PART ONE of TWO PART SERIES (part two can be found here)
ARIZONA LANDLORD TENANT LAW FREQUENTLY ASKED QUESTIONS - HOMEOWNER RIGHTS FOLLOWING FORECLOSURE. CAN YOU CHALLENGE THEIR LEGAL TITLE IN A FORCIBLE ENTRY AND DETAINER ("FED") ACTION?
COMMON FORECLOSURE SCENARIO: You were trying to work out a loan modification, and the lender/loan servicer and their offshore call center agents tell you that you are okay, that the house won't be sold, and then the sale date is extended. You trust them and rely on what they are saying. Then, you get the knock on the door "your house has been sold, you need to move out, you are staying in the property illegally with no right to be here." They tell you "if you don't leave voluntarily then we will evict you.
Wow, what do you do now? Didn't see that one coming? Call a foreclosure or real estate lawyer to see what your rights are, there must be some kind of justice available here.
So just what are your rights when facing this situation? What happens next? What is the process? What can be done? The following is a general overview of some of the types of things you can expect and some potential things to look into.
(1) WHERE DOES THE UNLAWFUL DETAINER TAKE PLACE IN ARIZONA?
In Arizona, a tenant may be evicted EITHER before a justice of the peace or before the superior court. These Courts have concurrent jurisdiction with the superior court.
(2) DO I HAVE A RIGHT TO A JURY TRIAL IN AN ARIZONA FORCIBLE ENTRY AND DETAINER ACTION?
Yes under A.R.S. 12-1176. BUT YOU MUST REQUEST IT IN YOUR FIRST APPEARANCE OR IT IS WAIVED. In the Superior Court you will get 8 jurors, and you will get 6 jurors if your Forcible Entry and Detainer ("FED") action is in the justice Courts.
(3) CAN I CHALLENGE "TITLE" TO THE HOME IN THE UNLAWFUL DETAINER EVICTION PROCEEDING IN ARIZONA?
Generally speaking, NO. As one Arizona Court put it:
"The Plain statutory language prohibits inquiry into the validity of title in an FED action. See A.R.S. § 12-1177(A) (See Below). "On the trial of an action of forcible entry or forcible detainer, the only issue shall be the right of actual possession and the merits of title shall not be inquired into." Id. (emphasis added). In keeping with the prohibition set out in A.R.S. section 12-1177.A, Arizona courts traditionally have held that title cannot be an issue in an FED action. See Curtis v. Morris, 184 Ariz. 393, 909 P.2d 460. In Curtis, the Court discussed how FED actions are designed to be speedy, and cannot address title issues (which can be challenged in a separate unlawful detainer action). Specifically the court stated:
"The fact that a forcible entry and detainer action is to provide a speedy and adequate remedy for obtaining possession of premises is indicated by the shortness of the time within which the action must come to trial and the strict limitation on the length of time that the trial of such action may be postponed. This is further indicated by the fact that a judgment in an action of forcible entry and detainer is not a bar to a subsequent proceedings between the same parties in a quiet title suit for the reason that the adjudication of the title is not available in such an action."
The Curtis Court also cited the case of Moreno v. Garcia, 169 Ariz. 586 (DISCUSSED BELOW), where an inquiry into Title WAS PERMITTED. But the Court determined that Garcia was wrongfully decided because the plain meaning of Arizona's Forcible Entry & Detainer Statutes is designed to be speedy, and the statutes specifically say the only issue to be tried is the right to immediate possession rather than the validity of Title. Again, this shows the reluctance to ever look into a title issue in an ARIZONA EVICTION ACTION. In fact, let's take a look at what A.R.S. § 12-1177 (cited above) says:
A. On the trial of an action of forcible entry or forcible detainer, the only issue shall be the right of actual possession and the merits of title shall not be inquired into.
B. If a jury is demanded, it shall return a verdict of guilty or not guilty of the charge as stated in the complaint. If a jury is not demanded the action shall be tried by the court.
C. For good cause shown, supported by affidavit, the trial may be postponed for a time not to exceed three calendar days in a justice court or ten calendar days in the superior court.
See our discussion below for some potential challenges that might exist.
ALSO, DON'T FORGET, IN REGARD TO THE TITLE ISSUE, THE PARTY THAT PURCHASED THE PROPERTY AT THE FORECLOSURE SALE WILL RELY ON THE TRUSTEES DEED AS EVIDENCE THAT IT HAS VALID TITLE AND THEREFORE IS ENTITLED TO POSSESSION. THEY WILL CITE THE FOLLOWING SECTION OF THE ARIZONA REVISED STATUTE IN SUPPORT OF THIS CONTENTION:
A.R.S. 33-811 will likely be raised by your lender to claim the Trustee's Deed is "conclusive evidence" of the right to evict. But read this carefully.
B. The price bid shall be paid at the office of the trustee or the trustee's agent, or any other reasonable place designated by the trustee. The payment of the bid price may be made at a later time if agreed upon in writing by the trustee. The trustee shall execute and deliver the trustee's deed to the purchaser within seven business days after receipt of payment by the trustee or the trustee's agent made in a form that is satisfactory to the trustee. The recording of the trustee's deed upon sale may also constitute delivery of the deed to the purchaser. The trustee is not liable for any damages resulting from the failure to record the trustee's deed upon sale after physical delivery of the deed to the purchaser. The trustee's deed shall raise the presumption of compliance with the requirements of the deed of trust and this chapter relating to the exercise of the power of sale and the sale of the trust property, including recording, mailing, publishing and posting of notice of sale and the conduct of the sale. A trustee's deed shall constitute conclusive evidence of the meeting of those requirements in favor of purchasers or encumbrancers for value and without actual notice. Knowledge of the trustee shall not be imputed to the beneficiary.
C. The trustor, its successors or assigns, and all persons to whom the trustee mails a notice of a sale under a trust deed pursuant to section 33-809 shall waive all defenses and objections to the sale not raised in an action that results in the issuance of a court order granting relief pursuant to rule 65, Arizona rules of civil procedure, entered before 5:00 p.m. mountain standard time on the last business day before the scheduled date of the sale. A copy of the order, the application for the order and the complaint shall be delivered to the trustee within twenty-four hours after entering the order.
OTHER INTERESTING CASES DEALING WITH A FORCIBLE ENTRY AND DETAINER ACTION COMPLAINT BEING DISMISSED IN ARIZONA AND TITLE ISSUES:
So let's look at a couple of cases that discussed where the Forcible Entry Complaint had to be dismissed:
(1) United Effort Plan Trust v. Holm, (Ariz. Ct. of Appeals - Division One), 209 Ariz. 347 (2004).
"A genuine dispute exists that can only be resolved beyond the limitations of a summary forcible-detainer action and in the context of a conventional civil action."
FACTS: The UEPT (Church) claimed that a tenancy relationship existed (justifying the complaint to evict) between the parties, a claim based on its ownership of the land and its assertion that the Holms had only been given permission to use the land as long as they acted in accord with the Church's principles. It alleged that, because Mr. Holm was no longer in compliance with those principles, its permission to use the land had been revoked and he was guilty of forcible detainer.
The Holms (Defendant in the eviction action), in turn, denied the existence of a tenancy and claimed a life-estate interest in the land. Their claim was based on Mr. Holm's belief that he would never have to leave the house that he had labored to construct on the land, buttressed by his and Mrs. Holm's expenditure of significant money and time to build their family home. In addition, no written tenancy contract existed between the parties, no money exchanged hands, and Mr. Holm paid the property taxes on the land.
HODLING: The trial court properly dismissed the UEPT's complaint but not as it did on the merits and with executory orders. A genuine dispute exists that can only be resolved beyond the limitations of a summary forcible-detainer action and in the context of a conventional civil action. The legal relationship between the parties depends upon their history since 1976 of oral and written understandings and agreements as do issues of the existence of a life estate, defensive collateral estoppel, and alleged violations of public policy and constitutional rights. This court will, however, affirm the trial court when it reaches the correct conclusion even if it does so for an incorrect reason. City of Phoenix v. Geyler, 144 Ariz. 323, 330, 697 P.2d 1073, 1080 (1985).
THOUGHTS: Now in the foreclosure setting, the Plaintiff will probably argue that the relation ship between the parties is already established (you are the homeowner who got foreclosed on, and they are your lender, or a third party that bought your property at a foreclosure sale). Just something to think about.
(2) Moreno v. Garcia, 169 Ariz. 586 (OVERRULED)
Moreno held that the prohibition against inquiring into title contained in A.R.S. Section 12-1177(A) no longer applies. Here is what the Court said:
"The forcible entry and detainer statutes were amended by the legislature in 1984. A.R.S. § 12-1173.01 substantially expands the definition of forcible entry and detainer to include several categories of possessor not previously covered. The traditional action was between a landlord and tenant and usually concerned the validity of a lease. The new statute now includes vendor/vendee situations, "if the property has been sold by the owner and the title has been duly transferred." A.R.S. § 12-1173.01(A)(5). All the cases cited by appellant as proscribing determination of title were decided before the enactment of this new statute. See, e.g., Taylor v. Stanford, 100 Ariz. 346, 414 P.2d 727 (1966); Olds Bros. Lumber Co. v. Rushing, 64 Ariz. 199, 167 P.2d 394 (1946). A.R.S. § 12-1173.01(C).............We conclude that the legislature intended that the forcible entry and detainer action for possession now include situations in which title is in dispute and that, for purposes of collateral estoppel, the issue of title may be decided even though the court's remedial power extends only to awarding possession of the property."
Again, the Court in Curtis (above) stated Moreno was BAD LAW and this was confirmed in Curtis II,186 Ariz. 534, 925 P.2d 259, (1996) where the Court held:
"Nor is our understanding new. Long before A.R.S. § 12-1173.01 was adopted, the court of appeals held that A.R.S. § 12-1173 was broad enough to authorize a forcible detainer action to obtain possession of property after an occupant's interest had been terminated pursuant to a nonjudicial sale because "one who remains in possession of property after termination of his interest under a deed of trust is a tenant at will or sufferance." Andreola v. Arizona Bank, 26 Ariz.App. 556, 558, 550 P.2d 110, 112 (1976). That court noted that while the merits of title may not be litigated in a forcible detainer action, "the fact of title may be proved as a matter incidental to showing right of possession by an owner." BUT JUST WHAT DOES THIS MEAN?
The Taylor case discussed what "fact of title" means in an unlawful detainer case. Taylor v. Stanford, 100 Ariz. 346, 414 P.2d 727, Ariz. (1966). In this case the Court stated:
"In attempting to prove their Right to possession plaintiffs seek to convert unlawful detainer into a suit for specific performance. In the case at bar there is no question but that title is in defendants. This evidentiary fact may be put in evidence since it is incidental to defendants' proof of right to possession by reason of ownership. But any further inquiry is prohibited by A.R.S. s 12-1177, subd. A. Merrifield v. Merrifield, 95 Ariz. 152, 388 P.2d 153."
(3) Colonial Tri-City Ltd. Partnership v. Ben Franklin Stores, Inc 179 Ariz. 428, 880 P.2d 648, Ariz.App. Div. 1,1993.. In this case the court discussed that some issues are a PREREQUISITE to determining whether a person is entitled to possession. Namely, whether or not their was a lease creating a landlord/tenant relationship. Specifically the court held:
"Whether plaintiff and defendant had a valid lease is not a question incident to the right of possession, but rather an issue whose resolution is a prerequisite to determining which party is entitled to possession. In other words, before the court in a forcible entry and detainer action can determine whether the landlord is entitled to possession because the tenant has breached the terms of the lease, it must be undisputed that a lease exists between the parties. If the latter question is disputed, that dispute must be resolved in a general civil action and not in a summary proceeding under section 33-361."
So, as you can see, for the most part you cannot challenge whether or not the lender or third party who purchased your property at a foreclosure sale has valid Title and acquired it properly. It appears, at least of the time of this writing in November 2010, that such a challenge normally will need to be raised in a separate civil action for quiet title or ejectment. Unless you can make some other valid argument. We have provided an example of one case we challenged below.
PART ONE of TWO PART SERIES (part two can be found here)
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