Rowe v. Schultz
642 P.2d 881, 131 Ariz. 536, 1982 Ariz. App. LEXIS 382 (1982)
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Rule of Law:
Under a state's recording statute that voids unrecorded conveyances as to creditors, a judgment lien that is recorded after a property conveyance but before the deed is recorded takes priority over the prior unrecorded conveyance.
Facts:
- Mr. and Mrs. Michael Peregoy were the owners of real property in Yuma County.
- On April 12, 1978, the Peregoys conveyed the property to Ben C. Rowe via a quitclaim deed.
- Rowe was a good faith purchaser for value without notice of any claims by Arthur C. Schultz, Jr.
- On May 12, 1978, Schultz obtained a money judgment against Peregoy on an unrelated matter.
- On the same day, May 12, 1978, Schultz recorded an abstract of his judgment with the county.
- On May 18, 1978, Rowe recorded his quitclaim deed, five weeks after receiving it and six days after Schultz recorded his judgment lien.
Procedural Posture:
- Ben C. Rowe filed an action to quiet title against Arthur C. Schultz, Jr. in the Yuma County Superior Court, a court of first instance.
- The Superior Court granted summary judgment in favor of the defendant, Arthur C. Schultz, Jr.
- Ben C. Rowe, as appellant, appealed the summary judgment to the Arizona Court of Appeals.
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Issue:
Does a judgment lien, recorded after a conveyance of real property but before the deed for that conveyance is recorded, create a valid lien against that property with priority over the unrecorded deed?
Opinions:
Majority - McFate, J.
Yes. A judgment lien recorded before a prior conveyance is recorded takes priority. Although a deed is valid between the buyer and seller upon delivery, a recording statute that declares unrecorded conveyances 'void as to creditors' renders that conveyance legally ineffective against a creditor who subsequently records a judgment lien without notice of the prior sale. By reading the judgment lien statute (A.R.S. § 33-964(A)) and the recording statute (A.R.S. § 33-412(A)) together, the court concluded that as to the creditor Schultz, the unrecorded conveyance from Peregoy to Rowe was void. Therefore, from Schultz's perspective, Peregoy was still the owner of the property when Schultz recorded his judgment lien, allowing the lien to validly attach to the property and take precedence over Rowe's later-recorded deed.
Analysis:
This decision solidifies the power of 'race-notice' or 'notice' recording statutes in determining property rights and priorities. It establishes a clear, albeit sometimes harsh, rule that a judgment creditor who properly records their lien is protected against prior unrecorded conveyances by the debtor. The case serves as a crucial precedent emphasizing the critical importance of promptly recording deeds to protect a purchaser's title against subsequent claims. By penalizing the failure to record, the ruling reinforces the public policy of creating a reliable public record of land titles that third parties can depend upon.
