Pretend you own real property in Arizona that you want to sell. You have a buyer. You enter into a purchase contract. But when the buyer runs a title report, she learns that someone else has wrongfully recorded a claim on your property. The buyer cancels.
You want to hold the individual who wrongfully recorded the interest on your property accountable. Not only do you need to consider the possible claims you should bring, but you may want to consider the order in which you decide to prosecute those claims.
Two claims come to mind: quiet title and wrongful recordation. Under A.R.S. § 12-1101(A), “[a]n action to determine and quiet title to real property may be brought by any one having or claiming an interest therein, whether in or out of possession, against any person . . . when such person . . . claims an estate or interest in the real property which is adverse to the party bringing the action.” To prevail on a quiet title claim, you simply need to prove that you, not the recorder, are the party with the rightful interest in the property. The recorder’s mental state is often irrelevant.
But to prevail on a wrongful recordation claim, the recorder’s knowledge is of critical importance. Pursuant to A.R.S. § 33-420(A), you must establish that the recorder knew or should have known “that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property . . .” If you prevail on this claim, not only are you entitled to attorneys’ fees, but you also are entitled to three times your actual damages.
But the wrongful recordation claim’s knowledge element can be difficult to prove; credibility often becomes the determining factor. There may be an easier way to establish knowledge—parlay one summary judgment motion into another.
Here’s how. To prevail on a summary judgment motion on the quiet title claim, the court must determine that no reasonable person could conclude that the recorder has a lawful interest in your property. If you meet this hurdle, the knowledge element of your wrongful recordation claim becomes much easier to jump. Why? It seems inconsistent to rule that no reasonable person could have believed that the recorder had an interest in the property but somehow that the recorder did not know or should not have known that his claim to the property was “groundless.” Thus, since the judge already concluded in the first motion that no reasonable person could have believed that the recorder had an interest in the property, logically then the recorder could not have reasonably believed that he had an interest in the property. In turn, the judge can easily find that the recorder knew, or at very least should have known, that the document he recorded purporting to claim an interest in your property was “groundless, contain a material misstatement or false claim or [was] otherwise invalid . . .” Then, you simply need to prove damages at trial.
When the knowledge component associated with proving a wrongful recordation claim is going to be difficult to prove, you may want to consider moving for summary judgment on the quiet title claim first. Success there might lead to success on a follow-up summary judgment motion on the wrongful recordation claim.