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Bank of New York Mellon Trust Co., N.A. v. Arizona HOA Acceptance LLC

Court of Appeals of Arizona, First Division

March 17, 2016

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, fka the Bank of New York Trust Company, N.A., successor to JPMorgan Chase Bank NA, as Trustee for RAMP 2006, Plaintiff/Appellee,
v.
ARIZONA HOA ACCEPTANCE LLC, Defendant/Appellant

          Appeal from the Superior Court in Maricopa County. No. CV2013-008807. The Honorable Benjamin E. Vatz, Commissioner (Retired).

         Law Offices of David L. Knapper, Phoenix, By David L. Knapper, Co-Counsel for Defendant/Appellant.

         Clark Hill PLC, Scottsdale, By Mark S. Sifferman, Co-Counsel for Defendant/Appellant.

         Wright, Finlay & Zak LLP, Scottsdale, By Kim R. Lepore, Jamin S. Neil, Counsel for Plaintiff/Appellee.

         Judge Patricia K. Norris delivered the opinion of the Court, in which Presiding Judge Jon W. Thompson and Judge Maurice Portley joined.

          OPINION

          Patricia K. Norris, Judge:

         [¶1] The issue in this appeal is whether Arizona's redemption statutes grant the holder of a homeowners' association assessment lien the right to redeem residential real property following the mortgage foreclosure sale of that property. We hold they do.

         FACTS AND PROCEDURAL BACKGROUND

         [¶2] In 2005, a borrower executed a promissory note secured by a deed of trust (" deed of trust lien" ) on residential real property in Maricopa County, Arizona. The real property was subject to a previously recorded Declaration of Covenants, Conditions and Restrictions. The Declaration created a homeowners association, Vista View Homeowners Association a/k/a Val Vista Views Homeowners Association (" Association" ), required the owners of property subject to the Declaration to pay certain assessments " fixed" by the Association, and, as authorized by Arizona Revised Statutes (" A.R.S." ) section 33-1807 (Supp. 2015),[1] declared

Page 260

the assessments to be " a continuing lien upon [each parcel of property] against which each such Assessment is made" (" assessment lien" ).

         [¶3] After the borrower defaulted on his obligations under the note and deed of trust, plaintiff/appellee, The Bank of New York Mellon Trust Company, National Association, sued the borrower for breach of contract and to foreclose the deed of trust lien and the borrower's interest in the property. The Bank also sued the Association and alleged that any interest it claimed in the property was subordinate and inferior to the deed of trust lien. Subsequently, the Association stipulated that any lien it held on the property was junior to the Bank's deed of trust lien.

         [¶4] The Bank obtained a default judgment against the borrower in the principal sum of $199,642.52. The judgment foreclosed the borrower's interest in the property, foreclosed the Bank's deed of trust lien, declared the Bank's deed of trust lien valid and superior to all other liens, and directed the Maricopa County Sheriff to sell the property pursuant to a writ of special execution (" Sheriff's Sale" ). The judgment also authorized the Bank to purchase the property at the Sheriff's Sale by applying " all of [sic] any portion of the indebtedness evidenced" by the judgment towards the purchase price (" credit bid" ).

         [¶5] The Bank purchased the property at the Sheriff's Sale for a $22,000 credit bid. Approximately one month later, the Association assigned all rights it had to enforce a $2,000 assessment lien it held on the property to defendant/appellant Arizona HOA Acceptance, LLC (" Arizona HOA" ). Simultaneously, Arizona HOA recorded a " Notice of Intent to Redeem." The notice stated, inter alia, that Arizona HOA intended to redeem the property by paying the amount of the credit bid, $22,000, plus any additional amounts required to effectuate the redemption as required by statute. See generally A.R.S. § ...


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