers, design professionals and others who use lien service companies operated by CLDPs to prepare their 20 Day Preliminary Notices, Mechanic’s Liens and other documents.  Presently, there are more than 50 different lien service companies operating inArizona.  Of those, less than 5 are owned and operated by licensedArizonaattorneys.  All 20 Day Preliminary Notices or Mechanic’s Liens prepared and signed by the non-attorney companies after 21-Nov-2012 are legally defective while those signed by licensed Arizona attorneys (or by an individual employed by the company itself) remain valid.

In order to protect your company from the likely situation of having the 20 Day Preliminary Notice determined to be defective and thus invalidating any subsequently recorded Mechanic’s Lien or Payment Bond claim, it is critical that the company either change their lien service company to one owned and operated by a licensed Arizona attorney, or otherwise change their internal procedures to have all such documents signed by an authorized representative of the company prior to mailing or recording.

To the extent that any 20 Day Preliminary Notices have been mailed out from and after 21-Nov-2012 which were only signed by a CLDP, they need to be amended and re-mailed out.  Any Mechanic’s Lien claims which were only signed by a CLDP and then recorded, need to be re-signed (by a company representative with personal knowledge of the lien claim, see ARS §33-993(A)) and then re-recorded immediately.

Practice Pointer for Attorneys:

For attorneys, it will be important to carefully review the 20 Day Preliminary Notices which may be attached to any recorded Mechanic’s Lien or Bond Claim filed after 21-Nov-2012.  While it is anticipated that most lien service companies will eventually make changes to their forms to include the direct signature of their clients, there will likely be a substantial gap in time before all such companies are in compliance.  A sampling of Mechanic’s Liens recorded just in MaricopaCountyafter the effective date of the order demonstrates that they are still being signed by the lien service companies and not the actual lien claimant.[5]  Clearly such liens will be determined to be defective – potentially subjecting the client to sanctions as provided by ARS §33-420 (A) and (C).



[1]           Guy W. Bluff, Esq. is a trial and business attorney licensed in Arizona, California, and Colorado.  Mr. Bluff is a frequent contributor and author of articles and books relating to Mechanic’s Liens, Preliminary Notices and Bond Claims procedures.  He is the author of the practice manual – Construction Lien Law in Arizona (©, 2005, 2009, 2012).

[2]           The full text of Arizona Supreme Court Administrative Order 2012-85 can be found at: http://www.azcourts.gov/Portals/22/admorder/orders12/2012-85.pdf

[3]           See, ARS §33-992.01(D) which provides that the mandatory form language include the signature and title of the company representative.

[4]           See, ARS §33-993(A), which provides that in order to perfect a Mechanic’s Lien “The notice and claim of lien shall be made under oath by the claimant or someone with knowledge of the facts”.

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Posted in Arizona, Mechanic Liens, Preliminary Notices

Changes to California’s Mechanics Lien Law and Release and Waiver Forms (Eff. 7/1/2012)

Significant Changes to California’s Mechanics Lien Law and Release and Waiver Forms.

Guy W. Bluff, Esq. (02-Jun-2012)

Effective July 1, 2012 all of the existing statutes governing mechanics liens, stop notices and payment bonds inCaliforniawill be repealed and replaced by updated statutes.  The previous statutory provisions were found in California Civil Code § 3082 to 3267.  The new statutory provisions are now located in California Civil Code § 8100-8200 et seq. and §8600 et seq. as relates to payment bonds.

Under existing law, a “Preliminary 20-Day Notice” must be served by most types of lien and payment bond claimants at the outset of their work, to preserve their lien claim, payment bond, and stop notice rights. If the notice is served “late” it relates back to cover work performed in the 20 days prior to mailing or service.  Under the new law, this notice is now referred to as a “Preliminary Notice.” Certain mandatory language for the Preliminary Notice has also been changed which is significantly different from that found under the prior statutes.  As a result of these statutory changes, it is important that all contractors, subcontractors and material suppliers insure that they begin using the new Preliminary Notice forms beginning July 1st.

While there are certain statutory safeguards which might allow a lien claimant to assert that the use of an older version form “substantially complied” with the mandatory language, doing so runs the risk having the lien or bond claim deemed defective thereby losing ones rights to payment.  See §8102(b).

Pursuant to §8104(b), a contractor or subcontractor must also make timely and full payment to laborers.  If the event full payment is not made when due, the contractor or subcontractor must provide written notice to the laborer, any bargaining representative, the owner and lender written notice detailing the name and address of the laborer, the wages due, hours worked, and rates of compensation.  Failure to do so can subject a contractor or subcontractor to discipline by the CSLB.

The new laws also require mandatory language and content for the four forms of Waiver and Releases.  Conditional Progress §8132; Unconditional Progress §8134; Conditional Final §8136 and Unconditional Final §8138.  Previously, the waiver and release language for all four forms was found in §3262(d).  The new language and format is now found in §8132 to §8138.  Because of these changes, contractors and suppliers should be careful to utilize new statutorily compliant forms for all releases executed on or after July 1st.  New 2012 statutorily compliant Waiver and Release forms can be located through the following link.

California Waiver and Release Forms

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Posted in California, Lien Waivers, Mechanic Liens, Preliminary Notices

Arizona Prompt Pay Statutes – Private and Public Works Projects

In Arizona, there are a number of different Prompt Payment statutes governing both
public and private projects. A common misconception in the construction industry and
even among legal practitioners is that ARS §32-1129.01 to §32-1129.06 apply to all Arizona
projects–regardless of whether the project is new or remodeled residential, commercial, or
work for the State or other public agency. The typical Prompt Payment statute referred to
in most legal articles relates only to private projects, which make up only a small fraction of
all construction projects in Arizona. This has been especially true for the past 5 years (2007
– 2011), when private lending has been difficult—if not impossible—to obtain for new
development.
An analysis of the Prompt Payment statutes applicable to work performed for the
various state agencies, cities, towns, school districts, counties, and for the State University
system have been uniformly ignored by most legal authors. What follows is a summary of
each of the various statutes and codes applicable to the majority of construction projects in
Arizona—both private and public. (The scope of this article is not intended to address the
Prompt Payment statutes and regulations for work performed for the federal government2,
or work performed on tribal lands.)

Read Full Text Here:  Arizona Prompt Payment Statutes

AN ANALYSIS OF ARIZONA PROMPT PAYMENT STATUTES
GUY W. BLUFF, ESQ.
I. ARIZONA’S PROMPT PAYMENT STATUTES
A.   The “General Rule”
B.   Objections Must be In Writing and Specific
II. SUMMARY OF STATUTORY AND CODE PROVISIONS
A.   Private Projects – ARS §32-1129.01 to ARS §32-1129.05
B.   Interpreting Case Authority
1.   Stonecreek Building Co., Inc. v. Shure, 216 Ariz. 36, 162 P.3d 675 (CA1, 2007)
2.   Slaton Bros. SW, LLC v. Bozrah Builders, Inc. (WL 1434683 (CA1, 2011).(Not Reported)
C. Counties, Cities, Special Districts – ARS §34-221
D. Arizona Department of Transportation – ARS §28-6924
E. State Agencies – Arizona State Procurement Code – ARS §41-2577
F. Arizona State University System –Board of Regents Policy Manual §3-804(G & H).
G. School District Procurement Code – Arizona Administrate Code R7-2-1114, R7-2-1115
III. STATUTORY AND CODE PROVISIONS (FULL TEXT)
A. Private Projects – ARS §32-1129.01 to ARS §32-1129.05
1. 32-1129.01. Progress payments by owner; conditions; interest
2. 32-1129.02. Performance and payment by contractor, subcontractor or material supplier; conditions; interest
B. Counties, Cities, Special Districts – ARS §34-221  1. 34-221. Contract with successful bidder; payments to contractor; security; recovery of damages by contractor for delay; progress payments
C. Arizona Department of Transportation – ARS §28-6924  1. 28-6924. Progress payments
D. Arizona State Procurement Code – ARS §41-2577  1. 41-2577. Progress payments
E. Arizona State University System – Az Board of Regents Policy §3-804(G & H).
1. §3-804(G). Contract Payment Retention
2. §3-804(H). Progress Payment
F. School District Procurement Code – Arizona Administrate Code R7-2-1114, R7-2-1115
1. R7-2-1114. Contract Payment Retention and Substitute Security
2. R7-2-1115. Progress Payments

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Posted in Arizona, Arizona Prompt Pay Act, Attorneys Fees

Attorneys’ Fees ARS §12-341.01; Rule 68 Sanctions; Berry v. 352 E Virginia LLC, 1 CA-CV 09-0630 (06-Oct-2011)

Guy W. Bluff, Esq.

Detailed analysis by the Court relating to discretionary award of attorneys fees pursuant to ARS §12-341.01 and analysis of award of Rule 68 Sanctions when considering “judgment finally obtained.”

Determination of the prevailing party for purposes of award of attorneys fees pursuant to ARS §12-341.01 is within the sound discretion of the trial court and will not be reversed on appeal absent an abuse of discretion. Appellate court will accord deference to the trial court pursuant to §12-341.01 because trial court is better able to evaluate the parties’ positions during the litigation and to determine which party has prevailed. When a case involves several claims based upon different facts or legal theories, the trial court may decline to award fees for those unsuccessful separate and distinct claims.
For purposes of determining an award of awarding attorneys fees pursuant to competing ARS §12-341.01 and Rule 68 offers, the “judgment finally obtained / more favorable judgment” includes the award of damages, plus taxable costs, plus any prejudgment interest.

Lastly, the court held that in order for a party to preserve its right to seek attorneys fees pursuant to a contractual provision (as opposed to a discretionary award pursuant to §12-341.01) requires specific pleading and proof. A general request for attorneys’ fees in the complaint or answer is not sufficient to support an award following trial and the trial court may properly disregard the contractual provisions when making a discretionary award.

Practice Pointer.

When drafting the Complaint and Answer, if there is are specific contractual provision upon which the parties may seek an award of attorneys fees, taxable costs, expenses, or other costs of collection, it is important to specifically plead that provision in the Complaint or Answer and in the prayer for relief in addition to any statutory provisions that might support such an award. For a typical construction contract, prompt pay act, and mechanic’s lien foreclosure complaint the language might be:

Plaintiff requests that this court determine it to be the prevailing party and award its reasonable attorneys fees pursuant to Contract sections 8(a), 14(d), and 15(c), and pursuant to ARS §12-341.01, §32-1129.01(S), §33-998(B) and any other statutory authority which may be applicable in the circumstances.

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Posted in Arizona, Arizona Prompt Pay Act, Attorneys Fees, Mechanic Liens, Rule 68 Sanctions

Mechanic Liens – Scope of Lien; 20 Day Preliminary Notices; Completion Date; Lis Pendens– Fagerlie v. Markham Contracting (31-May-2011)



Guy W. Bluff, Esq. 29-Oct-2011

In the case of Fagerlie v. Markham Contracting Co, (1 CA-CV-10-0051, 31-May-2011), Division 1 of the Arizona Court of Appeals held that (1) Markham could claim a lien on the lots for work done at the “instance” of the developer, Estates at Happy Valley, LLC (“EHV”), as the agent of the lot owners; (2) that Markham properly served the preliminary twenty-day notice on EHV as an owner/reputed owner or, alternatively, as an interested party; (3) that the beginning of the time period for recording the lien presents a genuine issue of material fact; (4) that Markham could correct documents filed with the lien within the time period for perfecting it, and that it substantially complied with the recording requirements in doing so; and (5) a lis pendens filed with a lien foreclosure action does not have to be notarized.

The Markham court re-affirmed the basic rule of law applicable to mechanic’s liens. Arizona’s lien statutes are remedial in nature and should be liberally construed to primarily protect laborers and materialmen who enhance the value of another’s property. Performance Funding, L.L.C. v. Ariz. Pipe Trade Trust Funds, 203 Ariz. 21, 24, ¶ 10, 49 P.3d 293, 296 (App.2002). At the same time, the statutory requirements for perfecting a mechanic’s lien must be strictly followed. MLM Constr. Co. v. Pace Corp., 172 Ariz. 226, 229, 836 P.2d 439, 442 (App.1992). These seemingly inconsistent principles are harmonized by requiring that all the statutory steps for perfecting a lien be followed, but permitting substantial compliance with any particular step so long as the purposes of the mechanic’s lien statutes are achieved.

The Markham case is important because it resolved several reoccurring problems for lien claimants and their counsel which trial court judges have troubled with in past years. First – a lien claimant can file supplements and amendments to correct an otherwise initially defective or deficient lien so long as the amendments are recorded within the statutorily mandated time period. Previously, it was not uncommon for property owners and their banks to argue that a defective or deficient lien claim, once filed, constituted a improper instrument, not capable of amendment or supplement, and thus subjected the lien claimant to statutory sanctions under ARS §33-420.

Second, that for purposes of service of the 20 day preliminary notice, the subdivision developer, here EHV, was considered the legal agent of the individual lot owners. In so holding, the court cited to Lewis v. Midway Lumber Inc., 114 Ariz. 426, 431, 561 P.2d 750, 755 (App.1977) (holding service on the owner of record sufficient even if the record owner is not the true owner) and concluded that service of the 20 day notice on EHV was therefore effective to give proper notice to the individual property owners,

Third, and probably the most important aspect of the case is the court’s discussion as to “completion” of the work for purposes of Markham timely recording its lien. ARS §33-993(A) provides the general rule that a lien must be filed within 120 days of “completion” In subsection C(1), completion is defined as 30 days final inspection and written acceptance by the governmental body which issued the building permit. In subsection C(2), completion is defined cessation of labor for a period of sixty consecutive days. When there is no building permit, or if the governmental body does not issue final inspections and written final acceptances, then “completion” for the purposes of subsection A of this section means the last date on which any labor, materials, fixtures or tools were furnished to the property.

These conflicting time periods are probably the single most confusing aspect of Arizona’s mechanic lien laws and are a common source of contention among practitioners. The statutory period could therefore be 60 days (in instances where a Notice of Completion has been recorded, see ARS §33-993(E), 120 days (when there is no building permit), 150 days (when there is a building permit and final inspection), or 180 days (when there has been a work stoppage).

Holding that Markham’s Lien was timely recorded, the court concluded that for purposes of subsection C(2), the ultimate question is not when Markham completed its work, but when the “improvement” was completed. Citing A.R.S. § 33–993(A) and S.K. Drywall, Inc. v. Developers Fin. Group, Inc., 169 Ariz. 345, 349, 819 P.2d 931, 935 (1991).

The last significant issue addressed by the Court was whether the Notice of Lis Pendens, required A.R.S. § 12–1191(A) must be notarized. While it is common practice for attorneys to have such notices notarized (acknowledged), nothing in A.R.S. §§ 33–998 or 12–1191 requires the lis pendens to be notarized. The court held that lack of notarization did not prevent the lis pendens from serving its intended purpose – giving constructive notice to interested parties of litigation that may affect title to the property – and therefore concluded that a lis pendens filed in conjunction with an action to foreclose a mechanic’s lien need not be notarized.

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Posted in Arizona, Lis Pendens, Mechanic Liens, Preliminary Notices

Mechanic Liens – 20 Day Preliminary Notice Requirements – Allstate Utility v. Towne Bank (CA1, Ariz 25-Oct-2011)



Guy W. Bluff, Esq. 28-Oct-2011

In the case of Allstate Utility Construction, LLC v. Towne Bank of Arizona (1 CA-CV-10-0556; 0747, 25-Oct-2011), Division 1 of the Arizona Court of Appeals finally addressed several issues relating to alleged defect with the 20 day preliminary notice accompanying Allstate’s mechanic’s Lien.  The court held that 1) 20 day notices need not contain an original handwritten signature of the claimant, 2) that certain typeface in the notice was not too small; 3) that the “time of day” of mailing the 20 day notice is not required, and 4) that failure of the lien claimant to include a form of acknowledgement with are not material defects invalidating the lien claim.

Allstate Utility contracted to perform work on property owned by ALC Builders.  Within 20 days of first stating work, Allstate served ALC Builders with its preliminary 20 day notice by first class mail.  When Allstate was not timely paid, it recorded and then sued to foreclose its mechanic’s lien for $112K.  Towne Bank held a security interest in the property which, if Allstate’s lien was determined valid, was admittedly junior to the lien of Allstate.

Towne Bank first argued Allstate’s preliminary 20-day notice was defective because it was not properly signed pursuant to ARS § 33-992.01(C) in that it did not contain an “original” signature of the lien claimant but instead was electronically signed by the notice preparation company.  The statutorily mandated 20 day notice form includes lines labeled “Company name” and “Signature,” as well as “Title.”  In Allstate’s case, in the space labeled “signature,” the notice stated, “SIGNATURE AND TITLE ON FILE.”  The Court held that as a matter of law, Allstate’s name, along with the other information and the notation that the claimant’s “signature and title” were “on file,” were sufficient to manifest Allstate’s intention to authenticate the notice.

Towne Bank next argued that the preliminary notice failed to contain statutorily mandated language in the proper font size.  ARS § 33-992.01(D) requires the preliminary 20-day notice to warn the property owner or other recipient that it has only 10 days to correct any inaccuracies in the notice. The statute provides that the warning “be in type at least as large as the largest type otherwise on the document.” ARS § 33-992.01(D). Towne Bank argues Allstate’s notice was invalid because the warning language was not as large as the largest type otherwise on the document.  The Court held that the font size, while small, was not materially different that the size of any other language on the notice and summarily rejected this argument.

Towne Bank’s third argument was that Allstate’s lien is invalid because the copy of the preliminary 20-day notice that Allstate averred it served on ALC Builders lacked a form by which ALC Builders could “acknowledge” receipt of the notice.  InArizona, a claimant may prove that it served the 20-day notice by recording an acknowledgment of receipt executed by the recipient of the notice.  ARS § 33-992.02(1).  Alternatively, the claimant may prove it served the notice by recording an affidavit of service together with its lien. ARS § 33-992.02(2).  The court held that while the 20 day notice failed to include an “acknowledgment” as provided by statute, this defect was not fatal because Allstate recorded an affidavit of service with its lien – the alternative method of proving delivery.  The court further held that failure to provide an acknowledgment form to the recipient of a preliminary 20-day notice does not invalidate the notice or the subsequent notice and claim of lien.

Towne Bank’s final argument was that the affidavit of service was defective because it did not state the time of day that the notice was mailed to ALC.  The court summarily disposed of this argument as well finding that there is nothing in the statutory language which requires that the precise time of day when the 20 day notice is mailed be noted.

In summary, the Court reaffirmed the long standing rule of law applicable to Arizona Mechanic Liens.  Arizona’s lien statutes generally have two purposes: To protect laborers and materialmen who have provided goods and services, and to protect the right of property owners to notice of lien claims against them. See Kerr-McGee Oil Ind., Inc. v. McCray, 89 Ariz. 307, 311, 361 P.2d 734, 736 (1961); Lewis, 114Ariz. at 431, 561 P.2d at 755.

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Posted in Arizona, Mechanic Liens, Preliminary Notices

[Article] 20 Day Preliminary Notices – Your Best Protection of Payment



SW Contractor – 2008 Professional Services Guide

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Posted in Arizona, Preliminary Notices

Mechanic Liens – Homeowner Exception; Willamson v. Fountain Hills Door



Family Trust Qualifies for Owner-Occupant Exception under ARS §33-1002(A)(2)

In the case of Williamson v. PVOrbit dba Fountain Hills Door & Supply, (1 CA-CV 10-0390, 01-Sep-2011), Division 1 of the Arizona Court of Appeals finally addressed the longstanding issue of whether title to a residence held in the name of a family trust will still qualify for the protections afforded by Arizona’s Homeowner Exception to the Mechanic Lien Statutes (ARS §33-981).  Subject to certain other statutory prerequisites, ARS §33-981 grants a Mechanic’s Lien to every person who labors, furnishes professional services, materials or supplies to the alteration, repair, or new construction of any building, including residential homes.

An exception to this rule is found in ARS §33-1002 — generally referred to the Homeowner Exception to the lien statutes — and provides that absent having a direct contract with the property owner (e.g. the general contractor or architect), no lien may be filed by laborers, subcontractors or material suppliers performing work or supplying materials to the project.

In order to qualify for the Homeowner’s Exception, the “Owner-Occupant” needed only demonstrate (1), that prior to start of construction, they held legal or equitable title to the dwelling by way of a recorded instrument and (2), that they resided or intended to reside in the dwelling at least 30 days during the first year following completion of the home or remodeling project.  The statute also required that an “Owner-Occupant” be a “natural person.”

The re-occurring issue addressed by the Williamson court was whether the exception would still apply when legal title to the residence was held, not by a “natural person”, but instead by a family trust which was controlled and operated by the same individuals living in the residence.  Transferring legal title to a family trust or other family limited liability company has long been a vehicle for estate planning attorneys to protect the assets of their clients and minimize tax liabilities on the death of the principals.

The Williamson court recognized that in a family trust situation, the  Williamsons’, as sole beneficiaries and trustees, still qualified as a “natural person” under the statute and thus were entitled to have the mechanic’s lien discharged.  The court held that in a trust, the trustees hold legal title and the beneficiaries hold equitable title, citing Dunlap Investors Ldt v. Hogan, 133 Ariz. 130 (1982).  Since the Williamsons’, as the trustees, held legal title, they still qualified for the exemption against liens provided in ARS §33-1002.

The court did not address the issue of whether Williamsons’ also would have qualified to the exception by virtue of the fact that as beneficiaries under the trust, they also held “equitable” title to the property.

An unanswered question also remains as to the issue when the legal title to the residence in held in the name of a Limited Liability Company with the owner(s) of the LLC being the same individuals residing (or intending to reside) in the residence.  This author believes that the court would resolve this question in the same manner since similar to the “trustee” under a family trust, the “members” in a limited liability company having been formed for estate planning purposes, effectively hold both legal and equitable title to the property in question.

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Posted in Arizona, Mechanic Liens

Arizona Judgments – Expiration / Practice and Procedure for Renewal



I.   EXPIRATION OF ARIZONA JUDGMENTS.

In Arizona, a judgment is initially effective for five (5) years from the date of its entry by the Clerk of the Court.  Arizona’s legislature has determined that the Judgment Debtor will be released from further obligation unless a Judgment Creditor timely files a renewal affidavit or otherwise brings an action on the judgment within five years after its entry.  Inherent in this statute of limitations is the risk that a party who owes money may escape liability if the creditor does not act in a timely fashion.   Fidelity Nat. Financial Inc. v. Friedman, 225 Ariz. 307 (2010).  The affidavit of renewal serves to notify interested parties of the existence and continued viability of the Judgment.  J.C. Penney v. Lane, 197 Ariz. 113 (CA1, 1999).

Entry of the Judgment by the Clerk is not always the same date as when the Judgment was signed by the Judge or Commissioner.  Execution or collection proceedings must be accomplished within that 5 year period.  A.R.S. § 12-1551(B).  The five-year period does not begin to run until the judgment can be enforced or sued upon, i.e., following a stay pending an appeal.  Groves v. Sorce, 161 Ariz. 619, (CA2, 1989); Northstar Development Corp v. Wolfswinkel, 146 Ariz. 406, (CA2, 1985), or upon default of payment arrangements.  Willers v. Willers, WL 1507190 (NR), (CA1, 2010)   Further, A.R.S. § 12-1551(B) provides that execution or other process may not be issued upon a judgment after the expiration of five (5) years from the date of its entry unless the judgment has been timely renewed.

Practice Pointer

Upon notification of entry of the Judgment by the Clerk of the Court, the best practice is to obtain one or more Certified copies (typically for a fee of around $30) and then immediately cause the same to be recorded in every county in which the Judgment Debtor has (or may in the future) acquire real property.  The recorded copy requires a Judgment Information sheet as the cover page, and should include a calculation worksheet detailing the amounts due under the Judgment and accruing interest.

A copy of the Recorded Judgment should be mailed to the Judgment Creditor at the last known address or the address for service of process (in the event of default judgments) to avoid collateral attacks on the Judgment later on.  Note that effective 21-Jul-2011, the interest rate attributable to judgments entered after that date is tied to the prime lending rate.  A sample Judgment Information Sheet and Judgment Calculation Worksheet is attached.

II.   RENEWAL OF ARIZONA JUDGMENTS.

A.   Renewal of Judgments on Real Property.

Judgment liens doe not exist at common law and exist only by statutes.  Tway v. Payne, 55 Airz 343 (1940).  Under A.R.S. §33-964, a judgment becomes a lien “upon all real property of the Judgment Debtor” after it has been recorded as provided by §33-961.  Bryan v. Nelson, 180 Ariz. 366 (CA1, 1994).  A Judgment Creditor who desires that a judgment become a lien on real property of the Judgment Debtor can accomplish this by recording a certified copy of the judgment in the office of the county recorder in each county in which the Judgment Debtor has, or might have, real property.  A.R.S. § 33-961(A).  The certified copy of the judgment tendered for recording must contain the following information:

1.  Title of the Court in which it was entered and the civil action number;

2.  Date the judgment was entered and the docket record thereof;

3.  Name of both the Judgment Creditor and the Judgment Debtor;

4.  Amount of the judgment; and,

5.  Attorney of Record for the Judgment Creditor.

Under A.R.S. §§ 33-963 and 33-964(A), a judgment that is recorded in this manner becomes a lien on the real property of the Judgment Debtor for a period of five (5) years from the date the judgment was entered by the Clerk of the Court.  As discussed in the above section, a judgment may be renewed either by filing a suit on it or by filing an affidavit of renewal with the Clerk of the appropriate Court.  A.R.S. §§ 12-1611, 1612(A).  Merely re-recording the original judgment with the county recorder every 5 years is not sufficient to extend the judgment lien.  An affidavit of renewal must be timely filed with the Clerk of the Court in which the original judgment was obtained.

Renewal, however, does not automatically extend the judgment lien created by the recording of the original judgment.  Hall v. World Savings and Loan Association, 189 Ariz. 495, (CA1, 1997).  In order to extend that judgment lien, the Judgment Creditor must also record in the county recorder’s office an affidavit of renewal of the original judgment.  No lien will attach to real property until the original judgment has been renewed with the Clerk, AND, the Affidavit of Renewal has been recorded with the County Recorder.  Id.  A.R.S. Section 12-1613(C).

Practice Pointer

The Judgment must be timely renewed with 5 years from the date of the original entry by the Clerk of the Court – NOT – 5 years from the date of recording (unless these are the same date).  For calendaring purposes, it is important to note the date of entry of judgment and calendar a tickler 90 days prior to the 5 year limitation (and preferably at 60 and 30 days prior as well).

Upon renewal, and in order to comply with the intent of the statues (to notify interested parties of the existence and continued viability of the Judgment), a copy of the Affidavit of Renewal should be mailed to the Judgment Creditor and its former counsel, at all known addresses.

Prior to renewing the Judgment and recording the Affidavit of Renewal, it is good practice to check with the County recorder’s office to determine if the Judgment Debtor has acquired any real property during the 5 year period from the original judgment recording and the renewal.  If property is located, mail a copy of the Affidavit of Renewal to the Judgment Debtor at the new address.  The Affidavit of Renewal recorded with the County Recorder should also make reference to the original recording information and include an updated Judgment Calculation Worksheet reflecting any payments received or a computation of the interest accrual.

B.   Renewal of Monetary Judgments.

Monetary judgments also expire if not renewed every five (5) years.  Crye v. Edwards, 178 Ariz. 327, 873 P.2d 665 (Div. 1 1993).  According to A.R.S. § 12-1611, a judgment may be renewed by instituting an action on it.  Further, a judgment may also be renewed for an additional five years by filing an affidavit for renewal which complies with the requirements of A.R.S § 12-1612.  An affidavit of renewal of a judgment, if required, must be filed within ninety (90) days before, and not after, expiration of the judgment or a prior renewal.  Mobile Discount Corporation v. Hargus, 156 Ariz. 559, 753 P.2d 1215 (Div. 2 1988).  [emphasis added].  In accordance with A.R.S. § 12-1612, the affidavit of renewal, which may be made by the Judgment Creditor or a personal representative or assignee of the Judgment Creditor, must set forth the following:

1.  The names of the parties to the action in which the judgment was rendered;

2.  The name of the court in which the judgment was docketed and the number and page of the docket in which it was entered;

3.   If the judgment has been recorded, the name of the county in which it has been so recorded and the number and page of the book in which it was recorded;

4.  The name of the owner of the judgment and, if the owner is not the judgment  creditor, the source and succession of the owner’s title;

5.  Whether or not any execution upon the judgment is outstanding and unreturned;

6.  The date and amount of all payments upon the judgment, and a statement that such payments have been credited;

7.  Whether or not there any set-offs or counterclaims in favor of the judgment  debtor and, if so, the amount thereof; and

8.  The exact amount currently due upon the judgment after allowances for set-offs and counterclaims.

Id.  The renewal of judgment statutes clearly prescribe that the affidavit is to be filed with the clerk of the superior court in the same County in which the judgment was docketed so that it can be maintained with the other records concerning that judgment. Id.  [emphasis added]

Practice Pointer

Prior to renewing the Judgment and recording the Affidavit of Renewal, it is good practice to check with the County recorder’s office to determine if the Judgment Debtor has acquired any real property during the 5 year period from the original judgment recording and the renewal.  If property is located, mail a copy of the Affidavit of Renewal to the Judgment Debtor at the new address.  The Affidavit of Renewal recorded with the County Recorder should also make reference to the original recording information and include an updated Judgment Calculation Worksheet reflecting any payments received or a computation of the interest accrual.

As a practical matter, monetary Judgments can be located in the Judgment Docket for the county in which the original judgment was entered.  In order to provide as much notice to potential third parties, one way to provide Statewide notice is to also file a UCC-1 together with a copy of the Judgment with the Arizona Secretary of State.

C.  Additional Procedural Requirements for Renewal of Judgments.

In order to properly record the judgment with the county recorder, the Judgment Creditor must attach the to Affidavit of Renewal a separate Judgment Information Statement which is to contain the following additional information on the first page: (1) the correct name and last known address of each Judgment Debtor; (2) the name and address of the Judgment Creditor; (3) the amount of the judgment; (4) the social security number, date of birth and driver’s license number of any Judgment Debtor who is a natural person; and, (5) whether enforcement of the judgment has been stayed and, if so, the date the stay expires.  A.R.S. § 33-967.

Practice Pointer

At the time of filing the Affidavit of Renewal with the Clerk of the Court, make two copies.  One for filing and a second for conformance (date stamp filing confirmation) by the Clerk.  To this copy, attach the Judgment Information Statement and the renewed Judgment Calculation Worksheet.  The Affidavit of Renewal and Judgment Information Statement should also make reference to the original recording information for ease of cross-referencing by the County Recorder’s office.

Since the Judgment Information Statement should include the name, address, and social security number, date of birth and driver’s license number (if a natual person), it is important for the Judgment Creditor to try and obtain this information at the time of the original transaction.  Fields for this information should be included on the original credit application with the Judgment Debtor whenever possible.

D. Bankruptcy and Renewal of Judgments.

During the period of 2007 through 2010, Arizona has experienced a significant number of bankruptcy filings for both individuals and businesses – over 106,000 (~2,000/mo).  2011 is expected to be the worse ever with over 3,000 new filings each month.  As such, prior to taking steps to renew any judgment, it is important to check with the US Courts official website to determine if the Judgment Debtor has filed for bankruptcy protection and the automatic stay provisions of 11 USC §361 are in effect.

The fact that the Judgment Debtor has filed for bankruptcy protection DOES NOT excuse the Judgment Creditor from timely filing an Affidavit of Renewal.  The automatic stay effects only the Judgment Creditor’s ability to enforce a judgment.  It does not excuse the need to timely renew the judgment during the pendency of the bankruptcy proceedings which is considered a simple ministerial act of preserving the Judgment Creditor’s potential rights and is not prohibited under Arizona law by an automatic bankruptcy stay or any stay of the enforcement of the judgment, such as might be imposed by the filing of a supersedeas bond.  In re Smith 209 Ariz. 343 (Ariz. 2004).

It has been the practice in the Arizona Bankruptcy Court that judgments are initially docketed in the Bankruptcy Court. If the Judgment Creditor wishes to execute on the judgment, Judgment Creditor follows the procedures under Arizona State law. If the Judgment Creditor wishes to proceed in another Federal District or State, the Judgment Creditor requests a certified copy of the Bankruptcy Court Judgment, which is then filed in the Arizona Federal District Court.  The Judgment Creditor then proceeds to domesticate the judgment in the other District or State, and executes on the judgment pursuant to the law of that District or State. As to renewal affidavits of Arizona Bankruptcy Court judgments, the party follows the procedure that is outlined in the Arizona statutes that refers to the “district court.”  In re Davis, 323 R.R. 745 (Bktcy.D.Ariz, 2005)

III.   FEDERAL DISTRICT COURT JUDGMENTS.

The process for registering a judgment of one federal district court in another federal district court is outlined in 28 USC §1963.  The federal court applies state law, however when renewing a judgment that has already been registered in that state.  Fidelity Nat. Financial Inc. v. Friedman, 602 F.3d 1121 (CA9, Ariz 2010).  Thus, the process to be followed for a federal court judgment in Arizona is the same as that required for a state court judgment – timely filing an Affidavit of Renewal within 5 years of the date of entry of the original judgment – with the Clerk of the District Court.  See generally A.R.S. §1-215 which provides for the applicability of Arizona state laws to any matter or proceeding in any court, civil or criminal.


Posted in Arizona, Bankruptcy, collections