Arizona Property Lien Law Applies to Recording of Invalid Mortgage

 Arizona Property Lien Law Applies to Recording of Invalid Mortgage

  Question: Three years ago in the divorce decree I was awarded our Prescott home.  I recently signed a contract to sell the home.  Several days later the title company said that I gave my ex-wife a $50,000 mortgage on the home.  The title company sent me a copy of this $50,000 mortgage, and my ex-wife had obviously forged my name.  When I contacted my ex-wife, she apologized.  She said that she had forged my name on this $50,000 mortgage when she was very angry with me after our divorce.  She said that she has now recorded a document that has nullified the $50,000 mortgage.  The problem is that, because of the delay, the buyer has cancelled the contract to buy the home.  Although I am very upset, my real estate agent says that she should be able to find a new buyer within the next 30 days, and, because home prices in our area of Prescott are appreciating, I may even make more money on the sale of the home.  Can my ex-wife record a wrongful mortgage on my home and have no liability to me even if I don’t lose any money?

  Answer: Under Arizona law a person who “knows” or even has “reason to know” of the recording of an invalid mortgage on a home or other real property has liability to the owner.  The amount of this liability is a $5,000 penalty, or three times the actual damages, whichever is higher, plus attorneys’ fees.  A.R.S. § 33-420(A).  Even if your ex-wife releases the $50,000 lien now, and the value of your home increases in value, your ex-wife knew that the mortgage was wrongful at the time of recording.  Therefore, she should be liable to you for at least the statutory penalty of $5,000, plus any of your attorneys’ fees.