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.