When a is lien is wrongfully filed against your property, it clouds your title. In most cases, it should be removed promptly. Arizona law provides several different options for removing invalid liens against real property. The two principal methods are used, one based on a statute, and one based on a common law claim.
A.R.S. § 33-420 – Groundless Liens
A person who files an invalid lien can open themselves up to liability for damages under A.R.S. § 33-420(a), which states that a person asserting a lien or other interest that the person knows to be groundless, forged, or which contains a material misstatement or false claim is liable to the property owner for damages of $5,000, or for treble the actual damages caused by the invalid lien.
Furthermore, A.R.S. § 33-420(c) provides for damages of $1,000 or actual damages caused by the invalid lien, whichever is greater, if the holder of the invalid lien fails to release or correct the lien within 20 days of receiving a written request from the property owner. Both sections (a) and (c) also provide for an award of reasonable attorney’s fees.
The penalties for groundless liens can convince the holder to release the lien in response to a demand letter. This can be an effective strategy for eliminating liens without requiring litigation. However, some lien claimants will not respond or will insist their lien is valid. Then, litigation will likely be necessary.
Lawsuit to Quiet Title
The common law approach to eliminating an improper lien is a lawsuit to quiet title. This is a lawsuit filed with the Court to declare a lien invalid. Unlike the Groundless Liens statue, this method is not limited to liens that the holder knows to be groundless or forged. A letter can also be sent before filing a suit to quiet title, which must allow 20 days for a decision. The letter asks the lien holder to renounce their lien by signing a a quitclaim deed. If the lien is determined invalid and the lien claimant failed to sign the deed, the landowner may be able to recover attorney fees.
Typically, the claim for statutory damages and to quiet title are filed as a single lawsuit. Under A.R.S. § 33-420, the landowner may also be entitled to expedited relief, so it can be particularly effective to pursue claims under that statute.
Chernoff Law handles real estate litigation and quiet title matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your real estate matters.